TMI Tax Updates - e-Newsletter
December 27, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Highlights / Catch Notes
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Income Tax:
Rectification of an order u/s 154 - there is merit in the claim for deduction u/s 115JB(6) of the Act and the same needs to be allowed as per the requirement of the Act while computing book profit u/s 115JB of the Act. - AT
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Income Tax:
The assessee is entitled to claim the deduction u/s 80IA(4) undertaking wise and the loss having been adjusted against business income, cannot curtail the deduction claimed u/s 80IA(4) - AT
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Income Tax:
Capital gains consequent to the development agreement - year of assessment - A transfer can be said to have taken place in the year when the possession was handed over by the assessee. Thus, capital gains tax, if any, is attracted in the year of agreement and not in the later years. - AT
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Income Tax:
Addition towards partners’ remuneration - there was a clause for increase/decrease of remuneration as per mutual consent before the end of the financial year - enhanced remuneration is authorized by the partnership deed which required to be allowed. - AT
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Income Tax:
Power of tribunal u/s 254 to rectify an order - The Tribunal travelled far beyond its power of rectification in accepting the assessee’s various contentions which were not confined to pure factual errors apparent on the record. - HC
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Customs:
Levy of customs duty - reimport - Mere filing of the documents at page 80 and 81 of the paper book does not exonerate the appellant from its duty liability without filing the Bills of Entry disclosing the value of the repair/renewal/modification and installation of machinery done to the vessel including freight and insurance charged incurred. - AT
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Central Excise:
Manufacture - The process of "cropping", which merely involves cutting away mechanically loose ends from the fabric to give a clean and smooth appearance will not fall within the ambit of "or any other process" for the purposes of Chapter Note 3 of Chapter 52 or Chapter Note 4 of Chapter 55 of the Schedule to the Central Excise Tariff Act, 1985 - AT
Articles
Notifications
GST - States-
G.O.MS.No. 599 - dated
12-12-2017
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Andhra Pradesh SGST
Exemption of tax over and above 2.5% for public funded research institutes.
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G.O.MS.No. 598 - dated
12-12-2017
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Andhra Pradesh SGST
Amendments in the Schedule to the notification issued in G.O.Ms.No.582, Revenue (CT-II) Dept., Dt.12-12-2017 - Granting exemptions to certain goods.
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G.O.MS.No. 597 - dated
12-12-2017
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Andhra Pradesh SGST
Prescribing State Tax rate of 0.05% on intra-State supply of taxable goods by a registered supplier to a registered recipient for export subject to specified conditions.
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G.O.Ms.No. 596 - dated
12-12-2017
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Andhra Pradesh SGST
EXEMPTION FROM PAYMENT OF TAX UNDER SECTION 9(4) OF THE SGST ACT, 2017 TILL 31-03-2018.
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G.O.MS.No. 595 - dated
12-12-2017
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Andhra Pradesh SGST
Amendment in the Notification No. G.O.MS.No.582, Revenue (CT-II) Dept., Dt.12-12-2017.
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G.O.MS.No. 594 - dated
12-12-2017
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Andhra Pradesh SGST
Amendment in the Notification No. G.O.Ms.No.588, Revenue (CT-II) Dept., Dt.12-12-2017.
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G.O.MS.No. 593 - dated
12-12-2017
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Andhra Pradesh SGST
Amendments in the Notification issued in G.O.Ms.No.588, Revenue (CT-II) Dept., Dt.12-12-2017 - Exempting supply of services associated with transit cargo to Nepal and Bhutan.
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G.O.MS.No. 592 - dated
12-12-2017
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Andhra Pradesh SGST
AMENDMENT TO G.O.Ms.No. 582, REVENUE (CT-II) DEPT., DATED : 12-12-2017.
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G.O.MS.No. 591 - dated
12-12-2017
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Andhra Pradesh SGST
Exempt Intra state supply of heavy water and nuclear fuels to NPCIL.
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G.O.Ms.No. 590 - dated
12-12-2017
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Andhra Pradesh SGST
Amendment to G.O.Ms.No.588, Revenue (CT-II) Dept., Dt.12-12-2017 to exempt right to admission to the events organized under FIFA U-17 World Cup 2017.
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G.O.Ms.No. 589 - dated
12-12-2017
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Andhra Pradesh SGST
Amendment to Exemption Notification No.G.O.Ms.No.588, Revenue (CT-II) Dept., Dt.12-12-2017. to exempt services provided by Fair Price Shops to Government and those provided by RWCIS & PMFBY for MNAIS & NAIS, and insert explanation for LLP.
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G.O.MS.No. 587 - dated
12-12-2017
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Andhra Pradesh SGST
Exemption for second hand goods dealers operating under Margin Scheme notified under section 11 (1).
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G.O.MS.No. 586 - dated
12-12-2017
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Andhra Pradesh SGST
Notification Exempting supplies to a TDS deductor by a supplier, who is not registered, under section 11 (1).
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G.O.MS.No. 585 - dated
12-12-2017
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Andhra Pradesh SGST
Exemption from reverse charge up to ₹ 5000 per day under section 11 (1).
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G.O.Ms.No. 583 - dated
12-12-2017
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Andhra Pradesh SGST
2.5% Concessional SGST Rate For Supplies To Explorataion And Production Notified Under Section 11 (1).
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G.O.MS.No. 581 - dated
8-12-2017
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Andhra Pradesh SGST
Andhra Pradesh Goods and Services Tax (Twelth Amendment) Rules, 2017.
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G.O.MS.No. 567 - dated
24-11-2017
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Andhra Pradesh SGST
Notifying the registered person who did not opt for the composition levy under section 10 of the said Act as the class of persons who shall pay the state tax on the outward supply of goods at the time of supply as specified in clause (a) of sub-section (2) of section 12 of the said Act.
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G.O.MS.No. 566 - dated
24-11-2017
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Andhra Pradesh SGST
Exempting from obtaining Registration, persons making supplies of services, other than supplies specified under sub-section (5) of section 9 of the said Act through an electronic commerce operator who is required to collect tax at source under section 52 of the said Act, and having an aggregate turnover, to be computed on all India basis, not exceeding an amount of twenty lakh rupees in a financial year.
