TMI Tax Updates - e-Newsletter
November 30, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
-
Income Tax:
Benefit of principle of mutuality - a minor contribution from non-members which has been offered for taxation, would not destroy the principle of mutuality. - AT
-
Income Tax:
Expenditure in the nature of penalty u/s 37(1) - The compensation was paid for delay in handing over of possession of the property, the liability to pay such compensation arose in the course of business of assessee - allowed - AT
-
Income Tax:
Addition u/s 68 - the addition for the reason that the denomination of notes withdrawn and re-deposited was different, it cannot be a ground to make the addition - AT
-
Income Tax:
Business promotion expenditure - The special box sponsored by the assessee - It is difficult to imagine how 15 persons sitting in an air-conditioned box and watching a cricket match would help the business of the assessee - Expenditure u/s 37(1) not allowed - AT
-
Customs:
The term “vessel” includes any ship, boat, sailing vessel or other description of vessel used in navigation. Motor tanker would be covered in the definition of vessel - the restriction of the ITC Policy applies - confiscation upheld - AT
-
Customs:
Frivolous application for Rectification of mistake - costs of ₹ 10,000/- imposed on the applicant-Commissioner to be paid in to the Prime Minister’s Relief Fund - AT
-
Indian Laws:
Point of Sale (POS) Devices and Goods required for their manufacture exempted from Central Excise Duty till March 31, 2017
-
Indian Laws:
Lok Sabha has passed THE TAXATION LAWS (SECOND AMENDMENT) BILL, 2016
-
Service Tax:
It is fairly well settled that when a new service is introduced from a particular date, the same activity cannot be charged to service tax prior to that date. The only exception could be if the new service is carved out of an existing service - AT
-
Service Tax:
Imposition of penalty - Except mere allegation of suppression, the Department did not bring any material on record to prove that there was suppression and concealment of facts to evade payment of tax - No penalty - AT
-
Service Tax:
Demand of the amount payable under reverse charge method recovered from the service provider - insurance auxiliary service - To the extent that the contributor has not ventured to avail credit of such contributions, there is no detriment to public revenue - demand u/s 73A set aside - AT
-
Central Excise:
The provision of Rule 4(4) of Cenvat Credit Rules, 2004 does not bar the assessee form taking cenvat credit on capital goods in the subsequent year after availing benefit of depreciation under IT Act in the year of receipt of capital gods. - AT
-
Central Excise:
The availment of cenvat credit without paying duty on the goods has resulted in a situation of loss of revenue. The facts of the case present an isolated situation and the contention of the appellant that writing off of the dues to the vendor is not the same as writing off of inputs and that Rule 3(5B) is not applicable is not tenable. - AT
-
Central Excise:
Excisibility of waste, scrap and parings of paper and paperboard arising during manufacture of empty boxes with use that paper and paperboard - scrap of paper cannot be considered as a product different from the paper - Mere mentioning in the tariff is not sufficient to attract excise levy. - AT
-
Central Excise:
Refund claim - reversal of cenvat credit wrongly - whether the appellant is required to reverse the CENVAT credit availed on inputs and input services attributable to LPG cleared by availing exemption - reversal is in accordance with law - no refund - AT
-
Central Excise:
Classification of Cetraben Cream - whether classified as medicament or as cosmetics? - merit classification under chapter 30 as medicament - AT
-
Central Excise:
Unjust enrichment - refund of credit which was reversed under protest during dispute - refund of Cenvat credit need not to be under gone the test of unjust enrichment. - AT
-
VAT:
Levy of tax - Eraser, Scale and Glass Marking Pencils - these are essentially stationary items and would fall in the exempt category - HC
-
VAT:
Jurisdiction of Single Judge Bench to reduce quantum of penalty - tax evasion - whether respondent was able to establish that his conduct was not fraudulent and that his omissions are not so grave so as to attract the maximum penalty, then it would be permissible - Reduced penalty order sustained - HC
Notifications
News
Case Laws:
-
Income Tax
-
2016 (11) TMI 1314
Interest income earned on the amount of deposit kept with the Bank for the purpose of opening of Letter of Credit (LC) used for the purchase of plant and machinery - taxability as “income from other sources" - Held that:- In light of the direct decision of the Hon’ble Supreme Court in the case of Karnal Cooperative Sugar Mills Ltd (1999 (4) TMI 7 - SUPREME Court) wherein held held that such interest was a capital receipt which would go capital shifted, which would go to reduce cost of asset and that deposit of money was directly linked with purchase of plant and machinery and therefore, any income earned on such deposit is incidental to the acquisition of the assets for setting up of plant and machinery. Thus we are of the opinion that the learned Tribunal has committed error in holding that the interest income earned on the amount of deposit kept with the bank for the purpose of opening letter of credit used for the purpose of plant and machinery would be taxable as “income from other source”. The question of law is answered in favour of the assessee and against the revenue
-
2016 (11) TMI 1313
Eligibility to claim accumulation under section 11(2) - Revenue contended that unless there is a specific purpose mentioned in Form No.10, the language ‘for general purpose’ would not permit the assessee to claim the benefit under Section 11(2) - revised Form No.10 filled - continuous proceeding Held that:- In the present case Form No.10 was already filed and the Revised Form No.10 filed for sub-head of the purposes falling under the main head of the objects of the Trust, was accepted by the Commissioner (Appeals) in the proceedings of the appeal. If the matter is considered in light of the above referred decision in the case of Mayur Foundation [2004 (12) TMI 48 - GUJARAT High Court ] and is considered that the appeal is a continuous proceeding, it cannot be said that the CIT (Appeals) had no authority to accept Revised Form No.10 nor can it be said that Revised Form No.10 could not at all be considered for allowing the claim made under Section 11(2) of the Act. In view of the aforesaid, we find that the Tribunal was right in allowing the claim of the assessee under Section 11(2) of the Act. Hence, the question is answered in the affirmative in favour of the assessee
-
2016 (11) TMI 1312
Benefit of principle of mutuality - receipts from the members and taxes the surplus income from non-members - Held that:- If the objects of the assessee are looked into cumulatively, then it would spell out that in order to appraise members about the latest technology in construction activities, market trend, it would not be futile to organize property show. As far as cricket match is concerned, it was not organized on commercial basis, rather participators are mainly from among the members. It is recreational activities. The assessee has pointed out that total receipts from these matches have not crossed one and half -lakhs of rupees. Therefore, this is minor contribution from non-members which has been offered for taxation, would not destroy the principle of mutuality. We find that the ld.CIT(A) has made reference to the various case laws, but not examined analytically the facts of the assessee’s case. She simply concurred with the proposition laid down in those cases laws, but has not spell out how these propositions are applicable on the facts of the present case. It is pertinent to observe that facts of all other years are identical. Therefore, we allow all the appeals of the assessee for statistical purpose.
-
2016 (11) TMI 1311
Revision of order u/s 143(3) and also u/s 154 by a combined order u/s 263 - Held that:- The objection of the assessee, that the CIT ought to have passed independent and separate orders, is not sustainable because the order u/s 154 is only a rectification of a mistake apparent from record of an order passed under the provisions of the I.T. Act and therefore, forms part of the order which is rectified. The order u/s 154 has no independent existence and is part of assessment proceedings itself as held by the Hon'ble Apex Court in the case of S. Sankappa vs. Income Tax Officer, reported in (1967 (12) TMI 2 - SUPREME Court). Therefore, the CIT was within his powers u/s 263 to revise the order u/s 143(3) and also the order u/s 154 by way of a combined and a single order. Entitlement of the assessee for claiming deduction u/s 80IA - Held that:- The allowability of the deduction u/s 80IA in respect of receipts from the sale of carbon credits is covered against the assessee by the decision of the Coordinate Bench of this Tribunal in the case of My Home Power Ltd vs. Dy.CIT [2012 (11) TMI 288 - ITAT HYDERABAD] wherein the Coordinate Bench of this Tribunal has held that it is not a revenue receipt but is a capital receipt. Thus, while holding that such receipt is not eligible for a deduction u/s 80IA, the Tribunal has also held that the addition cannot be made as it is a capital receipt. Therefore, assessment order is clearly erroneous in so far as allowing the deduction u/s 80IA is concerned. But since it is held to be a capital receipt and cannot be brought to tax, it is not prejudicial to the interest of the Revenue. Unaccounted income from the sale of remnant seed - Held that:- From the assessment order for the A.Y 2006-07, it is seen that the assessee has admitted a sum of ₹ 2,77,52,000 towards undisclosed cash payment in the return of income filed by it and the AO has made a further addition of ₹ 2,92,60,012 as unaccounted investment u/s 69 of the I.T Act. As seen from the table reproduced above from the CIT’s order u/s 263, the unaccounted income from remnant seed for the A.Y 2006-07 is ₹ 2,65,61,097, is included in the returned income of the assessee and further the addition of ₹ 2,07,32,443 is also made in the A.Y 2006-07. Therefore, if the same is brought to tax in the A.Y 2007-08 also because the assessee has offered it, it is clearly a double taxation of the same amount. We have gone through the annual report of the assessee and find that this sum of ₹ 2.07 crores is included in the returned income of the assessee for the A.Y 2007-08. The AO has considered the issue at length and thereafter accepted the assessee’s contention while passing the order u/s 154 of the Act. Therefore, we are of the opinion that the assessment order is not erroneous and prejudicial to the interests of the Revenue.
