TMI Tax Updates - e-Newsletter
November 3, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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GST:
MEANING AND SCOPE OF ‘SUPPLY’ UNDER MODEL GST LAW - Goods and Services Tax - GST
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GST:
GST : 10 POINT SERIES ON SUPPLY - Goods and Services Tax - GST
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Income Tax:
Reopening of assessment - It is beyond comprehension that even though the AO had time till 30.09.2011 to issue notice u/s 143(2) and even though he had recorded the reasons for assuming jurisdiction u/s 147 for re-assessment on 21.09.2011, he had still not chosen to issue the notice which would have then given him the jurisdiction to continue with the proceedings - HC
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Income Tax:
The assessment proceedings generated by the issuance of a notice u/s 153A (1)(a) can be concluded against the interest of the assessee including making additions even without any incriminating material being available against the assessee in the search u/s 132 - HC
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Income Tax:
Validity of reopening of assessment - Since this is a case of original non-scrutiny assessment, the concept of change of opinion cannot be applied. - HC
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Income Tax:
Expenditure incurred towards renovation and improvement of hotel building - it was not the case of the Revenue that number of rooms were added to the hotel premises or that the seating capacity was increased or otherwise - allowed as revenue expenditure - HC
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Income Tax:
Additional Depreciation @60% on the courseware - the department cannot be allowed to take different view in the different assessment years qua the same assets which are nothing but specialized software or customized training softwares which are eligible for depreciation at the rate of 60% - AT
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Income Tax:
The source of income of the BCCI is in India and not outside India. Merely because the event is performed outside India it cannot be said that source of income of the BCCI is not in India - receipt of the appellant satisfies the ‘make available‘ test as provided under article 13 (4) ( c) of the India UK DTAA as fees for technical services. - AT
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Customs:
100% EOU - the refrigerated trucks are used only for the purpose of transporting the frozen raw materials when it is brought into the factory for manufacture/production and also to carry the finished goods from factory to port for export - cannot be said that such trucks are in the nature of capital goods - AT
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Customs:
Central Government Notifies All Industry Rates (AIRs) Drawback to be effective from 15.11.2016 - Notification
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Customs:
Quantification of rate of ADD - The future possibility of continuing exemption or termination of such exemption cannot be predicted and factored into while arriving at the findings on material injury for DI. - AT
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FEMA:
FDI - Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Tenth Amendment) Regulations, 2016 - Notification
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Service Tax:
ME discount, by whatever name called, representing amounts retained by an acquiring bank from out of amounts recovered by such bank for settlement of payments to the ME does not amount to consideration received in relation to credit card services - Demand of service tax set aside - AT
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Service Tax:
Drilling and waste removal activity - t this activity of the appellant would get covered under the category of Site formation service - AT
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Service Tax:
Refund claim - exemption under N/N. 17/2009-ST - exemption to Airport service by way of refund was not available during the period July, 2009 to March, 2010. - AT
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Central Excise:
Reversal of CENVAT credit - the appellants are not liable to pay interest for wrongful availment of Cenvat Credit which has been reversed before utilization by the appellant - AT
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Central Excise:
Reversal of cenvat credit - recovery of 10% value of goods - When the goods are not passing the test of duty levy then the question applying the provisions of Rule 6 of Cenvat Credit Rules does not arise. - AT
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Central Excise:
Availing credit on returned goods - receipt of credit notes instead of Invoices - Rule 16 of Central Excise Rules,2002 - Since the entire quantity against the clearance of excise invoices were not received back but part quantity which were defective only received, credit cannot be denied - AT
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Central Excise:
Valuation - Non-inclusion of value of control panel used for Hot/ Wet Mix Plant - The said bought out items cannot be added to the value of their other components of plant without establishing that such a plant has been manufactured and marketed by the main respondent - AT
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Central Excise:
CENVAT credit - On their own acceptance suppliers have paid the differential duty and issued supplementary invoice to the appellant who availed the credit - credit allowed - AT
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Central Excise:
Cenvat credit - excess credit - credit on the of the duty on freight and insurance charges - the inputs supplier’s assessment cannot be changed at the recipient’s end - AT
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Central Excise:
Whether the appellant is eligible to avail CENVAT credit of service tax paid on services like erection, commissioning and installation and the capital goods used for the wind mills which are situated far away from the factory - Held Yes - AT
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VAT:
Quantum of surcharge - payment of Entry Tax u/s 3(3) of the Orissa Entry Tax Act, 1999 - the amount of surcharge u/s 5A of the OST Act is to be levied before deducting the amount of entry tax paid by a dealer - SC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2016 (11) TMI 77
Deduction of consideration paid for surrender of tenancy rights - genuine transaction - whether the said amount cannot be taken into account while arriving at the costs of the capital asset while computing the capital gains on sale of 2/3rd of its property? - ITAT allowed the claim - Held that:- We find that the impugned order of the Tribunal has rendered a finding of fact that the Revenue had itself accepted the transaction with regard to the recipient of the the amounts as surrender of tenancy to be a genuine transaction. Therefore, once the transaction is accepted by the Revenue to be a genuine in respect of one part of the transaction, is not open to the Revenue to urge that in respect of the other part i.e. person making the payment, the transaction is not genuine. This is not permissible as the payment and receipts are two sides of the same coin.
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2016 (11) TMI 76
Reopening of assessment - non issue of notice u/s 143(2) - Held that:- We are unable to understand why a notice under Section 143(2) was not issued for the year 2009-10 when the same was issued for the year 2010-11. The order sheet, Annexure- A2 annexed along with the papers shows that the Assessing Officer was aware of the need for issuance of the said notice as early as in April 2012. The only reason for not issuing a Section 143(2) notice has been recorded by him in the order sheet as “it is not possible to generate notice under Section 143(2) through an AST, since the assessee has not filed the return electronically”. The order sheet further shows that the assessee was again requested to file their return in response to Section 148 electronically. This conduct of the Assessing Officer is rather surprising and it defies logic, since the assessee cannot be forced and coerced to file their return electronically so as to then enable the Assessing Officer to issue a notice under Section 143(2) of the Act. This is more so because even in the absence of such an electronic return for the year 2010-11, the Assessing Officer had infact issued the mandatory notice for that year on 11.01.2012. It is beyond comprehension that even though the Assessing Officer had time till 30.09.2011 to issue notice under Section 143(2) and even though he had recorded the reasons for assuming jurisdiction under Section 147 for re-assessment on 21.09.2011, he had still not chosen to issue the notice which would have then given him the jurisdiction to continue with the proceedings. We are unable to obtain any reasons to these omissions and it is rather distressing, as we have recorded in the opening lines of the judgment, that on account of this omission and non compliance of mandatory and imperative provisions, the assessee would now be entitled to reliefs which they otherwise would not have able to obtain. We have, therefore, no other option but to hold in the absence of a Section 143(2) notice, proceedings of assessment initiated, conducted and completed for the year 2009-10 will have to fail but for the year 2010-11, since the proceedings have been continued on the basis of a validly issued Section 143(2) notice, same is being upheld.
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2016 (11) TMI 75
Eligible for deduction U/S 80-IA - Held that:- The assessee was not merely responsible for supplying labour for the aforesaid project, but rather was responsible for the development of the entire infrastructure facility. In order to do so, it deployed its various resources, materials, labour, supervisor, Engineers etc. It made substantial investments and exposed itself to various risks. Hence it is clear that the assessee was a developer in the aforesaid project and hence is eligible for deduction U/S 80-IA.
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2016 (11) TMI 74
Claim of deduction u/s 80IC on account of substantial expansion - Held that:- We following the decision of Hycrons Electronics V ITO (2015 (6) TMI 725 - ITAT CHANDIGARH) held that assessee is eligible for deduction @ 25 % only on the profit derived from the industrial undertaking under section 80IC of the act despite substantial expansion undertaken by it. We dismiss the appeal of the assessee for both the Assessment years confirming the finding of lower authorities.