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G.O.MS.No. 565 - dated
24-11-2017
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Andhra Pradesh SGST
Waiver of the amount of late fee payable by any registered person for failure to furnish the return in FORM GSTR-3B for the month of October, 2017 onwards by the due date under section 47 of the said Act.
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G.O.MS.No. 564 - dated
24-11-2017
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Andhra Pradesh SGST
Seeks to extend the due date for submission of details in Form GST-ITC-04 till 31.12.2017.
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G.O.MS.No. 563 - dated
24-11-2017
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Andhra Pradesh SGST
Seeks to extend the time limit for filing of Form GSTR-4 till 24-12-2017
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G.O.MS.No. 562 - dated
24-11-2017
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Andhra Pradesh SGST
Special Procedure for filing outward supplies for suppliers whose aggregate turnover is up to 1.50 crore rupees in the preceding financial year or the current financial year.
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G.O.MS.No. 561 - dated
24-11-2017
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Andhra Pradesh SGST
Seventh amendment to the APGST Rules, 2017 - Corrigendum Orders.
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G.O.MS.No. 555 - dated
17-11-2017
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Andhra Pradesh SGST
Amendments in the Notification No. G.O.Ms.No.264, Revenue (Commercial Taxes-II), 29th June, 2017 - No ITC Refund For Certain Commodities.
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G.O.MS.No. 554 - dated
17-11-2017
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Andhra Pradesh SGST
Amendments in the Notification No. G.O.Ms.No.255, Revenue (Commercial Taxes-II), 29th June, 2017. - Payment of Reverse Charge on Raw Cotton.
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G.O.Ms.No. 495 - dated
3-11-2017
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Andhra Pradesh SGST
Andhra Pradesh Goods and Services Tax (Tenth Amendment) Rules, 2017.
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51/2017 - State Tax - dated
27-11-2017
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Delhi SGST
Delhi Goods and Services Tax (Eleventh Amendment) Rules, 2017
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50/2017 - State Tax - dated
27-11-2017
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Delhi SGST
Waiver the late fee payable FORM GSTR-3B for the months of August and September, 2017
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46/2017 - State Tax - dated
27-11-2017
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Delhi SGST
Seeks to amend Notification No. 8/2017- State Tax, dated the 30th June, 2017
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40/2017 - State Tax - dated
27-11-2017
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Delhi SGST
Regarding provisions of furnishing returns for dealers having turnover less than 1.5 cr.
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2017 (12) TMI 1269
Cash deposits made in ICICI Bank - deemed income - Held that:- It is true that assessee has furnished cash flow statement from 01-04-2008 till 31-03-2010 to explain various withdrawals in the bank and expenditures. The opening cash balance of ₹ 2,99,664/- considered by the CIT(A) does not pertain to the year under consideration. This is the balance in earlier year. Remand Report of the AO has not been mentioned by the CIT(A) in the order. Neither the assessee also placed the copy of remand report on record. Assessee has filed a cash flow statement and justified the deposits in bank accounts.
Most of the amounts stated to have been received are advances made out of the withdrawals made in earlier years. This aspect has not been considered by the Ld.CIT(A). Even though, Ld.CIT(A) rejected the contentions that the creditworthiness of those people have not been proved, these are not cash credits by them but return of advances given to them earlier. If those transactions are to be disbelieved, then, advances to that extent would be available in cash balance with assessee. Since the verification of cash flow statement by AO is not on record, it is of the opinion that AO can verify the withdrawals of cash in earlier year and if those are not fully utilised for construction payments of the building, being constructed then, assessee’s contentions that these are advances given earlier and returned during the year should be accepted. For this limited purpose, the issue is restored to the file of AO to examine the cash flow statement and decide on the basis of the facts as available. - Decided in favour of assessee for statistical purposes.
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2017 (12) TMI 1266
TDS u/s 194A - non deduction of tds on interest payment - Held that:- As per the proviso, if the deductee admits the income and pays taxes on such income, the assessee is not deemed to be assessee in default and the disallowance u/s 40(a)(ia) does not attract. Though the amendment has come into effect w.e.f. 01.04.2013, the Hon’ble Delhi High Court in the case of CIT Vs. Ansal Landmark (2015 (9) TMI 79 - DELHI HIGH COURT) held that the second proviso to section 40(a)(ia) is declaratory and curative in nature and has retrospective effect from 01.04.2005. The Ld.CIT(A) has allowed the assessee’s appeal following the order of the Hon’ble Delhi High Court. During the appeal hearing, the Ld.DR did not place any other decision to controvert the reliance placed by the Ld.CIT(A). Since the CIT(A) allowed the assessee’s appeal following the decision of Hon’ble Delhi High court, we do not find any infirmity in the order of the Ld.CIT(A) and the same is upheld. Appeal of the revenue is dismissed.
