TMI Tax Updates - e-Newsletter
November 7, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Highlights / Catch Notes
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Income Tax:
TDS credit - vendor deposited the TDS with the PAN of the assessee wrongly instead of its sister concern - Assessee did not offer any income corresponding to TDS - credit allowed - HC
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Income Tax:
Commission for issuing the DDs and POs - CIT deleted the additions made in the hands of the Assessee only on the ground that in Ravinder Yadav's hand they have already been taxed - Revenue has not merit in the case, appeal dismissed - HC
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Income Tax:
Addition u/s 68 - no addition can be made in the hands of the Assessee under Section 68 of the Act and it will be open to the Revenue to move against the share applicants in accordance with law. - HC
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Income Tax:
Addition made u/s 14A r.w. 115JB - MAT computation - AO has rightly disallowed the expenditure of ₹ 73,07,018/- by invoking the provisions of Section 14A read with Rule 8D of Income Tax Rules, 1962 for computing book profit u/s 115JB(2) read with clause (f) to explanation 1 to clause 115JB(2) - AT
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Income Tax:
Reimbursement of salary costs of seconded personnel - whether is in the nature of ‘fees for technical services’ u/s 9(1)(vii) - TDS u/s 195 - all the payment made by the assessee to non-resident on account of FTS or royalty an chargeable to tax irrespective of any profit element in the said payment or not - AT
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Income Tax:
Addition on account of alleged difference between the interest income declared by the appellant and the Form No. 26AS of the Department - The information contained in Form No. 26AS cannot be itself the basis for making addition to the income returned. - AT
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Income Tax:
Transfer pricing adjustment - Disallowance of interest - due weightage is to be given towards interest benefit enjoyed by the assessee by availing credit for 150 days for payment and Rule 10B(1)(a)(ii) of the Income Tax Rules, 1962 also permits such benefit to the assesseeh - AT
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Income Tax:
TDS u/s 194C or u/s 192 - payment to Self Help Groups (SHG) - there is no contractor-contractee relationship but is more in the nature of employee-employer relationship as the assessee is also making contributions to the EPF and ESI - the payments made to an individual is not exceeding the prescribed limit u/s 192 - No TDS - AT
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Customs:
Imposition of penalty under Section 112(b) of Customs Act - Import of old and second hand textile machineries more than 10 years old - Restriction of 10 years old was removed later, same is of no consequence as appellant has intentionally manipulated the documents - Penalty imposed not on higher side - AT
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Customs:
Mis-declaration under Transfer of Residence Scheme – abetment by car dealer - appellant have venially violated the provisions hence, penalty imposed on him under provision of Section 112(a) & (b) of Customs Act, is excessive - AT
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Corporate Law:
Maintainability of petition under sections 397 & 398 of the Companies Act 1956 - oppression and mismanagement - withdrawal of suit without liberty will not make this CP non-maintainable. For having the respondents failed to establish that this petition is not maintainable, on the allegations referred above, hereby decide this issue against the respondents. - CLB
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Service Tax:
Effective Rate of Swachh Bharat Cess is 0.5% of the value of taxable services w.e.f. 15-11-2015 - Now the effective rate of service tax will be 14.5% w.e.f. 15-11-2015 - Notification
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Service Tax:
The main activity is not Site Formation since the drilling site is already existing and what the appellant to undertake is to remove the waste from the existing drilling site and clean up all the wastage and bring it back to the original condition. The Cleaning Service definitely covers the activity. - AT
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Service Tax:
Refund - Cenvat credit - Export of services before seeking service tax registration - Once the credit was taken if it is admissible and when it accumulates and cannot be utilised, when the Rule provided for refund, such refund cannot be rejected - AT
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Service Tax:
Intellectual Property Right not covered by the Indian laws would not be covered under taxable service in the category of Intellectual Property Right Services - The definition of taxable service includes only such IPRs (except copyright) that are prescribed under law for the time being in force - AT
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Service Tax:
Intellectual property rights - the allegation in the show cause notice that the service was provided on continuous basis is incorrect. Only payment of service was spread over a period of time. The service was performed as soon as the technology was transferred - AT
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Service Tax:
Denial of refund on the ground that authorization letter does not contain the signature of authorized signatory, although it bears the signature of the Director - Rejection of refund claim on such a ground is totally unjustified - AT
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Service Tax:
Even if there is an omission in the authorization letter as long as the assessee company does not dispute the signatures in the refund claim and documents, the omission is only a technical defect which can be condoned or cured. Rejection of refund claim on such a ground is totally unjustified - AT
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Service Tax:
Input service distribution - denial of the distribution of CENVAT credit during unregistered period shall be anomaly to law when tax liability incurred is ordered to be paid - so far as distribution of service tax credit prior to 1.4.2008 is concerned, the appellant is entitled to the CENVAT credit thereof. - AT
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Service Tax:
Appellant is undertaking the processing of vegetables on behalf of their client. It is settled law that revenue officers cannot argue against the board's circular - AT
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Service Tax:
Demand of service tax - activity of preparation of vegetables, fruits by processing the same & packing in consumer packs for their clients is in relation to agriculture - Not liable to service tax - AT
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Service Tax:
Taxability of amount received and for achieving the target under Target Incentive Scheme in the hands of car dealers - demand of service tax under Business Auxiliary Services is unsustainable and liable to be set aside - AT
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Service Tax:
Leviability of service tax - franchise service - franchisee was obliged not to open any school with any name in the existing premises/building operational area of the school. In other words, the franchisee was free to open any school with any name in a "different premises/building operational area of the school" - no service tax is leviable under franchise service prior to 16.6.2005 - AT
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Central Excise:
Denial of a refund of the interest recovered by the revenue - demand of interest is not sustainable. Consequently, the interest recovered from the appellant is to be refunded. - no show cause notice has been issued to the appellant. Therefore, adjustment of demand of interest is not permissible - AT
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Central Excise:
Denial of CENVAT Credit - invalid documents - covering letter vide which monthly returns were filed with the authorities indicated copies of RG23A part I and II as enclosures - the invocation of the extended period for demanding the Cenvat credit as being suppressed is incorrect - AT
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Central Excise:
Refund due of revision in price escalation clause - refund claim was filed withing one year from the issuance of credit notes - refund allowed - AT
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Central Excise:
CENVAT Credit - Credit in respect of imported fitment which has been cleared under Rule 4(5)(a) on job work challan - final products have been exported directly from the premises of Job worker - credit allowed - AT
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Central Excise:
SSI Exemption - Clubbing of turnover of exempted units situated in Baddi, Himachal Pradesh - we cannot go into the intentions of the legislature, unless there is ambiguity or lack of clarity in the notification. - Notification No.49/2003 and No.50/2003 have not been mentioned in paragraph 4 of the notification. 8/2003 - Benefit of exemption cannot be denied - AT
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Central Excise:
Duty demand - discrepancy in relation to recording of e-Challans in the ER-1 return - Considering the proof of payment of e-receipts, which is on record and the same can be verified from the system ACES data base by the adjudicating authority, confirming the demand only on the basis of ER-1 entry is not justified - AT
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VAT:
Challenge to rule 57A of Assam VAT - Specific activities which are not to be treated as manufacture - Delegated legislation cannot take away the right that is vested or accrued by way of retrospective amendment - amended rule 57A(1) ultra vires the provisions of the definition of "manufacture" under the Act and beyond the competence of rule-making power to alter the definition of "manufacture" - HC
Articles
Notifications
News
Case Laws:
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Income Tax
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2015 (11) TMI 287
Addition 'on money' receipt - Held that:- The finding reached by officers of the Tribunal is essentially a finding of fact. There was evidence available on record indicating receipt of 'on money' particularly for the period 1989 to 1996. This evidence of receipt of 'on money' with regard to the sale of Stenter machines is found in the appellant's letter dated 25 July 1998 is an admission of receipt 'on money' for sale for Stenter Machine in Surat Market during the period 1986-1989. Therefore, it could not be said that there was no evidence on record for the authorities to come to a conclusion that 'on money' was received by the appellant so as to hold that the finding is perverse.On the aforesaid factual scenario, the majority view taken by the Tribunal, that the addition of ₹ 10 lakhs as receipt of 'on money' for the period 1986 to 1989 in the circumstances of the case on appraisal of the facts before them is a plausible view. This view has not been shown to be arbitrary or perverse. - Decided against assessee. Claim of the expenses made in cash disallowed - Held that:- In the present facts, we find that the documents found during the course of the search are inchoate. It does not indicate the person to whom the payment has been made, the address of the recipient, the person by whom the payment is made and the documents itself indicates that it is prepared for either seeking of funds or reimbursement of funds. Therefore even if the presumption is to be applied and the documents are accepted as true, it would not lead to the conclusion that payments have been made in cash so as to claim the expenditure. Thus no purpose would be served in remanding the issue to the Tribunal. Further Section 292 of the Act provides that where any documents are found in possession or control of any person in the course of search under Section 132 of the Act, then it may be presumed in any proceedings under this Act that the contents of such documents are true and correct. It will be noted that the section uses the word 'may presume' and not 'shall presume' or 'conclusively presume'. The words 'may presume' are in the nature of discretionary presumption different from a compulsory presumption. Therefore this presumption has to be invoked by the authorities passing an order under the Act particularly when the invocation of such presumption is discretionary on the authorities. During the course of the assessment proceedings, the appellant-assessee sought to explain the fact that these expenses on which the deduction is claimed had in fact been incurred. This was in response to the show cause notice issued to the appellant. Thereafter Explanation offered by the appellant was not found satisfactory on the basis of the evidence available before the authorities and the Tribunal. In this view of the matter, the amendment to Section 292C of the Act even though with retrospective effect would not bring about any material change in the conclusion arrived at upon the existing facts.The finding of facts recorded by the authorities under the Act on the issue of payment not being made is a possible view. The same is not shown to be perverse on arbitrary. - Decided against assessee. Consideration received on sale of scrap - Held that:- the conclusion reached by the majority members of the Tribunal that there was in fact sale of scrap is a possible view. This is particularly so as in normal course of human conduct any purchase of raw material even scrap would be shown in regular books of accounts as the same would be entitled to deduction so as to reduce the taxable profit. No person carrying on business would in the usual course of its activity, deny itself the benefit of any deduction available to it in determining the taxable profit. Further the reasoning of the authorities that there is a sale of scrap viz. that one normally does not manufacture final products out of scrap, but scrap is certainly generated during the course of manufacturing final products, cannot be faulted. The appellant-assessee was manufacturing Stenter machines and in the normal course there would have been scrap generated in the manufacturing Stenter machines. It is the scrap which is likely to be sold in the open market for the consideration received by the appellant. Moreover, the appellant has not produced any evidence before the authorities to indicate who the suppliers of the scrap was or filed their evidence to indicate that they had sold scrap to the appellant. In these circumstances, the finding of facts arrived at by the majority members of the Tribunal upholding the order of the Assessing Officer is a plausible view. The same cannot be said to be perverse and/or arbitrary - Decided against assessee.