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2016 (11) TMI 73
Validity of reopening of assessment - Held that:- It is evident from a plain reading of the reasons furnished by the revenue that there is no allusion to tangible material in the form of objective documents, information etc outside of the concluded assessment and the documents pertaining to it. According to the binding ruling of the Supreme Court in Commissioner of Income Tax vs. Kelvinator Ltd. [2010 (1) TMI 11 - SUPREME COURT OF INDIA], sans such documents, evidence or tangible material, there cannot be valid opinion leading to proper re-assessment proceedings. The rationale furnished by the revenue in its counter affidavit and reiterated in the court during the hearing was that a component of income which was otherwise inadmissible but escaped the notice of the AO, because of the ratio in Liberty India [2009 (8) TMI 63 - SUPREME COURT] and Pandian (2003 (4) TMI 3 - SUPREME Court ) is unpersuasive. Besides, the lack of any reference to objective material, cannot in any way improve the case of the revenue – much less its reference to otherwise binding judgments that could have been the basis of a valid revision by the revenue under Section 264. It goes without saying that statutory orders containing reasons are to be judged on the basis of what is apparent and not what is explained later, as the validity of those orders does not improve with time or on account of better explanations furnished in the course of legal proceedings - Decided in favour of assessee
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2016 (11) TMI 72
Validity of assessment u/s 153A - whether it is necessary that incriminating materials should be unearthed in a search under Section 132 of the Act to sustain a notice issued under Section 153A(1)(a)? - Held that:- As per the judgment of this Court in St.Francis Clay Becor Tiles's case (2016 (6) TMI 378 - KERALA HIGH COURT ) and Promy Kuriakose's case (2016 (8) TMI 327 - KERALA HIGH COURT ) though the second among them relates to a third person to the search as well; which cases would fall under Section 153C of the Act. We, therefore, answer the said question stating that for the issuance of a notice under Section 153A(1)(a), it is not necessary that the search on which it was founded should have necessarily yielded any incriminating material against the assessee or the person to whom such notice is issued. Is it necessary that any incriminating material ought to have been unearthed in the search under Section 132 of the Act to make any additions to the returns filed by the assessee following notice under Section 153A(1)(a)? - Held that:- Once a return is filed in answer to such a notice, the Explanation to Section 153A provides, among other things, that all provisions of the Income Tax Act will apply to the assessment made under Section 153A of the Act. This is the manner in which the provisions in Sections 153A, 153B and 153C of the Act would regulate. Once that is done, it is well within the jurisdiction of the a ssessing authority to proceed with any lawful modes of assessment as prescribed in the Act. The Statute nowhere makes it conditional that the department has to unearth some incriminating material to conclude some method against the assessee in events where the assessment is triggered by a notice under Section 153A(1)(a) of the Act. This means that even when such notice is triggered following a search, the assessment proceedings can be concluded in any manner known to law, including under Section 143(3) or even Section 144 of the Act, if need be. Therefore, the assessment proceedings generated by the issuance of a notice under Section 153A (1)(a) of the Act can be concluded against the interest of the assessee including making additions even without any incriminating material being available against the assessee in the search under Section 132 of the Act on the basis of which the notice was issued under Section 153A(1)(a) of the Act. We answer this issue accordingly.
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2016 (11) TMI 71
Validity of reopening of assessment - mere registration of a Board under Section 12AA of the Act does not automatically give status of trust and therefore, the exemption which is meant for trust under Section 11(1)(a) of the Act is not available to the petitioner - Held that:- Since this is a case of original non-scrutiny assessment, the concept of change of opinion cannot be applied. Since the return of the assessee is accepted under Section 143(1) of the Act, we feel that there is no question of change of opinion while accepting the return and therefore, in the absence of any formation of opinion, the protest raised by the petitioner is devoid of merits and therefore, cannot be accepted. The statutory provision requiring the petitioner to set apart a particular percentage of income as stated above, whether it is scrupulously observed and whether it is fulfilling the conditions contained in Sections 11 and 12 of the Act or not, are the matters of examination and for that purpose, if the authority looking to the activity of the petitioner Board has come to the conclusion that reopening is necessary, we may deem it proper not to interject the said process. We reiterate that the reasons which are recorded are since forming the belief about escapement of income, we deem it proper not to intercept the process. The aforesaid situation which is prevailing on the record of the case on hand, we deem it proper to refer to and rely upon the decision of the Supreme Court in case of Zauri Estate Development & Investment Company Ltd. (2015 (8) TMI 480 - SUPREME COURT ) and leave it open to the respondent authority to proceed further in response to the notice having been issued. We see no merits in the contentions raised by the learned counsel for the petitioner and therefore, the petition being devoid of merits, the same is dismissed.
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2016 (11) TMI 70
Expenditure incurred towards renovation and improvement of hotel building - nature of expenditure - revenue or capital - Tribunal after perusing the record has found that the expenditure was incurred by the assessee only in the process of earning profit and not to acquire any capital asset - Held that:- Tribunal in the referred observation has elaborately considered that the explanation would not be applicable, more particularly when the expenditure was not of a capital expenditure. Further, we need to keep in mind that it was not the case of the Revenue that number of rooms were added to the hotel premises or that the seating capacity was increased or otherwise. It was only within the same complex the expenses were incurred in order to update the facility which ultimately would result as good business to attract the customer. Considering the facts and circumstances, it appears to us that the view taken by the Tribunal cannot be said to be erroneous nor such view can be said to be contrary to any statutory provision. - Decided against revenue
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2016 (11) TMI 69
Addition of speculation loss - nature of income - Held that:- There is not dispute about the fact that the assessee had already proved that its main income has already been treated to be under the head “income from other sources”. The Assessing Officer’s findings in assessment order as affirmed in the CIT(A)’s opinion deny application of above explanation in assessee’s case mainly on the ground that its statement of income is entirely under the head “ business income” . We reiterate that these two authorities have themselves treated the said receipts under the head “ income from other sources”. There is thus no substantive reason for not treating the assessee as an entity covered by Section 73 explanation hereinabove in these peculiar facts and circumstances. We accordingly delete the impugned disallowance/addition of speculation loss.
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2016 (11) TMI 68
Validity of reopening of assessment - whether the assessee failed to challenge the jurisdiction within the prescribed time of 30 day as per section 124(3)(a) of the Act? - Held that:- From the reading of section 124(2)(a) of the Act, it is seen that this section mandates that no person shall be entitled to call in question the jurisdiction of an Income Tax Officer after the expiry of one month from the date on which he has furnished the return u/s 139(1) from the date on which he was served with a notice under sub section (1) of section 142 or sub section (2) of section 143 or after the completion of the assessment whichever is earlier. Clause (a) of section 124(3) does not talk of any time limit for questioning the jurisdiction of the Assessing Officer for the service of notice u/s 148 of the Act. This provision provides a time limit of one month to question the jurisdiction of the Assessing Officer to issue notice u/s 143(2) and 142(1) of the Act. If we look into the said clause (b) of section 124(3), we noted that this clause talks of challenge of jurisdiction not after the expiry of the time allowed by the notice issued u/s 148 but clause (b) is applicable only in case where the assessee has not furnished the return. In the case of the assessee, the assessee has furnished the return u/s 139(1) therefore, it is only clause (a) of section 124(3) which is applicable. Clause (a) of section 124(3) does not refer to notice issued u/s 148 of the Act. Therefore, we do not find any illegality or infirmity in the order of CIT(A) which warrants our interference so far it relates to ground taken by the Revenue in respect of the provision of section 124(3)(a) of the Act is concerned. We also noted that the CIT(A) has annulled the assessment not only on the basis of jurisdiction but has also annulled the reassessment on the basis of provision of section 151 as in his opinion, the Assessing Officer has not taken approval in accordance with the provisions of section 151(2) before issue of notice u/s 148 of the Act.The Revenue has not come in appeal against the aforesaid finding of CIT(A). - Decided against revenue Claim of the assessee u/s 80IC - Held that:- The assessee is engaged in manufacturing and production of an article and therefore, the assessee shall be entitled for the deduction available u/s 80IC of the Act. We accordingly confirm the order of CIT(A) as in our opinion, no illegality or infirmity is found in the order of CIT(A).