Addition towards partners’ remuneration - enhanced remuneration paid to partner - Held that:- As gone through the partnership deed and in the partnership deed with regard to payment of remuneration,there was a clause for increase/decrease of remuneration as per mutual consent before the end of the financial year. In the instant case, there were only two partners. The P&L account and the financial statement were examined by both the partners and agreed for payment of remuneration. The partnership deed also limits the remuneration as permissible u/s 40(b) of I.T.Act. Since there are only two partners in the partnership firm, and the remuneration paid is permissible as per partnership deed and the books of accounts are being verified and certified by both the partners as stated by the Ld.AR, we are in agreement with the submission made by the Ld.AR that the payment of remuneration is in accordance with the partnership deed. The Ld.AR further submitted that the managing partner has admitted the income in his hands and paid taxes. Therefore, we hold that the remuneration of ₹ 5,30,000/- is authorized by the partnership deed which required to be allowed. See CIT Vs. Asian Marketing [2012 (5) TMI 56 - RAJASTHAN HIGH COURT ]. Therefore, we set aside the order of the lower authorities and allow the remuneration paid to the partners
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2017 (12) TMI 1265
Disallowing the expenses towards warehousing expenses being expenditure on repairs - nature of expenses - revenue or capital expenditure - Held that:- The undisputed facts of the issue are that the assessee has incurred an expenditure to the tune of ₹ 1,61,33,801/- on the repairs of compound wall which comprises payment for cost of bricks, cement steel, TMT bars , excavation and labour charges etc. Now the issue before us is whether the repair of compound wall constitutes revenue expenses in nature or falls under the category of capital expenditure. After examining the facts on records and relevant contentions, we find that the expenditure is clearly of revenue in nature as the same were incurred to repair and restore the dilapidated wall. Moreover, the case of the assessee finds support of the decision of the Hon’ble Madras High Court in the case of Southern Roadways Ltd (2007 (6) TMI 193 - MADRAS HIGH COURT), wherein it has been held that the expenditure incurred on compound wall is revenue expenditure - Decided in favour of assessee
Disallowance u/s 40(a)(ia) - non deduction of tds on payment made to Saikrupa Food Services Private Limited (SKFS) - Held that:- No disallowance is called for as the recipient has already paid the taxes on the sources of income and due certificate was furnished by the assessee. We also find that the case law relied upon by the ld. AR in the case of Ansal Land Mark Township P Ltd (2015 (9) TMI 79 - DELHI HIGH COURT) support the issue of the assessee - Decided in favour of assessee
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2017 (12) TMI 1264
Bogus purchases - profit rate determination - Held that:- We uphold addition in the instant case by directing the AO to re-compute income after applying profit rate @ 5% of the bogus purchases to the tune of ₹ 8.45 crores and appeal of the assessee is partly allowed.
We would like to clarify that the claim of the assessee for payment of additional VAT and interest on these alleged bogus hawala purchases from twelve dealers shall be verified by the AO as the said claim is set up for the first time before the tribunal and also since we have factored the additional VAT and interest etc. paid by the assessee on such alleged hawala purchases while estimating income on the said alleged hawala purchases by applying profit rate @5% of the alleged bogus purchases of ₹ 8.45 crores for the impugned assessment year, the deduction on account of additional VAT, interest etc paid by the assessee on these alleged bogus purchases cannot be availed once again in the year of determination of the additional liability by Maharashtra VAT authorities or in the year of payment thereof by the assessee as the case may be, as otherwise it will lead to double deduction. See Nikhil Kishore Gandhi case [2017 (12) TMI 1278 - ITAT MUMBAI]. The assessee gets part relief.
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2017 (12) TMI 1284
Addition u/s 41 - remission / cessation of liability - Held that:- When the assessee has furnished names and addresses of the sundry creditors and other relevant details the Assessing Officer could have conducted necessary enquiry with the concerned creditors for ascertaining the fact whether the liability is still continuing or not. Without making any such enquiry, the Assessing Officer cannot presume cessation of liability. More so, when the evidence brought on record indicate that the assessee has continued payment to the concerned parties subsequently to discharge the liability.
Though, DR has submitted before us that the first appellate authority has considered additional evidences in violation of rule 46A, however, after perusing the record we have found that the so called additional evidences are nothing but details of payment made to sundry creditors subsequent to the relevant financial year and part of such evidence was also produced before the Assessing Officer during the assessment proceedings. That being the case, we do not accept the contention of the learned Departmental Representative that the first appellate authority has committed any grave error which could invalidate the order passed by him. - Decided against revenue
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2017 (12) TMI 1283
Rejection of rectification petition u/s 154 on MAT applicability - provisions of sec. 115JB(6) is applicable to the assessee, since its unit is located in Special Economic Zone - whether admitting the liability under MAT does not constitute mistake apparent from record - Held that:- We have noticed that the Ld CIT(A) has taken the view that the issue of deduction u/s 10B is debatable in nature and hence the same falls outside the scope of sec. 154 of the Act. We have earlier noticed that the claim of the assessee related to sec. 115JB(6) of the Act and the ld CIT(A) has misdirected himself in this regard by presuming that the claim was u/s 10B. We have also noticed that the deduction u/s 10B of the Act is no longer available while computing book profit u/s 115JB of the Act.
The assessing officer has taken the support of decision rendered in the case of Goetz (India) Ltd.[2006 (3) TMI 75 - SUPREME Court] We notice that the Ld A.R has rightly pointed out that the AO was not correct in referring to that decision in the facts and circumstances of the case. Even otherwise, it is a mistake very much glaring and obvious and hence requires rectification. It is also settled proposition that income tax cannot be collected without the authority of law.
Thus we are of the view that there is merit in the rectification petition filed by the assessee. We notice that there is merit in the claim for deduction u/s 115JB(6) of the Act and the same needs to be allowed as per the requirement of the Act while computing book profit u/s 115JB of the Act. Accordingly we set aside the order passed by Ld CIT(A) and direct the AO to allow the claim made in the rectification petition filed by the assessee.
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2017 (12) TMI 1282
Penalty u/s 271(1)(c) - non recording of satisfaction by AO - Held that:- Recording of the satisfaction in the assessment order about the initiation of penalty is must. In absence of proper satisfaction about the initiation of penalty order the penalty is liable to be deleted. Thus, the submissions of the ld. AR for the assessee are convincible that the penalty was levied by assessing officer without proper satisfaction. In our view the ratio of decision in Reliance Petroproducts Ltd (2010 (3) TMI 80 - SUPREME COURT ) is directly applicable on the facts of the present case. Thus, the ld AR of assessee is succeeded in convincing us on his first two preposition that neither the AO recorded his satisfaction about initiating and in imposing the penalty on particular limb of section 271(1)(c) and there was difference of opinion on the disallowance of expenditure. Hence, the grounds of appeal raised by the assessee are allowed
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2017 (12) TMI 1263
Penalty u/s. 271(1)(c) - non specification of charge - defective notice - Held that:- Assessing Officer has not specified the charge on which he has imposed the penalty u/s. 271(1)(c) of the Act. The Assessment Order as well as the penalty order only show that the Income Tax Officer is satisfied that the income of the assessee falls within the purview of section 271(1)(c) of the Act. The Assessing Officer did not even mention that the assessee either concealed his income or furnished inaccurate particulars of such income. The issue of whether the penalty levied u/s. 271(1)(c) of the Act is sustainable in law in the absence of specific charge in the notice issued u/s. 274 r.w.s. 271(1)(c) - Decided in favour of assessee.