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2015 (11) TMI 286
Addition on account of cash seized from one of the employees of the assessee - assessment completed under Section 158 BC (1) - Held that:- In the present case, the Assessee had an explanation for not retracting the statement earlier. He also furnished an explanation for the cash that was found in the hands of his employee and this was verifiable from the books of accounts. In the circumstances, it was unsafe for the AO to proceed to make additions solely on the basis of the statement made under Section 132(4) of the Act, which was subsequently retracted. Consequently, the Court is unable to find any legal infirmity in the conclusion reached by the ITAT that the addition of ₹ 86 lakhs to the income of the Assessee was not justified. Question (B) is answered in the affirmative, i.e., in favour of the Assessee and against the Revenue. Addition on total export realisation - Held that:- Court finds that indeed no opportunity was given to the Assessee to cross-examine Mr. Sant Kumar Sharma, whose statement was the principal basis for making the addition of ₹ 1,38,41,971. The Court finds that in the present case the basis for making the addition of ₹ 1,38,41,971 was the statement of Mr. Sant Kumar Sharma. He had furnished various details which were incriminating as far as the Assessee was concerned. It was incumbent on the AO, in those circumstances, to afford the Assessee an opportunity of cross-examination of Mr. Sant Kumar Sharma. The ITAT also noted that the Assessee could not be said to have not cooperated at all in the assessment proceedings. The Court further notes that in M. Pirai Choodi’s case (2010 (11) TMI 26 - Supreme Court of India) the Assessee had not availed the statutory remedy of filing an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] against the order of the AO but had approached the High Court directly by way of a writ petition. In those circumstances, the Supreme Court held that the High Court ought to have required the Assessee to avail the remedy of a statutory appeal instead of quashing the assessment proceedings on the ground of violation of natural justice. The Supreme Court, in fact, permitted the Assessee to approach the CIT (A). As almost two decades have elapsed since the date of the search. There must be some finality to proceedings that seek to cover a block period beginning 1st April 1986. Consequently, Question (A) is also answered in the affirmative, i.e., in favour of the Assessee and against the Revenue.
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2015 (11) TMI 285
Addition made on the statements recorded during search proceedings - ITAT deleted the addition - Appellate Tribunal's finding to the effect that the other concerns were not benami of the assessee is borne out from the record - Held that:- Considering the principal laid down in the case of Kailashben Manharlal Chokshi (2008 (9) TMI 525 - GUJARAT HIGH COURT),we are of the considered opinion that the view taken by the Tribunal is just and proper. We are not convinced with the submissions made by Mr. Mehta, learned advocate for the appellant that the Tribunal has not given cogent reasons. Therefore, the answer to the first question would be against the Revenue and in favour of the assessee. The second question will also enure for the benefit of the assessee as from the record it is clear that other concerns were not Benami concerns of the assessee. For the forging reasons, the present appeal is dismissed. - Decided in favour of assessee.
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2015 (11) TMI 284
Entitlement to the TDS without offering the corresponding income to taxation by declaring it as total income - vendor had billed M/s Relcom Engineering Pvt. Ltd. ("REPL"), its sister company, for the work but had mistakenly mentioned its (assessee’s) PAN in the TDS certificate, thus inadvertently crediting its TDS account in the 26AS statement, which is PAN based. Held that:- The assessee fairly admitted throughout the proceedings for its TDS claim of ₹ 1,20,73,097/- that the benefit of such claim has not been availed by M/s. REPL. Therefore, the revenue, having assessed M/s REPL’s income in respect to such TDS claim cannot now deny the assessee’s claim on the mere technical ground that the income in respect of the said TDS claim was not that of the assessee, given that M/s Relcom (the assessee) and M/s REPL are sister concerns and M/s REPL has not raised any objection with regard to the assessee’s TDS claim of ₹ 1,20,73,097/-. The provisions of Rule 37BA of the Income Tax Rules, 1962, which envisions grant of TDS credit to entities other than the deductee (herein, M/s REPL). We must clarify that we are not oblivious of the fact that Rule 37BA is not directly applicable in the facts of this case. The reliance placed on Rule 37BA is merely to demonstrate that in not all circumstances is TDS credit given to the deductee. This Court relies upon the well-settled dictum in [Sardar Amarjit Singh Kalra v. Pramod Gupta, (2002 (12) TMI 607 - SUPREME COURT)]. Therefore, the revenue’s contention that the assessee, instead of claiming the entire TDS amount, ought to have sought a correction of the vendor’s mistake, would unnecessarily prolong the entire process of seeking refund based on TDS credit. - Decided against the revenue
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2015 (11) TMI 283
Authorization issued u/s 132A - silver ornaments weighing 228.140 KG came to be seized - Held that:- It is apparent that the silver ornaments weighing 228.140 KG came to be seized by the respondent authorities in exercise of powers under section 132A of the Income Tax Act, 1961 in the financial year 2011- 2012. Thereafter, the assessment came to be framed by the Assessing Officer of the petitioner at Varanasi for assessment year 2012-13, whereby after taking note of such seizure made by the authorities at Surat, the return as filed by the petitioner came to be accepted without making any addition on account of such seizure. In the aforesaid premises, the respondent authorities are no longer authorized to continue with such seizure made by them under section 132A of the Act. Under the circumstances, without entering into the merits of the validity of the authorization issued under section 132A of the Act, this court is of the opinion that in view of the assessment orders made in the case of the petitioner, the respondent authorities can no longer continue with the seizure of the ornaments in question and the same are required to forthwith be returned to the petitioner. For the foregoing reasons, the petition partly succeeds and is, accordingly, allowed to the following extent : The respondent authorities are directed to forthwith hand over the seized silver ornaments to the petitioner within a period of four weeks from today, in accordance with the provisions of section 132A of the Income Tax Act, 1961.
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2015 (11) TMI 282
Unexplained increase in shares capital - CIT(A) deleted the addition confirmed by ITAT - Held that:- Assessee has furnished details of all the 14 subscribers from whom funds had been received by way of share application money. The money was also shown to have been received through banking channels. After obtaining a remand report from the AO, the CIT (A) concluded that "the AO has not commented anything adverse" on the additional evidences, copies of accounts and bank statements furnished by the Assessee to the AO. The AO has not disapproved/doubted "the identity and the genuinely of the subscribers." The CIT(A) accordingly concluded that "all ingredients of Section 68 stands satisfied as far as the receipt of share application money by the Assessee company is concerned." Accordingly, the CIT(A) deleted the additions on this account. ITAT relied on CIT v. Lovely Exports (P) Limited [2008 (1) TMI 575 - SUPREME COURT OF INDIA] - Decided against revenue. Unexplained increase in sundry creditors - CIT(A) deleted the addition confirmed by ITAT - Held that:- The increase in sundry debtors was interlinked with the increase in the sundry creditors and both were on account of the "pure business transaction of purchases and sale of share." The CIT(A) was satisfied that the increase in sundry creditors stands fully explained and established by the Assessee. The ITAT, while observing that "there is no presumption that if increase in sundry creditors is proved, the increase in sundry debtors should also be taken as proved", found that the AO did not examine the details of each credit entry as was required by Section 68 and affirmed the decision of the CIT (A). On this issue this Court finds that the Revenue is not able to controvert the factual finding - Decided against revenue. Disallowance of 50% expenditure claimed under the head of the profit and loss account - CIT(A) deleted the addition confirmed by ITAT - Held that:- CIT (A) deleted the disallowance on the ground that the AO had not spelt out any basis for making the 50% disallowance and that there was no justification for such a huge addition. The ITAT agreed with the CIT (A) that no case for making ad hoc disallowance was made by the AO. The Revenue is not able to persuade this Court to interfere with the impugned order of the ITAT which appears to be on a sound legal basis. - Decided against revenue. Addition on account of stock in trading being shown in the balance sheet and not in the trading account - CIT(A) deleted the addition confirmed by ITAT - Held that:- The effect of the closing stock stands automatically considered and reflected in the accounts. The Assessee had declared a loss on trading in shares. With the Assessee having followed the mercantile system of accounting, it is not possible for it to show the closing stock in trade in the balance sheet without taking into account the effect of the credit entry passed for the closing stock which necessarily had to be routed through the profit and loss account. Since no adverse comment has been made by the auditor and since the same method of accounting had been followed by the Assessee in the earlier as well as the subsequent year, the CIT (A) concluded that there was no justification for the addition. - Decided against revenue.
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2015 (11) TMI 281
Commission for issuing the DDs and POs - CIT deleted the additions made in the hands of the Assessee only on the ground that in Ravinder Yadav's hand they have already been taxed - revenue contented that all the sales shown in the books were in fact bogus sales - Held that:- The CIT (A) in its order pointed out that as far as the Assessee is concerned it has in fact accounted all the receipts from the sales made to the different parties by producing all the relevant records. In fact the Revenue was unable to produce any material to counter the above facts and it was in those circumstances, the CIT (A) was persuaded to delete the addition. If in fact the genuineness of the sales have been proved by the Assessee and the amount received from such sales offered to tax then the addition made by the AO was in the facts and circumstances of the case not justified. The Court is not persuaded to hold that there is any perversity in the above factual findings of the CIT (A) and the ITAT warranting interference. - Decided against revenue.
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2015 (11) TMI 280
TDS credit - whether the receipts of amounts by the assessee from National Highways Authority of India (NHAI) could be treated as part of release of bank guarantee and the amount so received by the assessee should be treated as an advance and can it be an exception to the provisions of Section 199 of the Income Tax Act by availing all the benefits under Section 237 of the Act? - Held that:- If the amount is a mobilisation advance and not an income at all, the question of paying income tax would net arise. When the gross receipts is offered and in that assessment year he has suffered loss, the question of paying any tax on the said amount also does not arise. A conjoint reading of Sections 194C, 199 & 237 of the Act makes it clear that if there was no liability to pay tax, the TDS paid is liable to be refunded and that is absolutely what the Tribunal has stared. - Decided in favour of assessee.
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2015 (11) TMI 279
Addition u/s 68 - ITAT deleted the addition - Held that:- Assessee by produced sufficient documentation discharged its initial onus of showing the genuineness and creditworthiness of the share applicants. It was incumbent to the AO to have undertaken some inquiry and investigation before coming to a conclusion on the issue of creditworthiness. In Nova Promoters (2012 (2) TMI 194 - DELHI HIGH COURT), the Court has taken note of a situation where the complete particulars of the share applicants are furnished to the AO and the AO fails to conduct an inquiry. The Court has observed that in that event no addition can be made in the hands of the Assessee under Section 68 of the Act and it will be open to the Revenue to move against the share applicants in accordance with law. - Decided in favour of assessee.
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2015 (11) TMI 278
Transfer pricing adjustment - Whether selling expenses such as discounts and incentives/pricing adjustments should not be considered as part of AMP expenses? - Held that:- It is not in dispute that paras 175 and 176 of the decision of this Court in Sony Ericsson Mobile Communications Pvt.Ltd. v. CIT-III [2015 (3) TMI 580 - DELHI HIGH COURT] covers the issues raised in this appeal against the Revenue and in favour of the Assessee. It is further seen that this issue again stands answered in favour of the Assessee by the order dated 15th April 2015 passed by this Court in CIT v. MIS Amadeus India Pvt.Ltd. (2015 (6) TMI 590 - DELHI HIGH COURT).