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2016 (11) TMI 67
Computation Long Term Capital Gain - Rs. NIL filed by the assessee - withdrawing exemption of under section 54 claimed by the assessee - cost of indexation reduced - Held that:- As in the present case, assessee has sold the property in the next year in AY 2010-11 and withdrew the exemption claimed of ₹ 7,30,538/-in AY 2009-10 and reduced the same from the cost of acquisition claimed in AY 2010-11. Therefore, the impact of the above action of the assessee is that assessee has taxed the amount of ₹ 7,30,538/- as Long term capital gain and therefore disallowance of exemption in AY 2010-11 will leads to double taxation in the hands of the assessee. Therefore, this issue is squarely covered by the judgement of ITAT Mumbai in the case of Nilesh Pravin Vora and Yatin Pravin Vora (2016 (5) TMI 64 - ITAT MUMBAI ) and also the exemption is withdrawn in the subsequent year by the assessee himself exemption claimed by the assessee cannot be disallowed. - Decided in favour of assessee
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2016 (11) TMI 66
Depreciation at the rate of 60% on the courseware - Held that:- We find that the assessee is engaged in the business of imparting computer training and education on customized basis as per the requirements of the customers. The assessee developed various types of educational software/special courses keeping in view of the requirements of each institution/customer and these courses are designed and developed keeping in view of the requirements which varies from customer to customer, from industry to industry and these courses when combined with the software were called coursewares. In our view these courses are nothing but specially designed computer softwares meant for training and e-learning. We find that the ld. CIT(A) has wrongly held that these courses are basically manual which are used by the assessee in training institutes and mere fact that these manuals were on software could not be taken to mean that these are computer softwares. We further find that the department has allowed depreciation to the assessee at the rate of 60% in the previous and succeeding years even in the assessments framed u/s 143(3) of the Act and thus, the department cannot be allowed to take different view in the different assessment years qua the same assets which are nothing but specialized software or customized training softwares which are eligible for depreciation at the rate of 60% as per the Income Tax Rules and the same was correctly depreciated at the rate of 60% by the assessee. Accordingly, we set aisle the order of ld.CIT(A) and direct the AO to allow the deprecation at the rate of 60%. - Decided in favour of assessee. Disallowance at the rate of 10% being the expenditure incurred on Lucknow School Project - Held that:- We find that the assessee has incurred expenses on Lucknow school project which have been increased by 25% over the last three years. The reasons cited by the assessee for such increase was that the expenses which were as per terms as agreed in the memorandum of agreement and accordingly the assessee made payments through banking channels as agreed. We find merit in the submissions of the ld. AR that mere increase in expenditure was not sufficient ground for disallowance on estimation basis which is no basis in our opinion and is not justified particularly when these expenses were incurred in terms of agreement between the assessee and franchisees. The ld. CIT(A) has not given any cogent and solid reasons to support the addition made by AO. The assessee was maintaining proper bills and vouchers which were subject of various types of audit . We therefore of the view that the adhoc disallowance at the rate of 10% when the assessee is maintaining books of accounts which audited and supported with bills and vouchers and the payments were made by account payee cheques as per the agreements with franchisees can not be sustained especially when the AO took the total expenses of three years and thereby making disallowance of ₹ 23,34,738/- in a casual manner. In view of these facts and the manner in which adhoc disallowance was made, we are inclined to set aside the order of the ld. CIT(A) and direct the AO to delete the addition. Disallowance in respect of ESOP charges - Held that:- In the case of Biocon Ltd (2013 (8) TMI 629 - ITAT BANGALORE ), the Special Bench of the Bangalore Tribunal has held that discount on issue of shares to the employee stock option is allowable deduction in computing the income in the profit and loss account of business or profession and the same was on account of ascertained liability and not contingent liability. It was also held that by issuing shares at discounted price under the scheme ESOP is simply one of the motive to compensate the employees for their services and is part of the remuneration . In the case of PVP Ventures Limited (2012 (7) TMI 696 - MADRAS HIGH COURT ), the Hon’ble Madras High Court has held that the assessee had to follow SEBI guidelines and by following such directions the assessee has claimed ascertained amount as eligible for deduction arising on account of Employees Stock Option Plan. In the case of LEMON TREE HOTELS LTD (2015 (11) TMI 404 - DELHI HIGH COURT) upheld and fully endorsed that ESOP was an allowable expenses. In view of the facts as discussed above and the ratio laid down in the various decisions, we are of the view that the assessee has rightly written off ESOP charges and therefore, the order of the ld. CIT(A) is wrong and cannot be sustained. Accordingly, we set aside the order of ld.CIT(A) and direct the AO to delete the disallowance - Decided in favour of assessee. Disallowance u/s 40(a)(ia) - non deduction of tds on hire charges - Held that:- hese expenses were incurred by employees out of their tour advances while they were on tour. Looking into the facts and circumstances of the case, we find that the assessee had incurred these expenses through employees out of their travelling advances for hiring motor vehicles during the course of their employment and the expenditures incurred by them out of travelling advances. In our view, the same are not liable for deduction u/s 40(a)(ia) of the Act as it is the settled law that re-imbursement to the employees is not laible to the provisions of TDS . Accordingly, we direct AO to delete the addition. Disallowance being the provisions for rebate - Held that:- We find that the provision of rebate which is a kind of de-recognizing the revenue which was already credited in the books of accounts of the assessee as is clear from the ledger account of the Directorate of Education, New Delhi Government in the books of assessee. In our view provisions of rebate was rightly claimed by the assessee upon the same being denied by the person from whom it was receivable and also satisfies the conditions as laid down in section 36(1)(vii) of the Act particularly when the similar deductions were allowed by the department in the earlier and succeeding years. Accordingly, we direct AO to delete the addition. Disallowance made u/s 14A - Held that:- The total investments made in the subsidiary companies were to the tune of ₹ 23,85,10,386/- whereas the share capital of the assessee company were ₹ 43,15,11,170/- no interest disallowance is called for as the assessee’s own fund were sufficient to cover the investment in the shares in subsidiary companies. It is also clear from the copy of audited balance sheet as on 31.3.2007 that the assessee’s own funds were sufficient to meet the investment in the subsidiary company. Moreover, the investments made in the subsidiary companies were primarily made not with the objective of earning dividend but made out of strategic considerations to which the provisions of section 14A cannot be applied as has been held in the case of Commissioner of Income-tax v.Oriental Structural Engineers (P.) Ltd. [2013 (1) TMI 720 - DELHI HIGH COURT ] Addition u/s 68 - Held that:- There some un-reconciled entries in ITNS amounting to ₹ 5,15,396/- pertaining to several parties with whom the assessee has stated not to have any business or other dealings and could not be reconciled. The AO made addition on the basis of merely ITNS information without making any other further verification of ITNS information available with the AO and therefore, the addition as made by the AO and sustained by the ld.CIT(A) was not justified when the assessee has completely disowned the transactions with the said parties. The information as contained in the ITNS are filed by the third parties and the AO could have enquired from those parties whose information was available, however the AO simply proceeded to add the unaccounted amount without doing any inquiry. Accordingly, we direct the AO to delete the addition. Allowance of brand building expenses - expenses revenue in nature OR of capital nature - Held that:- e. We find that the assessee has incurred expenses on marketing/advertising and retainer-ship etc. for running and operation of business more profitably and efficiently which did not result in the creation of fixed asset or creation of any benefit of enduring nature in favour of the assessee and thus observation and findings of the AO was not correct and the ld. CIT(A) has rightly deleted the addition made by the AO after considering the submissions of the assessee and by recording the findings of facts that the expenditure incurred were of revenue in nature expended for day to day running and operation of assessee’s business. We are of the opinion that the order passed by the ld.CIT(A) is correct and does not require any interference from our part and accordingly we uphold the same on this issue by dismissing the appeal of revenue. Disallowance on account of writing off advances - Held that:- The company has paid various advances for obtaining telephone and electric connections in the business premises in its franchisees as the assessee carried on the business of imparting education and training and rendering other services. These deposits were adjusted by the department concerned against the outstanding and pending bills of electricity and telephone, when the franchisees failed to make the payments and the same could not be recovered for the reasons stated above in large number of cases. We also find merit in the arguments of the ld.AR that the record of the assessee were destroyed in flood in 2005 and the deposits could not be claimed due to damage and destructions of record of the assessee. In our opinion, the said writing off advances given in the ordinary course of business which has direct nexus of the operation of business of the assessee and the amount of advances were written off out of business exigency and is therefore business loss. Accordingly, we set aside the order of the ld.CIT(A) and direct the AO to delete the disallowance.