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2017 (12) TMI 1262
Validity of reopening of assessment - issue of notice against non-existent firm - Held that:- It is an undisputed fact that the assessee firm was converted into a private limited company on 20.02.2008 and the notice for re-opening of the assessment for the Assessment Year 2007-08 was issued on 27.02.2012 in the name of the firm which was non-existent as on the date of issue of notice under notice 148 of the Act. In other words, the proceedings were initiated by the Assessing Officer on a non-existent firm which is null and void. - Decided against revenue
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2017 (12) TMI 1261
Capital gains consequent to the development agreement - year of assessment - Held that:- As perused the development agreement-cum-GPA it shows that the builders and developers have to bear all the expenditure for preparation of the said plan, obtaining licenses, permissions as well as execution of work and thereafter the parties / land owners are entitled to 50% of the built up area; This shows that the assessees are merely entitled to a specified constructed space and not 50% of the land. The builders have taken over the possession of the entire land and in lieu thereof assessee was entitled to get only 2845.15 sft.
It is also not in dispute that as per the developer, vide letter dated 06.01.2015, cost of construction was ₹ 1,450/- per sft but as per the registered document, for the purpose of allotting the constructed place, the cost of construction is mentioned at ₹ 1,083/- per sft (1,108/- in the case of Smt. Usha Rani) and therefore, A.O. as well as Ld. CIT(A) have taken that figure as the value obtained by the assessee in lieu of transfer of the land. A transfer can be said to have taken place in the year when the possession was handed over by the assessee. Thus, capital gains tax, if any, is attracted in the year of agreement and not in the later years.
Since the developer has agreed to pay the assessee at the rate of ₹ 1,083/- per sft it is not appropriate to claim that only SRO value has to be adopted. If the assessee, purchased a land and the purchase consideration is not provided clearly, SRO value as per the Act as on specified date could have been taken into consideration whereas in the instant case the rate is specified by both the parties. Moreover we are not concerned with purchase cost. Under these circumstances, the concurrent findings of the A.O. as well as the Ld. CIT(A) do not call for any interference. - Decided against assessee.
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2017 (12) TMI 1260
Unexplained investments - explanation of sources - Held that:- It is an admitted fact that assessee opened the bank account on 09-03-2009 only and subsequently deposited cash to issue cheque/DDs to the said company for investment. It is also true that assessee has agricultural lands and agricultural income including amounts received on sale of agricultural lands, which are verifiable from the returns of earlier years. Thus, the source of agricultural income cannot be denied, just because assessee had not deposited the same in bank account. Considering the small town from which assessee hails and the fact that he is from agricultural family, the objections of AO and CIT(A) that these moneys are not deposited in bank and there was a gap can be rejected. Thus, the explanation for agricultural income and sale proceeds being a source, as explained before the CIT(A), can be accepted.
Addition of gifts - Held that:- Assessee explained that an amount of ₹ 11 lakhs was gifts from three persons. They could not be produced before AO for verification. The sources of gifts can be examined by AO by giving opportunity to assessee to produce the persons before AO or adducing evidence which can be verified/got verified by AO. Therefore, verification of source for gifts of ₹ 11 Lakhs is restored to the file of AO for fresh examination.
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2017 (12) TMI 1259
Computation of capital gains - claim of compensation to tenants as allowable expenditure u/s. 48(1) - Held that:- Assessee has paid certain amounts by way of cheque and certain amounts withdrawals from bank, much before the assessment year, the facts of which was also confirmed during the course of survey in the statements. Therefore, payment to tenants cannot be doubted. To that extent, we are not in agreement with the order of Ld.CIT(A), wherein he did not allow the amount stating that the agreements were entered in 18-07-2007 and there was no basis for claiming the expenses as compensation paid to tenants in the year 2009. If capital gains are to be taxed in the AY. 2008-09 on the basis of the sale agreement, the compensation could not have been paid, but assessee would be within her rights to claim that as a deduction from the sale value. Since assessee offered capital gains in the impugned assessment year [the actual sale is in the next assessment year and agreement of sale in previous assessment year] then, the compensation paid to tenants in the year 2009 would be relevant claim in AY. 2009-10. Looking at any aspect, the claim of compensation to tenants is allowable expenditure u/s. 48(1). Therefore, reversing the findings of CIT(A), since the capital gains were taxed in the impugned assessment year, the claim is allowable in this assessment year. For the reasons stated above, assessee’s grounds are allowed.
Coming to Revenue appeal, as seen from the facts of the case, assessee has not sold the property ultimately. GPA holder registered the document and difference in price was accounted by the company as ‘income’. On that reason, the order of CIT(A) cannot be faulted and there is no merit in Revenue’s contentions. Like-wise, the payments of commission to the parties is also established and nothing was brought on record to counter the findings of Ld.CIT(A) on the issue. Even with reference to indexed cost of acquisition, it is purely a matter of fact and Ld.CIT(A) has analysed in detail in para 8.4 and 8.5 of the order which was extracted above. The entire order was passed by CIT(A) after giving due opportunity to AO on all the issues and after obtaining a report through the Addl.CIT, Range-11, Hyderabad, being forwarded on 23-07-2013. When due opportunity was given to AO, it is not understandable how Revenue could contend that CIT(A) has not given opportunity under Rule 46A. We do not find any merit in any of the grounds raised by Revenue, accordingly all the grounds of Revenue are rejected.