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2015 (11) TMI 277
Addition made under section 14A r.w. 115JB - MAT computation - CIT(A) deleted the addition - whether the provisions of section 115JB(2) r.w. Explanation-1 r.w. clause of which requires any expenditure in relation to the exempt income also to be taken into consideration while computing the book profit under section 115JB? - Held that:- No infirmity with the orders of the AO and we hold that the AO has rightly disallowed the expenditure of ₹ 73,07,018/- by invoking the provisions of Section 14A of the Act read with Rule 8D of Income Tax Rules, 1962 for computing book profit u/s 115JB(2) of the Act read with clause (f) to explanation 1 to clause 115JB(2) of the Act. - Decided in favour of revenue.
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2015 (11) TMI 276
Undisputed forfeiture of the payment by a party related to the assessee - CIT(A) deleted the addition - Held that:- We are of the considered view that the learned First Appellate Authority has rightly deleted the addition of ₹ 5.85 croes made by the Assessing Officer because these expenses were incurred for the purpose of manufacturing of sugar in respective factories with a view to earn profit and, therefore, the assessee was entitled to deduction of the said expenses as Revenue Expenditure. After going through the impugned order, we find that the learned First Appellate Authority has deleted the addition in dispute by respectfully following various decisions rendered by the Hon’ble High Courts which are mentioned in the impugned order. We find no infirmity in the impugned order on the deletion of addition of ₹ 5.85 crores made by the Assessing Officer. - Decided against revenue. Advances received by the assessee - CIT(A) deleted the addition - Held that:- First appellate Authority has given various details of various parties mentioned in the impugned order. The learned First Appellate Authority has also supported his view by various decisions rendered by Hon’ble High Courts which includes the jurisdictional High Court, which are mentioned in the impugned order. After going through the same, we are of the considered view that the learned First Appellate Authority has passed a well reasoned order on the deletion of addition of ₹ 1.25 crores on account of advances received by the assessee.- Decided against revenue. Disallowance on account of rent receivable from let out property - CIT(A) deleted the addition - Held that:- The learned First Appellate Authority has examined the documentary evidence filed by the assessee in respect of its claim , i.e., copy of letter dated 10.10.2011, copy of rent agreement, copy of civil suit regarding mutation of property and receipts of rent, copy of order dated 03.02.2011 passed by Civil Judge, Bangalore and copy of pending recovery suit for unpaid rent. After considering all these documentary evidences, the learned First Appellate Authority has deleted the addition of ₹ 20.47 lakhs. We find no infirmity in the deletion of disallowance of ₹ 20.47 lakhs. We uphold the impugned order on the issue involved in ground No. 3. No other point has been argued or raised before us by both the parties. - Decided against revenue.
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2015 (11) TMI 275
Transfer pricing adjustment - Held that:- Transfer pricing study made by the TPO is far away from reality. If the erroneous presumptions of the TPO are excluded, we find that the price disclosed by the assessee is comparable and compatible to ALP and no adjustment is called for in the present case. Since the facts in assessment year 2007-2008 are identical, we are inclined to confirm the order of the Commissioner of Income Tax (Appeals) on this issue by placing reliance on the above order of the Tribunal - Decided in favour of assessee. Disallowance u/s. section 40(a) (i) - interest payments to Andhra Pradesh Mineral Development Corporation - CIT(A) deleted the addition - Held that:- The impugned payment which has direct link or immediate nexus with the trading liability being connected with the purchase payment and it will not fall under the category of interest as defined in Sec. 2(28A) of the Act. Payment made by the assessee in the present appeal cannot be termed as interest and accordingly we are in agreement with the findings of the Commissioner of Income Tax (Appeals). Without entering into the controversy so as to whether the payment is within the ambit of interest in Sec. 2(28A), the assessee is also bound to succeed in its alternative argument that the entire payment if made during the previous year relevant to the assessment year under dispute no disallowance would be made u/s.40(a)(ia) of the Act - Decided in favour of assessee.
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2015 (11) TMI 274
Assessment under section 172(4) - vessel voyage returns filed by the Atlantic Shipping Pvt Ltd, under section 172(3) - validity of orders passed under 172(4) challenged without issuing a draft order as required under section 144C as the assessee is an eligible assessee under section 144(15)(b)(ii) - denial the benefits of India Denmark Double Taxation Avoidance Agreement - Held that:- The point of dispute being whether or not the course of action 144C was permissible, a decision in favour of the assessee is to be essentially followed with an opportunity being given to the assessee to be allowed to traverse that path. However, having held so in principle, on the peculiar facts of this case and for the reasons we will now set out, this conclusion is somewhat academic as we see no need to remit the matter back to the Assessing Officer for the reason that the assessee deserves to succeed on merits. As evident from the Directors report of Torm A/s which is filed before us in the paperbook, the assessee has incurred a clearly unsatisfactory loss before tax of USD 579 million in 2012 . This report also states that the assessee incurred an operating loss of USD 253 millions which was stated to be on account of adverse market conditions. When assessee is incurring losses, in respect of its global operations, there cannot be an occasion to pay tax on the income. In these circumstances, if the freight receipts from India are not actually brought to tax in Denmark, it is not because of the profits from these receipts not being taxable in Denmark, it is because there are no profits embedded in these receipts. However, so far as Article 4(1) of Indo Danish tax treaty is concerned, all that is required of a Danish company to be entitled to treaty protection in India, is that its profits, on global basis, should be liable to tax in Denmark- irrespective of whether or not the assessee indeed earns any profits taxable in Denmark or whether or not such profits are actually subjected to tax in Demark. That condition, in our considered view and for the detailed reasons set out above, is clearly satisfied. As for the place of effective management being in Denmark, as required under Article 9(1), we have already taken note of the evidences in support of the place of effective management being in Denmark. In view of the above discussions, as also bearing in mind entirety of the case, we are of the considered view that the profits embedded in the freight receipts in question were not taxable in India. In this view of the matter, the Assessing Officer indeed erred in bringing the same to tax in India. The CIT(A) should have deleted the same. We, therefore, vacate the stand of the authorities below and delete the impugned tax demands. - Decided in favour of assessee.
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2015 (11) TMI 273
Transfer pricing adjustment - Held that:- Vishal Information Technologies Ltd. is not a valid comparable as held in Google India Pvt. Ltd. vs. DCIT, Bangalore (2013 (3) TMI 172 - ITAT BANGALORE) wherein Google India was engaged in the business of software development services and ITES. We are of the opinion that Coral Hub (previously known as Vishal) cannot be used as a comparable and so we direct the AO to exclude this company from the list of comparables. ECLERX SERVICES LIMITED need to be excluded taking into consideration the fact that eClerx is engaged in data analytics, data processing services, pricing analytics, bundling optimization, content operation, sales and marketing support, product data management, revenue management and in addition, eClerx also offered financial services such as realtime capital markets, middle and back-office support, portfolio risk management services and various critical data management services and the Hon’ble High Court held that this company is engaged in KPO services and so, this company cannot be compared with the low end service provider like the assessee in this case. We order the exclusion of this company from the set of comparables. INFOSYS BPO - extra ordinary event of amalgamation during the year has helped Infosys BPO in acquiring domains skill sets in the finance, administration space as well as enhanced its global presence with centers at Thailand and Poland. In view of the said extra ordinary event brought to our notice, we exclude Infosys BPO from the list of comparables. WIPRO BPO - Since sufficient information for this comparable is not available, we direct exclusion of this company as a comparable HCL COMNET SYSTEMS & SERVICES LTD is functionally similar to that of the assessee. Ld. AR could not point out any functional difference to our attention. In the said scenario, we uphold the inclusion of the said company in the set of comparables. The assessee fails. GENESYS INTERNATIONAL is into mapping business and it provides geographical information services comprising Photogrammetry, Remote Sensing, Cartography, Data Conversion, related Computer based Services and Information Technology enabled and other related services, which cannot be by any stretch of imagination be said to be comparable to that of the assessee. Since Genesys International Corporation Ltd. is functionally dis-similar with that of the assessee, we direct the TPO to exclude the said company from the list of comparables. ACROPETAL is into software development also and since the segmental information is not available, it would not be safe to rely on the finance of this company. Therefore, we order exclusion of this comparable from the set of comparables.
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2015 (11) TMI 272
Revision u/s 263 - addition on account of unsecured loans and sundry creditors - Held that:- We had called for the assessment records and the Ld.DR confirms that all the details in respect of the loans along with confirmations necessary for the purposes of verification, details regarding the sundry creditors etc., were available before the Ld.AO at the time of assessment. From the questionnaire raised by the ld.AO it further appears that specific queries have been raised by the Ld.AO in respect of loan liability, unsecured loans and sundry creditors and the assessee has filed all the details as sought for by the ld.AO. The ld.AO has verified the same at the time of assessment. It is evident from the order of the Assessing Officer that he has considered all detailed particulars filed before him. The same is verifiable from the questionnaire issued by the ld. AO at the time of assessment. The Ld.AO has dealt with and verified all the details in respect of the issues raised in the notice issued by the ld.CIT u/s.263 of the Act. We therefore reject the submission of the Revenue that the order of the Ld.AO is erroneous or prejudicial to the interest of the Revenue or have been passed without application of mind only because in the assessment order the ld.AO has not made elaborate discussion in that regard. It is evident that the ld.CIT has set aside the order of the ld.AO only on the ground that the view taken by the ld.AO was not agreeable to him. In our considered opinion, it cannot be said that the ld.AO has not applied his mind at the time of assessment. The view taken by the ld.AO was a possible view and that the condition precedent for invoking jurisdiction under section 263 by the Commissioner of Income-tax did not exist in the facts of the present case. See Commissioner Of Income-Tax Versus Gabriel India Limited [1993 (4) TMI 55 - BOMBAY High Court] - Decided in favour of assessee.