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2016 (11) TMI 65
Claim of exception to provisions of section 9(1)(vii) (b) - whether BCCI is an Indian concern and its global income is chargeable to tax in India ? - PE in India - satisfaction of ‘make available‘ test - Indo UK DTAA - whether the whole contract is ‘effectively connected‘ with the permanent establishment or part of the services are ‘effectively connected‘ with the permanent establishment? Held that:- The activities mentioned in the contract should be connected to the permanent establishment not only in the form but also in substance. According to us there are minimum activities performed by the PE of appellant in India. Hence just performing such minimum activities it cannot be said that whole of the revenue of ₹ 33 crores involved in the contract is ‘effectively connected‘ with the activities of the permanent establishment in India. Hence we reject the contention of the assessee that the whole of the revenue involved in the contract should be considered as effectively connected with the permanent establishment of the appellant. In transfer pricing study report, based on FAR analysis such attribution of the profit is considered to be at arm‘s length by the assessee and as well as by the transfer pricing officer, it cannot be said that the balance sum of ₹ 90 crores cannot be taxed in India as the whole contract was ‘effectively connected‘ with the permanent establishment created by the petitioner of some staff for performing some of the activities and crossing the threshold duration. We do not subscribe to such a view and we are also of the view that such is the case of the assessee before us. Article 13 (6) of the Double Taxation Avoidance Agreement shall apply only to the extent of the activities carried on by the appellant through its permanent establishment. In view of this we are of the view that activities carried out by the appellant which are not at all connected with the activities of the permanent establishment are not covered by article 7 or 15 of the Double Taxation Avoidance Agreement between India and United Kingdom and same shall remain as fees for technical services under article 13 only. Therefore natural corollary that follows is that whatever is income excluded by the applicability of article 13 (6) and goes back to article 7 is the same amount. We are of the view that activities carried on by the foreign office of the assessee are not at all arising through the permanent establishment of the appellant in India. Therefore one of the condition of the about twin conditions also failed in case of the appellant. Once again we would like to reiterate that for the purpose of applicability of article 13 (6) with respect to the fees for technical services one has to apply the activity test of the permanent establishment in the source country is held by the coordinate bench in case of the Nippon Kaiji Koyokoi V ITO (2011 (7) TMI 392 - ITAT MUMBAI ). Therefore we reject the contention of the assessee that out of 33 crores ₹ 9 crores are effectively connected with the permanent establishment of the appellant, the balance 22 crores cannot be taxed in India under article 13 as fees for technical services. Our one more reasons for holding such a view is that according to us there is no distinction between the two phrases used into two different articles of the Double Taxation Avoidance Agreement. These two phrases are (1) “attributable to ‘ in article 7 of the Double Taxation Avoidance Agreement, and (2) ‘effectively connected with ‘ in article 13 (6) the Double Taxation Avoidance Agreement, because Indo US DTAA uses the same term ‘attributable to‘ in place of ‘effectively connected‘ with in article 12(6). Therefore, in the present case, according to us, out of the total receipt of ₹ 33 crores the receipt of ₹ 92249819/- which is attributable to the permanent establishment in India and the balance sum of ₹ 237750181/- shall be chargeable as fees for technical services under article 13 of the DTAA. In the present case according to us the BCCI is enabled to absorb and apply the information and the advice provided by the appellant to it for conducting such sporting events. According to us when all this documentation and material is provided to the BCCI it is able to use such know-how and documentation generated from provision of the services of the appellant independent of the services of the appellant in future. It is too naïve to say that in absence of IMG services BCCI on its own IPL tournament cannot hold. Merely because the BCCI has entered into a contract for conducting further 9 events does not lead to the conclusion that the information documentation, agreements, contracts etc cannot be said to be ‘made available‘ to the appellant. In fact according to us it is. In view of this we reject the contention of the appellant that the sum of ₹ 237750181/-cannot be taxed as fees for technical services as it does not satisfy ‘make available‘ condition provided in article 13(4) (9c ) of the DTAA. To fall within the exception the assessee must be carrying out business outside India and such services must be utilized in that business by a person who is a resident in India and who pays income by way of fees for technical services to a non-resident. It is an established fact that BCCI is carrying on business in India and not outside India. Further the source of income of the BCCI is in India and not outside India. Merely because the event is performed outside India it cannot be said that source of income of the BCCI is not in India. Therefore according to us the income of the appellant of ₹ 237055181/-is chargeable to tax as fees for technical services under section 9 (1) (vii) of the Income Tax Act as Fees for technical services. We hold that receipt of the appellant satisfies the ‘make available‘ test as provided under article 13 (4) ( c) of the India UK DTAA as fees for technical services.
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2016 (11) TMI 64
Addition on account of sale of plot - CIT(A) has recorded a finding of fact that the assessee has not shown this plot as "Stock-in-Trade" in his balance sheet and no document was found during the course of search to the effect that the assessee has converted this plot into Stock-in-trade - Held that:- The intention of the assessee can be determined through the treatment of the asset in the financial statements as well as the conduct and the actions of the assessee in relation to the asset. In the instant case, the asset has been shown as an investment and not as stock-in-trade in the financial statements. Further, there are no physical improvements/ developments which has been carried out right from the year of purchase to the year of sale. The intention of the assessee was therefore to hold this plot of land as an investment and not as stock-in trade. On similar facts, the Coordinate Bench of this Tribunal in the assessee’s own case for the A.Y. 2004-05 had decided the issue under consideration in favour of the assessee. Addition on account of investment in construction of house when the addition is supported by the finding of the DVO - Held that:- AO as well as DVO both failed to list out the items considered as loose furniture found at the time of inspection of the house of the assessee and no valuation of such loose furniture was made by the DVO, therefore there is no justification to made estimated addition on this account just merely on the presumptive finding of the DVO which is not supported by any evidence more so when the investment shown by the assessee is duly supported by the bills and vouchers. We have given a careful consideration to the matter and of the view that the ld CIT(A) has elaborately gone through the contentions and has rightly arrived at the conclusion that there is no basis for the adhoc estimation of ₹ 20,00,000. Hence, we confirm the following findings of the ld CIT(A). - Decided in favour of the assessee. Addition on account of advance given to Gulam Farooq Ansari - Held that:- Assessee had produced the re-casted audited cash book after incorporating all entries before the AO. There were sufficient cash balance available with assessee and his family members/group concern to cover the payment of ₹ 1,50,00,000/- to Ansari.” During the course of the arguments, the Revenue has not brought anything further to our notice and the findings of ld CIT(A) remain uncontroverted before us. The assessee has successfully demonstrated through its explanation and documentation in terms of re-casted books of accounts that the statement made during the course of the search cannot be made the sole basis for making the addition of ₹ 1,50,00,000 in his hands as there was sufficient cash balance in the books of accounts to make the said payment and discharged its onus as laid down by the decision of Hon’ble Supreme Court in case of Pullangode Rubber Produce Co (1971 (9) TMI 64 - SUPREME Court ) and Rajasthan High Court in case of Ashok Kumar Soni (2006 (7) TMI 162 - RAJASTHAN High Court ). - Decided in favour of the assessee. Deemed dividend income under section 2(22)(e) - Held that:- The advance given by the company to the assessee is for business purposes towards purchase of land and the same cannot be treated as deemed dividend in the hands of the assessee. Accordingly, we allow the appeal of the assessee
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Customs
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2016 (11) TMI 38
100% EOU - N/N. 13/81-Cus. dated 9.2.1981 - import of refrigerated trucks - de-bonding of EOU unit under EPCG scheme under N/N. .29/1997-Cus - furnishing of bank guarantee to cover the duty liability on the refrigerated trucks - SCN at the time of expiry of the bond and the bank guarantee proposing to enforce the bond to recover the dues - Held that: - the refrigerated trucks are used only for the purpose of transporting the frozen raw materials when it is brought into the factory for manufacture/production and also to carry the finished goods from factory to port for export. It is also an admitted fact that the appellant deals with highly perishable sea food. But the connotation of the term capital goods is to cover plant, machinery, equipment or accessories required for manufacture of goods including refrigeration equipment. But from the use of refrigerated trucks by the appellant, it cannot be said that the said use is in the nature of capital goods and cannot be covered by the Notification No.13/81-Cus. The decision cited by the learned AR in the case of International Creative Foods Ltd. [1997 (12) TMI 400 - CEGAT, MADRAS] is squarely covering the issue against the appellant. Benefit of N/N. 13/81 not available - appeal dismissed - decided against appellant.
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2016 (11) TMI 37
Imposition of ADD - Polytetrafluoroethylene or PTEF - imported from Russia - correctness of method adopted by the DA while arriving at NIP considering a large number of captively produced and consumed inputs while manufacturing the subject goods by the appellant - the DA has adopted the norms of Rule 8 of Central Excise Valuation Rules, 2000 and CAS-4 governing transfer value and captive excisable inputs - the DA had been adding 22% return on capital employed in producing captive inputs for arriving at price - Held that: - neither AD Rule 1995 including Annexure III of the said Rules nor any other statutory provision mandated specifically the method to be adopted in dealing with captively used inputs while arriving at NIP. The admitted practice by the DA of allowing 22% return on capital deployed has been changed in the present case by the DA. We find no reason recorded for such sudden change inpractice. We also note that there is no reason recorded for adopting the Central Excise provision of Valuation (Rules 8) for captively used inputs. Rule 8 as in the present form mandate that the value of excisable goods captively consumed shall be 110% of cost of production. The said Rule is meant for excise duty levied. Admittedly, there is no provision in AD Rules or in Customs Tariff Act which mandates the application of such Rule to calculate NIP in antidumping investigations. It is apparent that DA has deviated from the consistent practice of valuation adopted by him in numerous other cases of captively used inputs while fixing NIP for subject goods. We do not find any legal reason for such deviation in the present case. In such a factual matrix, we find that NIP determined in the present case is faulty in so far as it relates to the treatment of captively used goods with specific reference to profit/ return on capital deployed. The matter has to be re-examined by the DA afresh after giving due opportunity to the interested parties to arrive at a finding in consonance with the legal provision applicable - Appeal disposed off - matter remanded - decided partly in favor of appellant.
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2016 (11) TMI 36
Imposition of penalties - EPCG scheme - N/N. 97/2004-Cus dated 17.9.2004. - 2 star hotel status - import of car - Held that: - There is no dispute to the factual position that the appellants were admittedly granted status of 2 star hotels and were entitled to EPGC Scheme during the relevant period. Subsequent action of authorities to take away the said 2 star hotels from the appellant cannot be adopted as a ground to deny them the benefit which also stands availed by them by following duty procedure of law. No mala fide can be attributed for imposition of penalty. So, I am of the view that imposition of penalty on the appellant is not justified. The same is accordingly set aside. Demand of duty with interest - as the appellant have not contested the duty demand and interest, the same is upheld.
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2016 (11) TMI 35
Absolute confiscation of consignment - imposition of penalties - prohibited goods - unclaimed container - Held that: - there is no dispute about the fact that the respondent had not filed the Bill of Entry and as such, cannot be considered to be an importer. Based upon the information passed by Container Corporation that the container in question was ordered by the respondent. When their being no evidence to that effect, penalty cannot be imposed upon the respondent - appeal rejected - decided against Revenue.