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2017 (12) TMI 1258
Computation of income on estimate basis - genuineness of expenses - Held that:- When the assessee cannot establish the genuineness of the expenses, we do not find any error in the action of the Assessing Officer for computing the income on estimate basis. Therefore, we uphold the order of the ld. CIT(A) with regard to estimation of income @ 8% on main contract receipts and @ 6% on sub-contract receipts, apart from sub-contract commission.
Allowance of depreciation and remuneration paid to the partners - Held that:- Assessing Officer selected the case for verification of depreciation and as per the information available on record, he has verified the depreciation and found that there was no defect in the transaction. The Assessing Officer has observed that the suppliers had supplied wooden structures and the assessee is eligible for higher rate of depreciation. The Assessing Officer has also viewed that no disallowance is required to be made on account of depreciation, hence, we are of the opinion that assessee is entitled for depreciation from the estimated income, since ld. CIT(A) while allowing the appeal, followed the order of this tribunal on similar facts and no material is placed to controvert the findings of the ld. CIT(A). Therefore, we uphold the order of the ld. CIT(A) and dismis the appeal of the revenue.
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2017 (12) TMI 1257
Deduction u/s 80IA - allowance of claim undertaking wise or on a consolidated basis - Held that:- The assessee had shown profits from its windmill at Satara and had worked out the deduction under section 80IA(4) of the Act in respect of said windmill at ₹ 2.42 crores. The assessee was entitled to claim the said deduction undertaking wise. The losses suffered from the other windmill established by the assessee in Karnataka and Gujarat were not to be set off against the profit of Satara windmill, on the proposition that each windmill was a separate undertaking. Such view was upheld by the Pune Bench of the Tribunal in the case of M/s. J-Sons Foundry Pvt. Ltd. (2013 (1) TMI 778 - ITAT PUNE) and in the case of M/s. D.J. Malpani Vs. ACIT (2015 (12) TMI 896 - ITAT PUNE).
Coming to the adjustment of losses of other windmill, which have been set off against the profits of another business carried on by the assessee i.e. manufacture of Zarda. The assessee pointed out that after adjusting the said losses return of income was offered at ₹ 19.69 crores. In view thereof, the proposition laid down by the Hon’ble Gujarat High Court in the case of Sintex Industries Ltd. Vs. Assistant Commissioner of Income Tax (OSD) (2013 (7) TMI 979 - GUJARAT HIGH COURT) is at variance where the income after adjustment of losses was Nil and hence, the said proposition is not to be applied to the facts of the present case. Accordingly, we hold that the assessee is entitled to claim the deduction under section 80IA(4) of the Act undertaking wise and the loss having been adjusted against business income, cannot curtail the deduction claimed under section 80IA(4) of the Act. Accordingly, we dismiss the grounds of appeal raised by the Revenue.
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2017 (12) TMI 1256
Capital gains exemption u/s 54B - entitlement to exemption - Held that:- It is an undisputed fact that the assessee is a HUF and the assessment year under consideration is A.Y. 2012-13. As per section 54B of the Act, “the assessee or a parent of his are eligible for claiming exemption u/s 54B of the Act”. Subsequently, by Finance Act, 2012 w.e.f. 1.4.2013, section 54B of the Act is amended, which says that “the assessee being an individual or his parent or a Hindu undivided family”. The subsequent amendment made by the Finance Act, 2012 applies only for the assessment year 2013-14 and not for the A.Y. 2012-13. Therefore, the assessee is not entitled to claim exemption u/s 54B of the Act. - Decided against assessee.
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2017 (12) TMI 1255
Claim of depreciation to assessee trust - prospectivity or retrospectivity of amendment of sec 11(6) - Held that:- An identical issue has been considered by the Hon’ble jurisdiction High Court in case of CIT (E) vs. Mahima Shiksha Samiti (2017 (11) TMI 1421 - RAJASTHAN HIGH COURT) wherein the Hon’ble High Court has held the amendment in section 11(6) of the Income Tax Act is prospective and not retrospective and therefore, the claim of depreciation is allowable prior to the amendment - Decided against revenue.
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2017 (12) TMI 1254
Bogus purchases - ingenuity of claim - Held that:- In the present case, it is noticed that the AO doubted the purchases made by the assessee from M/s Parshanath Enterprises only on the basis of statement of one Sh. Mukesh Mangla. However, it is not brought on record, in which capacity Sh. Mukesh Mangla has given statement when Sh. Sachin Jain was the proprietor of M/s Parshanath Enterprises. The assessee furnished the copy of ledger account of the assessee in the books of M/s Parshanath Enterprises and also filed confirmation as well as its bank account alongwith copy of ITR of the proprietor of M/s Parshanath Enterprises. The AO did not make any inquiry from the proprietor of M/s Parshanath Enterprises. It is also not in dispute that the sales made by the assessee from the purchases under consideration and the gross profit rate has been accepted then there was no reason to consider the purchases as bogus purchases. In that view of the matter, the addition sustained by the ld. CIT(A)is deleted.
Addition on account of commission on bogus purchases u/s 69C - Held that:- Since, the addition made by the AO considering the purchase as bogus has been deleted in the former part of this order. Therefore, the impugned addition is also deleted being co- related with the said purchases.
Addition on account of capital introduced by Sh. Rishi Sachdeva, the partner in the assessee firm - Held that:- The amount in question was deposited by the partner as his capital, therefore, even if the Assessing Officer was not satisfied with the explanation of the assessee, it cannot be added in the hands of the assessee firm. At the most it cannot be considered in the hands of the individual partner of the assessee firm.Therefore, considering the totality of the facts, as discussed herein above, am of the view that the learned CIT(A) was not justified in confirming the addition made by the Assessing Officer on account of capital contributed by the partner in the assessee firm.
Assessee appeal allowed.
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2017 (12) TMI 1253
Unsecured loans unexplained - amount taken from Ghisubhai Jain and Vishal Jain HUF - Held that:- Identity of these parties who were basically investors / customers of the project undertaken by the assessee are clearly proved and also genuineness of the total investment of ₹ 39 lakhs in the project of the assessee firm was proved. Under these circumstances, considering the totality of facts and circumstances of the case, we do not find any merit in the addition of ₹ 39,00,000/- so made with respect to the amount taken from Ghisubhai Jain and Vishal Jain HUF.