-
2016 (11) TMI 1310
Validity of Revision orders u/s 263 - Held that:- The revisional authority ought to have made proper investigation and recorded appropriate conclusion to buttress his view that the order passed by the Assessing Officer is erroneous and prejudicial to the interests of the Revenue; He ought to have pointed out what more investigation is warranted in the facts and circumstances of the case. It may not be out of place to mention that the Pr. CIT passed a lackluster order while holding that the order of Assessing Officer is unsustainable without making any effort to investigate further. We have also noticed that the Assessing Officer had called for details with regard to the nature of investments, nature of business activity etc., and after applying his mind the assessment was completed. Such being the case, without any further material to prove to the contrary i.e., to highlight that it is in the nature of round-tripping activity or the investments into the shares of a sister concern are colourable the Ld. Commissioner, in our humble opinion, is not justified in holding that the order passed by the Assessing Officer is erroneous and prejudicial to the interests of the Revenue. We hold that the order passed by the Commissioner is bad in law and therefore, we quash and set aside the order passed by the Commissioner and allow the appeal filed by the assessee company.
-
2016 (11) TMI 1309
TDS u/s 194C - non deduction of tds on payment towards hire charges - disallowance u/s 40(a)(ia) - Held that:- As from amended definition of rent for the purpose of Sec.194I that payment for use of machinery, plant or equipment was considered as “rent” for the purpose of Sec.194I only w.e.f. 13.7.2006. Prior to such amendment any payment of rent for use of machinery, plant or equipment was not considered as “Rent” for the purpose of Sec.194I. The payment of rent for use of any plant, machinery or equipment cannot fall within the ambit of Sec.194C also as it does not fall within the definition of the term “Work” as laid down in Sec.194C of the Act. In the light of the aforesaid statutory provision we are of the view that the disallowance u/s 40(a)(ia) of the Act was rightly deleted by CIT(A) as the payment towards hire charges do not require deduction of tax at source at the relevant point of time when it was paid or credited to the account of the payee. With regard to the argument of the ld. DR that the payment in question, if it is a composite payment for carrying out work as well as hiring of machinery, then the provision of section 194C of the Act would be attracted, we are of the view that it is neither the case made out by the AO nor the case made out in the grounds of appeal before the Tribunal. Nevertheless a perusal of the relevant bills evidencing the payment of hiring charges shows that these were payments made independently of any contract for carrying out work and was hiring simpliciter. There is no material on record to show that the payment in question was part of a composite payment for carrying out a work as a part of which machinery was also hired. We are therefore of the view that the provision of section 194C of the Act are not attracted.- Decided against revenue.
-
2016 (11) TMI 1308
Refund of amount offered for taxation conditionally - Held that:- Since there is no co-relation between the alleged disclosures of the appellants qua the seized material, we do not find any reason why addition should be made and why the tax paid on such disclosure should not be refunded. The amount disputed by the present assessee has also been mentioned at Sr.No.3 on page no.3 of the order, while taking note of the details in tabular form. There is no disparity of any fact. Therefore, respectfully following the above, I allow appeal of the assessee, and direct the AO to grant refund as claimed by the assessee on the amount of ₹ 15 lakhs, which was offered conditionally. This amount cannot be taxed in the hands of the assessee, and tax paid on this amount is to be refunded. - Decided in favour of assessee
-
2016 (11) TMI 1307
Disallowance of expenses made on account of Travelling & Conveyance, Brokerage & Commission, Advertisement, Publicity & marketing, legal & professional charges, service maintenance charges, rent, rates & taxes, security expenses, consultancy charges and miscellaneous expenses - Held that:- We find that out of the total expenses incurred of ₹ 48,16,12,000/-, a sum of ₹ 31,22,58,000/- was transferred by assessee to work in progress and ₹ 11,86,10,000/- being expenses not related to project development was debited to profit and loss account and balance sum of ₹ 5,07,44,000/- was transferred to fixed assets by way of capitalization. These facts are not in dispute before us. We find that the expenditure incurred towards advertisement, marketing, publicity expenses, printing and stationery, brokerage, commission, car hire charges, legal and professional charges etc fall under the head General Administrative Costs which should not be included in the project cost as per the guidance note supra. However, we find that the assessee had erroneously claimed insurance as a revenue expenditure instead of allocating the same to project costs as per the guidance note. To that extent, the argument of the ld DR is well appreciated. We find that the other expenditures incurred by the assessee supra are squarely to be allowed as revenue in nature as they are not related to project cost. Hence we find that the ld CITA had rightly granted relief by deleting the disallowance made on that count. The decision rendered herein for the Asst Year 2007-08 would apply with equal force for the Asst Year 2009-10 also except with variance in figures. The ground no. 1 raised by the revenue for the Asst Years 2007-08 and 2009-10 is partly allowed. Disallowance of gifts - Held that:- We find that the expenditure on gifts is related to the project of the assessee and hence the business nexus is proved beyond doubt. Hence the same is squarely allowable as deduction. Moreover, as per para 2.4 of the Guidance Note on Accounting of Real estate transactions, the said expenditure cannot be added to the project cost and hence the assessee had rightly charged off the same as revenue expenditure. Accordingly, the Grounds raised by the revenue are dismissed for the Asst Year 2007-08. Addition on account of interest - Held that:- We find that the assessee had duly proved before the ld CITA that only the own funds lying in UTI Bank was utilized for advancing interest free advance to Mr Ashoke Dasgupta. Moreover, this advance was given in Asst Year 2006-07. In any case, we are in agreement with the argument of the ld AR that no notional interest income could be brought to tax. On what basis 10% rate of interest was assumed by the ld AO is not brought on record by the ld AO. The ld AO had not made any disallowance of interest paid by the assessee on its borrowings. This itself goes to prove that the borrowed funds were utilized only for business purposes of the assessee. Hence it could be safely concluded that only the own funds were utilized for advancing interest free funds to Mr Ashoke Dasgupta. In such an event, whether to charge interest or not on the said advance, becomes the prerogative of the assessee and the business nexus of such advance has not been doubted by the revenue. Hence there is no question of adding the notional interest income on the said advance without any basis.
-
2016 (11) TMI 1306
Deduction u/s. 80IB(10) - Held that:- In the present case, the project has been approved by the local authority before 01.04.2005 within the meaning of clause (a) of section 80-IB(10) of the Act and therefore the ratio of the judgement of the Hon’ble High Court in the case of CIT vs. CHD Developers Ltd. (2014 (1) TMI 1542 - DELHI HIGH COURT ) squarely applies. However, it would be required to establish by the assessee that the construction of the project as sanctioned was completed before the stipulated date. On this aspect, assessee has been consistently pointing out before the Assessing Officer, CIT(A), as well as before the Tribunal that the construction was completed before the stipulated date. The flats have been sold and are occupied by the respective customers. It has also been pointed out that in some of the cases the local authority has issued individual completion certificates to the respective flat owners. Other document viz. property tax assessment of some individual flat owners, electricity bills showing occupation of the flats, etc. have been referred to in the course of hearing. We find that the said material was placed before the lower authorities and the same has not been repudiated at all. The denial of deduction has been solely on non-obtaining of completion certificate, which in the present case is not a requirement to be insisted upon in view of the judgement of the Hon’ble Delhi High Court in the case of CIT vs. CHD Developers Ltd. - Decided in favour of assessee
-
2016 (11) TMI 1305
Calculation of deduction under Section 80HHC - Interpretation of term “Total turnover” - whether sale of scrap do not form part of the turnover? - Held that:- The proceeds generated from the sale of scrap would not be included in the ‘total turnover’. See Commissioner of Income Tax-VII vs. Punjab Stainless Industries [2014 (5) TMI 238 - SUPREME COURT ] – Decided against Revenue. Net interest received considered for deducting 90% of interest income in compliance of explanation (baa) to Section 80HHC - Held that:- The same substantial question of law has fallen for consideration before the Supreme Court in ASCG Associated Capsules Private Limited vs. Commissioner of Income Tax - (2012 (2) TMI 101 - SUPREME COURT OF INDIA ) wherein it was held that 90% of the net amount of any receipt of the nature mentioned in Clause (1) of Explanation (baa) of Section 80HHC, which is actually included in the profits of the assessee, is to be deducted from the profits of the assessee for determining the "profits of the business" – Decided against Revenue.