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2016 (11) TMI 34
Quantification of rate of ADD - Plain Medium Density Fibre Board - imported from China PR, Malaysia, New Zealand, Thailand and Sri Lanka - N/N. 116/2009-Cus ADD dated 08.10.2009 - advertising expenses - Held that: - Regarding non-inclusion of advertising expenses for NIP calculation, we find that the claim of the appellant is incorrect. We have perused the confidential calculation of non-injurious price submitted by the counsel for the DA. We note that under the Administrative heads, advertising and sales promotion expenses have been fully allowed as claimed by the appellant. On this, we find no merit in the argument of the appellant. Bonafidiness of accounting followed by Merbok - Held that: - we find that the DA has verified the data submitted and had discussions on various points before arriving at his conclusion. Spot verification is not always required. Area based exemption - Held that: - the DA has to consider the material facts relevant to the period. The future possibility of continuing exemption or termination of such exemption cannot be predicted and factored into while arriving at the findings on material injury for DI. The relevant facts available in record have been examined to draw conclusion. Appeal rejected - decided against appellant.
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2016 (11) TMI 33
Sunset review - imposition off ADD in the sunset review - whether it is justified to hold that appellant should have been excluded from the sunset review as in the initial final finding it was recorded that the dumping margin was less than 2% and as such in the sunset review imposition of AD duty on the appellant was not legally tenable? - Plain Medium Density Fiber Board - imported from Malaysia - Held that: - the DA can consider where an exporter was awarded zero duty in the original investigation and has now found to be dumping which is likely the cause injury to DI, then AD duty can be considered for imposition with reference to dumping margin and injury margin established during the review. We note that the DA followed the requirements of Article 2 & 3 of the ADA and the relevant provisions of AD Rules. We also note that regarding appellants, the DA has examined and reviewed all the aspects of original investigation and in addition examined whether expiry of initial Notification is likely to lead a recurrence of dumping/ injury to the DI. As already noted that this is like a fresh investigation in so far as appellant is concerned and we find no legal infirmity in such action by the DA - no merit in present appeal - appeal rejected - decided against appellant.
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2016 (11) TMI 32
Confiscation of consignment u/s 111 (m) of CA, 1962 - option to redeem on payment of redemption fine u/s 125 - imposition of penalties u/s 112 (a) - import of 60 pieces of heater - Held that: - The courier bill of entry filed by the importer was accompanied with an invoice for U.S. $ 105 FOB. The revised invoice indicating the correct value of the import goods as U.S. $ 3,000 was submitted by the importer only after it was noticed by the Customs that the goods imported were under valued. Hence, it stands established that the goods have been mis-declared and, hence, is liable for confiscation under Section 111 (m) of the Customs Act, 1962. Once the goods are found to be mis-declared the same will be liable for confiscation in Section 111 (m). Accordingly redemption fine will be imposable for clearance of such goods. However, keeping in view the facts and circumstances of the case, I reduce the redemption fine to ₹ 50,000/- (Rupees Fifty Thousand) under Section 125 of the Customs Act. I also reduce the penalty imposed under Section 112 (a) to ₹ 20,000/- (Rupees Twenty Thousand). Imposition of penalties u/s 114 (AA) - Held that: - false and incorrect material not found - penalty set aside. Appeal disposed off - decided partly in favor of appellant.
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Corporate Laws
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2016 (11) TMI 29
Necessity of investigation into the affairs of the company - exercise of power by the Central Government by resorting to section 212(1) of the Act of 2013 - Held that:- We do not think that there were materials in the present case and which can be termed as enough to warrant the exercise of power by the Central Government by resorting to section 212(1) of the Act of 2013. The Central Government, in the order under challenge, did not spell out any circumstances, except outlining its power under the above sections to order investigation into the affairs of a company in public interest. None disputes that power or its existence. In para 2 of the impugned order, however, a reference is made to the report of the Registrar of Companies, West Bengal, dated 13th January, 2016. We have already held that the findings in this report are not enough for the Central Government to exercise the drastic power. Something more was required and to be established as circumstances or material enough for exercise of the power. That is clearly lacking in this case. This is the only basis, namely, the report of the Registrar of Companies, West Bengal, or its contents which has enabled the Central Government to exercise its powers under section 212(1)(c). It is, therefore, apparent that it has not necessarily acted in terms of its power conferred by section 212 to direct investigation into the affairs of the company in public interest. The foundation for reaching the opinion or satisfaction is the report of the Registrar. We have referred to the details in that report and we are of the firm opinion that based on that the Central Government could not have recorded a satisfaction or an opinion that investigation into the affairs of the company are necessary. There is no element of public interest which is projected, save and except some vague and general references to certain allegations in matters of bank finance and allotment of coal mines and alleged diversion of raw materials. There has been absolutely no details furnished nor referred in the report. Rather, the report proceeds on the basis that as far as these issues are concerned nothing can be done by the Ministry of Corporate Affairs or the Registrar of Companies. We fail to understand, therefore, how based on allegations and counter allegations between two groups of shareholders can it be even held that it is necessary in public interest to direct an investigation into the affairs of the company. Once we reach the conclusion that there is lack of requisite material to arrive at the requisite opinion or record the necessary satisfaction, then, in exercise of our powers of judicial review, we can safely quash and set aside the impugned order. We find that the opinion recorded or the satisfaction reached is vitiated by total non application of mind. None of the factors which are germane and relevant for forming the opinion have been referred. The opinion or satisfaction is based only on the complaint of the Member of Parliament to the CVC and with regard to which report was called for from the Registrar. Even the contents of that report have been, as held above, misread and totally misinterpreted. Based on that no opinion could have been recorded that it is necessary to investigate the affairs of the company in public interest.
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2016 (11) TMI 28
Scheme of arrangement between Composite Scheme of Arrangement in the nature of Amalgamation - it does not appear to be any impediment to the grant of sanction to the Scheme of Arrangement, in as much as from the material on record and on perusal of the Scheme, the scheme appears to be fair and reasonable and is not violative of any of public policy. The arrangement under the proposed scheme appears to be in the interest of the companies and its members and creditors and, therefore deserves to be sanctioned.
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2016 (11) TMI 27
Conversion of preference shares to equity shares - Held that:- The meaning sought to be given to Articles 20, 21 and 22, namely, that every share holder including the holder of a preference share has a right to vote cannot be readily accepted. The resolution of the Board dated 5.7.1994 relating to the conversion of preference shares into equity shares proceeds on the basis that dividends in respect of the 3065 shares have not been paid and in lieu thereof the shareholders had agreed to receive an equivalent number of equity shares. The above statement of fact is difficult to accept. Neither is the period during which dividends had not been paid is specified, nor is the amount due indicated. No material has been laid to show that the 3065 equity shares represent a fair value of the dividends claimed to be unpaid. What cannot also be lost sight of is that the preference shares in question were held by the Gupta Group who was in control of the company at that point of time. A number of self serving decisions by the Gupta Group and its conduct of the business of the company in a manner detrimental to the interest of the company, as discussed hereinabove, would make it extremely perilous to rely on the version available in the resolution of the Board for allotment of 3065 equity shares in place of the preference shares in question. In the above circumstances it would be just and proper to strike down the conversion of the 3065 preference shares into equity shares and revert the preference shares to its earlier status to be dealt with in the future in accordance with law. This is, of course, subject to the orders of the Delhi High Court in the appeal pending before it.
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2016 (11) TMI 26
Highest bidder - auction sales - Held that:- In view of the prayer made by in the application for confirming the minutes recorded on 14.07.2016, the same is allowed and the Official Liquidator is directed to hand over the possession of the assets/property situated at Plot No.191, Village Bamanbore, Tehsil Chotila, District Surendernagar, Gujrat to Virti R. Shah- the highest bidder and the Official Liquidator is also allowed to refund the earnest money of the other bidders which were taken as per minutes dated 14.07.2016 and to pay the bill of expenses of publication of sale notice incurred by the Ex- Management/Secured Creditor on publication of sale notice in priority to other debts in terms of Rule 272 of the Rules. However, it is made clear that the physical possession of the property purchased by Virti R. Shah shall be handed over after receipt of the entire sale consideration.
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Service Tax
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2016 (11) TMI 62
Taxability - steamer agent service - custom house agent service - extended period of limitation - Held that: - the case have to be remanded back to the original adjudicating authority to re-determine the service tax due within the normal period of limitation after deducting the claims made by the assessee. Even for the period of 2005-06 the demand needs to be reworked by allowing deductions as above. We make it clear that for purposes of allowing said deductions, the details as duly certified by independent Chartered Accountant may be made use of. Since the issue has undergone several rounds of litigation, we direct that this exercise may be completed within a period of three months from the date of receipt of this order. The assessee is also directed to cooperate and satisfy the department authorities regarding the quantum of deductions - appeal disposed off by way of remand.