In respect of loan payment from Pradeep Dharmesh Poddar, the assessee has filed confirmation dated 16/12/2010 and 09/08/2011. The full particulars and PAN Number of the loan creditor was also filed. Assessee has repaid loan of ₹ 7,00,000/- on 26/09/2009 and ₹ 8.81 Lakhs on 31/03/2010. We have considered rival contentions and found from record that in respect of Pradeep Dharmesh Poddar, the assessee has discharged its initial burden and also after filing confirmation has repaid the entire amount of loans on the dates discussed above, we accordingly do not find any merit for the addition of ₹ 15,81,000/- made in respect of Pradeep Dharmesh Poddar. Similarly , in respect of loan of ₹ 4,00,000/- taken from Shah Dhirajlal Harilal HUF and ₹ 1,50,000/- from Shah Dhirajlal Harilal HUF, the assessee has discharged its primary onus, accordingly, no addition is warranted. AO is directed to delete the addition in respect of above loan creditors.
In respect of loan taken from Lala Ji, we found that assessee has not discharged its primary onus of proving the identity and genuineness of loan transaction. Accordingly, we confirm the same. - Decided partly in favour of assessee.
Disallowance of brokerage paid to Mr.Jayesh Bhanshli - Held that:- We found that the Ld. Assessing Officer merely relying upon the statement of Mr.Vijay Bhanushali, brother of Mr. Jayesh Bhanushali, in which he has stated that Mr. Jayesh Bhanushali has not rendered any services to M/s. Tirupati Construction had disallowed the same. However, Mr. Vijay Bhanushali does not have any rights or locus-standi to comment on the transactions of the assessee with the third parties and also, the same is not reliable. No merit for the disallowance of commission paid to Mr. Vijay Bhanushali on which TDS has also been deducted by the assessee at source. We direct accordingly.
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2017 (12) TMI 1252
Rejection of books of accounts - Unverifiable purchases - bogus transactions - Most of the purchases of the assessee were from persons/ concerns issuing bills without delivery of goods - Held that:-books of accounts are rejected by the AO the only course of action left to the AO is to assess the income of the assessee on the basis of best judgment and GP rate is considered as proper and reasonable basis and guidance for the best judgment. Once, the books result are rejected the Assessing Officer cannot proceed to make an addition to the income offered by the assessee as per books result. However, the AO in the case of the assessee instead of applying the GP rate made on addition@ 25% of the purchases to the book results. This act of the Assessing officer itself contradicts the decision of rejecting the books of accounts and books result.
AO not given any finding of inflated purchases by the assessee but doubted the very transaction of purchases due to non production of these parties before the AO. The AO has not given the finding that the prices of the goods was inflated by the assessee but the AO doubted the genuineness of the purchases on the ground that the suppliers were found to be accommodation entries providers. When the AO rejected the book results u/s 145(3) of the Act, then the AO after rejection of the books of account can proceed to make the assessment on the basis of best judgment instead of resorting make the addition to the book results. Accordingly, in the facts and circumstances of the case and in view of the decision of this Tribunal in assessee’s own case for A.Y. 2006-07 we do not find any error or illegality in the orders of the ld. CIT(A) in restricting the addition to the average GP rate based on the past history. Hence, the grounds raised in the Revenue appeals are rejected being without any substance or merits.
Trading addition - Held that:- AO issued summons to the parties from whom the assessee made the purchases however, there was no response and no compliance of the notice issued by the AO to these parties. Thus, the Assessing officer has rightly pointed out that the sale to the extent of more than 60% of the assessee was not verifiable. Therefore, in these facts and circumstances of the case when the sales of the assessee to the extent of more than 60% is not verifiable due to the failure of the assessee to produce the relevant evidence and the supplier then the book results of the assessee would not reflected true picture and consequently it was a sufficient and proper ground for rejection of books of accounts by the AO.
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2017 (12) TMI 1251
Grant of registration u/s 12A - prescribed conditions for registration of the trust - assessee trust did not produce the books and vouchers in respect of expenses claimed by the society for verification of the activities of the trust - Held that:- We find merit in the submission of assessee that at the time of granting of registration the ld. CIT is required only to examine the objects of the trust and is not required to examine the books of account of the trust and it is only during the claim of exemption u/s 11 the Assessing Officer will examine the same and allow or disallow the same as the case may be. Also that since the assessee trust is imparting education by running various schools and colleges, therefore, it is doing charitable activities as according to him “education” per se is charitable activity. The various decisions relied on by the ld. counsel for the assessee in the Paper Book also supports the view that education per se is a charitable activity.
Powers of the Commissioner while granting registration u/s 12A - Held that:- We find various courts have held that while granting registration u/s 12A the ld. CIT is required to see only the objects of the assessee trust/society and not to examine the application of income. He is not required to examine whether the income derived by the trust is being spent for charitable purposes or the trust is earning profit while granting registration. He is only required to examine the objects of the trust. See Bhartiya Kisan Sangh vs. CIT [2017 (8) TMI 1065 - ITAT DELHI] wherein held that at the stage of granting registration u/s 12A, the ld. CIT (Exemptions) is required to see the objects of the society and not required to examine on the application of income which will have to be undertaken by the Assessing Officer on a year to year basis after the assessee files return of income claiming exemption under section 11 - Decided in favour of assessee.
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2017 (12) TMI 1250
Addition invoking provisions of Section 145(3) - rejection of books of accounts - G.P. estimation - Held that:- This is a fact that the assessee was not maintaining quality wise details of the commodities traded, therefore, it shall not be possible to verify the correctness of the valuation of the closing stock. Therefore, the Bench is of the view that the books of account were rightly rejected by invoking the provisions of Section 145(3) of the Act. Further the Assessing Officer made the addition of ₹ 3,04,903/- lacs and the ld. CIT(A) restricted it to ₹ 1,51,811/- lacs. After considering both the sides and the various other aspects of the case including the increase in the sales turnover by 3.5 times in the year under consideration in comparison to immediate preceding year, the estimate of G.P. at ₹ 1,51,811/- lacs is justified, therefore, the Bench uphold the order of the ld. CIT(A) on this ground. Accordingly, grounds No. 2 and 3 are dismissed.
