TMI Tax Updates - e-Newsletter
November 4, 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
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Income Tax:
Jurisdiction to make the assessment - order of assessment has been made by ITO (Exemptions), Muzaffarpur, who has not been vested with the jurisdiction to deal with the Trust, which do not claim exemption from payment of taxes - the order is void ab initio and cannot be regarded as a mere irregularity. - HC
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Income Tax:
Treatment to grant and the interest earned thereon as income of the Appellant-society - When the assessee is held as a custodian and the full command for utilization of the money including interest earned thereon remains with the Government, same cannot be termed as income of the assessee - HC
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Income Tax:
TDS liability arises or not - nature of agreement - Contract v/s joint venture - when the assessee has not claimed any amount towards expenditure pertaining to the contract amount which has been received by the assessee, there would not be any scope for disallowing any amount towards the expenditure - HC
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Income Tax:
Capital gain - development agreement - unless the purchaser was actually physically put in possession, even though the agreement was entered, it cannot be said that transfer had taken place in view of section 2(47)(v) - AT
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Income Tax:
The retrospective amendment made by Finance Act, 2010 w.e.f. 01.06.1976 in Explanation 2 to section 9(2) of the Act, which received the assent of the President of India on 08.05.2010, does not create any liability to the assessee in the case on hand for deduction of tax under section 195 of the Act on the remittance to 'OBT' since the payment was made much earlier - AT
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Indian Laws:
Four-tier GST rate structure of 5, 12, 18, 28 percent has been announced by the GST Council in addition to zero rated goods
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Service Tax:
The Commissioner (Appeals) apparently committed an illegality in calculating the period of three months from the date of dispatch of order instead of from the date of its receipt by the appellant - HC
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Service Tax:
Management, Maintenance or Repair services in respect of SAP software - while canned software can be treated as goods the customer specific software would be classified as Information Technology software - AT
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Service Tax:
When main contractor has discharged the service tax liability, there can be no demand against the subcontractor for the same services for the same period - demand set aside - AT
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Service Tax:
Classification of service - organic synthesis and related process research - The testing and analysis are primary protocol for carrying out the process research - the services carried out by the assessee are nothing but " technical testing and Analysis" services - AT
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Service Tax:
CENVAT credit - the works contract services received by the appellant are eligible input services. - AT
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Central Excise:
CENVAT credit - input services - the disputed services namely legal services and erection and commissioning of elevator fall in the definition of input services as they are integrally connected with the business activities of the appellant - AT
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Central Excise:
Rule 16(1) of Cenvat Credit Rules, 2002 - buy-back of non-usable batteries - retrieved material of old batteries underwent certain processes and was cleared as new battery and as waste/scrap on payment of duty of Central Excise - credit allowed - AT
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Central Excise:
Remission of duty - the goods cleared for export under bond, if destroyed before being exported, could be considered as destruction before removal only - AT
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VAT:
Vires of Rule 3 (2) (b) (ii) of the Delhi Tax on Luxury Rules, 1996 - bifurcation of consolidated bill amount - as long as there is a sale or transfer of goods or right to use the goods or other services which are purportedly a subject of VAT, that the dealer is subjected to actual levy and collection at a higher threshold is a matter of detail. - Rule 3 (2) (b) (ii) is ultra vires - HC
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VAT:
Non-production of the books of accounts at the time of survey is a factor which can be taken into consideration by the Assessing officer while examining the return to find out whether the same is incorrect or incomplete. - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2016 (11) TMI 124
Jurisdiction to make the assessment - validity of assessment - Held that:- From a bare reading of the relevant part of the notification, dated 22nd October, 2014, aforementioned, it becomes abundantly clear that it is the Commissioner of Income Tax (Exemption), Patna, who has been vested with the jurisdiction to make assessment under various provisions of the Income Tax Act including Section 11 thereof, which relates to income from property held for charitable or religious purposes. Considering the fact that impugned order of assessment has been made by Income Tax Officer (Exemptions), Muzaffarpur, who, in the light of the Notification, dated 22nd October, 2014, has not been vested with the jurisdiction to deal with the Trust, which do not claim exemption from payment of taxes, the Income Tax Officer (Exemptions), Muzaffarpur, could not have, apparently, made any assessment of tax in the case of the present petitioner.Because of the fact that the assessment, has impugned in the present case, has been made by an authority, which had no jurisdiction to make assessment inasmuch as the authority to make assessment stood vested in the Commissioner of Income-Tax (Exemption), Patna, the impugned assessment, so made, is void ab initio and cannot be regarded as a mere irregularity.
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2016 (11) TMI 123
Transfer pricing adjustment - bench marking - Whether the Tribunal was right in holding that royalty and technical assistance fee did not form part of a composite transaction and have to be treated as two separate transactions for the purpose of benchmarking and computing arms length price? - Held that:- Undoubtedly the assessee was obliged to make the payment and that obligation arose from the agreements, a pre-incorporation binding contract. However, that such contractual obligation existed cannot ipso facto be the end of the enquiry. ALP determination in respect of every payment that is part of an international transaction is to be conducted irrespective of such obligation undertaken by the parties. If the transactions are, in the opinion of the TPO, not at arm's length, the required adjustment has to be made, as provided in the Act, irrespective of the fact that the expenditure is allowable under other provisions of the Act. There can conceivably be various reasons not to subject such payments, such as for instance, if no similar data exists at all; or that sectional data for such payments is absent. Quite possibly, this may also be a general pattern of expenditure which AEs may insist to part with technology; further, similarly, other models of payment- deferred or lump sum, along with royalty or inclusive of it, may be discerned in comparable transactions. However, to say that such a substantial amount had to necessarily be paid and that it was a commercial decision, dictated by need for the technology, in the light of a specific query, it could not be said by the assessee that later profits justified it, or that has essentiality precluded the scrutiny. This court holds that the explanation by the assessee that the payment of ₹ 38.58 crores in the circumstances was correctly not accepted. The first question is answered against the assessee. The remit directed by the impugned order is, therefore, upheld. Transactional Net Margin Method applied for benchmarking/computing arm's length price in respect of transaction relating to "technical assistance fee" - Held that:- This court concurs with the assessee that having accepted the TNMM as the most appropriate, it was not open to the TPO to subject only one element, i.e payment of technical assistance fee, to an entirely different (CUP) method. The adoption of a method as the most appropriate one assures the applicability of one standard or criteria to judge an international transaction by. Each method is a package in itself, as it were, containing the necessary elements that are to be used as filters to judge the soundness of the international transaction in an ALP fixing exercise. If this were to be disturbed, the end result would be distorted and within one ALP determination for a year, two or even five methods can be adopted. This would spell chaos and be detrimental to the interests of both the assessee and the revenue. The second question is, therefore, answered in favour of the assessee; the TNMM had to be applied by the TPO/AO in respect of the technical fee payment too.