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2015 (11) TMI 271
Reimbursement of salary costs of seconded personnel made to M/s Diary Farm Co. Ltd., Hongkong - whether is in the nature of ‘fees for technical services’ u/s 9(1)(vii) and consequently liable for deduction of tax at source u/s 195 - Held that:- The concept of income includes positive as well as negative income or nil income. In the case of payment being FTS or royalty as per sec. 9(1) of the Act it is irrelevant whether any profit element in the income or not. It is not only a matter of computation of total income when the concept of profit element in payment is relevant. If the payment being FTS or royalty is made to nonresident, then the concept of total income becomes irrelevant and the provisions of sec. 44D recognize the gross payment chargeable to tax. Thus all the payment made by the assessee to non-resident on account of FTS or royalty an chargeable to tax irrespective of any profit element in the said payment or not. However, there is an exception to this Rule of charging the gross amount when the non-resident is having fixed place of business or PE in India and the amount is earned through the PE, then the expenditure incurred in the relation to the PE for earning said amount is allowable as per the provisions of sec. 44DA of the Act. Therefore, in view of the judgment of Hon’ble Delhi High Court in the case of Centrica (2014 (5) TMI 154 - DELHI HIGH COURT), the payment made to foreign company DFCL partakes the character of FTS as per the definition under explanation 2 to sec . 9(1)(vii) of the Act. The learned AR of the assessee has raised an alternative point that the secondment of employees constitute a service PE and secondly the amount would be chargeable to tax as per the provision of sec. 44DA of the Act. Admittedly there is no DTA between India and Hong Kong and under the provision of Income-tax there is no concept of service PE. The Hon’ble Apex Court in the case of DIT International Vs. Morgan Stanely and Co. Inc. [2007 (7) TMI 201 - SUPREME Court] while analyzing the definition of PE u/s 92F(iii) of the Act has observed that the intention of parliament in adopting an inclusive definition of PE covers the service PE, agency PE, Software PE, Construction PE etc. Since this plea has been taken by the assessee for the first time before this Tribunal and there is no DTA between India and Hong Kong therefore, this concept of service PE requires a proper examination of all the relevant facts as well as provisions on the point whether it constitute a service PE in India. Accordingly, the issue is remitted to the record of the AO for adjudication of the plea raised by the assessee that the secondment of the employees constitute a services PE and accordingly provisions of sec. 44DA would be applicable. Needless to say, the AO to adjudicate issue after affording an opportunity of hearing to the assessee. - Decided partly in favour of assessee for statistical purpose.
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2015 (11) TMI 270
Disallowance of claim for deduction of bonus paid - Held that:- There is no bar to entertain new claim either by Commissioner of Income Tax (Appeals) or Income Tax Appellate Tribunal". Accordingly, we direct the Assessing Officer to allow this claim after due verification, whether the bonus has been paid during the previous year under consideration, and whether the interest claim of ₹ 2,55,233/- is tax free or not. Accordingly, this ground of appeal is set aside to the file of the Assessing Officer to allow the claim, in the aforesaid terms. Commissioner of Income Tax Versus Mitesh Impex [2014 (4) TMI 484 - GUJARAT HIGH COURT] Disallowance of deduction on account of bad debts - Held that:- In the case in hand, the Assessing Officer denied the deductions under Section 36(1)(vii) solely on the ground that the bad debts which were written off were pertaining to the period when the income was exempt under the provisions of Section 80P of the Act and also on the ground that the deduction claimed under Section 36(1)(viia) is more than the deduction claimed under Section 36(1)(vii) of the Act. The reasoning of the Assessing Officer does not stand test of the law laid down by the Hon'ble Apex Court in the case of Catholic Syrian Bank Ltd. (2012 (2) TMI 262 - SUPREME COURT OF INDIA). Further, it is not in dispute that the amounts claimed as bad debts were actually written off in the books of account and in the light of the fact that the provisions for bad debts was not claimed in the earlier years which goes to prove that the claim is not hit by the proviso to Section 36(1)(vii) of the Act. Therefore, we direct the Assessing Officer to allow the bad debts claimed. Accordingly, this ground of appeal is allowed. Addition on account of alleged difference between the interest income declared by the appellant and the Form No. 26AS of the Department - Held that:- The information contained in Form No. 26AS cannot be itself the basis for making addition to the income returned. To the same effect, the decision of a coordinate bench of ITAT, Jabalpur, in the case of Ravindra Pratap Thareja Vs. ITO [2015 (10) TMI 1487 - ITAT JABALPUR]. Accordingly, the grounds of appeal is set aside to the file of the Assessing Officer for due verification after affording reasonable opportunity of being heard to the assessee. Hence, the appeal is partly allowed for statistical purposes.
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2015 (11) TMI 269
Transfer pricing adjustment - leverage of 5% disallowed - whether assessee is entitled for the benefit of + 5% tolerance margin for the purpose of determining the arm’s length price of the international transaction as variation between the arm’s length price computed by the Transfer Pricing Officer and price at which the international transaction has actually been undertaken which does not exceed 5% of the latter? - Held that:- Second proviso to sec 92C(2) is to be read independently. The lower authorities instead of following above second proviso followed the first proviso. Being so, the Transfer Pricing Officer wrongly came to the conclusion that leverage of 5% is not allowable to the assessee’s case where once price based on a particular method of arm’s length price is not applicable. Accordingly, we are in complete agreement with the claim of the assessee with regard to benefit for the adjustment of + 5% variation, while computing the arm’s length price. This ground of the assessee is allowed. The transfer pricing officer is not justified in comparing with the average price published by the cashew bulletin of cashew export council with that of price mentioned in individual transaction for the products. Accordingly, we direct the TPO to compare the average monthly price to the product published in cashew bulletin with the average price charged by the assessee for its product and decide accordingly. - Decided in favour of assessee. Disallowance of interest - assessee has computed interest on all the import transactions at the Bank Rate of 12% on the credit term in excess of 30 day - Held that:- The contention of the ld. Departmental Representative is that for importing cashews from its Associated Enterprises from Benin, the assessee paid more than the price mentioned in the CEPC Journal (External data), so the Assessing Officer made transfer price adjustment. The plea of the assessee is that the assessee availed 150 days credit for payment. Being so, the price was charged little more than the rate mentioned in the CEPC Journal (External data). If due credit is given to interest @12% for the credit period, there is no necessity for TP adjustment. This plea of the assessee is correct. In our opinion, due weightage is to be given towards interest benefit enjoyed by the assessee by availing credit for 150 days for payment and Rule 10B(1)(a)(ii) of the Income Tax Rules, 1962 also permits such benefit to the assessee. Hence, the lower authorities are not justified in making such adjustments. This ground is allowed.- Decided in favour of assessee.
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2015 (11) TMI 268
Rectification of mistake - omission to disallow a sum towards loss on sale/exchange of fixed assets in the original assessment - Held that:- Notice issued u/s 154 of the Act clearly mentions the intention of the Learned AO by duly mentioning the mistake that had crept in the original assessment order towards omission to disallow the loss on sale of fixed assets to the tune of ₹ 10,27,456/-. Admittedly, the loss on sale of fixed assets is only a capital loss and cannot be construed as a loss incidental to the business as claimed by the Learned AR. Hence the said capital loss ought to have been disallowed in the computation of total income by the assessee voluntarily or by the Learned AO in the original scrutiny assessment proceedings in accordance with law. However, the same was duly sought to be rectified by the Learned AO in section 154 proceedings as it is not a debatable issue and the said mistake is patent , glaring and very obvious AO had clearly mentioned the mistake sought to be rectified in the notice u/s 154 of the Act itself. We don't endorse the arguments of the Learned AR that when there is no computation under the head capital gains while determining the taxable income, the resultant capital loss cannot be set off against the business income. This is a glaring mistake committed by both assessee as well as by the Learned AO in original scrutiny assessment proceedings which was later rectified u/s 154 by the Learned AO and we hold that the action of the Learned CITA does not require any interference in this regard. - Decided against assessee.
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2015 (11) TMI 267
Revision u/s 263 - issue of share application money - Held that:- With regard to the issue of share application money, we find that the amount of ₹ 52,48,000/- taken by the CIT is a clear mistake and it represents the opening balance as on 01.04.2007 and, in fact, the addition during the year was of ₹ 2.53 lakhs. The assessee has filed the required details and the order of the learned CIT itself is erroneous on this issue. In these facts of the case, we hold that the learned CIT was not justified in invoking the provisions of Section 263 of the Act on the issue of trade creditors and share application money and the same is cancelled. Claim of expenses which was accepted without any evidence or verification - Held that:- Complete details of the expenses over ₹ 1 lakh were asked by the Assessing Officer and the same were submitted by the assessee vide reply dated 25.10.2010 and copies of accounts of various heads of expenses were submitted and the supporting vouchers and bills, receipts etc. were also summoned and produced by the assessee on 25.10.2010 and on 28.10.2010. The accounts of the assessee were audited by the Chartered Accountant. We find that the order of learned CIT u/s 263 on this issue is based on mere suspicion and there is no material brought on record to suggest that the order of the Assessing Officer was erroneous or prejudicial to the interests of the Revenue. Accordingly, we hold that there was no justification for the learned CIT to pass order u/s 263 on this issue, which is cancelled accordingly. The grounds of appeal of the assessee are allowed. - Decided in favour of assessee.
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2015 (11) TMI 266
TDS u/s 194C or u/s 192 - payment to Self Help Groups (SHG) - whether no contractual relationship between the payees, i.e. the Self Help Groups (SHG) and Greater Hyderabad Municipal Corporation (GHMC) and consequently payments made to the SHGs are not liable for TDS? - Held that:- TDS provisions are not applicable. See Greater Municipal Corporation, Central Zone Hyderabad [2015 (10) TMI 2320 - ITAT HYDERABAD] wherein held that it is clear that the allotment of work by the assessee to the SHGs is not by way of contract but is engagement of workers for a fixed period. The workers are being paid as per the agreed terms and conditions and the aggregate amount is paid to the group and not to any particular person. Therefore, as rightly held by the CIT (A), there is no contractor-contractee relationship but is more in the nature of employee-employer relationship as the assessee is also making contributions to the EPF and ESI and as rightly pointed out by the ld CIT (A), the payments made to an individual is not exceeding the prescribed limit u/s 192 of the I.T. Act, the TDS provisions are not applicable to the facts of the case - Decided in favour of assessee.
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2015 (11) TMI 265
Non deduction of TDS - expenses claimed by the assessee on storage and parking charges - case of the assessee is that it has already paid all the amounts and no amount is pending - Held that:- Once already amounts are paid, the Special Bench decision of the Tribunal in the case of Myerlin Shipping and Transports v. Addl.CIT (2012 (4) TMI 290 - ITAT VISAKHAPATNAM ) squarely applies to the case. Also see CIT v. Vector Shipping Services P. Ltd. [2013 (7) TMI 622 - ALLAHABAD HIGH COURT] There is nothing on record that the assessee has already paid the amount. We, therefore, direct the Assessing Officer to examine whether payments were made or not and after examining and if found that the payments were already made, the Assessing Officer is directed to allow the claim of the assessee. - Decided in favour of assessee for statistical purposes.
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Customs
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2015 (11) TMI 259
Denial of benefit of DEPB Claim - Penalty imposed under Section 114(iii) of the Customs Act, 1962 for mis-declaration of goods - Shipping bill filed for clearance of 100% Cotton Terry Towels - Appellant accepts that mentioning of 100% was an unintentional mistake and not with a view to claim higher DEPB - Held That:- Imposition of penalty is warranted as there is misdeclaration in shipping bills but same is reduced to ₹ 10,000.00 - Decided partially in favour of assessee.