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2016 (11) TMI 61
Levy of service tax - commission received by the Banks on credit card transactions - Banking and Other Financial Services - Held that: - the matter stands decided by the decision of the Larger Bench in the case of Standard Chartered Bank vs. CST, Mumai-I [2015 (8) TMI 686 - CESTAT DELHI (LB)] where matter was decided in favor of assessee. Introduction of comprehensive definition of credit card, debit card, charge card or other payment service in Section 65(33a) read with Section 65(105)(zzzw), by the Finance Act, 2006 is a substantive legislative exertion which enacts levy on the several transactions enumerated in sub-clauses (i) to (vii) specified in the definition set out in Section 65(33a); and all these transactions are neither impliedly covered nor inherently subsumed within the purview of credit card services defined in Section 65(10) or (12) as part of the BOFS. Section 65(33a) is neither intended nor expressed to have a retroactive reach i.e., w.e.f. 16.7.2001. Services enumerated in these sub-clauses are not implicit in the scope of credit card services. A Merchant/Merchant Establishment is a customer in the context of credit card services enumerated in Section 65(72)(zm), subsequently Section 65(105)(zm) and a fortiori an acquiring bank is a customer of an issuing bank. ME discount, by whatever name called, representing amounts retained by an acquiring bank from out of amounts recovered by such bank for settlement of payments to the ME does not amount to consideration received in relation to credit card services. Appeal dismissed - decided against Revenue.
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2016 (11) TMI 60
Drilling and waste removal - whether the activity falls under the category of Site Formation service? - Held that: - there is no dispute as to the fact that the contract which has been awarded to appellant was in respect of the drilling and removal of waste rock material from the site wherein Manganese Ore India Ltd., Jain Carbide and RBS & Co. were intending to do mining of manganese ore. We find that the first appellate authority as well as the adjudicating authority has correctly held that this activity of the appellant would get covered under the category of Site formation service. There is nothing on record to controvert such finding of the first appellate authority as well as the adjudicating authority. Reliance placed on the decision of case Avtar & Company [2014 (2) TMI 1130 - CESTAT MUMBAI] where it was held that activity undertaken of the similar nature would fall under Site formation service. Extended period of limitation - Held that: - the appellant had himself taken the registration under the category of Site formation service but did not indicate the turnover which is attributable to the site formation services. This itself calls for invocation of extended period. Appeal rejected - decided against appellant.
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2016 (11) TMI 59
Refund claim - exemption under N/N. 17/2009-ST dated 7/7/2009 - Airport Services - Held that: - the ATF was supplied which was treated as exports during the period July, 2009 to March, 2010 and the Airport services which is input service was received by the appellant during the same period. The Airport service was not covered under exemption notification no. 17/2009-ST dated 7/7/2009. It is important to note that this Notification exempt the services specified in the notification by way of refund. Therefore the exemption is available in the hands of the recipient. However, service provider in the present case is MIAL suppose to discharge the service tax - point of time of exemption under notification No. 17/2009-ST is time when services were received and used in export of the goods. In the present case receipt of the service as well as use in the exports of goods have taken place during the July, 2009 to March, 2010, at that material time there was no exemption provided to Airport service under notification no. 17/2009-ST, the exemption was made applicable to the airport service under notification no. 17/2009-ST only by amending notification no. 37/2010-ST w.e.f. 28/6/2010 i.e. much after the period of refund in the present case of the appellant. Therefore it is clear that exemption to Airport service by way of refund was not available during the period July, 2009 to March, 2010. Limitation bar - refund pertaining to the period 7/7/2009 to 27/7/2009 - Held that: - as per condition (c) of para (1) of the Notification No. 17/09-ST, one of the important condition is that payment of service tax should be made by the service recipient, therefore before complying this condition refund does not arise - for services pertaining to the period 7/7/2009 to 27/7/2009 the service provider MIAL raised bills itself on 10/8/2009 therefore it is obvious that payment for said period was made after raising bill by MIAL. For this period refund claim was filed on 27/7/2010 which is well within the one year therefore refund is not time bar. Board Circular No. 354/256/2009-TRU dated 1/1/2010 - the same is not dealing with the issue in hand. It does not deal with the issue that even if the input service is not specified in the notification refund can be granted therefore circular will not apply in the facts of the present case.
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2016 (11) TMI 58
Restoration of appeal - stay and waiver of pre-deposit u/s 35F of Central Excise Act, 1944 - modification in the terms of pre- deposit? - Held that: - even though the decision of the Tribunal, viz., Petronet LNG Ltd v. Commissioner of Service Tax [2013 (11) TMI 1011 - CESTAT NEW DELHI], may not favour Revenue, but that would be subject to the requirement that the appeal stands restored. The judgments cited by the learned Authorised Representative Adison Textiles Pvt Ltd v. CESTAT [2007 (9) TMI 606 - ALLAHABAD HIGH COURT] would place the applicant within the ambit of the amended provisions of section 35F of Central Excise Act, 1944. The pre-deposit mandated in section 35F of Central Excise Act, 1944 is the same as that directed by this Tribunal on the earlier occasion. We, therefore, do not find any justification for modifying the terms of pre-deposit. The applicant is directed to deposit ₹ 5 crores within eight weeks and report compliance thereafter latest by 15th November 2016 following which the appeal will stand restored and the plea for raising additional ground sought for in the application shall be taken up thereafter - appeal disposed off.
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2016 (11) TMI 57
Extension of stay order - appeal has not come up for disposal for no fault of appellant - Whether from the initial grant of stay and extension thereof, which is in force beyond 7.8.2014, whether any application is required to be considered by the Bench for extending stay order; on the fact of omissions of 1st, 2nd and 3rd proviso to Section 35C(2A) of the Central Excise Act 1944 - Held that: - relianceplaced in the decision of the case M/s. Venketeshwara Filaments Pvt. Ltd. & Ors. Vs. C.C.E. & S.T., Vapi [2014 (12) TMI 227 - CESTAT AHMEDABAD] where it was held that stay order passed by this Tribunal, if it is in force beyond 7.8.2014, it would continue till the disposal of the appeals and there is no need for filing any further applications for extension orders granting stay either fully or partially - as the stay in the present case was in force beyond 07.08.2014, the same would continue till the disposal of the appeal - extension of stay order granted - the application for extension of stay is disposed off - decided in favor of applicant.
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2016 (11) TMI 56
Classification of the service - re-rubberisation of old and worn out Rollers - Held that: - the issue is similar to the case of Zenith Rollers Ltd. Vs. CCE Noida [2013 (12) TMI 620 - CESTAT NEW DELHI] and the decision followed, where it was held that the activity undertaken (re-rubberisation of old and worn out Rollers) would fall under Business Auxiliary Service and exempted from payment of tax in terms of Notification No. 14/2004. Appeal allowed - decided in favor of appellant.
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2016 (11) TMI 55
Small service provider - Eligibility for exemption under N/N.6/2005-ST - ‘Goods Transport Agency’ service - ‘Renting of Immovable Property Services’ - threshold limit - Held that: - The clause of Notification No. 6/2005-ST as amended would be applicable in as much as, the said notification exempt the Service Tax liability on the small scale service providers, if the value of clearance is up to ₹ 10,00,000/-. It is the case of the assessee that during the relevant period, they received amount raised, it was the first year of renting out of the premises. We find that the notification in Clause 3 and explanation to clause 3 clearly indicates that aggregate value would mean some total gross value of receipt during the financial year, as prescribed under Section 67 of the Finance Act, 1994 charged by the service provider towards taxable services. The appellant had received only an amount of ₹ 10,22,656/- bifurcation of which for the period 01.06.2007 to 31.03.2008 is ₹ 6,39,160/- and for the period 01.04.2008 to 30.09.2008 is ₹ 3,83,496/-. It can be seen from the above factual matrix that the appellant have not received any excess of amount of ₹ 10,00,000/- in earlier years and accordingly entitled for benefit of Notification No. 6/2005-ST - appeal allowed - decided in favor of appellant.
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Central Excise
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2016 (11) TMI 54
Reversal of CENVAT credit - whether interest is liable on the cenvat credit which was reversed and whether the appellant is liable to penalty under Rule 15(1) of the Cenvat Credit rules, 2004? - Held that: - the unit had not commenced production when the investigation started and hence there was no clearance from the factory. As there was no clearance from the factory, there was no question of utilization of the cenvat credit availed by the party - reliance placed on the decision of the case GTL Infrastructure Ltd. Vs. CCE [2014 (9) TMI 647 - CESTAT MUMBAI] where it was held that the appellants are not liable to pay interest for wrongful availment of Cenvat Credit which has been reversed before utilization by the appellant - the demand of interest in this case is not proper and justified. Levy of penalty - reliance placed in the decision of CCE Madurai Vs. M/s Strategic Engineering (P) Ltd. [2014 (11) TMI 89 - MADRAS HIGH COURT] where it was held that mere taken of CENVAT credit facilities is not at all sufficient for claiming of interest as well as penalty - the appellants are not liable to penalty. Appeal allowed - decided in favor of appellant.