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2016 (11) TMI 122
Allowance of issue raised before the Appellate Authority for the first time - Held that:- Apex Court in the case of National Thermal Power Co. Ltd. v. CIT [1996 (12) TMI 7 - SUPREME Court] clarified that the Appellate Authority is entitled to entertain a claim for the first time on a point of law provided the facts, on the basis of which the claim is made are available on record. This was in the context of dealing with the powers of the Appellate authority. The decision of the Supreme Court in Goetze (India) ( 2006 (3) TMI 75 - SUPREME Court ) only circumscribes the powers of an Assessing Officer to consider/grant a claim which have been made in the return of income or in the revised return of income. However, the same does not restrain the Appellate Authority from considering a new claim where facts are already on record. In the present case, it is not disputed that the facts necessary for making the fresh claim before the Appellate Authority, are already available on record. See Commissioner of Income Tax. Central-I Versus M/s. Pruthvi Brokers & Shareholders Pvt. Ltd. [2012 (7) TMI 158 - BOMBAY HIGH COURT ]
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2016 (11) TMI 121
Subsidy receipt - revenue or capital receipt - nature of income - Held that:- Examining the settled view of this Court in the case of CIT vs Kisan Sahkari Chini Mills Ltd. reported in (2009 (5) TMI 72 - ALLAHABAD HIGH COURT ) this Court is of the opinion that subsidy that was allowed to the assessee and was utilized by the assessee could not be in the nature of revenue but rather the subsidy receipt by the assessee was in the course of incentives as per Sampat scheme. Accordingly, the subsidy receipt by the assessee was not in the course of trade and was of capital nature. - Decided in favour of assessee. Addition u/s 40-A (2) - excessive and unreasonable payment of management service charges to M/s Dhampur Sugar Mills Ltd. - Held that:- The Tribunal has further recorded findings of fact that the AO himself has allowed the deduction of rupees one lac per month paid to M/s Dhampur Sugar Mills Ltd, hence, he has not doubted the fact of service rendered to the assessee. The Tribunal further found that AO has invoked provisions of Section 40A(2) of the Income Tax Act and has not brought any material on record to show that how the expenses claimed by the assessee were unreasonable or excessive. The Tribunal further found that it is for the businessman to decide what expenses are essential in the conduct of his business and the AO cannot enter into the shoes of a businessman and decide what expenses he should incur and what he should not incur for the purpose of business. Accordingly, the Tribunal affirmed the finding of CIT (A). The Tribunal, therefore, vacated the disallowances - Decided in favour of assessee. Disallowance of lease rental paid in respect of plant and machinery taken on hire - Held that:- There was no physical transfer of machinery and it only amounted to rent expenses. Learned Counsel for the assessee has correctly relied on a decision of this Court in the case of Commissioner of Income Tax vs. Modi Xerox reported in ( 2010 (2) TMI 945 - Allahabad High Court ) wherein a similar issue has been considered and the rental paid for various items by the assessee who are allowed - Decided in favour of assessee. Inclusion of excise duty in the closing stock - Held that:- An identical question has been answered by this Court in Income Tax Appeal No.574 of 2007 (The Commissioner of Income Tax and another vs. M/s Jubilant Organosys Ltd.) [2015 (2) TMI 1192 - ALLAHABAD HIGH COURT] wherein this Court has relied on a decision of the Apex Court in the case of Burger Paints India Ltd. vs. Commissioner of Income Tax (2004 (2) TMI 4 - SUPREME Court ) wherein the similar question has been answered against the revenue and infavour of the assessee holding that no addition could be made to the closing stock of the assessee on account of excise duty. - Decided in favour of assessee. Addition on an account of interest payable - Held that:- The assessee was following the mercantile system of accounting and the Auditors have qualified the report on this point as the liability accrued during the year the assessee claimed deduction of the balance amount of ₹ 42,28,650/- which was short provided and evidence for the same had been submitted before the AO. The only reason for not allowing the deduction was because the yearwise breakup was not given but this has not been considered necessary in view of the decision of Hon'ble Apex Court in Kedarnath Jute Manufacturing Co. (1971 (8) TMI 10 - SUPREME Court), which has been recently followed by the Allahabad High Court in the case of Commissioner of Income Tax v. U.P. Electronics Corporation Ltd. reported in (2005 (7) TMI 51 - ALLAHABAD High Court ) wherein held ascertained liability was allowable deduction to the assessee while computing the income, even though the same had not been entered in the books of accounts of the assesse or even if they did not march the entries in the books of account.- Decided in favour of assessee. Allowability of contribution by the assessee to the molasses reserve fund - Held that:- As in the case of The Simbhaoli Sugar Mills Limited vs. The Commissioner of Income Tax, Meerut [2005 (9) TMI 590 - ALLAHABAD HIGH COURT ] wherein this Court has considered the fact that the contributions made by the assessee to the molasses reserve fund are made under the statute itself i.e. under the Molasses Control (Regulation of Fund For Erection of Storage Facilities) Order, 1976 and, therefore, any such amount which is paid against statutory charge would have to be allowed to the assessee. - Decided in favour of assessee.
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2016 (11) TMI 120
Reopening of assessment - validity of notice - Held that:- We find that the reasons indicate that the basis for issuing a notice was not any material outside the record but proceedings available with the Assessing Officer on the basis of which the assessment under Section 143(3) of the Act was completed. No doubt, the reasons recorded in support do use the words 'that income has escaped assessment on account of non-submission of any information / nondisclosure of material facts'. However, merely using the above phrase as a 'mantra' would not satisfy the requirement of the Assessing Officer having reason to believe that income chargeable to tax has escaped assessment on account of the assessee not having fully and truly disclosed all material facts necessary for assessment. The minimum the reasons should have indicated was which material fact / information the Petitioner had failed to disclose. Further how this material fact has come to his knowledge subsequent to the finalising of assessment which led to the Assessing Officer to have reason to believe that the income chargeable to tax escaped assessment. No material in support of the above is indicated in the reasons in support of the impugned notice. This clearly makes the impugned notice without jurisdiction.
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2016 (11) TMI 119
Treatment to grant and the interest earned thereon as income of the Appellant-society - Appellant guided by the directions of the Government of Karnataka - Held that:- When the assessee is to act as a custodian of the Government money released to the assessee by way of a grant and the interest thereon is also to be utilised as per the terms and conditions of the grant, the view taken by the Tribunal cannot be sustained for two reasons. One is that such cannot be termed as ‘income’ of the assessee and another is that even if the addendum is issued by the Government for controlling the utilization of the amount of interest on the deposit at the later date the character of the money would remain the same and addendum can be termed as only by way of a clarification. It was not a matter where the question was to be considered with the retrospectivity as observed by the Tribunal. When the assessee is held as a custodian and the full command for utilization of the money including interest earned thereon remains with the Government, same cannot be termed as income of the assessee. The impugned order passed by the Tribunal is set aside and the questions are answered in favour of the assessee
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2016 (11) TMI 118
TDS liability arises or not - nature of agreement - Contract v/s joint venture - Held that:- We cannot accept the submission of the learned counsel for the appellant-revenue for two- fold reason; one is that, there is enough material to show that the amount received of the contract was directly shared by the assessee and Sri Bapuji as per their proportionate share and the second is that: it was not a matter where the money/the amount realized of the contract was apportioned as the income of the assessee and thereafter, the portion of it or a major portion was paid by the assessee to Sri Bapuji. When after receipt of the contract amount, the shares are identified and taken by both the parties of the joint venture, it cannot be said as a sub-contract. There is no material brought to our notice by the learned counsel for the appellant-revenue that there was any contract entered into by the assessee to assign the work to Bapuji as sub-contractor. Further, additional aspect is that, when the respective share is received by the assessee, it has been shown as the income by the assessee in the return of income. Same is the situation for the respective share of Sri Bapuji who has shown its income of the amount received by it. Under these circumstances, it is not possible for us to agree with the submission of the learned counsel appearing for the appellant-revenue that the finding of the Tribunal that it was of joint venture between the assessee and Sri Bapuji was contrary to the material or based on conjectures and surmises. - Decided in favour of assessee. Addition u/s 40a(i)(a) - Held that:- In the present case, when the assessee has not claimed any amount towards expenditure pertaining to the contract amount which has been received by the assessee, there would not be any scope for disallowing any amount towards the expenditure. The Tribunal has followed the decision of this Court in case of CIT vs. Balaji Engineering Construction Works (2008 (1) TMI 564 - KARNATAKA HIGH COURT). When the issue is already covered by the decision of this Court, it cannot be said that any substantial questions of law would arise for consideration.