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2015 (11) TMI 258
Imposition of penalty under Section 112(b) of Customs Act - Import of old and second hand textile machineries more than 10 years old - Invoices declared as less than 10 years - Appellant contends that machines are 10 years old and hence require specific import licence and it is on their instance that same were declared as less than 10 years old - Further contended that penalty should not be imposed on appellant as he has not got any extra financial benefit by misdeclaration. Held That:- It is at the instance of both importers as also the present appellant that year of manufacture would be misdeclared thus penalty imposed on appellant is correct - Restriction of 10 years old was removed later, same is of no consequence as appellant has intentionally manipulated the documents - Penalty imposed not on higher side - Decided in favour of Revenue.
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2015 (11) TMI 257
Mis-declaration under Transfer of Residence Scheme – Imported Toyota Prado vehicle imported by mis-declaring the model code of the vehicle and year of manufacture as 1998 but was of higher model – Alleged that appellant was involved in selling the car to Shri Roshan Somjee despite knowing that vehicle imported under T.R. scheme cannot be sold for period of two years thus car is liable for confiscation under Sec. 111(o). Appellant contends that car was registered in name of Roshan Somjee only, after 2 years of its importation and ‘NO SALE’ condition is not mentioned in SCN issued – Further contended that he was not involved in clearance of car through Customs but was involved to the extent of deferred sale of the vehicle on Commission basis. Held That:- Condition under Transfer of Residence Scheme which places restriction of 2 years have been violated as sale consideration of car was paid and delivery taken by buyer, Roshan Somjee, before expiry of two years - Helping in identification of willing buyer and some financial arrangement does not mean appellant has venially violated the provisions – Penalty thus imposed is excessive and reduced – Decided partially in favour of appellant.
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2015 (11) TMI 256
Imposition of Penalty under Section 114(i) of Customs Act, 1962 on partner and partnership firm – fraudulent duty drawback claim - attempted to export the readymade garments by mis-declaring and it was found that the consignment was loaded with old and used garments. – Held That:- The Appellant No. 1 took a definite stand that they have brought to the notice to the Customs officers of the damage goods. - Adjudicating authority had not disputed the contention made by Appellant in his reply – thus they are not liable to penalty Shri Harjit Singh Grewal is the Partner of M/s Shivam Overseas, who has attempted to export the goods improperly to earn the drawback claim. It is seen that the appeal of M/s Shivam Overseas was already dismissed by the Tribunal. It is evident from the records that the Appellant was involved to export the goods improperly. Hence, imposition of penalty is justified.– Decided partially in favour of Appellant.
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2015 (11) TMI 255
Reckoning of Earned foreign exchange towards discharge of export obligation – Supreme Court after condoning the delay did not find any reason to entertain the petition. Appeal was filed against the decision of Tribunal [2013 (11) TMI 1568 - KERALA HIGH COURT]; wherein Tribunal held that there was error apparent on face of record of judgment and judgment deserves to be reviewed – Plea that was accepted by Tribunal was that said issue was technical one – Liability under Motor Vehicles Act, 1988 is different from liability under Customs Act – Earnings by way of Indian currency or Foreign exchange does not get affected by provisions under Motor Vehicles Act, 1988 – Also plea of importer that it was only by Foreign Trade Policy of 2006, that made it mandatory to follow Section 66(1) of Motor Vehicles Act, 1988 to obtain benefits of Foreign Trade Policy deserved consideration – That also escaped notice in adjudicating process which stood confined to requirement of compliance of Section 66(1) of Motor Vehicles Act, 1988 to ply motor vehicle as transport vehicle – Ends of justice require that impugned judgment be reviewed .
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2015 (11) TMI 254
Confiscation of gold - Detention of appellant - Supreme Court dismissed the appeal on the ground of delay and merits. The appeal was filed by assessee against the decision of High Court [2011 (9) TMI 968 - PATNA HIGH COURT]; wherein High court held that department was able to discharge its primary onus by recording the appellant’s voluntary statement under section 107 of the Act, read with the appellant’s statement under section 108 of the Act which is in the nature of substantive evidence, with which the onus passed on to the appellant in terms of section 123 of the Act. The appellant has not in the least discharged the onus of proof on him. He admitted recovery of the contraband goods from his person on 20.8.2000. He made different statements at different stages of the proceedings. His defence that it was purchased from Dhan Cholia Sons, Delhi, has been found to be false leading to the irresistible conclusion that it was contraband goods, having been smuggled from a country of third origin.
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2015 (11) TMI 253
Review petition - Classification of Dry (Betel) nuts under CTH 08129090 or CTH 08028020 – Mis-declaration of Goods – Imposition of redemption fine, duty and penalty – Supreme Court after condoning the delay and going throught he review petition, did not find any merit in petition. The original petition was filed by assessee against the decision of Tribunal [2015 (8) TMI 1069 - CESTAT KOLKATA]; wherein Tribunal held that goods imported by appellant were liable for confiscation – Once imported goods were found to be classifiable under CTH 0802 8020, their import is not allowable if their CIF value is below ₹75 per kg. as provided in DGFT Notification.
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2015 (11) TMI 252
Stay application - Valuation - import of drawings, designs and documents separately from import of plant and machinery - drawings, designs and technical documents classifiable under Customs Tariff Heading 98.03 were imported through courier without payment of duty - Suppression of value at the time of import - Supreme Court stayed the demand raiased ubject to the petitioner depositing a sum of ₹ 6 crores before the Registry of this Court by end of May, 2015. The appeal was filed by assessee against the decision of Tribunal [2014 (8) TMI 396 - CESTAT NEW DELHI]; wherein it is held that exemption benefit of the notification claimed by it is not admissible to it since the drawings and designs are not books classifiable under the CTH claimed by the appellant.
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Corporate Laws
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2015 (11) TMI 264
Grant of development rights - Restraint order against a person who is not a shareholder of R1 company - creation of third party rights - Held that:- In this case the petitioners initiated this CP against the act of Respondents saying the conduct of R2 and others is oppressive, and this fact of creating third party rights to Magnum has come to their noticed only after disclosure come from the Respondents side, therefore it cannot be said it is hit by limitation. For having the petitioner alleged that the value of the property is no way close to the real value of the property, for having alleged that R2 caused it transferred to Magnum without notice to the petitioners, and there being an order from CLB that the petitioners are entitled to implead Magnum as party to the proceeding, this Application is maintainable. On seeing the company accounts, it is evident that there is no entry showing that the money of ₹ 9,51,00,000/- shown as consideration to the company property has not come into the accounts of the company, therefore, for time being it is to be understood that no money has come into the company showing it as consideration to Swami Samarth Property, For having this Bench already stated in the order dated 18th May, 2015 that R2 dealt with the affairs of R1 prejudicial to the interest of the petitioners, this Bench directs Magnum Landcon LLP not to alienate or create third party rights over the Swami Samarth Property and shall maintain status quo over the property pending disposal of the main Company Petition. The respondent side is directed to file reply to this application within 15 days hereof, rejoinder, If any, within 15 days thereafter.
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2015 (11) TMI 263
Maintainability of petition under sections 397 & 398 of the Companies Act 1956 - oppression and mismanagement - Held that:- It is true that it is undisputable when a proceeding is withdrawn unconditionally, there shall not be any later proceeding on the same cause of action, but when the reliefs are different which cannot be granted in the earlier proceeding, for such reliefs, if any statutory right is conferred on any person to proceed before a special forum for remedying the grievance of a party, then, like Honourable High Court of Madras held in M/s. S.V.T Spinning Mills (P.) Ltd. [2009 (7) TMI 776 - HIGH COURT OF MADRAS] that a party is under no obligation to obtain liberty before withdrawal of suit from civil court to approach CLB u/s 397 & 398 of the Act 1956 for it is a statutory right given to a member to avoid oppression and mismanagement against member or the company, which a civil court cannot grant, therefore I, in the backdrop of this factual history, safely conclude that withdrawal of suit without liberty will not make this CP non-maintainable. For having the respondents failed to establish that this petition is not maintainable, on the allegations referred above, hereby decide this issue against the respondents. Whether the petitioner seized to continue as director of the company on an alleged letter dated 14.03.2007 or not ? - Held that:- The petitioner being the promoter director of shareholder of the company with a slightly majority shareholding in the company, it could not be assumed that the petitioner resigned from the company as director leaving his shareholding and his guarantees with the company. The petitioner being the elder brother of R2, being a promoter of the company, for still continuing as shareholder of the company, keeping his guarantee with the bank, it could not be construed by any stretch of imagination that the petitioner resigned from the company by submitting a resignation letter dated 10.03.2007. Thus have drawn this inference independent of the Hand Writing Expert opinion filed by the petitioner, therefore, hereby hold that alleged resignation letter used by the R2, to show petitioner resigned from the company as invalid. Whether appointment of R3 as director of R-1 company is oppressive against the petitioner or not ? - Held that:- The explanation given by R2 saying they could not file Form 32 because DIN number has not come to the directors, is not believable, therefore, appointing R3, who is not a shareholder in the company as director by shunting the petitioner out of the company, is oppressive and prejudicial to the interest of the petitioner who is admittedly 50% shareholder in the company. It need not be seen whether the petitioner signed on the resolution or not, on seeing the overwhelming evidence disclosing that R2 set up appointment of R3 as director in the company only after the petitioner approached the Bank on 4.3.2009 for requesting the Bank to change mode of operation of the account, for there being no material on record showing R3 as director for more than two years from the date of alleged appointment of R3 as director, and on seeing the Form 32 filed only on 25-3-2009, that is only after the petitoner requested the Bank to change the mode of operation of the Account, this issue is therefore decided against the respondents holding that appointment of R3 as director is oppressive against the petitioner, hence declared it invalid. Whether increased of authorized capital on 28.03.2008 is oppressive against the petitioner or not ? - Held that:- As to increase of authorized capital as well as paid-up capital of the company, the petitioner, according to him 57% in the company, according to respondents he has only 50% in between them. Since the petitioner and respondents are not on cordial terms in between them in the year 2008, it could not be assumed that a resolution was passed to make their shareholding in between the petitioner and the second respondent as 50:50. The delay in filing Forms, happens in normal course, it could be considered as delay simplicitor, but if the delay is inordinate and such delay is not properly explained to the satisfaction of this Bench, and if such delayed filings are aimed at causing prejudice to any member of the company, such delay cannot be construed as happened in normal course. Here also Form-5 was filed one year after alleged increase of capital. For the relations in between the petitioner and respondents being strained from 2007 itself, it cannot be said that the petitioner agreed to allow R2 to change the shareholding pattern prejudicial to the interest of the petitioner, therefore, this issue is decided against the respondents. For this allotment being held invalid, the shareholding existing before this increase and allotment, will come into force. Whether R2 to be directed to restore ₹ 91 lacs shown as taken out ? - Held that:- Since the siphoning of the funds is not proved, could not say that R2 has siphoned the funds of the company at this juncture. 1 also cannot say that R2 opened those two Bank accounts with a bona fide intention for the growth of the company. When a Bank account is opened in the name of the company without notice to the other shareholder who has, according to him, 50% shareholding, it only reflects that those accounts are opened to handle financial transactions without notice to the other shareholder or director of the company. The counsel of the Respondents relied upon a case in between Ramesh Bhajanlal Thakur v. Seaside Hotel (P.) Ltd. & Ors [1999 (11) TMI 869 - COMPANY LAW BOARD] to say that when no particulars are given in support of allegation siphoning the funds of the company, then obviously no relief can be granted, as to this principle, I, on principle, agree no relief can be granted when a petition has come without any details and proof over the allegations of siphoning. To what relief ? - Held that:- The company is directed to pay remuneration to the Chartered Accountant, as agreeable to him, because the company is an almost 50:50 company in between the petitioner and R2. For having this Bench decided that the petitioner has not been removed as a director at any point of time, he will continue as director in the company whereas the wife of R2 i.e. R3 will not continue as director because her appointment has already been declared invalid. Since the company is a family company in between the two real brothers, the company's size also not being big, these two real brothers can come together and continue working in the company as before. R1 company is directed to file forms with RoC in compliance of this order within 30 days hereof. This Bench hereby directs the parties to pay to the company if any of them is held as siphoning the funds of the company in the audit report given by the Chartered Accountant. If any objections are there over the Chartered Accountant's audit report, they are at liberty to place their objections before CLB.