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2016 (11) TMI 53
Demand of duty mainly on the basis of statements of employee - whether demand of duty mainly on the statements justified? - Molasses - N/N. 6/97-CE (NT) dated 01/3/97 issued under Rule 7A of the erstwhile Central Excise Rules - BS-26 register - 750 M.T. of molasses received in the factory with purposes of testing in the laboratory within the factory - Held that: - To examine the veracity of the statement made by Shri N.L. Sharma, his cross examination was requested by the appellants at the time of adjudication by the Commissioner. However, this was turned down by him. Under the circumstances, such statement loses its evidentionary value. It has been held time and again by the higher judiciary that cross-examination of the persons giving statements if asked for has to be necessarily given. In the absence of such cross-examination the statement cannot be relied upon by Revenue to demand excise duty - in the present case the requirements of Section 9 (d) (2) of the Central Excise Act has not been satisfied. Even otherwise the statement stands retracted and cannot be relied upon to enforce duty demand - I find that the two main pieces of evidences relied upon by the Revenue to raise the demand against the appellant have been successfully assailed. Consequently the demand made in the show cause notice cannot be upheld - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 52
Classification - Demand - Penalty - Notification No. 4/97 - CE dated 1.3.1997 - Whether the cement concrete mixture or ready mix concrete is manufactured by the appellant at the site or otherwise - Held that: - the issue in this case is now squarely covered by the order of the Tribunal in the appellant’s own case in appeal number E/610 & 670/2001 - As for the period from 01.03.1997 to 01.06.1998, the product is exempt from duty vide Notification No. 4/97 dated 01.03.1997 and Notification No. 5/98 dated 02.06.1998 - Appeal allowed.
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2016 (11) TMI 51
Reversal of cenvat credit - recovery of 10% value of goods - Iron Ore Fines and Coal Fines - Rule 6(3)(b) of Cenvat Credit Rules, 2004 - Whether the said Fines (Iron Ore/Coal) are manufactured excisable product by the appellant? - Held that: - reliance placed on the decision of Hindustan Zinc Ltd. [2014 (5) TMI 253 - SUPREME COURT] where it was held that Rule 6 of CCR is not attracted if a by product emerging in the process of manufacture of final product is cleared without payment of duty. The present case is not related to levy of duty on Iron Ore Fines and Coal Fines under Section 3, but relates to removal of exempted goods. We find such assertion very strange to say the least. When the goods are not passing the test of duty levy then the question applying the provisions of Rule 6 of Cenvat Credit Rules does not arise. Demand of duty not justified - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 50
Refund - Unjust enrichment - Held that: - the show cause notice was issued to the respective Appellants directing them to produce evidences to show that the incidence of duty has not been passed on to the customers or any other person as required under Sec.11B(2)(e) of CEA,1944 - In nut shell, both the authorities had not addressed the issue after examining the evidences/documents produced by the appellants alongwith their refund claim, so as to establish the fact that the incidence of duty has not been passed to the customers - Appeals are allowed by way of remand.
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2016 (11) TMI 49
Availing credit on returned goods - receipt of credit notes instead of Invoices - Rule 16 of Central Excise Rules,2002 - Held that: - there is no dispute about the receipt of the returned defective goods from the depots as well as their customers, listed out in the Form V Register enclosed as Annexure ‘B’ to the appeal paper book - Since the entire quantity against the clearance of excise invoices were not received back but part quantity which were defective only received, the credit notes were issued to regularize the account - Appeal allowed.
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2016 (11) TMI 48
Valuation - bought out items - Non-inclusion of value of control panel used for Hot/ Wet Mix Plant - Held that: - The said bought out items cannot be added to the value of their other components of plant without establishing that such a plant has been manufactured and marketed by the main respondent - Decided in favor of the assessee.
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2016 (11) TMI 47
Denial of CENVAT credit/MODVAT credit - final product exempt - Held that: - the provisions of Modvat were embodied in the Rule 57 A of the Central Excise Rules, which provided for allowing modvat credit on the inputs used in the final products charged to duty. In this case I find that undisputedly the duty has been paid on the final products manufactured by the appellants; though the products have subsequently been held as exempted. Further I find that even if the product was classified as exempted; the appellants were forbidden from claiming refund by the High Court. Therefore denial of Modvat is not justifiable; while the appellants were required to pay on the final products. It would also be discriminatory and contrary to the provisions of Rule 57 A. As such the Order-In-Original is not sustainable and the appellants are eligible to the modvat credit - denial of credit not justified - appeal rejected - decided against Revenue.
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2016 (11) TMI 46
Liability to pay duty is of the Job worker or Principal manufacturer - Rule 4 (5) (a) of Cenvat Credit Rules, 2004 - Held that: - the principal manufacturer had cleared the wire rods under the cover of challan in terms of Rule 4 (5) (a) of Cenvat Credit Rules, 2004. In such situation, the responsibility for due accounting and further disposal of such credit availed inputs rest with the principal manufacturer. Duty demand of such items on the appellant job worker is not justifiable - Appeal allowed.
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2016 (11) TMI 45
CENVAT credit - revision of price of free of cost materials - supplementary invoice - manufacture of auto parts - job work - whether the appellant is eligible to avail cenvat credit on the inputs received from GMI based on supplementary invoice issued by GMI on 29.06.2006 for the materials cleared from April, 2004 to May, 2006? - Held that: - during the material time the Cenvat Credit Rules do not prescribe any time limit for availing the credit. On the main issue regarding applicability of Rule 9(1)(b) of the said Rules, there has been no proceedings against GMI who issued the said supplementary invoice. There has been no allegation to cover the present supplementary invoice under exclusion of Rule 9(1)(b) for barring the credit. Admittedly, GMI paid additional Central Excise duty on recalculation of the price of various items supplied free of cost to the appellant on a much later date. On their own acceptance they have paid the differential duty and issued supplementary invoice to the appellant who availed the credit. Reliance placed on the decision of Indian Oil Corp. Limited vs. CCE, Kolkata-VI [2012 (2) TMI 421 - CESTAT KOLKATA] where it was held that in the absence of any finding that extra duty payment by the supplier of input has been made on account of the finding regarding fraud, suppression etc. the credit of supplementary invoice cannot be denied - In the present case there has been no proceedings against GMI with reference to the additional duty payment made by them. As such, the denial of credit as per the impugned order is not justifiable. Appeal allowed - decided in favor of appellant.
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2016 (11) TMI 44
Whether the appellant has correctly availed the cenvat credit of the CVD paid on the imported goods which were traded by them - Held that: - the appellant had discharged applicable/appropriate central excise duty on the sinks after packing/repacking them - It is settled law that when duty liability has been demanded and discharged, the inputs used for such goods if dutiable and duty has been discharged, the assessee is eligible to avail cenvat credit of the same - Appeal allowed.
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2016 (11) TMI 43
CENVAT credit - commission paid - commission agent situated abroad - reverse charge mechanism - Held that: - the decision of the Tribunal in the appellant's own case [2015 (2) TMI 755 - CESTAT MUMBAI] is squarely on the subject, which clearly indicates that the appellant is eligible to avail the cenvat credit of such commission paid to foreign commission agent. The appellant is eligible to utilize the cenvat credit for discharge of such service tax liability - following the same, the impugned order is unsustainable. Reliance placed on the decision of case ITC Ltd. vs. CCE, Guntur [2011 (3) TMI 186 - CESTAT, BANGALORE] by departmental representative - the facts are totally different as in case, ITC Ltd. was not providing any output service or they were not manufacturing any dutiable final product while in the case in hand, it is an admitted fact that the appellant is manufacturing dutiable product. CENVAT credit allowed - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 42
Cenvat credit - excess credit - credit on the of the duty on freight and insurance charges - Held that: - identical issue was before the Tribunal in the case of Hindalco Industries Ltd. [2014 (11) TMI 156 - CESTAT NEW DELHI], wherein the Tribunal held in favour of appellant therein on merits itself, holding that the inputs supplier’s assessment cannot be changed at the recipient’s end - Appeal allowed.
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2016 (11) TMI 41
Cenvat credit - Input service distributor - Held that: - whether CENVAT credit can be availed by manufacturing unit before the registration of Input Service Distributor is now settled in favour of the appellant by the judgement of Hon'ble High Court of Gujarat in the case of Commissioner of Central Excise v. Dashion Ltd.2016 (2) TMI 183 - GUJARAT HIGH COURT - it was found that full records were maintained and the irregularity, if at all, was procedural and when it was further found that the records were available for the Revenue to verify the correctness, the Tribunal, in our opinion, rightly did not dis-entitle the assessee from the entire Cenvat credit availed for payment of duty - Decided in favor of the assessee.