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2016 (11) TMI 117
Capital gain - development agreement - transfer u/s 2(47)(v) - whether possession has been given by the assessee to the developer or not? - Held that:- Clause 3, clause 6 and clause 14 of the Development Agreement clearly laid down that the possession shall be given to the developer only upon fulfillment of certain conditions i.e. sanctioning of scheme by Slum Rehabilitation Authority and obtaining the ‘letter of intent’ and other requisite permissions from the Competent Authorities. It has also been clarified in clause 14 that owner (assessee) shall always be deemed to be in physical and exclusive possession of the said property until the issuance of Annexure -II by SRA. It is an admitted fact on record that even till date no permission or scheme has been granted by the SRA in respect in the impugned land. Thus, there could not have been any question of parting with the physical possession by the assessee with the developer. Even otherwise, no material has been brought on record by the AO or by Ld. CIT-DR before us indicating any contradiction in the factually findings recorded by Ld. CIT(A). In other words, nothing has been brought on record to show that physical possession was given by the assessee to the developer. It does not transpire that there was clear intendment of the assessee to make transfer of the said land by virtue of this agreement itself, in view of the detailed reasoning and analyses given by us in earlier part of our order. Further, the distinguishing features and facts of the above said case were that in the said case, the admitted case of the said assessee was that transfer had taken place, and the only dispute in the said case was confined to the year of chargeability. Further, the fact of possession having been handed over by the assessee to the developer was also admittedly on record and the same was not denied. Whereas, on the other hand, in the case before us neither the possession has been handed over nor it is an admitted case of the assessee that transfer has taken place even till date. Further,Hon’ble Bombay High Court got an occasion to analyse the aforesaid judgment in the case of CIT v. Geeta Devi Pasari (2008 (7) TMI 990 - BOMBAY HIGH COURT) wherein it was clearly held that unless the purchaser was actually physically put in possession, even though the agreement was entered, it cannot be said that transfer had taken place in view of section 2(47)(v) and therefore capital gain could not be charged to tax. Thus it can be said that no transfer of the impugned land had taken place during the year before us. Whether the impugned amount of ₹ 10 crores received by the assessee should be brought to tax as income from other sources? - Held that:- The impugned amount of ₹ 10 crores is stated to be in the nature of advance money received by the assessee for the proposed contracts of the land and to deal with such a situation a specific section i.e. section 51 exists on the statute. Section 51 provides that under such circumstances, amount of advance received shall be deducted from the cost for which impugned asset was acquired. Thus, we direct the AO to treat this amount of ₹ 10 crores as per provisions of section 51 of the Act and the consequences as per law should follow. The AO is directed to re-compute the income accordingly after giving opportunity of hearing to the assessee. - Decided against revenue.
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2016 (11) TMI 116
MAT applicability - Held that:- Section 115JB is applicable to the assessee company and therefore, the ground of the assessee is required to be dismissed and we accordingly dismiss this ground in respect of all the appeals. See Amin Merchant Versus Chairman, Central Board of Excise & Revenue & Others [2016 (7) TMI 1063 - SUPREME COURT] Deduction U/s 80-IC - sale of scrap - Held that:- Both the provisions apply and operates in different fields. Whereas in Section 80HHC revolves around, the issue of export benefit on the turnover whereas in the case of 80-IC the benefit is to be calculated on the profit and loss of an undertaking qualifying as per Section 80-IC(2) of the Act. The treatment of the scrap for the purposes of manufacturing activity is required to be appreciated in the context that the sale of scrap which will goes to reduce the input cost of the undertaking and thereby decline the profit margin of the undertaking whereas in the case of 80HHC if the sale scrap is made a part of the turnover the export benefit of the undertaking will increase and therefore to different effects are therefore for treating the sale being part of the turnover and also treating the receipt of sale scrap being part and parcel of the activity being proximate to the activities of the industrial undertaking while computing the deduction u/s 80-IC of the Act. For the reasons stated above, we uphold the order passed by the ld CIT(A) and dismiss the appeals of the revenue on this ground. We hold that the sale of scrap being part and parcel of the activities of the undertaking and the gains derived from the said activity is arising out of core activity of the assessee and therefore, is required to be taken into consideration for the purposes of computation the deduction under the provisions. Interest on sale invoices - Held that:- The assessee has claimed that the interest charged on account of delayed payment from the purchaser in respect of the manufactured goods sold to them, is required to be allowed as deduction u/s 80-IC of the Act. However, the assessee itself is engaged in manufacturing activities and trading of goods, therefore, the assessee has itself offered amount for taxation. The assessee has not filed bifurcation of the interest received under the manufacturing and trading activities, considering the complicity, the ld Assessing Officer has allowed 50% of interest received are in respect of trading item and 50% of the interest received/in respect of manufacturing item. Thus, the ld Assessing Officer has allowed the deduction of 50% of ₹ 67,114/- in respect of assessment year 2008-09. Deduction u/s 80-IC - Held that:- The contention of the ld AR of the assessee that the credit balance of ₹ 48,875/- is required to be reduced from deduction u/s 80-IC of the Act, in our view, is required to be set aside to the file of the Assessing Officer, as the assessee has failed to prove the nexus between the amount of the credit balance of ₹ 48,875/- for the A.Y. 2010-11 and ₹ 70,670/- for A.Y. 2011-12 with that of the manufacturing activities. The assessee is directed to produce all the evidences before the Assessing Officer. In this regard, the Assessing Officer is directed to examine the same and after examination, the Assessing Officer, if found that the creditors were associated with the manufacturing activities of the assessee, then he shall reduce the credit balance from the deduction u/s 80-IC of the Act. Hence, this ground of appeals is allowed for statistical purposes only.