-
2016 (11) TMI 1304
TPA - selection of comparable - Held that:- We uphold the order of CIT(A) in excluding the companies whose turnover was more than ₹ 200 crores. Transfer pricing adjustment - bench marking technique - whether margins of provision of software development services and provision of on-site services by the assessee to its associate enterprises have to be computed cumulatively? - Held that:- Where the mark-up earned by the assessee is different from two activities carried on by it that established that the activities undertaken were different on account of functional and risk perspective. Since the assessee in the present case was being remunerated at separate mark-up for each of the activity, then both the activities have to be considered separately while benchmarking arm's length price of transactions perse. Merely because the same set of comparables have been utilized does not justify the case of assessee. The Assessing Officer is directed to benchmark the international transactions of provision of software development services i.e. off-site services independently from on-site services provided by way of consultancy services provided by the assessee. The Assessing Officer is also directed to adopt the segmental details of comparables, if available for benchmarking the international transactions of assessee. Accordingly, this aspect of transfer pricing adjustment, if any, is remitted back to the file of Assessing Officer, who is directed to adopt only the margins of software consultancy services i.e. off-site services in order to compute the addition, if any, on account of transfer pricing adjustment. Reopening of assessment - reference made to the TPO for determining the arm's length price of international transactions - Held that:- When no assessment proceedings were pending in relation to the relevant assessment year, the Assessing Officer was precluded from making a reference to the TPO under section 92CA(1) of the Act for the purposes of computing the arm's length price in relation to the international transaction. Consequently, order passed by the TPO under section 92CA(3) proposing an adjustment of ₹ 2,60,00,882/- to the arm's length price of the international transaction was a nullity in law and void ab initio. In view of the above-said facts and circumstances, such an order passed by the TPO was not a valid material for the Assessing Officer to entertain a belief that certain income chargeable to tax had escaped assessment within the meaning of section 147 of the Act. Consequently, we hold that the reasons recorded for reopening the assessment under section 147 of the Act do not meet the requirements of the section and hence the Assessing Officer had no jurisdiction to issue notice under section 148 of the Act
-
2016 (11) TMI 1303
Disallowance of payment of compensation to flat owners - delay in handing over of possession to the flat owners - Held that:- The assessee was justified in compensating the allottees of the flats for delay in handing over of possession. The amount paid by the assessee was certainly on account of business expediency. Another reason for disallowing the payment of compensation was that the amount paid by the assessee was in the nature of penalty for Breach of contract. The Delhi Bench of the Tribunal in the case of DCIT Vs. M/s. Achiever Builders (P) Ltd. ( 2014 (6) TMI 251) where the Department disallowed the amount paid by the assessee to the customers for delay in handing over of possession of properties holding it to be penal in nature held, that the amount paid by the assessee to customers is compensatory in nature and not penal. The compensation was paid for delay in handing over of possession of the property, the liability to pay such compensation arose in the course of business of assessee. In the present case the assessee paid compensation to the assessee under similar circumstances and not out of any liability arising from invoking of penal provisions of any statute. Thus, the compensation paid by the assessee cannot be held to be penal in nature. Thus we hold the expenditure incurred by the assessee on payment of compensation to the flat owners for delay in possession as allowable. - Decided in favour of assessee
-
2016 (11) TMI 1302
Validity of assessment u/s 144C - Held that:- the claim of the assessee company that as the insertion of Sec. 144C had created new rights and obligations, not only in favour of assessee, but also in favour of DRP and concerned assessing officer, therefore by implication the said statutory provision would partake the color and character as that of a 'Substantive provision', is not found to be acceptable and is hereby rejected. In the case of the assessee company, the A.0 who remained under a statutory obligation to frame the assessment, not later then 31.01.2012, is found to have framed the same as on 19.01.2012, therefore the same is within the period of limitation. Thus the claim of the assessee company that the assessment framed by the A.0 is barred by limitation, is rejected. Treating remittances by the assessee company to its 'AE' towards 'Share application' money as loans and advances - adjustment/addition towards impugned interest computed @14% p.a w.r.t the aforesaid amount in the hands of the assessee company - Held that:- We herein set aside the order of the Ld. CIT(A), to the extent the latter had upheld the order of the A.0 treating remittances to the extent of US $ 6,60,000/- by the assessee company to its 'AE', i.e M/s Taurian CISA at Abdidjan Ivory Coast of South Africa (the 'WOS' of the assessee company) towards 'Share application' money, as loans and advances, and on the said basis had thus sustained the consequent adjustment/addition towards impugned interest computed @14% p.a w.r.t the said amount in the hands of the assessee company. That the order of the Ld. CIT(A), to the extent relatable to remittance of US $ 2,00,000 to its aforesaid 'WOS', and the consequent adjustment/addition as regards the same is however sustained, however the A.O/TPO is herein directed to work out and restrict the said adjustment/addition by adopting rate of interest as 6 months LIBOR plus 150 basis point for the delayed receipt of the payments by the assessee company from its aforesaid WOS/AE. Disallowance of 'lease rentals' - whether the 'lease transaction' executed by the assessee company was a Finance lease' and not an 'Operating lease'? - Held that:- We herein set aside the order of the Ld. CIT(A) to the extent the latter had upheld the order of the A.0 who despite holding the lease transaction as that being in the nature as that of a 'Finance lease', had however declined to allow the claim of the assessee company towards 'depreciation' and 'Interest', and herein direct the A.0 to verify the amount of loan and the amounts of interest payments made by the assessee company during the year under consideration towards such loans taken for purchase of railway wagons through finance lease method and allow the claim of interest payment accordingly. Still further the A.O is directed to verify the rate and amount of depreciation on the railway wagons to which the assessee company would stand entitled as per Sec. 32(1) of the 'Act' r.w the Income tax rules and allow depreciation in the hands of the assessee company. Disallowance of difference in value of the forward contracts as on the date on which contract was entered into and the rate prevailing as at the end of the financial year, on the ground that the same represents notional loss - Held that:- As before us it was at the very outset submitted by the Ld. A.R for the assessee company that as the A.0 vide his assessment order dated. 26/03/2013 so passed for A.Y. 2009-10, had allowed the impugned loss in the said year, therefore the same may not be allowed in the year under consideration. We have considered the aforesaid submission of the Ld. A.R and in the background of the said factual position, going by the statement of the Ld. A.R that as the impugned loss had been allowed by the A.0 while framing assessment in the hands of the assessee company for A.Y. 2009-10, therefore the same may not be allowed in the year under consideration, the said ground of appeal is dismissed as not pressed by the assessee company. Levy of Interest u/s 234A, 234B and 234C is mandatory, automatic and consequential, no infirmity can be attributed to the general observation of the CIT(A) therein directing the A.0 to levy interest at the time of giving appeal effect to his order
-
2016 (11) TMI 1301
Addition u/s 68 - assessee contends that the Assessing Officer had made the addition without appreciating the fact that all the said amount of unsecured loans outstanding as on 31/3/2009 are outstanding in books of account for a long time and are reflected in previous years balance sheets - Held that:- In our considered view a perusal of the CIT(A)’s finding in the impugned order would clearly establish that the CIT(A) has not examined, verified or addressed the ground raised by the assessee and regrettably without any application of mind has parroted the finding of of the CIT(A). This finding in our view, is a travesty justice and the impugned order of the CIT(A) becomes unsustainable, as he has failed to examine and verify the contentions put forth by the assessee in the ground raised before him. In the event the said unsecured loans from three parties are found to be old loans and pertain to a period prior to the year under consideration, as contended by the assessee, then the addition under section 68 of the Act as upheld by the CIT(A) cannot be made or sustained. In this view of the matter, we are constrained in the interest of equity and justice to set aside the finding in the impugned order of the CIT(A) and restore the matter to his file to consider and adjudicate the grounds raised before him - Decided in favour of assessee for statistical purposes.
-
2016 (11) TMI 1300
Addition on account of credits in the saving bank accounts - difference in denomination of notes - Held that:- In the present case, it is not in dispute that the assessee had withdrawn cash from the bank account and also re-deposited the similar amount in her bank account and since there was a gap in the withdrawal and the deposit in the bank account and even denominations of the notes were also different, however, nothing was brought on record to substantiate that the cash withdrawn by the assessee from her bank account was utilized elsewhere. Therefore, only on this basis that the denomination of notes was different the addition cannot be made particularly when the assessee proved the source of the deposit which was the withdrawal from her bank account. Thus the addition for the reason that the denomination of notes withdrawn and re-deposited was different, it cannot be a ground to make the impugned addition particularly when nothing is brought on record that the amount withdrawn by the assessee was utilized elsewhere and not redeposited in the bank account. - Decided in favour of assessee
-
2016 (11) TMI 1299
Disallowance of additional depreciation u/s 32(1)(iia) - asset put to use - Held that:- The assessee could not claim 100% of the depreciation in the year of installation of plant and machinery because it was put to use for the purpose of business for a period of less than 180 days and claimed 50% of depreciation in the year of installation of plant and machinery, the remaining 50% was claimed in the year under consideration. The intention of the legislation is absolutely clear that the assessee shall be allowed certain additional benefit, which was restricted by the proviso to half being granted in one assessment year, if certain condition was not fulfilled, but that would not restrain the assessee from claiming balance of the benefit in the subsequent assessment year. In the present case the assessee claimed 50% of depreciation allowable @ 20% under Section 32(1)(iia) of the Act and the remaining 50% was claimed in the year under consideration. Therefore, by following the ratio laid down in the case of Commissioner of Income Tax and Another Vs. Rittal India Pvt. Ltd., (2016 (1) TMI 81 - KARNATAKA HIGH COURT ) the impugned order is set aside and the Assessing Officer is directed to allow the claim of the assessee.