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Service Tax
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2015 (11) TMI 239
Denial of refund claim - services used for export of goods - Business Support Service, Clearing and Forwarding Service, Bank and Financial Services - Notification No. 52/2011-ST 13/12/2011 - Held that:- Appellant have subsequently made refund claim under Notification 52/2011-ST instead of Notification 41/201-ST. Therefore, I am of the view that refund is clearly covered by Notification No. 52/2011-ST and not by 41/2012-ST. On this fact the judgment in the case of WNS Global Services (P) Ltd.(2008 (1) TMI 94 - CESTAT, MUMBAI) relied upon by the Ld. Counsel is not applicable to the present case. In view of the above position the services of business support services is not covered under Notification No. 52/2011-ST, therefore refund on business support service is not admissible. If service tax was paid by the service provider under the head of clearing and forwarding services or cargo handling service or in any other service then appellant is entitled for the refund. But if it is found that service tax paid under the business support service irrespective of the nature of the service the appellants is not entitled for the refund. As regard the clearing and forwarding services from the bill of the service provider it can be seen that the bill was raised by the clearing and forwarding agent, therefore apparently the service for which the bill is raised is for clearing and forwarding service. In this bill classification of services is not provided therefore it is not known under which head service tax is paid. These facts need to be verified on the basis of payment details of the service tax made by service provider. - Matter remanded back in respect of business support service and clearing and forwarding service - Decided partly in favour of assessee.
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2015 (11) TMI 238
Waiver of pre deposit - Cleaning Service and Site Formation and Clearance, Excavation and Earthmoving and Demolition Service - Held that:- Appellant was engaged in restoration of waste pits in the oil extraction area of M/s. Cairn Energy and what they are doing physically is to clean the pits and bring them into a condition in which they are usable again. Therefore what the appellant is undertaking the activity of cleaning the pits of waste, oil etc and therefore the activity is clearly cleaning only. - work undertaken by the appellant is provision of pit restoration services at drill sites. The objective as per Clause 2 of the agreement is to restore waste pits and for this purpose the service providers have to undertake skimming of oily waste, collection, redistribution and transportation of oily and non oily drilling waste and thereafter restoration and back filling of the pits with locally available soil. It can be seen from the objective itself that the main objective is to clean the pits by removing oily and non oily waste completely and thereafter put in fresh soil (back filling). The main activity is not Site Formation since the drilling site is already existing and what the appellant to undertake is to remove the waste from the existing drilling site and clean up all the wastage and bring it back to the original condition. The Cleaning Service definitely covers the activity. Therefore on merit we do not consider that appellants have made out a case. - Partial stay granted.
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2015 (11) TMI 237
Refund - Cenvat credit - Export of services before seeking service tax registration - Rule 5 of Cenvat Credit Rules, 2004 read with Notification No. 5/2006, dated 14-3-2006 - Held that:- In all cases where there has been evasion of service tax or central excise duty or there has been short-levy for whatever reason, the Tribunal and the Courts have taken consistent view that Cenvat credit would be admissible when the duty payment is made, provided assessee has all the documents and is able to show that input or input service has been received and utilized for the purpose specified in the Rules. That being the position, it cannot be said that just because the assessee was not registered, Cenvat credit could not have been taken. Once the credit was taken if it is admissible and when it accumulates and cannot be utilised, when the Rule provided for refund, such refund cannot be rejected. In any case, I have already taken a view that Paragraph 3(b) cannot be considered as a condition to avail Cenvat credit or to claim refund holding that the prerequisite would be export from the registered premises. - appellant is eligible for the refund. However, for the purpose of verification of correctness of the amount claimed and scrutiny which has not been done earlier or which has not been considered to have been done in my order can be considered and the admissibility of refund decided in accordance with law without ignoring the observation in this order. - impugned orders are set aside - Decided in favour of assessee.
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2015 (11) TMI 236
Intellectual Property Right Services - Technical 'know how' service - whether the transfer of technical 'know how' received by the appellant is a service which may be categorized under "Intellectual Property Right Services" - Held that:- It is obvious from the definition of Intellectual Property Right that the right has to be a specific Right under a specific Law. Examples are given under the definition such as the Trade Mark which is a right provided under "Trade Marks Act". Similarly the right mentioned as 'design' in the definition is a right under the "Design Act". Therefore we find that the technical know-how received by the appellant and the royalty payment made by the appellant to Unisys is nowhere established to result from the use of any Intellectual Property Right. Intellectual Property Right not covered by the Indian laws would not be covered under taxable service in the category of Intellectual Property Right Services. We are fortified in our view by Board Circular F.No. 80/10/2004-ST dated 17/9/2004 which clarified that "Intellectual Property emerges from application of intellect, which may be in the form of an invention, design, product, process, technology, book, goodwill etc. In India, legislations are made in respect of certain Intellectual Property Rights (i.e.IPRs) such as patents, copyrights, trademarks and designs. The definition of taxable service includes only such IPRs (except copyright) that are prescribed under law for the time being in force. - Impugned order is set aside - Decided in favour of assessee.
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2015 (11) TMI 235
Demand of service tax - intellectual property rights - Reverse charge mechanism - whether or not IPR service was received even after 10.09.2004 by M/s DHPL in terms of agreement entered into in 2002 - Held that:- Agreement for grant of license or transfer / permission to use technology was effected before 10.09.2004. The fact that M/s DHPL continued to manufacture and sell using such transferred technology even after the introduction of service tax on IPR cannot be considered as continuous supply of service. The rendering of service is effectively determined by the date of transfer / permission to use technology by M/s Denso, Japan which was prior to the introduction of tax liability on such service. - Commissioner (Adjudication) Service Tax, Delhi in his order dated 28.02.2011, in para 3.6.2, categorically examined the legal position and concluded that the allegation in the show cause notice that the service was provided on continuous basis is incorrect. Only payment of service was spread over a period of time. The service was performed as soon as the technology was transferred. - Decided against Revenue.
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2015 (11) TMI 234
Denial of refund claim - Denial on the ground that authorization letter does not contain the signature of authorized signatory, although it bears the signature of the Director - Notification No. 41/2012 dated 29.6.2012 - Held that:- This is explained by the appellant that it might be due to mistake while taking photocopy of the authorization letter dated 14.3.2013. While photocopying the authorization letter which was in Legal Size Paper to an A-4 Size Paper, the signature of Anand Agarwal put at the bottom was left out. The Commissioner took the view that this explanation is an after thought. It needs to mention that there is no dispute that Shri Anand Agarwal is the authorized signatory. All documents and refund claim has been filed by him. Even if there is an omission in the authorization letter as long as the assessee company does not dispute the signatures in the refund claim and documents, the omission is only a technical defect which can be condoned or cured. Rejection of refund claim on such a ground is totally unjustified. - adjudicating authority had properly considered the objections raised by the Range Superintendent. Admittedly the service tax for the impugned services used for export of goods has been paid. In such circumstances denial of refund on technical ground if any is not sustainable, as laid in various judgements. The refund claim is only to be allowed. - Impugned order is set aside - Decided in favour of assessee.
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2015 (11) TMI 233
Denial of CENVAT Credit as distributed by the head office - Department denied the same on the ground that the head office of the appellant is not registered as Input Service Distributor - Held that:- So far as claim of CENVAT credit prior to 1.4.2008 is concerned, law has permitted grant of CENVAT credit in respect of service tax paid to avail GTA services. There shall be no dispute on this count. However, whether status of ISD registration is sine qua non is the question. When the credit claimed on the services availed was not disputed nor even service tax paid is in dispute, so also the genuinity of the parties is not disbelieved, denial of CENVAT credit of the service tax suffered by the head office of the appellant shall be detrimental to the interest of justice. There is also no finding that service tax paid by the head office were not connected to the business of the appellant or were irrelevant - Even if unregistered, the liability under law remains unchanged. Therefore, denial of the distribution of CENVAT credit during unregistered period shall be anomaly to law when tax liability incurred is ordered to be paid. Accordingly, in so far as distribution of service tax credit prior to 1.4.2008 is concerned, the appellant is entitled to the CENVAT credit thereof. - Decided partly in favour of assessee.
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2015 (11) TMI 232
Denial of refund claim - CHA Service - Section 11B - CENVAT Credit - Held that:- The order dated 24.12.2009 was passed in adjudication proceedings initiated by a show cause notice alleging illegal availment of cenvat credit and for recovery of the same along with interest and penalties. These proceedings culminated in the order dated 24.12.2009 whereunder the finding is recorded that the appellant was disentitled to avail cenvat credit, but the proceedings were dropped since the appellant had already reversed the cenvat credit and had remitted interest thereon, in cash vide TR-06 challan. The order dated 24.12.2009 however imposed penalty under Rule 15 of Cenvat Credit Rules, 2004 on the appellant for having unauthorizedly availed cenvat credit. This proceeding has become final. - appellant cannot be heard to contend that cenvat credit on CHA input service availed by it was valid and legitimately availed. The adjudication order dated 24.8.2009 and the conclusion thereon that the appellant irregularly availed cenvat credit estopps the appellant for canvassing such a contention. The conclusion of the authorities below that the appellant was disentitled to refund of ₹ 12,48,993/- is therefore impeccable and warrants no appellate intervention. - Decided against assessee.
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2015 (11) TMI 231
Demand of service tax - activity of preparation of vegetables, fruits by processing the same & packing in consumer packs for their clients. - whether appellant is liable to discharge service tax liability under the category of "Business Auxiliary Services” or otherwise - Held that:- Appellant is preparing the vegetables by sorting, cleaning, boiling and freezing the same and subsequently packing it in unit packings to be sold by their the brand name. The first appellate authority has held that the activity undertaken by the appellant is not in respect of agriculture are in relation to agriculture. - appellant is undertaking the processing of vegetables on behalf of their client. It is settled law that revenue officers cannot argue against the board's circular. In the case in hand, the first appellate authority as well as the authorised representative of the revenue are arguing against the board's clarification as reproduced hereinabove. We do not have any hesitation to hold that such arguments put forth our view the activity of processing the vegetables by the appellant will be in relation to agriculture hence not liable to service tax under business auxiliary services. - impugned order is unsustainable and liable to be set aside - Decided in favour of assessee.