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2016 (11) TMI 115
Estimation of net profit - comparison of trading profit of two different years - Held that:- Once in the survey year no adverse inference has been drawn, then as a logical corollary without any material or information on record qua this year, no addition on account of estimation of net profit can be made. We also agree with the contention of the Ld. Counsel that the trading result for the part of the year cannot be compared with the trading result of whole of preceding accounting year, because various expenditures like, interest, depreciation and host of other expenditures are debited or provided on the last day of the accounting year. Thus, we reject the estimation of net profit by the AO and uphold the order of the CIT(A) on this point. Ad-hoc disallowance on account of labour expenditure - entire reason for making the disallowance on account of labour expenditure is the statement of two labour contractors recorded at the time of survey under section 133A - Held that:- It is an admitted fact that, none of the two labour contractors whose statements were recorded were involved in any of the contract work relating to the assessment year under consideration and it has also been pointed out by the Ld. Counsel that, in fact, one of the contractors was never employed by the assessee company at all, therefore, we agree him that reliance placed on such statements does not corroborate the stand of the Department and in fact this material cannot be considered for making any kind of disallowance on account of labour expenses. This fact has been noted by the Ld. CIT(A) also as incorporated above by us. However, ld. CIT(A) has proceeded to make the ad-hoc disallowance @ 5% simply on the reason that it reflects a modus operandi that, assessee might be inflating the labour expenditure. Once the material relied upon itself has been disapproved or found to be irrelevant qua the present assessment year, then it cannot be the basis or ground for drawing any adverse inference. Thus, we hold that, ad-hoc disallowance as sustained by the Ld. CIT(A) @ 5% cannot be upheld either on facts or in law and accordingly we direct the AO to delete the addition made on this score. Disallowance of depreciation - assessee did not commence its wind-mil project and did not start the production in the year under consideration - Held that:- The finding of the authorities below that the assessee was not in the possession of the land to install the Wind Mill as the registration of land was done in November, 2010, has no substance, because it has been brought on the record that assessee was in the possession of the land by virtue of sub-lease agreement and not only had installed the wind-mill project but also commenced the production from the month of March, 2010 onwards. This is evident from in the invoices raised right from April 2010 to July 2010 and other host of other material and evidence filed before the authorities below which has been incorporated by us in the foregoing paragraphs. The commission certificate dated 15th July, 2010 was issued on basis of minutes of the meeting held on 31st March, 2010, wherein, it has been mentioned that date of commissioning of the said project viz. Wind-Mill is from 31st March, 2010. Another important fact which has been completely missed by the authorities below is that, revenue generated from the sale of power have been accepted as income of the project and it has been taxed also in this year. Thus, we are unable to accept the finding and conclusion arrived at by the authorities below that no depreciation is allowable to the assessee and accordingly, we set aside the finding of CIT(A) and hold that not only the Wind-Mil was installed and commissioned in this financial year but also had started its operation on 31st March, 2010. Thus, assessee is entitled for claim of depreciation. The claim of depreciation on the Wind-Mill is directed to be allowed in the assessment year 2010-11 itself. Disallowance of finance cost on account of interest paid by the assessee for the purposes of Wind-Mill at Rajasthan - Held that:- No reason for disallowance of finance cost which is on account of interest paid for the purpose of Wind-Mill Project. Accordingly, we direct the AO to allow the interest on the loan taken for the purpose for installing wind-mill, because as stated above, the sale proceed of the power generation has been accepted and taxed in this year. Disallowance u/s 14A - Held that:- only disallowance which has been made by the AO is on account of indirect expenditure under Rule 8D(2)(iii) of ₹ 19,552/-. The assessee had shown investment of ₹ 55.25 lakhs for which it has not attributed any expenditure for earning of the dividend income nor it had been demonstrated that, why no expenditure can be held to be attributable. The primary and initial onus is upon the assessee to demonstrate that no expenditure is attributable for earning of the exempt income and expenses debited in the accounts. It is then onus shifts to the AO to satisfy himself about the correctness of the claim of the assessee having regard to the accounts maintained by the assessee. Thus, looking to the facts of the case, we find that the disallowance made by the AO and as confirmed by the CIT(A) under Rule 8D(2)(iii) appears to be reasonable hence, the disallowance is confirmed. Addition on account of liasioning fee paid - Held that:- From the facts and material available it is evidently clear that, M/s. Sahadev Project was providing this kind of services not only to the assessee but also to the various other customers in this line. As incorporated in the foregoing paragraphs, not only he has shown all such receipts from rendering of such services in his income-tax returns, but the entire details of regular assessment of M/s Sahadev Project were also filed before the authorities below to substantiate. Not only that, the details of TDS deducted were produced and the service tax paid on such professional services rendered by it, were also shown. Further, it is also an admitted fact that no one from M/s Sahadev Project or Mr. Devkinandan Sehgal is a relative of the assessee within the scope and ambit of section 40A(b) and, therefore, there cannot be any question for considering that any payment to excessive or unreasonable. Once, the genuineness of the payments and the purpose for which it has been made is not doubted then the entire payment has confirmed by the party has to be allowed. Accordingly, we uphold the order of the CIT(A) in deleting the said disallowance. Addition on account of survey fee - disallowance on the basis of some telephonic conversions made with the ACIT, Gandhidham - Held that:- No merits in the addition made by the AO, firstly, he has made the addition simply on the basis of some telephonic conversation and hence such an addition has no legs to stand; secondly, looking to the nature of activity carried out by the assessee, wherein surveyors are required to certify loading and unloading the shipment and cargos, therefore, such a payment made to them cannot be held to be for non-business purpose. The payment made to the surveyors is fully corroborated by the bills raised by them and also payment made throughout account payee cheques after deducting TDS. Thus, the order of the CIT(A) in deleting the said disallowance is upheld
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2016 (11) TMI 114
Exclusion of expenses incurred in foreign currency from the export turnover while computing the deduction under Section 10A - Held that:- This issue is covered by the decision of the Hon'ble jurisdictional High Court of Karnataka in the case of CIT V Tata Elxsi Ltd & Others (2011 (8) TMI 782 - KARNATAKA HIGH COURT ) wherein it has been held that while computing the exemption u/s 10A, if the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded from the total turnover in the denominator.
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2016 (11) TMI 113
TDS u/s 195 - dis allowance of professional fees under section 40(a)(ia) for the alleged non-deduction of tax at source - Indo-France DTAA - Held that:- Following, inter alia, the decisions of the ITAT Panaji Bench in the case of Ajit Ramakant Phatarpekar (2015 (4) TMI 261 - ITAT PANAJI ), of the ITAT Agra Bench in the case of Virola International (2014 (2) TMI 653 - ITAT AGRA ), we hold that the retrospective amendment made by Finance Act, 2010 w.e.f. 01.06.1976 in Explanation 2 to section 9(2) of the Act, which received the assent of the President of India on 08.05.2010, does not create any liability to the assessee in the case on hand for deduction of tax under section 195 of the Act on the remittance to 'OBT' since the payment was made much earlier; in the period relevant to Financial Year 01.04.2008 to 31.03.2009. Since the assessee was not liable at that point in time to deduct tax at source in respect of the remittance e to 'OBT' the disallowance made thereof under section 40(a)(i) could not have been made and being factually and legally unsustainable, we direct the AO to delete the same. It is accordingly ordered. On this short point, we allow the assessee's appeal.
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Customs
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2016 (11) TMI 91
Seizure - Valuation - Perishable goods - Violation of the Intellectual Property Rights - Held that: - the present petition can be disposed of, at this stage, with direction to respondent No.2 to dispose of the application filed by the petitioner for disposal of the seized goods, which according to the petitioner, have already expired and further to dispose of the show cause notice issued on 15.3.2012 - Petition disposed - Decided in favor of the assessee.
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2016 (11) TMI 90
Enhancement of penalties - penalties imposed upto the range of about 44% & 50% - duty drawback - Held that: - The Revenue has failed to give substantial reasoning that why this penalty has to be enhanced to the range of 70 to 100%, when the demand of undue benefits of draw-back alongwith the interest has already been confirmed for recovery by the impugned order. The Revenue has cited certain case-laws but in no case law the penalty imposed by the lower Revenue Authorities has been enhanced by the Appellate Authority. Further, we do not find enough reasons to enhance the penalties which have been imposed by the impugned order. Therefore, the Revenue’s appeal for enhancing the penalties against the appellants fails - appeal dismissed - decided against Revenue.
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2016 (11) TMI 89
Import of restricted goods along with baggage - Air Gun Diana Model No. 350 Magnum of 4.5mm/0.177 Caliber and 2 boxes of pellets - Held that: - It is not disputed that the items in question were in restricted category of Import Policy at the time of their import. It is also evident that the appellant himself had made a request to the lower appellate authority to permit the export of the items, on which basis only lower appellate authority allowed re-export on payment of a small redemption fine of ₹ 1000/- only. This being the case, appellant cannot now take a U-turn and seek retention of the weapon in India - retention of goods not justified - appeal dismissed - decided against appellant.