Disallowance of shops expenses, telephone expenses and low household withdrawals - Held that:- Since, the addition on account of estimating of gross profit and rejection of books of account has been sustained, therefore, in view of the various decisions of the Hon’ble Jurisdictional High Court on this issue, no specific additions out of expenses debited in P&L account can be sustained. Therefore, the same are directed to be deleted.
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2017 (12) TMI 1270
Power of tribunal u/s 254 to rectify an order - assessee company’s claim of deduction of interest expenditure at all stages - Held that:- We are of the view that the Tribunal committed a legal error in recalling its earlier detailed judgement. As noted, there was a raging controversy between the Revenue and the assessee regarding the assessee company’s claim of deduction of interest expenditure at all stages before the Assessing Officer, Commissioner (Appeals) and the Tribunal. This issue received minute scrutiny.
The relevant question could the Tribunal have exercised the power of rectification to recall such judgement? is to be answered being obvious, is in the negative. The powers of rectification flowing from Section 254(2) of the Act are for correcting apparent errors and not for re-examination of the issues already considered and concluded. It is well recognised that the powers of rectification cannot be equated to that of review. The Tribunal thus travelled far beyond its power of rectification in accepting the assessee’s various contentions which were not confined to pure factual errors apparent on the record. Some of the contentions of the assessee were highly contentious legal issues. Once the Tribunal had taken a particular view, it was always open for the aggrieved party to challenge such views before the higher court. The Tribunal could not have been persuaded to re-examine the issues on the premise that there was an error apparent on the record - Decided in favour of revenue
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2017 (12) TMI 1278
Addition made by applying the profit rate at 12.5% of the bogus purchase - assessee contended that only profit element is higher as the assessee deals in iron and steel and assessee is disclosed profit at 2% - Held that:- We find reasonable profit rate of 5% will meet the end of justice for the reason that the assessee has already declared profit @ 2% on the sale made out of bogus purchases and assessee also filed the proofs of payments of sales tax/ VAT to the Maharashtra Sales Tax Department and once the assessee has paid the Sales Tax/ VAT to the Government, the profit will automatically decline. In view of these reasons, we direct the AO to re-compute income after applying profit rate @ 5% of the bogus purchase and appeal of the assessee is partly allowed.
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Customs
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2017 (12) TMI 1281
Levy of customs duty - reimport into India after repair/modification - investigation found that when all the three vessels were coming back to India on re-import from time to time during the impugned period with the repair/modification thereto, No Bills of Entry having been filed for the value of repair/modification carried out thereto abroad as well as freight and insurance incurred and No adjudication or assessments were ever made thereon, that has resulted in loss to the exchequer for the relevant periods - case of Revenue is that those vessels were never foreign-going vessels although appellant falsely claims that to be so - whether on such re-importation, value of repair so made including freight shall form part of the assessable of the such re-imported vessels and necessary duty leviable thereon under the Act? - classification of vessel.
Held that: - All the three vessels were dedicated vessels to render aforesaid service to ONGC only, without being capable of commercially operated as passenger or cargo carriage. For a limited purpose those were conveyance for ONGC only. Appellant was obliged to ONGC under contract to transport its working personnel and goods without providing any transportation service to general public - the vessels remained as “goods” only not only at the time of first entry thereof into India but also during re-imports made from time to time on repair thereof. Re-import of goods under Section 20 of the Act is permitted under law when the exported goods came to India again goes back out of India for repairs Partial duty concession/exemption is available to the re-import as is covered by the aforesaid notification. Revenue discharged its burden of proof bringing the goods to CTH 89059090 in view of technical character of vessels ruling out their adoptability by CTH 89019090.
Mere filing of the documents at page 80 and 81 of the paper book does not exonerate the appellant from its duty liability without filing the Bills of Entry disclosing the value of the repair/renewal/modification and installation of machinery done to the vessel including freight and insurance charged incurred. Therefore, there was violation of law made by the appellant relating to filing of Bills of Entry which is well established. Similarly, merely because the vessel was running from one coast to another during its movement while executing contract with ONGC, that does not entitle the appellant to plead that the vessels were foreign-going vessels. Accordingly the re-imports were not immune from levy.
For the violation of law made by appellant, as stated herein before for No filing of Shipping Bills and Bills of Entry against exit from time to time and re-imports in respect of cost/value of repair and freight and insurance incurred, appellant was bound to face the consequences of adjudication as has been directed by adjudication order, which does not call for interference except to the extent modified by this order. Accordingly, it may be stated that Revenue’s plea that disclosure of stores and consumables for inventorization by the Customs upon re-import of the vessel, shall not exonerate the appellant from levy of duty in law, has force and sustains.
Time limitation - Held that: - It may be stated that bar is only against recovery but not against the levy which arises when event of levy occurs Normal period shall be subject to levy and recoverable on the basis of rate of duty applicable on the dates of re-import during the impugned period. Basic Customs Duty, Additional Duty of Customs and Special Additional Duty shall be leviable and recoverable for such normal period in accordance with law.
In view of the settled position of law and having decided the appeals on the statutory principles as well as first principles of law, further discussions on other citations is considered redundant and not to burden this order, in the fitness of the circumstances of the case and all the pleadings of appellant except bar of limitation is dismissed being devoid of merit.