-
2016 (11) TMI 1298
Addition of unexplained cash deposits in Bank Account - Held that:- In case cash was available with the assessee out of withdrawals made from the bank account, where was the necessity to draw ₹ 1000/- to ₹ 2000/- from day-to-day and even on one particular day, the withdrawal of money by two or three different transactions through ATM. The assessee has deposited sum of ₹ 50,000/- on 26.03.2007 and further sum of ₹ 30,000/- on 30.03.2007, before depositing sum of ₹ 14,600/- on 05.02.2007, against which there were no cash withdrawals in intervening dates. The availability of cash in the hands of assessee in these circumstances is thus, doubted except as referred in the paras above that the assessee had made cash withdrawals of ₹ 15,000/- on 05.06.2006 and ₹ 16,000/- on 09.06.2006, which can be said to be available with the assessee. Coming to the second stand of assessee that the source of cash deposit in the bank account is out of withdrawals made by the husband of assessee. The assessee has filed on record the bank statement of her husband. Undoubtedly, there are cash withdrawals from the said bank account but the withdrawals are similarly made by her husband in the range of ₹ 2000/- to ₹ 5000/- and on some occasions higher withdrawals of ₹ 10,000/- to ₹ 15,000/- has been made. However, the explanation filed by the assessee cannot be accepted in the entirety as the household expenses are also to be met out of withdrawals made by the assessee and her husband. Accordingly, the plea of the assessee is accepted to the extent of availability of cash of ₹ 1 lakh from her husband. Further, sum of ₹ 31,000/- out of withdrawals from the account of assessee is accepted and addition to that extent is deleted. However, the addition to the extent of ₹ 69,900/- is confirmed. - Decided partly in favour of assessee
-
2016 (11) TMI 1297
Disallowance u/s 14A - AO given a finding that the assessee had not used any borrowed funds for earning exempt income - Held that:- It is not disputed that the assessee for the relevant previous year had not claimed any income as exempt. In other words, even if the investment made by the assessee was capable to raise any exempt income in future, assessee had not earned any such income during the impugned assessment year. That Sec. 14A cannot be invoked where the assessee has not claimed any income of exempt is a view taken by various High Courts of the country. It has been held so by the Delhi High Court in the case of Cheminvest vs CIT [2015 (9) TMI 238 - DELHI HIGH COURT]. Accordingly, we are of the opinion that disallowance u/s 14A would not have been made and such disallowance is deleted. - Decided in favour of assessee Addition being the expenditure incurred for business promotion/advertisement - expenditure incurred for sponsoring of special box - Held that:- No commercial concern would employ a software concern for development of software through its exposure from hoardings at a cricket tournament. They would be looking into the skills of the concern to decide whether it would be an appropriate choice for developing software. It is also an admitted position that the Managing Director of the assessee-company was the Vice President of Tamilnadu Cricket Association. The special box sponsored by the assessee could be used by 15 persons and was an air-conditioned one. It is difficult to imagine how 15 persons sitting in an air-conditioned box and watching a cricket match would help the business of the assessee. As per the ld AR, similar disallowances ought to have been made in the case of other concerns who had sponsored similar boxes. In our opinion, this would not help the assessee’s case in any manner. Sec. 37 mandates that an expenditure could be allowed only if it was incurred wholly and exclusively for the purpose of business. The assessee has not been able to show the nexus of the business of the assessee with the expenditure incurred for sponsoring of special box. Hence, we are of the view that the CIT(A) had rightly confirmed the disallowance made by the Assessing Officer - Decided against assessee
-
2016 (11) TMI 1296
Deemed dividend addition u/s 2(22) - additions made u/s 153A - Held that:- A.O. had no jurisdiction to make additions u/s 153A of the Act, for the assessments which are not pending as on the date of search. The assessment for the assessment years 2005-06 to 2009-10 were not pending as on the date of search. The time limit for issue of notice under sec. 143(2) has been expired. Therefore, the A.O. has no jurisdiction to reassess the income for the assessment year 2005-06 to 2009-10 in the absence of any incriminating materials. The CIT(A) has rightly deleted the additions. We do not see any reason to interfere with the order of CIT(A). Hence, we inclined to uphold CIT(A) order and direct the A.O. to delete the additions made towards deemed dividend for the assessment year 2005-06 to 2009- 10. Even where there is no pending proceedings and no incriminating material has been found, the assessing officer is still required to pass an order u/s 153A of the Act, despite the fact that the assessed income will be remaining the same as that was originally assessed income, since there was no incriminating material. Therefore, we direct the A.O. to delete the additions made towards deemed dividend u/s 2(22)(e) of the Act, for the A.Y. 2010-11 and 2011-12. The transaction between the assessee and his company are not coming within the meaning of loans and advances as defined u/s 2(22)(e) of the Act. The facts remain unchanged. The revenue has failed to brought on record any evidences to prove that the findings of the fact recorded by the CIT(A) is incorrect. Therefore, we are of the view that the CIT(A) has rightly deleted additions made towards deemed dividend under the provisions of section 2(22)(e) of the Act. We do not see any reason to interfere with the order of the CIT(A). - Decided in favour of assessee
-
2016 (11) TMI 1295
Revision u/s 263 - Advances for the flats - Held that:- We find that the assessee has shown both the figures of advance for the flats and sundry creditors under the head ‘booking advance of flats and sundry creditors’. Therefore in our considered, it is not appropriate to draw the conclusion that only the ld. CIT(A) directed to verify the advances for the flats only and not sundry creditors. It is also important to note that the assessee has not been co-operative at the time of impugned proceedings u/s 263 and 144 of the Act. Considering the fact and circumstances of the case, we uphold the order of Ld. CIT(A) and this ground of assessee is dismissed. Disallowance of sundry creditors balance - Held that:- The addition was made by the lower authorities in the absence of necessary documents for the verification of the sundry creditors. It is beyond doubt that it is the primary duty of the assessee to produce the necessary details for the justification of the sundry creditors. The necessary details include the address, PAN, confirmation, their income tax returns etc. However, we find that the assessee failed to produce the same in spite of several opportunities. In our considered view merely paying the amount through banking channel and submitting the bank statements in support of it, the assessee does not get discharged from his responsibility. However, at the same time we cannot ignore the fact that the assessee has shown its income from the business of civil construction which has been accepted and the assessee cannot generate the income without incurring the expenses on the material. Therefore, once the income has been accepted then its corresponding expenses should also be accepted by the lower authorities. As the material supplier are not responding in terms of the notice issued u/s 131 of the Act, the assessee should not be punished for the same. In view of above and in the interest of the justice & fair play, we are inclined to give one more opportunity to the assessee to justify the amount of creditors. Advance received against the sale of flat - Estimation of profit - Held that:- We find that assessee in earlier year has declared profit @ 2.35% which was accepted by the Department. In our considered view, the estimated profit calculated@ 20% is on much higher side. After considering the facts in totality we restrict the estimated profit @ 5%. Hence, this ground of assessee’s appeal is partly allowed.
-
Customs
-
2016 (11) TMI 1271
Detention of consignment - re-rollable scrap - the weight of the consignment was shown as 96.750 MTs of heavy melting scrap whereas it was found as 106.200 MTs - Held that: - on examination part of the consignment was found re-rollable scrap but the appellant has placed an order for supply of Heavy Melting Scrap and the certificate of origin also certifies the same. The appellant has actual used the said goods as Heavy Melt Scrap. Without any contrary evidence on record, I hold that goods are not liable for confiscation on this ground. Further, I find the charge of mis-declaration of weight. I find that as during the examination goods were found in excess to the declared weight, therefore, the goods are rightly held liable for confiscation by the lower authorities. Therefore, I do agree with the impugned order that on account of excess weight, the goods are liable for confiscation. As the goods impugned are not restricted goods therefore, they can be released on payment of redemption fine and penalty. Further, I find that the redemption fine & penalty imposed on the appellant highly excessive and the goods cannot be held liable for confiscation on the change of mis declaration of description, I reduce the redemption fine to ₹ 40,000/- and penalty to ₹ 15,000/- - appeal allowed - decided partly in favor of assessee.
-
2016 (11) TMI 1270
Valuation - enhancement of value - Rule 6 of the Customs Valuation Rules, 1988 - Indonesia Copra Expeller Cake - The importer has totally imported 4000 MTs of Copra Expeller Cake. Out of this, quantity of 3000 tonnes have been imported at US $ 146 per MT whereas the balance 1000 MTs has been imported at a higher value of US $ 165 per MT. Revenue has enhanced the value of that portion of the imported cargo to the extent of 3000 MTs to US $ 165 per MT from US $ 146 which is the price paid for the balance 1000 MT - Whether enhancement of value justified? - Held that: - the Revenue authorities have enhanced the value without giving proper justification for rejecting the transaction values. The enhancement of values ordered by the lower authorities appears to be in the nature of arbitrary and triggered by the fact that some goods stand imported by the importer in the same vessel at different prices. We are of the view that the fact that both the consignments had different prices and have been imported in the same vessel can be no valid reason for disregarding the transaction value. In any case, Revenue has not brought any other documentary evidence to say that the transaction value is to be doubted. The Hon’ble Supreme Court s decision in the case of EICHER TRACTORS LTD. Versus COMMISSIONER OF CUSTOMS, MUMBAI [2000 (11) TMI 139 - SUPREME COURT OF INDIA] support our stand. The impugned order cannot be sustained in the light of Section 14 of the Customs Act, read with Customs Valuation Rules - appeal allowed - decided in favor of appellant.