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2016 (11) TMI 88
Imposition of ADD - rubber chemicals - imported from China PR and Korea RP - N/N. 4/2016 - CUS (ADD) dated 29/1/2016 of Ministry of Finance - principles of natural justice - Held that: - in the first round of appeal, the Tribunal examined two issues for decision. The first one being the correctness of cost construction for production of 6 PPD (one of the subject goods) for arriving at normal value and consequently the dumping margin and injury decision on the said goods. After elaborate discussion, the Tribunal recorded that the DA rightly rejected the price of 4 ADPA from Sinorgchem and after for construction of normal value based on the international price of 4 ADPA which is a main raw material for 6 PPD. The Tribunal upheld the rejection of 4 ADPA price from China and arriving of normal value based on international price of 4 ADPA. Hence, the issue relating to methodology adopted by the DA in constructing the normal value for the appellants has reached finality. The conclusion of the Tribunal has not been challenged before any higher judicial forum. On the second issue, the Tribunal observed that the DA should have made adequate disclosure and call for information/comments from the interested parties regarding evidence of international price of 4 ADPA. For this limited purpose, the matter was remanded to the DA. The background data for fixing normal value, export price and dumping margin are to be made to all interested parties. Admittedly, the directions of the Tribunal have been complied with fully. In such situation, we find that there is no merit in the present appeals which pleads to over throw the original finding of the DA which was affirmed by the Tribunal earlier, in this second round of litigation. No merit in the present appeal - appeal dismissed - decided against Appellant.
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2016 (11) TMI 87
Quantification of ADD - Gypsemna - import from UAE - N/N. 6/2013-Cus. ADD dated 12.4.2013 - improper construction of "normal value" for Gypsemna in UAE - Held that: - no substantive documentary evidence has been furnished by the DI regarding dual pricing or favoured pricing in the supply of gas to the producer exporter. While arriving at the normal value for Gypsemna in respect of subject goods the DA had considered the objection of DI and after due verification of the project report etc. arrived at the value. We note that while constructing cost for the said producer exporter the DA has considered the standard accounting norms. The DA has noted that Gypsemna have sold the subject goods to independent entities as well as to a related company. The sales of subject goods to the related company have been noted to be in the ordinary course of trading and have been accepted by the authority for determination of normal value - appeal dismissed - decided against appellant.
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2016 (11) TMI 86
Valuation - whether amount of royalty to be included in the assessable value? - Held that: - the appellant has produced a certificate of the CA which categorically states that the royalty payment made by the appellant to M/s. Ford Motor Company, USA is excluding the amount/sales of the Mondeo cars. The appellant had clearly stated before the lower authorities that the Ford Mondeo cars is not covered under the technical agreement and the inclusion of the royalty paid seems incorrect - the adjudicating authority was correct in coming to a conclusion that the amount of royalty paid cannot be included in the assessable value. Reliance placed in the decision in the case of Saregama India Ltd. and Sony Pictures Home Entertainment India Versus Commissioner of Customs Airport, Mumbai [2016 (9) TMI 931 - CESTAT MUMBAI] where it was held that the decision does not impact upon such imports which can draw a distinction between royalty on goods imported and royalty as a post-importation condition. Appeal allowed - decided in favor of appellant.
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2016 (11) TMI 85
Overvaluation of goods - declared value of the goods exported as US $ 1750 & US $ 4700 for export of men’s socks and men’s briefs respectively, as against the value of US $ 875 and US $ 2350 respectively declared before the Dubai Customs Authorities - Held that: - the FOB value declared by the appellant in respect of Men’s shocks and Men’s briefs works out in terms of ₹ 17/- per piece of briefs and ₹ 13.30 per pair of shocks. This fact is recorded by the adjudicating authority in his findings. These findings are not disputed by the lower authorities before the Commissioner (Appeals). The entire case of Revenue was that the appellant had raised another set of invoices, which indicate lower prices, hence there is overvaluation. We note that the adjudicating authority has clearly recorded the factual findings that no samples were drawn; no market enquiry was conducted to ascertain the PMV of the goods exported and investigation has also not revealed any overvaluation in respect of the past exports made by the exporter and that there are no contemporaneous export price of the same products. In our view, the findings recorded by the adjudicating authority are more factual than the findings recorded by the first appellate authority to set aside the Order-in-original. The impugned order does not reveal any reasoning for setting aside such a detailed order passed by the adjudicating authority, and hence set aside - appeal allowed - decided in favor of appellant.
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Corporate Laws
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2016 (11) TMI 80
Exercise of jurisdiction under Section 10F of the Companies Act, 1956 by the High Court - Held that:- Exercise of jurisdiction under Section 10F of the Companies Act, 1956 by the High Court to interfere with the order of the CLB cannot be faulted. If the subject matter of the appeal before the High Court was limited to the validity of the transfer of 2,20,000 shares from Bobby Kuriakose to T.O. Abraham, the interference made with the entire of the Resolution dated 17.04.2002 thereby invalidating the other share transfers, not under challenge before the High Court, was clearly an error apparent on the face of the record. The correction made in the exercise of the review jurisdiction was, therefore, justified and will not call for any interference.
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2016 (11) TMI 79
Recall of order - withdraw the application seeking amendment of the company petition and to agitate the matter before the Company Law Board - Held that:- In view of death of some of the respondents in the Company Petition, applications have been filed to bring the legal representatives of the deceased respondents. Hence, there is some delay is disposing of the said applications. In the meantime, some of the share holders approached the Company Law Board alleging oppression and mismanagement. Since the issue is pending before the Company Law Board, the respondents have thought it fit to withdraw the application seeking amendment of the company petition and to agitate the matter before the Company Law Board. Accordingly, they filed a memo seeking permission of this Court to withdraw the Company Application reserving liberty to them to raise such issue before the Company Law Board. None of the parties objected for the same. Accordingly the order has been passed. Even without liberty also, the respondents can agitate the matter before the Company Law Board with necessary application with regard to oppression and mismanagement. If any such application is filed, the same has to be considered by the Company Law Board and to take steps in accordance with law. No blanket permission has been granted to agitate the issue before the Company Law Board. The application has to be considered on its own merits. If there is delay in filing the application, it is for the Company Law Board to deal with the same. Hence, there is no infirmity or irregularity in permitting the respondents to withdraw the amendment application to agitate the issue before the Company Law Board. The order dated 27-3-2013 will not affect the interest of the applicant herein. It is the discretionary of a person either to prosecute the matter or withdraw the same. Hence, the question of recalling the order dated 27-03-2013 permitting the respondents to withdraw the amendment application does not arise. No ground is made out to recall the order dated 27-03-2013. Accordingly, the C.A. is rejected.
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Service Tax
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2016 (11) TMI 112
Liability of service tax - Renting of Immovable Property - Held that: - the petitioner did not avail the opportunity provided to him to appear before the authority. Therefore, the procedure adopted by the respondents in proceeding with the adjudication proceeding exparte, was perfectly valid and justified. However, considering the peculiar facts and circumstances of the case, wherein the petitioner had filed a Petition for Eviction before the District Munsif Court cum Rent Controller of Coimbatore in R.C.O.P.No.144 of 2012 and the lessee had entered appearance in the Petition filed by the petitioner under section 11(4) of the Rent Control Act, is also pending and the in the said Petition, an order has been passed to direct the lessee to pay the entire arrears of loan on or before 01.10.2013, which the lessee did not complied with, the petitioner had filed an Execution Petition in E.P.No.5 of 2014, to execute the said order and the said petition is also pending. Further, the petitioner has filed a Civil Suit in O.S.No.2928 of 2015, on the file of the City Civil Court, Bangalore, for recovery of arrears of rent amounting to ₹ 89,85,529/- and the same is also pending. The petitioner has been pushed to and taking note of the fact that the petitioner has complied with the interim direction issued by this Court dated 24.06.2016, this Court is of the view that the petitioner can be afforded one more opportunity and the matter can be adjudicated on merits - petition allowed - matter remanded to the respondents for fresh consideration - opportunity of personal hearing to be provided to the petitioner.