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2015 (11) TMI 230
Waiver of pre deposit - business auxiliary service - reverse charge mechanism - Held that:- Licensor acted on behalf of the appellant and undertook activity relating to sale of the appellant s goods for which the licensor was paid commission based upon the value of exports. Although the appellant has also tried to make an arguable case that the licensor did not act as an agent of the appellant and therefore was not falling in the category of commission agent. Prima facie, it is an arguable case on either side. The appellant has also argued that there was no need for it to indulge in any suppression as any service tax paid by it would have been available as Cenvat credit. Prima facie it is a fair argument in favour of non-invocability of the extended period. In these circumstances it is fair to order pre-deposit of approximately 50% of the impugned demand pertaining to the normal period in respect of both the show cause notices. Accordingly, we order pre-deposit of ₹ 1.25 crores with proportionate interest within four weeks - Partial stay granted.
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2015 (11) TMI 229
Demand of service tax - Business Auxiliary Services - appellant received some amount from various financial institutions as commission for marketing of Auto Loan products and also an amount from manufacturers of car under the head Target Incentive Scheme - Imposition of penalty - Invocation of extended period of limitation - Held that:- confirmation of tax liability under this head is upheld along with interest. Since the issue of whether such amount received by an assessee from financial institution for promoting the products like auto loan etc, would be taxable or not, has been settled by the Larger Bench [2014 (2) TMI 98 - CESTAT NEW DELHI (LB)], we find that the appellant could have entertained a bona fide impression that such amounts received as commission are not taxable. Accordingly, by invoking the provisions of Section 80 of the Finance Act, 1994, we set aside the penalties that are leviable on this count. Taxability of amount received and for achieving the target under Target Incentive Scheme - Held that:- Appellant had been given targets for specific quantum of sale by the manufacturers of the cars. As per the agreement, on achievement of such target and in excess of it, appellant was to receive some amount as an incentive. Service Tax liability confirmed against the appellant on the amount received as incentive for achieving the targets under Business Auxiliary Services is unsustainable and liable to be set aside - Decided in favour of assessee.
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2015 (11) TMI 228
Leviability of service tax - franchise service - Held that:- With effect from 16.6.2005 and that amount has already been paid along with interest and duly appropriated. Indeed we find that while imposing penalty under Section 78 ibid only the amount of service tax leviable for the period prior to 16.6.2005 has been taken into account and no penalty was levied in relation to the amount of service tax leviable with effect from on 16.6.2005. As is evident from the forgoing the only issue involved in this case is whether condition No. iv of the definition of franchise given in Section 65(47) of Finance Act, 1994 was satisfied in terms of the franchise agreement entered into by the appellant. - franchisee was obliged not to open any school with any name in the existing premises/building operational area of the school. In other words, the franchisee was free to open any school with any name in a "different premises/building operational area of the school". Thus in our view condition No. iv of the definition of franchise quoted above is not satisfied in the present case and consequently the agreement does not fall in the category of franchise agreement as defined under Section 65(47) ibid prior to 16.6.2005 - no service tax is leviable under franchise service prior to 16.6.2005 - Impugned order is set aside - Decided in favour of assessee.
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Central Excise
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2015 (11) TMI 251
Clandestine removal of goods - Imposition of penalty - Benefit of Cum duty - Held that:- on the issue of cum-duty is also required to be decided by the Adjudicating authority in view of the law laid down by Supreme Court in the case of Amrit Agro Industries Limited vs. Commissioner (2007 (3) TMI 14 - SUPREME COURT OF INDIA) and CCE Jaipur vs. Dugar Tetenal India Limited (2008 (3) TMI 50 - SUPREME COURT ). - Matter remanded back - Decided in favour of assessee.
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2015 (11) TMI 250
Imposition of penalty u/s 11AC - Malafide intention - Evasion of duty - Held that:- The duty involved in the present case is ₹ 24,376/-. We note that the appellant is not disputing the duty amount as also the interest leviable thereon. Their only submission is that they had no wilful intention to evade payment of duty or suppression of fact and non-inclusion of the cost of printing cylinder was a bona fide mistake. - Keeping in view the overall conduct of the appellant at the time of audit as also the amount of duty involved in the case, we do not consider the present case to be a fit case for imposition of penalty under Section 11AC. We, therefore, set aside the penalty under Section 11AC. Barring the above modification, the impugned order is upheld. - Appeal disposed of.
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2015 (11) TMI 249
Denial of a refund of the interest recovered by the revenue - delayed payment of duty which was later found as not sustainable - Held that:- if at all, there is any short payment of duty, the mandate of law is that a show cause notice is required to be issued as per section 11 AC of the Act which Department has failed to do so. Therefore, without issuance of the show cause notice, demand of duty cannot be confirmed against the appellant and consequently be recovered from the appellant. In case when demand is not sustainable question of payment of interest does not arise. In this case demand of interest has been confirmed against the appellant for delayed payment without issuance of the show cause notice. Therefore, demand of interest is not sustainable. Consequently, the interest recovered from the appellant is to be refunded. - no show cause notice has been issued to the appellant. Therefore, adjustment of demand of interest is not permissible. In these terms, the impugned order deserves no merits. Hence same is set aside. - Decided in favour of assessee.
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2015 (11) TMI 248
Denial of CENVAT Credit - appellant had availed Cenvat credit on invalid documents - Held that:- Adjudicating Authority has come to a conclusion that extended period can be invoked by observing that the appellant had not informed the department of availment of Cenvat credit despite being in knowledge that they are not eligible for availment of such Cenvat credit. I find that the Adjudicating Authority's findings are misdirected on the limitation issue, inasmuch the Cenvat credit was availed during the period March to November 2005, and show-cause notice is issued in October 2007, it is almost beyond two years - Appellant had been filing their returns regularly with the authorities and said returns indicated the Cenvat credit availed by them. It is also brought on record that earlier audit of the appellant was conducted by the authorities and audit report was forwarded to the appellant on 28.03.2006 wherein this point was raised and appellant vide their letter dated 28.05.2006 specifically explained the reasons of their availment of Cenvat credit. There was no further correspondence between the assessee and the department on this, and directly a show-cause notice was issued by invoking the extended period. - invocation of the extended period in these circumstances, is incorrect as I find that covering letter vide which monthly returns were filed with the authorities indicated copies of RG23A part I and II as enclosures. In my view, in the facts of this case, the invocation of the extended period for demanding the Cenvat credit as being suppressed is incorrect. - Decided in favour of assessee.
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2015 (11) TMI 247
Denial of refund claim - Bar of limitation - Held that:- As regards, rejection of refund of priod of limitation, I find that the said appeal needs to be rejected and both the lower authorities were correct in coming to a conclusion that refund claim of ₹ 4,39,002/- is time barred. It is seen from the records that the assessee had issued credit note in March 2003 and refund claim is filed on 5th April, 2004 which is beyond the period of 12 months as mandated in Sec. 11B of the Central Excise Act, 1944. Refund due of revision in price escalation clause - refund claim was filed withing one year from the issuance of credit notes - Held that:- The issuance of credit note by the assessee is not disputed. If that be so the judgment of Hon ble High Court Rajasthan in the case of A.K. Spintex Ltd. (2008 (11) TMI 89 - RAJASTHAN HIGH COURT ) is directly on the point. It is to be recorded that the judgment of Hon ble High Court of Andhra Pradesh in the case of A.P. Papers Mills Ltd. (2014 (3) TMI 671 - ANDHRA PRADESH HIGH COURT ) also covers the issue in favour of the assessee, as to that refund claim filed by an assessee, he has to only satisfiy the provision of Sec. 11B of the Central Excise Act, 1944 and not any further. I find that in the case in hand, the appellant has satisfied all the requirements of provision of Sec. 11B of the Central Excise Act, 1944. In view of forgoing appeal filed by the revenue of devoid of merits - Appeal disposed of.
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2015 (11) TMI 246
Denial of CENVAT Credit - Credit in respect of imported fitment which has been cleared under Rule 4(5)(a) on job work challan to M/s. NSSL and M/s. NSSL has carried out process of fitting of fitment in the cylinder head and the said final products have been exported directly from the premises of Job worker - Held that:- It is observed that even though partly goods were manufactured by the job worker but part of the process i.e. fitting of fitment supplied by the appellant was carried out by the job worker on behalf of the appellant and thereafter the final product has been completed, the said final product since then exported on behalf of the appellant only therefore even though part manufacturing carried out by job worker on their own since entire final product is complete on behalf of the appellant and said final product has been exported on behalf of the appellant they are legally entitled for Cenvat Credit in respect of fitment. From the records, it is observed that the supply of fitment by the appellant under Rule 4(5)(a), use of said fitment for export goods and the export of the final product though from the premises of the job worker ie M/s. NSSL is not under dispute, on the basis of invoices, ARE 1 and other export documents, the Cenvat Credit in respect of fitment used in the export goods cannot be denied. - from where the goods have been exported is not much of relevance, it is export irrespective of locations, either from the appellants premises or from the job workers premises(M/s. NSSL) the Cenvat Credit should be allowed on input used in the export goods. In view of my above discussion, I am of the considered view that appellant is entitled for the Cenvat Credit in respect of fitment used in the final product by the job worker M/s. NSSL and cleared final product from the premises of job worker for export on behalf of the appellant. - Decided in favour of assessee.
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2015 (11) TMI 245
Duty demand - Cum duty benefit - Shortage of stock - Clandestine removal of goods - Held that:- To claim the benefit of Central Excise duty paid in respect of invoice nos.1 to 4, in support of their contention that a part of the goods were cleared on payment of duty cannot be appreciated and accepted inasmuch as the appellant had not produced any evidence in respect of clearance of 20.315 MTs of towers to M/s. U.R. Telecom (P) Ltd. As such, I am of the view that the duty demand in respect of the said quantum of supplies made by the appellant is required to be upheld. However I am of the view that the entire consideration has to be treated as cum duty and the benefit of duty has to be extended to the appellant. As regards confirmation of demand of duty in respect of 8.256 MTs, detected as short stock by the visiting officers, I find that the said visit in the factory was on 09/09/1998. The invoices No.8 to 15 under the cover of which the appellant cleared the goods to M/s. U.R. Telecom Research Pvt. Ltd. are dated 11/08/1998, 12/08/1998 and 13/08/1998. This clearance was during the period of less than one month prior to the visit of the officers. As such, it can be reasonably concluded that such non-duty paid clearances from the factory, contributed to the shortages of the final stock of the appellant. Otherwise also in the absence of any corroborative material showing clearance of such short found final goods to any other person, I am of the view that the confirmation of demand of duty in respect of the same on the findings of clandestine removal is not in accordance with the settled judicial precedent decisions. - Impugned order is set aside - Decided partly in favour of assessee.