-
2016 (11) TMI 1269
Confiscation of imported ship - Import of ship in violation of ITC provisions - the appellant vide letter dated 20.09.2004 requested the revenue to allow the said vessel to be scrapped and broken, and sought permission to file a bill of entry for this purpose. Since Marmagoa port, where the bill of entry was filed, was not designated port for braking up of ships, the revenue rejected the application for such conversion and adjudged the issue as per ITC provisions - Held that: - Proviso to the said section clearly indicates that the importer can waive the show-cause notice. In the instant case the importer has waived the show-cause notice, therefore, it is not necessary that a show-cause notice be issued before confiscation. It is seen that the motor tanker imported by appellants is powered by 2000BHP engine. In this circumstance, it cannot be said that the said motor tanker is not navigable. In the instant case the engine have been found not in working condition therefore, appellant had obtained a permission to tow the tanker from Marmagoa to Alang - It can be seen from the definition that the term “vessel” includes any ship, boat, sailing vessel or other description of vessel used in navigation. Motor tanker would be covered in the definition of vessel - appeal dismissed - decided against appellant.
-
2016 (11) TMI 1268
Rejection of refund claim - time bar - Held that: - any refund application beyond period specified under Section 11B of the Central Excise Act could not be entertained unless the refund was as a consequence of declaration of a provision as unconstitutional - the refund claim filed by the appellant is time-barred - appeal dismissed - decided against appellant.
-
2016 (11) TMI 1267
Confiscation of imported goods - imported goods are parts of second hand machine therefore it requires licence for import and clearance of the same - Held that: - I find that purchase order in comparison with the invoices of both the consignment, it clearly established that it is one consignment of second hand machine which has been ordered by the importer and imported accordingly. Even though the part of the second hand machine were imported at JNPT, Nahva Sheva and part imported at New Customs House, Mumbai Port that will not make both the consignment as separate consignment. In terms of Interpretation Rule 2(a), if complete machine is presented unassembled or disassembled, it has to be classified under classification of particular machine and not as parts. In the present case even though the second hand machine has been imported and cleared from two different ports but both consignments put together comprises of one second hand machine which in my view covered in this Rule 2(a) of General Rules for Interpretations therefore the present consignment has to be classified under classification of machine and not as a part, if it is so then no licence is required for clearance of such goods - irrespective of fact that both the consignment were imported on different port at different time will not change the classification of a whole machine. As per my above discussion, I am of the view that consignment in the present appeal is nothing but part and parcel of the machine as a whole and could not be classified and assessed as independent part hence no licence is required, accordingly confiscation is set aside. Appeal allowed - decided in favor of appellant-importer.
-
2016 (11) TMI 1266
Rectification of mistake - stay of recovery - the Bench, while granting the interim prayer of the appellant, appeared to have been guided by the decision of the Principal Bench in Hem Chand Gupta & Sons Versus Commissioner of Cus. (ICD) , New Delhi [2015 (1) TMI 1266 - CESTAT NEW DELHI] instead of following the decision of the Hon’ble High Court of Bombay in Sunil Gupta v. Union o India & Ors [2014 (12) TMI 151 - BOMBAY HIGH COURT] - Held that: - The applicant is in gross error in behaving that, by the amendment in section 28 of Customs Act, 1962 which pertain only to recovery of duty, the 'officer of customs' is, in every provision of the Act and Rules, a 'proper officer'. A prejudicial understanding of a judicial decision is no substitute for diligent comprehension and responsible reaction. We, therefore, find no mistake and, hence, no cause to entertain the present application before us. Before we part with the matter, we also take note of the behavior of the representative of Revenue while seeking the rectification. Both sides of the bar may consider themselves competent to form an opinion on our orders or may be dissatisfied by the 'failure' rate but that does not confer upon them the liberty to articulate, and that too in intemperate language, which, regretfully, the representative of Revenue arrogated to himself. Such lack of grace does not add to the credit of the office of the Chief Commissioner (AR) as it demonstrably reveals the failure to instill the importance of disciplined behavior and professional stoicism in the face of in favourable outcome. Our courts and tribunals are overworked owing to manifold causes and not the least of which is the apathetic abdication of responsibility by senior levels of the tax administration in the resort to litigation. Escalating the workload without justifiable cause, or even by patent ignorance, must be checked. The impulse to litigate against an order of the Tribunal that is not to its satisfaction or if the interpretation is seen as potential threat to their fief is disservice to public interest. We are not sure if the present application is motivated by ill-advice, lack of knowledge, unwillingness to accept the law, overweening desire to display juristic brilliance or merely an exercise in evading responsibility. We are certain that it demonstrates impulsive reaction without even the most rudimentary application of mind. To condone that is to abet in condoning irresponsible behavior and to encourage frivolous litigation. To that end, we impose costs of ₹ 10,000/- on the applicant-Commissioner to be paid in to the Prime Minister’s Relief Fund within 45 days of receipt of the order. Application for rectification of mistake dismissed.
-
Corporate Laws
-
2016 (11) TMI 1260
Scheme of Amalgamation - Held that:- Taking into account the contentions raised in the affidavits and counter affidavits and the undertakings given vide the additional affidavit dated 20th October, 2016, and the submissions advanced, the observations made by the Regional Director, Ministry of Corporate Affairs, no longer survive. It appears from the material on record that the Scheme of amalgamation would be in the interest of its shareholders and creditors as well as in the public interest, therefore the same deserves to be sanctioned and is hereby, sanctioned.
-
Service Tax
-
2016 (11) TMI 1294
Taxability - contract carriages - rent-a-cab service - 'tour operators' service - Held that: - There is, compelling logic for, by any other interpretation, would render the taximeter cab-driver/operator also liable to tax. That such has been the intent of the legislature appears far-fetched and we hold that vehicles contracted out in return for payment on actual usage is not taxable under section 65 (105) (o) of Finance Act, 1994. Revenue has not appealed the finding that contracting the use of buses does not fall within the ambit of taxation for rendering ‘tour operator’ service - we find no merit in the appeals of Revenue and dismiss them. We find in favour of M/s Rahul Travels, M/s Anay Tours & Travels and M/s Deepak Transport Bus Service and set aside the orders impugned in their appeals.
-
2016 (11) TMI 1293
Demand - Stock Broker Services - Banking & Other Financial Services - Business Auxiliary Service - Held that: - no service tax will be leviable on transaction charges in the hands of the stock broker Banking & Other Financial Services - delayed payment charges - Held that: - delayed payment charges received by the stock brokers are not includible in taxable value as the same are not the charges for providing taxable services. Such charges are on account of delay in making payments by the service recipient to the service provider and are in the nature of a penal charge for not making the payment within stipulated time. Such amounts are not includible in the taxable value for charging Service Tax Business Auxiliary Service - incentive/ commission amounts received by the appellant towards services rendered as Registrar for IPOs - Held that: - Such amounts have been charged to service tax under a new service, "[registrar to an issue]" w.e.f. 01/5/2006. In the impugned order such charges have been levied to service tax under Business Auxiliary Service for the period prior to 01/5/2006. We find no justification for such demands. It is fairly well settled that when a new service is introduced from a particular date, the same activity cannot be charged to service tax prior to that date. The only exception could be if the new service is carved out of an existing service - the service came into service tax net only with effect from 1-5-2006 and a demand to levy the service tax retrospectively under other categories such as Business Auxiliary Service is not justified. Appeal allowed - decided in favor of appellant.
-
2016 (11) TMI 1292
Imposition of penalty - CENVAT credit - availing of services of foreign company, M/s Granco Clark Inc., USA for maintenance and repair of capital goods installed in the factory at Mysore - suppression of facts - Held that: I find that Section 73(3) is very clear as it says that if tax is paid along with interest before issuance of the show-cause notice, then in that case, show-cause notice shall not be issued. In this case, I find that the contention of the appellant that he bonafide believed that he is not liable to pay service tax but during the audit, the audit party informed him that he is liable to pay service tax, then he immediately paid the entire service tax along with interest. Except mere allegation of suppression, the Department did not bring any material on record to prove that there was suppression and concealment of facts to evade payment of tax. Consequently, in my opinion, the imposition of penalty under Section 78 of the Act is not justified and bad in law. Moreover, in the impugned order, the learned Commissioner (Appeals) has not recorded any finding on suppression of facts by the appellant with an intention to evade tax. In view of the above discussion, I set aside the impugned order. Appeal allowed - decided in favor of appellant-assessee.
-
2016 (11) TMI 1291
Demand of the amount payable under reverse charge method recovered from the service provider - insurance auxiliary service - demand of the amount of that tax which has, allegedly, been recovered by the appellant from the agent - section 73A of Finance Act, 1994 - reverse charge mechanism - Held that: - The appellant has paid the tax on commission paid to agents on ‘reverse charge’ basis and appellant is, under CENVAT Credit Rules, 2004, entitled to take credit of such tax paid. Contribution, partial or entire, to the tax liability in an agreement with the provider of the service is not forbidden by law. To the extent that the contributor has not ventured to avail credit of such contributions, there is no detriment to public revenue. And to the extent that the appellant has not deprived the provider of the service of any amount in excess of the tax deposited by the appellant, there can be no substance to the allegation that appellant has contravened section 73A of Finance Act, 1994 - appeal allowed - decided in favor of appellant-assessee.