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2016 (11) TMI 111
Filing an appeal before Commissioner (Appeals) - Period of limitation - Section 85 of the Act - Held that: - The Commissioner (Appeals), therefore, apparently committed an illegality in calculating the period of three months from the date of dispatch of order instead of from the date of its receipt by the appellant and dismissing the appeal on the ground of limitation. Likewise, Commissioner (Appeals) also committed an illegality in dismissing the appeal merely because verification of appeal in the office of the appellant was not properly done. In all fairness, Commissioner (Appeals) should have given an opportunity to the appellant to remove the defect. Appeal allowed - demand not justified - matter remanded.
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2016 (11) TMI 110
Manpower Recruitment or Supply Agency services - it was contended that, SBL is a distributor of their goods and is employing these staff on behalf of the appellant to promote the sale of J&J range of products. - Held that: - the agreement with SBL is not an agreement of service provision but it is an agreement involving only reimbursement - The decision of Hon'ble High Court of Gujarat in Arvind Mills Ltd. 2014 [2014 (4) TMI 132 - GUJARAT HIGH COURT] applies - SBL is not engaged in the business of supplying manpower. Only actual cost incurred is recovered from the appellant and there is no element of profit to SBL - demand in respect of Manpower Recruitment or Supply Agency services is set aside Management, Maintenance or Repair services in respect of SAP software - Held that:- In the decision of the Tribunal in Persistent System Ltd. 2016 [2016 (3) TMI 402 - CESTAT MUMBAI] In the said decision, it has been held that while canned software can be treated as goods the customer specific software would be classified as Information Technology software - service tax can only be demanded on the service received w.e.f. 16.05.2008 - Decided partly in favor assessee.
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2016 (11) TMI 109
CENVAT credit - input services - domestic and international travel ticket - reliance placed upon the judgement in the case of M/s Semco Electrical Pvt Ltd Vs CCE Pune [2009 (12) TMI 143 - CESTAT, MUMBAI] - Held that: - there is nothing wrong in the impugned order allowing the CENVAT credit on domestic and international travel ticket as the Air travel services have been availed for the purpose of travel of software engineers outside India for on site services rendered at customers's place. This is a valid input service as it relates to business activity and also covered by the ratio of the judgment in the case of Semco Electrical Pvt Ltd Vs CCE - appeal dismissed - decided against Revenue.
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2016 (11) TMI 108
Levy of service tax under the sub-contract agreement - main contractor certified that they have discharged full amount of service tax on value of work awarded to the sub-contractor - Held that: - the issue stands covered in the decision of the case M/s. Visesh Engineering Co. Versus CCE & ST, Guntur [2016 (6) TMI 1103 - CESTAT HYDERABAD] where it was held that When main contractor has discharged the service tax liability, there can be no demand against the subcontractor for the same services for the same period - demand set aside - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 107
Classification of service - organic synthesis and related process research - classified under Scientific and Technical Consultancy (STC) service or Technical Testing and Analysis (TTA) service? - Section 65 (106) - Section 65 (105) (zzh) - Section 65 (105) (za) of the Finance Act, 1994 - Held that: - the assessee is required to synthesize chemical entities and submit monthly reports of the progress thereof. Merit is found in the departments' contention that these test reports are more about the produced compound in terms of its purity, constituents, the degree of deviation from expected etc. There can be no doubt that such activity will involve innumerable trials, testing of intermediate and final resultant chemical entities and scientific analysis at every stage. In fact the service performed by the assessee is closely monitored by GRUNENTHAL by telephone, fax and e-mail. It is not the case that the assessee is in the position of a scientific or technical consultant to GRUNENTHAL. On the other hand, from the facts on offer, the assessee is only carrying out predominantly testing and analysis work - outsourced by GRUNENTHAL to them. The testing and analysis are primary protocol for carrying out the process research. This conclusion is borne out by the fact that chemicals Euro 150 per item will be additionally reimbursed to the assessee - the services carried out by the assessee are nothing but " technical testing and Analysis" services as defined at the material time in Sec-65(105) of the Finance Act, 1994. Appeal allowed - decided in favor of Department.
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2016 (11) TMI 106
Rejection of refund claim - export of services - CENVAT credit denied - Chartered Accountant's Services - Courier Services - Commercial Training or Coaching Centre's Services - Cleaning Services - Telecommunication Services - Works Contract Services - whether the denial of CENVAT credit on these services justified on the ground that the services have no nexus with the output services exported - Held that: - works contract service - these input services are not hit by the exclusion clause of 2(l) of the CENVAT Credit Rules, which excludes service portion in the execution of a works contract and construction services in so far as they are used for (a) construction or execution of a works contract of a building or civil structure or a part thereof; or (b) laying of foundation or making of structures of capital goods: Hence I hold that the works contract services received by the appellant are eligible input services. Chartered Accountant's services - Held that: - these are akin to eligible input services like auditing, accounting listed in the inclusive definition of input service in Rule 2(I) of the Rules. They are also not barred by any of the exclusions to the said Rule 2(l). This being so, these services will also take on the colour of an eligible input service. Reference made to the decision of case CST Delhi vs Convergys India Pvt Ltd [2009 (5) TMI 50 - CESTAT, NEW DELHI] where it was held that there cannot be two different yardsticks, one for permitting credit and the other for eligibility for granting rebate. Whatever credit has been permitted to be taken, the same are permitted to be utilized and when the same is not possible there is provision for grant of refund or as rebate. Without questioning the credit taken, the eligibility to rebate cannot be questioned - In the common parlance, if the cost of such goods and services becomes part of the cost of the final product or the cost of the output services, as the case may be, then they are understood as input and input services in relation to said final products or the output services. The disputed input services are very much eligible input services and by implications, the appellant is eligible for refund of the credit - appeal allowed - decided in favor of appellant.
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Central Excise
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2016 (11) TMI 105
Period of limitation - delay in filing an appeal before the Commissioner (Appeals) - Held that: - the appellant has entered into correspondence with the Primary Authority as lately as on 15.03.2011 and 28.03.2011. But, never brought to the notice of the department that they are not operating from their Tuticorin Office premises and instead, shifted their operations to Cochin. The default in this regard lies with the appellant - Decided against the assessee.
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2016 (11) TMI 104
Demand - manufacture of pan masala containing tobacco, commonly known as gutkha - whether the respondent had actually paid excess duty for July, 2008 and whether the same can be adjusted against the duty for the month of August, 2008? - Held that: - Revenue in their Memorandum of Appeal have only contested that instead of making suo moto adjustments, the respondent should have applied for refund of duty paid by them in excess. Otherwise, there is no dispute about the assessee's duty liability paid collectively in the months of July and August, 2008. When the liability for the period July was also required to be discharged in the month of August, 2008 itself and the respondent done so, I find no merits in Revenue's appeal and no justifiable reasons to interfere in the impugned orders passed by the authorities below - appeal rejected - decided against Revenue.