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2015 (11) TMI 244
Benefit of SSI Notification No.8/2003-CE dt. 01/03/2003 - Clubbing of turnover of exempted units situated in Baddi, Himachal Pradesh - Denial on the ground that aggregate value of clearances of all excisable goods of the two units i.e. the one at Hyderabad and the one at Himachal Pradesh put together has exceeded ₹ 400 lakhs during the financial year 2006-07, thereby making them ineligible for availing the benefit of SSI exemption for the period April 2007 onwards in terms of condition No2(vii) of the Notification Held that:- It is settled law that we cannot go into the intentions of the legislature, unless there is ambiguity or lack of clarity in the notification. The notification has to be implemented according to the meaning of the words and clauses used therein. It is nobody s case that Notification No.49/2003 and No.50/2003 have been mentioned in paragraph 4 of the notification. When Notification No.49 & 50/2003 have not been mentioned in paragraph 4, we cannot read the same into the notification. Therefore the impugned order cannot be sustained and accordingly we set aside the impugned orders - Decided in favour of assessee.
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2015 (11) TMI 243
Denial of CENVAT Credit - Invocation of extended period of limitation - held that:- Prior to reference of this Vandana Global Ltd case [2010 (4) TMI 133 - CESTAT, NEW DELHI (LB) ] to the Larger Bench of this Tribunal, in various judgments the Tribunal allowed the credit of structural steel item and thereafter one of the Division Bench of this Tribunal had contrary view and matter was referred to the Larger Bench. Under this position of law on the issue of Cenvat Credit in respect of structural steel items assessee had bonafide belief and rather bound by the judgment of this Tribunal wherein Cenvat Credit was allowed therefore it cannot be alleged that the appellant has suppressed the fact or any ingredient as provided under proviso to Section 11Ac is applicable in the fact and circumstances of the case. The case of N.R. Agarwal Industries [2014 (5) TMI 603 - GUJARAT HIGH COURT], Hon'ble Gujarat High Court has held that longer period of limitation is not invokable in the case of Cenvat Credit availed in respect of goods namely Angles, Channels, Tubes Rails etc. In all other judgments cited by the Ld. Counsel, this Tribunal has taken consistent view that since admissibility of Cenvat credit in respect of structural steel items is an issue of interpretation of Cenvat Rules, therefore extended period of limitation is not invokable. - Decided in favour of assessee.
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2015 (11) TMI 242
Duty demand - discrepancy in relation to recording of e-Challans in the ER-1 return - Divergence in recording correct opening balances consistent with previous closing balances - Held that:- Entire demand has been raised purely on the basis of the figures indicated in the Account current as shown in both ER-1 returns. On perusal of e-receipt challan No. 01498 and No. 01360 both dated 04.11.2010, the appellants have remitted an amount of ₹ 3,88,310/- and ₹ 1,91,580/- respectively in their Account, Current and this can be easily verified from ACS data. Appellants plea that there is an error while filing e-return for the month of December and January in both the cases. The appellants deposit of the above amount in their Account Current for the month of November is not in dispute. - Both the lower authorities confirmed the demand only on the ground that the appellant failed to produce sufficient evidence of payment details. Considering the proof of payment of e-receipts, which is on record and the same can be verified from the system ACES data base by the adjudicating authority, confirming the demand only on the basis of ER-1 entry is not justified. - matter remanded back to re-adjudicate - Decided in favour of assessee.
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2015 (11) TMI 241
Rectification of mistake - Valuation - Inclusion of freight and transit insurance charges and Dharmada charges - Held that:- Apex Court in the case of Mentha & Allied Products Ltd. Vs. Commissioner of C. Ex., Meerut reported in [2004 (5) TMI 74 - SUPREME COURT OF INDIA] has held that when different views were expressed at different stages by the Tribunal and High Courts, application of extended limitation period under proviso to section 11A1 and penalty under section 11AC would not be justified. - ratio of this judgment would be squarely applicable to the facts of this case, and therefore, there no penalty would be imposable on the appellant for non-payment of duty of dharmada charges - Tribunal's order uphelds only part of the Commissioner (appeals)'s order confirming the duty demand on dharmada charges and there is no confirmation of the part of the Commissioner (appeals)'s order imposing penalty on the appellant. However, for removal of any doubts, it is clarified that by the final order dated 5/2/2014 [2014 (4) TMI 606 - CESTAT NEW DELHI] only the part Commissioner (appeals) order confirming duty demand on dharmada charges has been upheld and the part of the order confirming duty demand on freight and transit insurance and imposing penalty on the appellant is set aside. - Decided partly in favour of assessee.
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2015 (11) TMI 240
Duty demand - Goods destroyed in fire - CENVAT Credit - Invocation of extended period of limitation - Held that:- The main duty demand of ₹ 95,43,677/- is in respect of alleged loss in fire of certain finished products. According to the appellant, however, the goods lost were the inputs in process i.e. work-in-progress goods in the reaction tanks and were not finished goods, as after the completion of manufacturing process, they are taken out from the reaction tanks, tested for quality control and are packed and as such, the goods lying in reaction tanks have to be treated as work in progress and not finished goods and therefore, they were not entered in RG I register. Prima facie, we find merit in this plea of the appellant. Moreover, we also find that while the Superintendent had submitted his report on 3.3.2010 and clarifications were given by the appellant on 25.4.2011, but still show cause notice was issued beyond the normal period of limitation of one year. In the circumstances of the case, longer period of limitation under section 11A is not invokable in terms of Tribunal's decision in Nectar Lifesciences Ltd. (2013 (8) TMI 843 - CESTAT NEW DELHI). As regards the Cenvat credit demand of ₹ 4,41,949/-, the same is in respect of loss of Cenvat credit availed inputs namely the packing material and solvent, Though on merits, the appellant would not be eligible for Cenvat credit, the demand for this Cenvat credit is, prima facie, not sustainable as, an discussed above, the same is time barred. - Stay granted.
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CST, VAT & Sales Tax
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2015 (11) TMI 262
Challenge to rule 57A of Assam Value Added Tax Rules, 2005 - Specific activities which are not to be treated as manufacture - Availment of tax benefit - request for grant of eligibility certificate - Held that:- rule 57A framed by way of delegated legislation is beyond the competence of the State. The definition of "manufacture" in the Act clearly discloses that the process of manufacture would mean that the process of change in the product and bringing out a new product or combination of products in the process to bring out a new product would amount to manufacture. The process of making coal from coke will bring a new product from the coal; therefore, it amounts to manufacture within the definition of section 2(30) of the Act. Under the guise of the rule-making power, the State could not have amended the definition of "manufacture" to omit or to alter the activities, which come within the definition of "manufacture", that apart, the decision of the Supreme Court in Mahabir Vegetable Oils (P.) Ltd. (2006 (3) TMI 234 - Supreme Court) succinctly makes a distinction between the legislation and subordinate legislation and the limitation of subordinate legislation. Delegated legislation cannot take away the right that is vested or accrued by way of retrospective amendment. Therefore, in view of the said reasons, we hold that the amended rule 57A(1) ultra vires the provisions of the definition of "manufacture" under the Act and beyond the competence of rule-making power to alter the definition of "manufacture". Dispute with regard to the date on which the industry was set up and it commenced the commercial production. - Held that:- disputes are basically questions of fact, which has to be resolved by the industries Department where the application for grant of eligibility certificate is pending - Petition disposed of.
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2015 (11) TMI 261
Exemption from sales tax - HDPE fabrics - Assistant Commissioner sustained 50 per cent of the suppressions and modified the penalty accordingly - Held that:- Discrepancy, as attempted to be pointed out by the learned counsel appearing for the petitioner that there was an error in the number of slips in the first round of litigation and therefore, there is error in the determination of escaped assessment in respect of HDPE bags. This was corrected by the Tribunal by way of remand. But, on remand from the Tribunal, we find the second order was passed by the assessing authority after detailed verification of D7 records and the lorry receipts to come to a conclusion as to the quantum and sales of bags, allegedly HDPE fabrics. We find such a determination made by the assessing authority has been rightly confirmed by the Tribunal. We are not inclined to go into individual slips to find fault with the calculation made by the assessing authority, which was confirmed by the Tribunal. Being pure question of fact, we find no error in the order of the Tribunal. We find no question of law much less any substantial question of law arises for consideration in these revisions. Insofar as levy of penalty under section 16(2) of the TNGST Act, for the assessment year 1987-88 and under section 12(5)(iii) of the TNGST Act for the assessment year 1988-89 is concerned, the provision of section 16(2) and section 12(5)(iii) of the TNGST Act provides for levy of penalty between 50 per cent and 150 per cent. The assessing authority levied penalty at 150 per cent whereas the Tribunal has thought it fit to reduce the same at 75 per cent. We find no reason to interfere with the discretion exercised by the Tribunal in the case of suppression of material fact with an intention to avail wrongful benefit. - Decided against assessee.
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2015 (11) TMI 260
Disallowance of set-off on purchases of goods for scientific research and development - purchases of cement used in the foundation of plant and machinery - Rule 41D of the B.S.T Rules - Held that:- what Rule 41D provides for is a drawback, set-off of a tax paid by a manufacturer in respect of purchases made on or after the notified day. The language is that in assessing the amount of tax payable in respect of any period by a Registered dealer who manufactures goods for sale or export, the claimant/dealer can claim set-off and the Commissioner shall allow in respect of purchases made by such claimant dealer on or after the notified day, of any goods specified in entry 6 of Schedule 'B' and in Schedule 'C' and used by him within the State. The rule does not stop here. It goes on further to say that the set-off is admissible if the purchased goods are used by the claimant dealer within the State in the manufacture of goods [not being kerosene] for sale, which manufactured goods are in fact been sold by him or exported or in the packing of the goods so manufactured. The set-off is subject to reduction specified in sub-Rule (3). First Appellate Authority was concerned with a set-off on purchases of scientific equipments and other materials which are used for research and development purposes. - set-off can be claimed and granted provided the manufacturer sells the goods manufactured by using the goods purchased and during the assessment year or period in question. It is in that period and if at all the conditions under this sub-rule are satisfied that this set-off is admissible. Once it is found that the goods brought in are not used in the manufacture of goods for sale and which goods have in fact been sold by the dealer or exported by him or in the packing of the goods so manufactured, then, there was no scope for any such set-off. In the case of set-off under Rule 41D of purchase of cement the Tribunal as also the First Appellate Authority found that the cement may have been brought in and purchased for the purposes of strengthening the foundation of the manufacturing plant and the manufacturing plant may have been used in the manufacture of goods sold, still, the cement brought in was not used for such purpose. The cement was not used during the course of the manufacture of goods but substantial portion of this cement was used for construction of staff quarters etc. That had nothing to do with the manufacturing activity. The cement brought in having no direct connection with the manufacturing activity that the Tribunal and the First Appellate Authority concluded that no set-off is admissible in terms of the rule and as it stands. - Decided against assessee.
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