-
2016 (11) TMI 1290
Demand - construction of residential complex services - Held that: - For the period 01.07.2010 to 31.03.2012, it is seen that the appellant on being pointed by the officers immediately discharged their tax liability along with interest. In as much as the issue of taxability was the subject matter of the Hon’ble High court of Bombay whereas the vires of the same was challenged it can be safely concluded that there was confusion in respect of the taxability of the same. In such a scenario the provisions of section 73B would come into play, thus not requiring any issuance of show cause notice. As such I find no justifiable reasons to impose penalty upon the assessee. Accordingly while confirming tax already paid along with interest I set aside the penalty imposed on the said count. As regards amount of ₹ 2,52,715/- which appellant collected from their customs for the period 2007-08, the same also stands paid by the assessee subsequently along with interest of ₹ 1,02,722/-. I do not find any merit in the appellant’s plea of bonafide in respect of the said amount in as much as having collected the same in the name of the revenue and having retained the same, definitely reflects upon appellant’s intention of enriching themselves at the cost of Revenue. While upholding the confirmation of the said demand along with interest, I am of the view that the appellant needs to be penalized on the said count. The penalty of ₹ 10,000/- imposed by the lower authorities under section 77 of the Finance Act is accordingly upheld. The appeal is disposed off.
-
Central Excise
-
2016 (11) TMI 1289
Whether the penalty under Section 11-AC is liable to be imposed on assessee and interest under Section 11-AB can be levied in view of Explanation-1 of the said Sub-Section (2B) of Section 11-A, where duty has been deposited before issue of show cause notice? - Held that: - We find that there is a consensus in various High Courts as also various Benches of High Courts that if disputed duty is paid by an assessee before a show-cause-notice proposing penalty under Section 11-AC and interest under Section 11-AB is issued, this would show that there was no question of any fraud, misrepresentation or suppression of fact hence penalty and interest should not be levied. In Rashtriya Ispat Nigam Ltd. Vs. Commissioner of Central Excise, Visakhapatnam, [2002 (11) TMI 234 - CEGAT, BANGALORE], took this view. Confronted with the aforesaid authorities, learned Counsel for appellant could not dispute the above position and also neither could place any other authority taking a different view so as to persuade us to take a different view nor could advance any other argument justifying penalty and interest under aforesaid provision even when the assessee admitting disputed liability, has deposited the same even before issuing of a show-cause-notice under the aforesaid provision - substantial question of law is answered against Revenue and in favor of assessee - appeal disposed off.
-
2016 (11) TMI 1288
Rebate claim - jurisdiction under Section 35-G of Central Excise Act - recovery of erroneously sanctioned refund claim - Held that: - The impugned recovery order passed by the Commissioner of Customs and Central Excise, Hyderabad – IV confirming the recovery of erroneously sanctioned rebate was only a consequential order of recovery based on the orders which were challenged before the Delhi High Court. When the Delhi High Court set aside the consequential demands raised for recovery of the rebate of excise duty, the question of again issuing demand for recovery of ₹ 21,02,12,794/- and ₹ 64,66,041/- does not arise and issue of such demand is in utter disregard of the orders passed by the Delhi High Court. As demands were issued for recovery of allegedly erroneously sanctioned rebate, the CESTAT, South Zonal Bench, Bangalore set aside the same since the Delhi High Court set aside the consequential demands also and held that the issue of such demand is arbitrary and illegal. Even otherwise, if consequential recovery is permitted, on any ground, it amounts to reviewing the order of Delhi High Court. When the order of Delhi High Court attained finality, this Court while exercising the jurisdiction under Section 35-G of Central Excise Act, has no option except to confirm the order under challenge. On an overall consideration of the entire material available on record, we find no ground to set aside the order passed by the CESTAT, South Zonal Bench, Bangalore as the Delhi High Court set aside the order passed for recovery of rebate and consequential demands, while restoring the Orders-in-Original No.462/2011- REBATE and No.3/2012-REBATE, dated 30.09.2011 and 13.01.2012. Therefore, we find no error in the order passed by the CESTAT, South Zonal Bench, Bangalore warranting interference by this Court - appeal dismissed - decided against Revenue.
-
2016 (11) TMI 1287
100% EOU - CENVAT credit - Central Excise Duty paid on some inputs and of Service Tax paid on input services, which they use for payment of duty in respect of their DTA clearances - Rule 5 of the Cenvat Credit Rules, 2004 readwith Notification No. 5/2006-CE (NT) dated 14/3/06 - Held that: - I find that the point of dispute in this case stand decided in the favour of the appellant by the Tribunal’s judgment in the case of CCE, Hyderabad Vs. Ravi Foods Ltd. [2011 (3) TMI 1108 - CESTAT, BANGALORE], where it was held that Provisions of Rule 5 of the CCR read with Notification No.5/2006 as amended makes it very clear that there is no requirement for co-relation between the inputs used and the goods exported - If that be so, the question of restricting the refund claim to the extent of input services used / consumed during the month / quarter seems to be mis-placed - At the same time, find that as per the condition No.5 of the Notification No.5/2006, the calculation which has been worked out by the Commissioner(Appeals) in the impugned order, if is correct, then the refund is liable to be sanctioned to the respondent/assessee. Moreover, I also find that the point regarding one to one co-relationship is not the point stemming from the order-in-original, which was passed by the Assistant Commissioner. It is only at the review stage that the point of one to one co-relationship between the receipt of input service in installation of capital goods and use of those capital goods in manufacture of the final products exported was raised. Appeal allowed - decided in favor of appellant-assessee.
-
2016 (11) TMI 1286
Refund claim - duty on Sub-Standard Kraft Paper mistakenly - ignorance of Notification No. 217/86-CE dated 01.031986 - time bar - whether unjust enrichment will be applicable to the refund of the duty finalized after 25.06.1999 but pertaining to the period prior to 25.06.1999? - Held that: - The issue whether unjust enrichment will be applicable to the refund of the duty finalized after 25.06.1999 but pertaining to the period prior to 25.06.1999 was held to be in favour of the assessee by the Larger Bench of Tribunal in the case of Panasonic Battery India Company Limited [2013 (9) TMI 652 - CESTAT AHMEDABAD], where it was held that the doctrine of unjust enrichment will, therefore, not be attracted to the refunds pertaining to the finalization of provisional assessments for period prior to 25/06/1999 when the linking proviso under Rules 9B(5) of Central Excise Rules 2004 was not existing. The linking provision under proviso to Rule 9B(5) was made by an amendment with effect from 25.06.1999 and will be applicable only w.e.f. 25.06.1999 - the refund cannot be credited to the Consumer Welfare Fund enrichment. The impugned order is set aside and I hold that the appellant is eligible for sanction of refund - appeal allowed - decided in favor of appellant.
-
2016 (11) TMI 1285
CENVAT credit - job-work - capital goods - CENVAT credit on depreciation on the duty part of the value of capital goods - Held that: - The provision of Rule 4(4) of Cenvat Credit Rules, 2004 does not bar the assessee form taking cenvat credit on capital goods in the subsequent year after availing benefit of depreciation under IT Act in the year of receipt of capital gods. The respondent has earned credit of ₹ 17,07,038/- in the year of receipt of capital goods. He would be eligible for credit of 50% in the same year and the balance 50% can be availed in the subsequent year. In that case, the contention of department that the respondent can avail only 50% of the balance of ₹ 12,32,337/- in the subsequent year, lacks legal basis - CENVAT credit allowed - decided in favor of respondent-assessee.
-
2016 (11) TMI 1284
Reversal of CENVAT credit - Rule 3(5B) of the Cenvat Credit Rules, 2004 - availing credit without paying duty to the supplier - amount booked as extraordinary income - Held that: - The appellants having decided not to make payment to the vendors, for whatever reason that may be, it is equal to a situation of writing off the inputs especially when they have accounted the amount as ‘extra-ordinary income’. This income amount includes the duty portion of the goods also. Therefore, appellant ought to have reversed the credit along with interest as they have not paid the duty on the goods. The facts reveal that the appellant have attempted to avail credit without paying duty in the guise of accounting the same as ‘extra ordinary income’. The availment of credit without paying duty on the goods has resulted in a situation of loss of revenue. The facts of the case present an isolated situation and the contention of the appellant that writing off of the dues to the vendor is not the same as writing off of inputs and that Rule 3(5B) is not applicable is not tenable. Circular No.877/15/2008-CX dated 17-11-2008 regarding reversal of Cenvat credit in the case of trade discount, and therefore, is not at all applicable. Be that as it may, the circular clarifies that by way of discount if price is reduced and consequently duty is also reduced, the reduced excise duty only will be available as credit. In the present case, the appellant not having paid the duty, the credit cannot be availed at all. Appeal dismissed - decided against appellant.