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2016 (11) TMI 103
MODVAT/CENVAT credit - Rule 57Q of Central Excise Rules, 1944 - manufacturers of cement and clinker - use of subject items in the factory except in case of hydraulic excavator, which was used by the appellant in their mines - Held that: - the matter is squarely covered by the Hon’ble Supreme Court s decision in case of Madras Cement Ltd. vs. CCE, Chennai [2010 (7) TMI 179 - SUPREME COURT] where it was held that As regards the Modvat/Cenvat credit on capital, goods, if the mines are captive mines so that they constitute one integrated unit together with the concerned cement factory, Modvat/Cenvat credit on capital goods will be available to the assessee - credit availabe - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 102
Demand of differential duty - SSI exemption - opting out of SSI scheme subsequently - Held that: - the show cause notice itself indicates that for the period from 1.9.2003 to 31.3.2004, the total clearance value of the appellant still is less than ₹ 30 lakhs which is the threshold limit. Same is the case in respect of the period 1.4.2004 to 8.7.2004. If the entire clearance during the period in question is less than the threshold limit, there cannot be any duty liability on the appellant as has been held by the Tribunal in the case of CCE, Kanpur vs. A.K. Chemicals (P) Ltd.[2010 (8) TMI 343 - CESTAT, NEW DELHI], wherein it was held that if intermittently central excise duty is paid, it would not amount to the fact that the appellant has opted out of the small scale exemption; same is the view expressed by the Tribunal in the case of CCE, Kanpur vs. Jaina Detergent Pvt. Ltd.[2014 (3) TMI 162 - CESTAT NEW DELHI] - demand not sustainable - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 101
Entitlement of interest - delayed refund - whether appellant entitled to interest from three months of the filing of their refund application till the sanction of the refund? - adjudicating authority with the claim that there is no delay in sanctioning of refund - Held that: - the refund claim was filed by the appellant on 3.9.2001. It is because of the rejection of the refund claim, the matter had travelled upto the Tribunal and as per the Tribunal s order dated 27.9.2003, the department had sanctioned the refund on 19.1.2004. Though the refund was sanctioned as per the order of the Tribunal, but it is the same refund claim which was filed on 3.9.2001. This issue is no longer res integra as the Hon’ble Supreme Court in the case of Ranbaxy Laboratories Ltd.[2011 (10) TMI 16 - Supreme Court of India] held that the interest on the refund under Section 11BB shall be given from three months of the date of filing the refund application - the appellant is legally entitled for interest from three months of the date of filing the application till the sanction of refund claim - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 100
CENVAT credit - input services - Rule 2(l) of the CENVAT Credit Rules 2004 - legal services - repair and maintenance services of elevator - recovery u/r 14 of the CENVAT Credit Rules 2004 read with Section 11A of the Central Excise Act - Held that: - the disputed services namely legal services and erection and commissioning of elevator fall in the definition of input services as they are integrally connected with the business activities of the appellant. Reliance placed on the decision of CCE Nagpur Vs Ultratech Cement Ltd [2010 (10) TMI 13 - BOMBAY HIGH COURT] where Hon’ble High Court of Bombay has given a very vide definition of input services which expression includes activities relating to business - credit allowed - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 99
Denial of CENVAT credit - input services - office on rent - car parking services - Rule 2(l) of CCR, 2004 - Held that: - reliance placed on the decision of KPMG vs. CCE, New Delhi [2013 (4) TMI 493 - CESTAT NEW DELHI] where it was held that car parking facilities is held to constitute input service and eligible to claim CENVAT credit. Reliance also placed on the decision of Carrier Airconditioning & Refrigeration Ltd. vs. CCE [2016 (4) TMI 103 - CESTAT CHANDIGARH] where it was held that the renting of immovable property for setting marketing office fall in the definition of input service and the assessee is entitled to take CENVAT credit on these services. CENVAT credit on both services allowed - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 98
Clandestine removal of goods - shortages in the physical stock of yarn - ex-parte order - non receipt of SCN - principle of natural justice - Held that:- appellants had not participated in the adjudication proceedings, claiming that the show cause notice was not received by them hence they cannot file reply to the show cause notice - Adjudicating Authority direectd to supply a copy of the show cause notice and all relied upon documents - matter remanded back.
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2016 (11) TMI 97
Availing credit on returned goods - Rule 16(1) of Cenvat Credit Rules, 2002 - buy-back of non-usable batteries - reliance placed in the decision of Maruti Udyog Ltd. v. C.C.E., Delhi III [2015 (12) TMI 1493 - CESTAT NEW DELHI] - The appellant emphasizes that after bringing the unusable batteries back to the factory they retrieved the lead for which is used for manufacturing new batteries; and the remaining material of unusable batteries is sold as waste and scrap on payment of duty of central excise. The appellant claims that new products are made out of unusable batteries. - Held that: - subject transaction of the appellant is covered under Rule 16(1) of Central Excise Rules, 2002 and the said transaction is not covered within the mischief of Rule 16(2) of Central Excise Rules, 2002. It is a fact that retrieved material of old batteries underwent certain processes and was cleared as new battery and as waste/scrap on payment of duty of Central Excise. Therefore, following the CESTAT Delhi’s decision in the case of Maruti Udyog Ltd. v. C.C.E., Delhi III, the appellant is entitled to Cenvat Credit under Rule 16(1) of Central Excise Rules, 2002 - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 96
Excisability of goods manufactured by the respondent - goods declared as non-excisable category - manufactured goods of iron and steel falling under Tariff Entry No. 7308.90 attracting duty of 15% - manufacturing activity - marketability of goods - the decision in the case of Electrical Hardware Industries [1997 (3) TMI 111 - HIGH COURT OF KERALA] referred - Held that: - The Tribunal in various decisions has held that activities like drilling, cutting, punching, bending, welding do not lead to the emergence of a new article and therefore would not constitute manufacture for the purpose of Central Excise Act, 1944, for eg; in CCE, Madras V Tamil Nadu electricity Board workshop [1998 (1) TMI 330 - CEGAT, NEW DELHI], Karnataka electricity Board V CCE [1999 (7) TMI 421 - CEGAT, CHENNAI]. However, the Hon ble Apex court has set aside the decision of Tribunal in Karnataka Electricity Board case and remanded the matter in view of the judgement of Constitution Bench in the case of CCE, Aurangabad V M/s Benzo Chem Inds. P. Ltd.[2001 (4) TMI 927 - SUPREME COURT]. The case laws relied upon by the Ld.AR, in particular the Kerala High Court judgement in electrical Hardware Industries case are squarely applicable to the issue in hand. Respectfully following the law laid down by apex court and other appellate forums, we hold that the demand is sustainable - appeal allowed - decided in favor of Revenue.
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2016 (11) TMI 95
Remission of duty - Rule 21 of the Central Excise Rules 2002 - Held that: - the issue is no more res integra being settled by Larger Bench decision of this Tribunal in the case of M/s Honest Bio-vet Pvt. Ltd [2014 (11) TMI 579 - CESTAT AHMEDABAD]. This Tribunal, in the said judgment, after considering the definition of ‘place of removal’ prescribed under Section 4(3)(c)(iii) of Central Excise Act, 1944, observed that the goods cleared for export under bond, if destroyed before being exported, could be considered as destruction before removal only - Appeal allowed.
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2016 (11) TMI 94
CENVAT credit - Input services in relation to construction and laying of water supply pipeline from Narmada Canal to the Appellant’s factory - manufacture of Sodium Salt of Trichloro Pyridinol and Trichloro Acetyle Chloride falling under Chapter 29 of Central Excise Tariff Act, 1985 - Held that: - the eligibility of CENVAT Credit of input service viz. construction and laying of pipeline for bringing water from Narmada river to the Appellant’s factory used in the manufacture of Sodium Salt of Trichloro Pyridinol and Trichloro Acetyle Chloride - Appeal allowed.