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2016 (11) TMI 40
Imposition of personal penalties - Rule 26 of the Central Excise Rules, 2002 - under valuation of clandestine removal of goods - Held that: - I do find that the adjudicating authority has attributed a direct role played by Shri Sanjay V. Karkare. The individuals namely Ms. Meena Bhandare, Ms. Bhagyashree Joshi and Shri Ajay Balbhar have categorically stated that Shri Sanjay V. Karkare was directing them to manipulate and to record the transactions in respect of sales of the Company. I am not convinced that Shri Sanjay V. Karkare has any case in his favour in respect of non-imposition of any penalties. Accordingly in the facts and circumstances of the case, I hold that the penalty of ₹ 1,00,000/- under the provisions of Rule 26 of CER, 2002 is correctly imposed - appeal rejected. Imposition of penalties on Mrs. Geetu S. Gidwani - undervaluation of clandestine removal of goods - Held that: - there is nothing on record to indicate Mrs. Geetu S. Gidwani had played any active role in such under-valuation of clandestine removal of the goods nor the adjudicating authority has indicated any reason for imposing penalty on appellant, hence the penalty imposed on Mrs. Geetu S. Gidwani is liable to be set aside - appeal allowed. Appeal disposed off - decided partly in favor of appellant.
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2016 (11) TMI 39
Whether the appellant is eligible to avail CENVAT credit of service tax paid on services like erection, commissioning and installation and the capital goods used for the wind mills which are situated far away from the factory - Held that: - the said electricity generated by the windmills is fed to the Grid of State Electricity Board. Appellant got equivalent quantity of electricity from Grid after minor adjustment as per the terms and conditions entered between the appellant and the Electricity Board - Hon'ble High Court of Bombay in the case of Commissioner of Central Excise v. Endurance Technology Pvt. Ltd. [2011 (7) TMI 373 - CESTAT, MUMBAI ] is directly on the point of availment of CENVAT credit on the wind mills, hence the case directly on the issue is being considered by me for disposing of the appeals.
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CST, VAT & Sales Tax
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2016 (11) TMI 31
Quantum of surcharge - payment of Entry Tax u/s 3(3) of the Orissa Entry Tax Act, 1999 - surcharge calculated on the balance amount after deduction of the entry tax paid on the motor vehicles - whether the ‘Surcharge’ under Section 5A of the OST Act is to be computed on the gross amount of sales tax or on the net amount of sales tax after setting of or deducting the amount of entry tax? - Section 5A of the OST Act - Rule 18 of the Odisha Entry Tax Rule, 1999 - Held that: - It is well settled that an illustration given under the Rules does not exhaust the full content of the section which it illustrates but equally it can neither curtails nor expands its ambit. Further, surcharge is nothing but an additional tax and is payable on the sale of goods in the manner laid down for levy of surcharge. In view of the provisions contained in the OET Act, a dealer is not entitled for reduction of the amount of entry tax from the amount of tax payable before the levy of surcharge under Section 5A of the OST Act - on a conjoint reading of Section 5 of the OST Act, Section 4 of the OET Act and Rule 18 of the Rules, we are of the considered opinion that the amount of surcharge under Section 5A of the OST Act is to be levied before deducting the amount of entry tax paid by a dealer. Surchargr to be calculated on gross amount - appeal allowed - decided in favor of appellant revenue.
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2016 (11) TMI 30
Levy of tax - inter-state sales - defective 'C-Forms' - petitioner applied for return of 'C-Forms' for correction - Held that: - there are several decisions as well as circulars of the commissioners, which state that defective forms, such as 'C-Forms', 'Form-F' etc., should be returned, so that the dealer is given an opportunity to rectify the defects. Direction to the petitioner to appear before the respondent, within a period of two weeks to produce the 'C-Forms', which are available with them and on the said date, the respondent shall return the defective 'C-Forms' and within a period of two weeks thereafter, the defects should be rectified by the petitioner and the 'C-Forms' should be resubmitted. While resubmitting those forms, it is open to the petitioner to submit the fresh 'C-Forms', if, by then, they have acquired, and on receipt of the same, the respondent shall exercise his powers under Section 84 of the TNVAT Act, and re-do the assessment, under the said two heads alone, by passing a speaking order, on merits and in accordance with law. Petition disposed off - decided in favor of petitioner.
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Wealth tax
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2016 (11) TMI 63
Exemption of the value of the plot to the extent of 500 sq. mts under section 5(1)(vi) of the Wealth Tax Act - CIT(A) treating it as a basic exemption limit and deleting the addition made by the A.O. in respect of such limit - Held that:- It is an asset being plot of land comprising of an area of 500 sq. mts or less which is exempt from tax and not up to 500 sq. mts or less. Therefore, the finding of the CWT(A) is not tenable since the assessee possesses the plot of land consisting of 935 sq. yards. Further, we find that the CWT(A) has followed the decision of ITAT in the case of Shri Sunil B. Handa in WTA. [2012 (7) TMI 634 - ITAT, AHMEDABAD ] for giving relief to the assessee. On perusal of the order of the Tribunal, we find that the Tribunal was concerned with the allowability of exemption of the value of a residential house on a plot of land under section 5(1)(vi) and while giving a finding that the exemption is not allowable in the said case as the construction of the house was not complete, the Tribunal has allowed exemption of the value of the plot upto 500 sq. Mts. Thus, the facts of the said case are distinguishable from the facts of the case before us as we are concerned with the allowability of exemption under the proviso to section 5(1)(vi) of the Wealth Tax Act. Therefore, the stand of the Assessing Officer is upheld and the Revenue’s appeals for all the assessment years are allowed. Further, the issue of addition of value of car is not adjudicated by the CWT(A) and is also not contested by assessee before us. Therefore, the assessment order on this issue also attained finality. Therefore, the Revenue’s appeals for all the assessment years are allowed.
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Indian Laws
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2016 (11) TMI 25
Rights under the SARFAESI Act - continuation of ad-interim order - Held that:- The Petitioner, in exercise of its powers under Section 13 of the SARFAESI Act took possession of the properties. Thereafter, this Notification and which we have declared to be not binding on the Petitioner, came to be issued. In the meanwhile, on 6th June, 2013, the Collector and District Magistrate, Kolhapur (Respondent No.3) called upon the Petitioner to hand over possession of the properties. The Petitioner requested thirty days time to adopt appropriate proceedings. The order passed on 11th June, 2013 wrongly refers to Respondent No.4 as Petitioner. The Petitioner is an ARC and which would not ordinarily ask for any interim relief. However, it was forced to apply for interim reliefs as the property in question, the possession of which was with it in terms of the measures under the SARFAESI Act, was to be handed over or returned back to Respondent No.4. Accordingly, whilst granting interim reliefs in favour of the Petitioner, it was directed to maintain status-quo. However, it was permitted to proceed with the auction but not finalize the sale pursuant thereto, until further orders. This Court did not prevent Respondent No.4 from adopting proceedings either before this Court or the DRT under Section 17 of the SARFAESI Act. Now, the order passed by this Court records that the Collector and District Magistrate cannot insist on the Petitioner handing over the possession of the property in question to Respondent No.4. We do not have any record of the further steps taken either by the Petitioner or by Respondent No.4 - Borrower. In these circumstances, we do not see any purpose of continuing this order. We do not know whether the Petitioner before us has conducted the auction, finalized it, and is now keen to hand over the possession of the property to the successful bidder. Even if all this has been done, we do not know what steps the successful bidder or auction purchaser proposes to take. In these circumstances, and on some vague understanding of the parties, we cannot continue this ad-interim order. Rather, after the Petitioner has succeeded, there is no point in restraining it from exercising its rights under the SARFAESI Act. This is more so in the facts of the present case because Respondent No.4 - Borrower is indebted to the Petitioner and other consortium banks for more than ₹ 250 Crores (approximately), and has not taken any steps to clear the debts. The request is therefore refused.
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2016 (11) TMI 24
Offense Section 138 of the Negotiable Instruments Act, 1881 - Held that:- By proving his case by way of leading the oral as well as documentary evidence, the respondent no.2/complainant had duly proved all the essential ingredients of his case under Section 138 of the N.I. Act. The respondent no.2/complainant has also placed on record the promissory note signed by the petitioner. On the other hand, it is an admitted case of the petitioner himself that the cheque in question bore his signatures. Section 139 of the N.I. Act provides for raising of presumption to the effect that the holder of the cheque has received it in discharge of liability. The plea of the petitioner that he had issued the cheque in question to one Sukhbir Singh has not been established as Sukhbir Singh was never examined by the petitioner. The petitioner was given opportunity to lead his defence evidence. Despite availing the said opportunity, the petitioner had not produced any defence evidence to establish his plea that he had given the cheque in question to one Sukhbir Singh. The Hon’ble Apex Court in the case of Vijay v. Laxman and Anr. (2013 (5) TMI 40 - SUPREME COURT OF INDIA) has observed that once the cheque has been issued and the signatures thereon has been admitted by the accused, then it is not available to the accused to take the defence that the cheque was not issued by him. The present revision petition has been filed assailing the judgments/orders passed by the Courts below. After going through the record and the submissions made by the parties, this Court is of the considered opinion that there is no apparent illegality or infirmity in the judgments/orders passed by the Courts below.
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