-
2016 (11) TMI 1283
Manufacture – excisibility of waste, scrap and parings of paper and paperboard arising during manufacture of empty boxes with use that paper and paperboard - Held that: - We find that the appellant is not engaged in the manufacture of any paper or paper board. These items were their inputs procured after payment of Cenvat Credit duty. These inputs were put to intended use in appellant s factory. In such a situation this is not tenable to hold that appellant was engaged in the manufacture of waste and scrap of paper. We note the similar dispute was before the Tribunal in the case of WIMCO Ltd. vs CCE Lucknow [2008 (7) TMI 108 - CESTAT NEW DELHI], where it was held that These scrap/waste/paring also cannot be considered as intermediate product or by product during the course of manufacture of any excisable goods - scrap of paper cannot be considered as a product different from the paper - Mere mentioning in the tariff is not sufficient to attract excise levy. Appeal allowed - decided in favor of appellant-assessee.
-
2016 (11) TMI 1282
Refund claim - reversal of cenvat credit wrongly - whether the appellant is required to reverse the CENVAT credit availed on inputs and input services attributable to LPG cleared by availing exemption under Notification No. 4/2006-CE dated 01.03.2006 during the period May, 2007 to April, 2008 or other wise? - Held that: - the contention of the appellant cannot be acceptable as there is a specific mention of reversal of CENVAT credit attributable to inputs and input services under Rule 6 (3)(a)(viii) of CCR, 2004 where the Appellants fail to maintain separate records. Reading the definition of the ‘exempted goods’ prescribed at Rule 2(d) of the said CCR Rules,2004 and the said provisions it cannot be said that LPG exempted or chargeable to NIL rate of duty are not required to reverse proportionate CENVAT credit on the inputs attributable to the exempted product. In the present case, the appellant are well aware of the quantum of CENVAT credit on inputs and input services used in our in relation of LPG used for domestic purpose and accordingly reversed the same periodically as per the said Rules - refund not allowed - appeal rejected - decided against appellant-assessee.
-
2016 (11) TMI 1281
CENVAT credit - forged invoices - Held that: - On going through the observation made by this Tribunal, the matter was remanded back to the adjudicating authority for de novo adjudication on the issue. There was no specific direction to the appellants to prove that they have received the goods. In that, circumstance, the argument advanced by the learned AR is not tenable. Further, I find that the statements of the appellants have not been controverted by any cogent evidence. In that circumstance, statements made by the appellants have evidentiary value. Moreover, the crucial statement of the transporter has not been recorded. In these circumstances, if the statement of the transporter would have been recorded the truth may come out to adjudicate the case. In the absence of such crucial; evidence, the benefit of doubt goes in favour of the appellants. In these circumstances, I hold that the credit cannot be denied to manufacture/buyers. Consequently, no penalty is imposable on all the appellants - appeal allowed - decided in favor of appellant.
-
2016 (11) TMI 1280
Demand - credit availed on capital goods and welding electrodes - time bar - Held that: - proper description of the inputs and capital goods along with the Tariff Heading have been given. Further the nature of input whether raw material, component, packing material, catalyst etc. have also been given. Simultaneously the utilisation of input for particular capital goods have also been specifically given. Having considered the rival contentions I find that no case of non-declaration or mis-declaration is made out on the part of the appellant. I further find that there is no specific allegation of the revenue as to what detail was lacking which the appellant did not furnish to the revenue. The findings of the lowers Courts holding suppression of facts in regard to material which was used, while filing declaration is perverse, as is evident from the facts on record. Under these facts and circumstances I hold that the appellant had made adequate declarations in the prescribed returns at the time of taking credit and accordingly the extended period of limitation is not invokable. In this view of the matter the demand in dispute being wholly attributable to the extended period is set aside. Accordingly the impugned order is set aside and the appeal is allowed. The appellant should be entitled to consequential benefits, if any, in accordance with law.
-
2016 (11) TMI 1279
CENVAT credit - bogus registered dealers - Held that: - the department sought to deny Cenvat Credit to the appellants on the basis of fact that the registered dealer from whom the goods have been procured by the appellants found to be non-existent. It is not the case of the Department hat appellants have not received the goods. In fact, no investigation has been conducted at the end of the appellants to ascertain they have received the goods or not. Revenue has not made any investigation at the end of the manufacturer supplier of the goods. No investigation was conducted at the transporter of the goods or at the premises of the appellants to reveal the truth. No cross examination of the registered dealer was granted to the appellants to reveal the truth. In these circumstances, Cenvat Credit cannot be denied to the appellants on the basis of deficient investigation - appeal allowed - decided in favor of appellant.
-
2016 (11) TMI 1278
Levy of excise duty - activity of packing/repacking of auto parts - Held that: - I find that as the appellant has claimed that on 31.5.2006, there was inventory of stock of finished goods the same was required to be considered by the adjudicating authority and if the same is excluded from the total turnover of the impugned period, in that circumstance, the turnover fall below the threshold limit of SSI exemption of Notification No.8/03-CE, the appellant is not liable to pay duty. These facts are required to be verified by the adjudicating authority. Therefore, the matter is remanded back to the adjudicating authority to verify the facts as discussed above, on the basis of the documents produced by the appellant. Other issues are kept open for both sides to be agitated before the adjudicating authority - appeal disposed off by way of remand.
-
2016 (11) TMI 1277
Doctrine of merger of appeals - scope of the word "accordingly" used in the order of the Apex Court - appellant contended that, When Revenue failed to succeed before apex court against final order of Tribunal, that order merged in the order of Apex court. Present appeal being a consequence of the final order of Tribunal, there is nothing more to be contested by Revenue today. - Pre-deposit - Held that: - the word "accordingly" used in that order is with reference to the matters covered against Revenue. Hence, Revenue cannot plead today that the merits of the order passed by the Tribunal has not received scrutiny of the apex court. - the order of the Tribunal having merged in the dismissal order of the apex court, this Bench has no jurisdiction to touch the merits of the case again and there is no further scope for Revenue to reopen its case. Accordingly the miscellaneous application is rejected and Appeal of the appellant is allowed. At this juncture, it is submitted on behalf of Revenue that it may be granted opportunity to realize its dues. It may be stated that there is no bar in law to take appropriate action under law, if that is not otherwise barred.
-
2016 (11) TMI 1276
CENVAT credit - recovery - Subsection 1 of Section 11A of Central Excise Act, 1944 - Held that: - the packing of sugar into 1 & 5 kgs pack is done in the factory premises. The goods when brought into such packing division are again entered into RG-I Register and subsequently packed into 1 & 5 kgs packs. The clearance of such goods from factory on payment of a specific rate of duty. The packing material on which Cenvat Credit was availed were used for packing of goods into 1 & 5 kgs. pack within the premises of factory. The ratio of the ruling of Hon’ble High Court of Chhattisgarh in the case of Advani Oerlikon Ltd. [2012 (12) TMI 266 - CHATTISGARH HIGH COURT] is squarely applicable in the present case where it was held that the item “Hot Melt Unit”was admittedly used by the assessee while packing their finished goods – “welding electrodes”. Since packing is held to be one of the essential components of the manufacturing process of the finished goods and being in the nature of incidental or/and ancillary to the main manufacturing activity, the assessee in this case was rightly held entitled to claim Modvat credit on the item- “Hot Melt Unit” treating the same as capital goods under the Rule 57Q ibid for claiming benefit. The packing is activity incidental or/and ancillary to the main manufacturing activity. Therefore, Cenvat Credit of duty paid on inputs used for packing sugar in 1kg & 5 kg packs is admissible to the appellant - appeal allowed - decided in favor of appellant.
-
2016 (11) TMI 1275
Valuation - short-payment or recovery of differential duty - Altec Expectorant 100 ml - principal-to-principal sale - Held that: - he appellant has discharged duty liability by arriving at the assessable value wherein the appellant has considered cost of raw materials, packing material, cost of conversion charges and the profit margin. It is the case of Revenue that this price is very low considering the fact that M/s Lyka Hetero Healthcare Ltd has sold these products at a very high price - during the period in question, April 2002 to January 2003, P&P medicaments were not covered under the regime of Section 4A of the Central Excise Act, 1944 and the duty liability was to be discharged under the provisions of Section 4 of the Central Excise Act, 1944, which mandated the determination of the assessable value after ascertaining the normal price. Secondly, there is no dispute that the appellant is manufacturing “Altec Expectorant 100 ml” on an agreement entered with M/s Lyka Hetero Healthcare Ltd. During the period in question, there is also a factual matrix recorded that the discharge of the duty liability by the appellant is on the raw material + packing material + conversion charges and the margin of profit. This formula for discharge of duty liability is for goods manufactured on principal-to-principal agreement, is a settled law by the apex Court in the case of Ujagar Prints [1989 (1) TMI 124 - SUPREME COURT OF INDIA]. We find that the entire issue stands covered by the judgment of the apex Court in the case of Ujagar Prints. There is no dispute that the appellant has discharged duty liability based upon the formula as has been settled by the apex Court in the case of job-work manufacturer - appeal allowed.
-
2016 (11) TMI 1274
Classification of goods - Cetraben Cream - whether classified as medicament or as cosmetics? - Held that: - the said product would merit classification under chapter 30 by recording that the ingredients used in the manufacturing of the product are mentioned in different pharmacopoeia and letters of medical practitioners based in India and abroad indicate the product in question is a medicament - appeal allowed.