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2016 (11) TMI 93
Denial of concessional rate of duty - ordinary Portland cement and clinker - violation of conditions of N/N. 06/2002-CE dated 01.03.2002 - enhancement of installed capacity to 950 T PD - use of brand name of others - Held that: - the Commissioner has correctly interpreted the relevant provisions of the notification alleged to be contravened - as per the various notifications issued by Government of India both in Industry Department as well as Revenue Department and also as per the opinion given by Cement Research Institute, New Delhi, the capacity of the grinding mill has to be taken as the capacity of the mini cement plant, since the capacities in all other sections of the plant i.e. raw mill, coal mill and packing machine etc., will have no bearing on the output of the cement. In view of the above while assessing the installed capacity of the cement pl. it is essential to assess the installed capacity of the Grinding Mill Further, the Honourable Board, in their clarification No. 131/3/20-CA dated 08.07.1980, held that "the installed capacity should not exceed the limit fixed in the notification and the actual production of cement can be to an extent of 25% more than the installed capacity. Use of brand name of others - Held that: - I find that Shree Chakra Gold is used by the assessee and by M/s. Modern Plastic Corporation From the records, I find that M/s. Modern Plastic Corporation is of a recent origin and before the inception of M/s. Modern Plastic Corporation itself, the assessee were using the brand name Shree Chakra Gold, which is also the name of the Company The part brand name being used by the other units can not be equated with the brand name of SCCL, as the same is different. Therefore I hold that no violation of Trade Name clause of the exemption notification is established. Appeal dismissed - decided against Revenue.
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2016 (11) TMI 92
Cenvat credit - GTA - Notification No. 10/2008-CE (NT) dated 01/3/2008 - Held that: - Since these are in the nature of input services for which the service tax also has been paid by the appellant, they will be entitled to the Cenvat credit. However, for purposes of verification of these bills it would be necessary to remand the matter to the original Adjudicating Authority for verification before allowing Cenvat credit for inward transportation. In the sample purchase order perused, I find that the terms and conditions of the contract state that the price agreed is for delivery at the premises of the customer and that the price is CIF - the various purchase orders need be verified to confirm the terms whether they are similar to the purchase order produce before me - Appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2016 (11) TMI 84
Validity of order of assessment - TNVAT Act - Section 19(20) of the TNVAT Act - opportunity of being heard - Held that: - reliance placed on the decision of Jayam & Co. Versus Assistant Commissioner & Anr. [2016 (9) TMI 408 - SUPREME COURT] where it was upholding the vires of Section 19(20) of the Tamil Nadu Value Added Tax Act, 2006, has held that it can be given only prospective effect and not retrospective effect from January 2007 - the only issue involved in the impugned assessment orders is on account of the applicability of Section 19(20) of the TNVAT Act, this Court is of the view that the assessments can be re-done by the assessing officer, after taking note of the decision of the Hon'ble Supreme Court - petitions allowed - assessment orders set aside - matter remanded to the respondent for fresh consideration - opportunity of personal hearing to be provided to the petitioner.
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2016 (11) TMI 83
Vires of Rule 3 (2) (b) (ii) of the Delhi Tax on Luxury Rules, 1996 - bifurcation of consolidated bill amount - principle contained in Section (3) (5) of the Act - luxury tax “in respect of turnover of receipts for supply of food, drinks and goods such as cosmetics, medicines, nutritional supplements etc. on the sale of which the proprietor is liable to pay tax under the Delhi Value Added Tax Act, 2004” - Held that: - the revenue had suggested that there is a radical difference between the threshold required for luxury tax levy on the one hand and the DVAT levy on the other. This argument too has to fail. There is no doubt that in the present case, the thresholds are fulfilled. Furthermore, what is important is not the collection but the subjecting of the incidents of taxation. As long as the activity answers description provided by the legislature – in the present instance of luxury, it would be subjected to tax. Equally, as long as there is a sale or transfer of goods or right to use the goods or other services which are purportedly a subject of VAT, that the dealer is subjected to actual levy and collection at a higher threshold is a matter of detail. The levy exists per se by legal definition. It is this aspect which is crucial rather than the existence of higher or lower threshold as is urged by the revenue - Rule 3 (2) (b) (ii) is ultra vires - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 82
Rejection of books of accounts - best judgment assessment - non-production of books on inspection - suppression of facts - escaped and undisclosed turnover - whether a failure on the part of the assessee to produce the books of accounts during the course of survey as well as whether the same can form a valid ground for rejection of books? - Held that: - a failure on the part of the assessee to produce the relevant books of accounts can validly form one of the circumstances which may weigh with the assessing authority to reject the books of accounts. Non-production of the books of accounts at the time of survey is a factor which can be taken into consideration by the Assessing officer while examining the return to find out whether the same is incorrect or incomplete. Revision dismissed - decided against revisionist.
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Indian Laws
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2016 (11) TMI 81
Determination of the “Market Value” of an immovable property based on “Proposed Land Use” - whether information obtained by the Registering Officer on the basis of the details provided by the applicant in the appropriate form mentioned in Appendix V of the West Bengal Registration Rules, can mandatorily include such information required to be provided under the column specifically relating to “Proposed Land Use”? - Held that:- The rate per square feet of market value of any flat or structure for residential use shall be determined on the basis of the highest rate on which such flat or structure of similar nature in the same locality or a comparable locality has been transacted during the five consecutive years immediately preceding the year of preparation of annual statement of rate of such flat or structure. While determining the rate per square feet of market value of any flat or structure for commercial use or semi-commercial use, the rate per square feet of market value of flat or structure for residential use in the same locality shall be appreciated following the same methodology as elucidated in clause (13) under Rule 3B. Thus, following the scheme of the Rules as introduced by the 2010 amendment of the West Bengal Stamp (Prevention of Undervaluation of Instruments) Rules, 2001, this Court is of the view that there cannot be an indefinite period of time attached to the details as required to be filled-up under the column “Proposed Land Use” and it is imperative to attach a time frame to the details to be filled-up under the said column. Such time frame should be in sync with the scheme of Rules 3A, 3B, 3C, 3D and 3E and ideally, five years. The concerned authority of the State of West Bengal is directed to incorporate such time frame in the column, “Proposed Land Use”, accordingly. Such incorporation shall be carried out as expeditiously as possible, preferably within a period of eight weeks, but not later than twelve weeks from date of communication of a photostat certified copy of the order.
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2016 (11) TMI 78
Cheques in question issued by the deceased Managing Director - Negotiable instruments act - summons issues - Held that:- Instant is a case where the learned Magistrate has not gone into the depth of From-32, where the petitioner i.e., Ms. Richa Aggarwal, was not even an existing Director of the Company at the time of issuance of the said cheques in question. The learned Magistrate has not gone into the depth of the cause of action arisen qua against the petitioner, i.e., Ms. Mohini Aggarwal, as the cheques in question were issued by the deceased Managing Director, i.e., Mr. Vineet Aggarwal, of the Company on 20.09.2014 and subsequently, there was no occasion of actus reus on the part of Ms. Mohini Aggarwal. It is because of this reason she had replied to the notice dated 12.11.2014 that she does not owe any liability as alleged in the said notice. There is no other factor or circumstance which could show any change of state of mind of Ms. Mohini Aggarwal after issuance of the cheques in question by the deceased, i.e., Mr. Vineet Aggarwal, till the filing of the complaint petition CC. No. 2011/1/14 by the respondent to attract the provisions of Section 138 read with Section 141 of the Negotiable Instruments Act. The aforesaid facts on record only indicates liability if so there is, it could be of civil liability and not criminal liability, which could be put into motion under Section 138 read with Section 141 of the Negotiable Instruments Act
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