-
2016 (11) TMI 1273
Denial of CENVAT credit - angles, channels, joist, beam etc - Held that: - in the present appeal, the emphasis by Revenue that only immovable structure emerges after fabrication is misplaced. Most of the capital goods are to be held in place for their operation. It is no ones case that products which are to put in place firmly for further operation will automatically become immovable property. No such sweeping assertion can be made without examining the nature of machinery or structure or in the manner of installment. We find no evidence in the present appeal to arrive at contrary view against the findings of the lower authorities - appeal dismissed - decided against Revenue.
-
2016 (11) TMI 1272
Unjust enrichment - refund of credit which was reversed under protest during dispute - Held that: - I find that the original dispute raised by the department is that the admissibility of Cenvat credit in respect of packing material. Due to the dispute, appellant reversed the Cenvat credit. Tribunal. Accordingly, amount reversed was claimed as a refund. I find that this is not a case of refund of excise duty paid on final product whereas originally it is an amount of Cenvat credit which was reversed under protest and on succeeding, the appellant claimed refund. In my considered view, even there is no need of filing refund claim in case of succeeding in a matter of dispute on Cenvat credit. In the present case, even if the amount is towards reversal of Cenvat credit but it is as good as availment of fresh Cenvat credit therefore unjust enrichment is not applicable for availment of Cenvat credit. In the present case also refund of Cenvat credit need not to be under gone the test of unjust enrichment. Appeal allowed - decided in favor of appellant-assessee.
-
CST, VAT & Sales Tax
-
2016 (11) TMI 1265
Pre-deposit - period of limitation - Held that: - It is not in dispute that the appeals before the learned Tribunal were against the order passed by the first Appellate Authority preferred by the assessee dismissing the same on nondeposit of the amount of predeposit. Therefore, as such the learned Tribunal was required to consider the issue with respect to the predeposit only and whether the learned first Appellate Authority is justified in dismissing the appeals on the ground of nondeposit of predeposit or not Despite the aforesaid pointed out, the learned Tribunal has entered into the merits of the original assessment order and by impugned common judgment and order the learned Tribunal has set aside the original assessment orders - the impugned common judgment and order passed by the learned Tribunal cannot be sustained and the same deserves to be quashed and set aside and are, accordingly, quashed and set aside. The matters are remitted back to the learned Tribunal to consider the appeals only with respect to the issue of nondeposit of the predeposit and/or the orders passed by the first Appellate Authority dismissing the appeals on the ground of nondeposit of predeposit - appeal disposed off by way of remand.
-
2016 (11) TMI 1264
Jurisdiction of Single Judge Bench to reduce quantum of penalty - tax evasion - whether respondent was able to establish that his conduct was not fraudulent and that his omissions are not so grave so as to attract the maximum penalty, then it would be permissible - Held that: - The fact that the learned single Judge has only reduced the penalty and did not exonerate the respondent from it completely, makes us to conclude that the learned single Judge found the respondent to have acted in culpability and that his action in attempting to prove a contract with Mr.Kumar by creating a document in a stamp paper subsequent to the interception has not been fully proved. It is, therefore, that the levy of penalty was upheld since in normal circumstances, if there was no culpability on the part of the respondent, no penalty ought to have been imposed. We have also examined all the documents on record and the statements given by the respondent and Mr.Kumar before the assessing authority. We see that the case of the respondent that he brought the vehicle to Kerala for executing a work under a contract/agreement with Mr.Kumar appears to be probable. However, his conduct in creating a document, in support of his contention, on a stamp paper that was purchased subsequent to the interception would not give the benefit of exculpation. In such view of the matter, it is, therefore, necessary that he be mulcted with penalty, since he was only enjoying the benefit of doubt based on attendant circumstances. We see that it is in such circumstances the learned single Judge has also upheld the order of penalty, but reduced it to ₹ 1,00,000/- based on the reasons and rationale recorded in the judgment, which, we are of the view, are totally justifiable and with sufficient reason and cause. Appeal dismissed - decided against the revenue.
-
2016 (11) TMI 1263
Release of attached warehoused goods - Castor Seeds - upon raiding such godown, it was found that the petitioner has stored the said goods without proper documentation with an intention to evade payment of duty - Held that: - the petitioner's estimated tax, interest and penalty liability works out to ₹ 1,54,36,314/. This takes into account maximum imposable penalty at one and a half times the tax. So far assessment is not yet made, the final liability could be ascertained. In the meantime, if the petitioner secures the full amount, the interest of the Revenue would be sufficiently safeguarded. Counsel for the petitioner also offered to give unconditional bank guarantee of ₹ 1,55,00,000/to the department. In our opinion, subject to such bank guarantee being furnished, the goods could be released. The petition is disposed of with the direction that if the petitioner gives the bank guarantee from a scheduled bank to the department of sum of ₹ 1.55 crores to be recovered by the department with the tax when interest and penalty liabilities are crystallized, the goods lying in the warehouse of M/s Edelweiss Integrated Commodity Management Limited shall be released - decided partly in favor of petitioner.
-
2016 (11) TMI 1262
Levy of tax - Eraser, Scale and Glass Marking Pencils - stationary items - Held that: - the controversy relating to the similar items being sold by the respondent-assessee came up for consideration before this Court in the case of Assistant Commissioner, Anti Evasion, Rajasthan-I, Jaipur Vs. M/s Camlin Limited & anr. [2015 (4) TMI 250 - RAJASTHAN HIGH COURT] where it was held that these are essentially stationary items and would fall in the exempt category. Petition dismissed - decided against Revenue.
-
2016 (11) TMI 1261
Interpretation of Notification dt 12.7.2004 - turnover tax - composition scheme - turnover tax is payable on the basis of annual turnover and not on the basis of quarterly turnover as laid down in sec.13A of the Act - Held that: - a bare perusal of section 13A itself makes it explicitly clear when it mentions "whose total turnover in a year exceeds 3 lac rupees" should mean that it has to be computed on the basis of annual turnover and not on the basis of proportionate or part of the turnover or quarterly. Admittedly, Notification dt 12.7.2004 with regard to the assessment of the turnover tax and the exemption fee in lieu of turnover tax had been rescinded, therefore, assessment of the annual turnover or the exemption fee on any part of the same of the assessee for the assessment year 2004-05, could not be made applicable - The Tax Board, in my considered opinion has correctly interpreted the Notifications and the view which has been taken by the Tax Board appears to be just and proper and is not required to be interpreted differently than what has been expressed by the Tax Board and taking into consideration the aforesaid view of the Tax Board, which I do concur, in my view it being a finding of fact based on evidence, no question of law arises out of the order of Tax Board. I find no perversity or illegality in the order of Tax Board so as to call for interference of this court - petition dismissed - decided against the revenue.
-
Indian Laws
-
2016 (11) TMI 1259
Condonation of delay - Divisional Commissioner exercising his jurisdiction under the Societies Registration Act, 1860 authority to condone delay - Held that:- In the facts of the present case, immediately after the order had been passed by the Registrar, the respondent preferred a Writ Petition which was dismissed on the ground of alternative remedy of preferring an appeal under Section 12-D(2) of the Act of 1860. After passing of such order, petitioner has immediately preferred an appeal, and delay has been condoned. Since the principles underlying Section 14 of the Limitation Act are attracted, as such, the period spent in pursuing a wrong remedy is liable to be condoned. In the present case, if principles of Section 14 are not applied, grave hardship would be otherwise caused to respondent Pilgrim's Mission. The respondent in this case was diligently pursuing remedy against the order of Registrar by filing a writ petition, and unless delay is condoned, it would not be possible to challenge the order. In the present case, Commissioner has condoned delay in filing of appeal, for which source of power can be traced to the principles contained under Section 14 of the Act of 1963. Although provisions of Section 14 ipso facto do not apply but its principles are clearly attracted. The Commissioner was thus right in condoning delay. No interference is thus warranted in exercise of writ jurisdiction of this Court under Article 226 of the Constitution of India with the order of Commissioner dated 13.6.2016. Writ petition fails and is dismissed.
-
2016 (11) TMI 1258
Seizure of contraband substance - contraband substance was found having presence of Methaqualone - whether, the effected 951.350 Kg of contraband substance from the vehicle make Toyota Fortuner bearing registration No. DL 13CA 1800 pursuant to the disclosure made by Manu Khosla does cover under the NDPS Act, 1985? - the NDPS Act, 1985 which is a special law as compared to the general procedural law mentioned herein above. The NDPS Act, 1985 is applicable over the general law for the purposes of the present case - Held that: - The Court below while dealing with the instant case went wrong on the point that, no offence under the NDPS Act was made out, for want of inclusion of Ketamine Hydrochloride in the Schedule of the NDPS Rules, 1985. The notification of the Department of Revenue of the Ministry of Finance with its Notification No.S.0.311.(E) dated 10.02.2011 declared Ketamine Hydrochloride to be a part of the schedule of the NDPS Act, thereby declaring it to be a psychotropic substance - The respondent is directed to surrender the vehicle make Toyota Fortuner bearing registration No. DL 13CA 1800 forthwith before the trial court, failing which the trial court will proceed further in accordance with law - petition allowed - decided against respondent assessee.
|