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Corporate Laws
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2017 (12) TMI 1271
Winding up petition - BIFR had rendered its confirmed opinion on 11.03.2008 for winding up of the company and to forward its opinion to this Court for necessary action in accordance with law and the company / promoters were directed to safeguard the assets of the company in their possession till regular Official Liquidator of the High Court took possession of the same - Held that:- It is true that the opinion of the BIFR may not bind this Court for winding of the company, however, if the company fails to satisfy this Court that it has become viable economically and financially, there is no reason not accept the opinion of the BIFR which was rendered after giving full opportunities to the company and after finding that the company was not viable for rehabilitation. As stated above the BIFR rendered its opinion before three years and there is no headway by the company to establish any viability before this Court. Simply because the company has made application under the scheme introduced by the Government for extending reliefs to the Sick Industries, such would not be a ground to defer making order for winding up of the company.
In view of the above, the Company – M/s. Hari Raj Paper Mills is ordered to be wound up. The Registry shall forward / intimate the present order of winding up to the Official Liquidator, the Registrar of the companies as also to the company within two weeks from today. On receipt of the order of winding up from the Registry of this Court, the Official Liquidator shall give the publication of winding up order in Gujarati daily Newspaper as also in English daily Newspaper within 14 days thereafter.
The Official Liquidator is appointed as liquidator of the company and is directed to take possession of the assets and properties of the company and to discharge all statutory functions as per the provisions made in the Companies Act, 1956.
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Insolvency & Bankruptcy
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2017 (12) TMI 1243
Corporate insolvency process - Held that:- The Corporate Insolvency Resolution Process is aimed to revive the Company. In case if no Resolution Plan is there or in case the Resolution Plan is not approved by this Adjudicating Authority, then all the Creditors can claim the amounts from the assets of the Corporate Debtor as per the provisions of the Insolvency Code. Therefore, the admission of the Petition is not going to cause any prejudice to any of the Financial Creditors and at best it may cause delay of about six months in recovering their debts which they can realize later on also.
Moreover, the Petitioner furnished the required information as per sub-section (3) of Section 10. Therefore, the Application is complete. The material on record establish that the Corporate Debtor has committed default in payment of financial debts as well as operational debts.
In view of the above discussion, this Petition is admitted under Section 10(4)(a) of the Code.
The Petitioner proposed the name of CA Prem Laddha as ‘Insolvency Resolution Professional’. Hence, this Adjudicating Authority hereby appoint, CA Prem Laddha having address at 304, Abhijit-3, Above Pantaloon, Mithakhali, Law Garden Road, Ellisbridge, Ahmedabad with Registration No. IBBI/IPA-001/IP-P00060/2016-17/10138 as ‘Interim Insolvency Resolution Professional’ under Section 13(l)(c) of the Code. The Interim Insolvency Resolution Professional is hereby directed to cause a public announcement of the initiation of ‘Corporate Insolvency Resolution Process’
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2017 (12) TMI 1242
Corporate insolvency process - application barred by limitation - Held that:- For initiation of ‘Corporate Insolvency Resolution Process’, the right to apply accrues under Section 7 or Section 9 or Section 10 only with effect from 1st December, 2016 when ‘I&B Code’ has come into force, therefore, the right to apply under Section 7 or Section 9 or Section 10 in all present cases having accrued after 1st December 2016, such applications cannot be rejected on the ground that the application is barred by limitation.
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2017 (12) TMI 1241
Corporate insolvency resolution process - Held that:- The petitioner is not an operational creditor as per section 5(20) read with section 5 (21) of I&B Code, 2016. The preliminary objection raised by the respondent being sustainable under law this petition is liable to be dismissed.
Accordingly, this petition is dismissed.
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Service Tax
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2017 (12) TMI 1275
Scope of SCN - CENVAT credit on Capital goods - Held that: - It is a settled principle of law that no demand can be sustained unless the same is based on a proposal in the SCN - Once the SCN do not propose to deny any CENVAT Credit availed on items treated as capital goods, the same could not have been taken up and adjudicated in the Impugned Order - the demand of INR 7,63,18,307/- confirmed in impugned order on this issue is not sustainable and is set aside.
Excess utilisation of credit - adjustment with the shortfall - Held that: - it is evident from the Table that the Appellant was entitled to further utilise credit amounting to INR 20,66,664/- and INR 90,78,879/- in the months of November and December, 2004 and there is no bar in law to restrict the utilisation of such quota of entitlement in the subsequent months. Thus, the entitlement of INR 1,11,45,561/- (INR 20,66,664/- + INR 90,78,897/-) is in excess of INR 59,77,551/- which is the short fall in the month of January, 2005 - reliance placed in the case of Vijyanand Roadlines Ltd. Vs. Commissioner of Central Excise, Belgaum [2006 (12) TMI 56 - CESTAT,BANGALORE] where it was held that utilisation is not restricted to monthly or quarterly basis and it can be utilised at any point of time - the demand of INR 59,77,551/- confirmed on this issue is thus not sustainable and is set aside.
Appeal allowed - decided in favor of appellant.
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Central Excise
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2017 (12) TMI 1268
Manufacture - whether the process of "cropping" carried out by the appellant on the grey fabrics will attract mischief of Chapter Note 3 of Chapter 52 and Chapter Note 4 of Chapter 55 as "any other process" that shall amount to 'manufacture'?
Held that: - A closer examination at the indicative list of processes in the chapter notes would lead to the inescapable conclusion that, all those processes when subjected to woven fabrics of cotton/synthetic staple fibres bring about irreversible change in the characteristics of such fabrics and further, all these processes may also require treatment or intervention of chemicals to achieve the desired result - the term "any other process" will necessarily be of the same genre of processes which bring about permanent change in the characteristics of the fabrics. This is the doctrine of Noscitur A Socis, namely, that the meaning of doubtful word can be ascertained by reference to the meaning of words associated with that word - Applying the doctrine of Noscitur a sociis, it is held that "any other process" will necessarily have to be one like bleaching, mercerizing, shrink-proofing etc. resulting in permanent change in the characteristics of the fabrics and mostly involving use of a chemical agent. Per contra, "cropping" involves removal of fibres from surface of the fabrics, by cutting projecting fibres and yarn, the terms "cropping" and "shearing" are very often used interchangeably. The only apparent difference being that in shearing the fibres are cut in an angular manner on the surface of the fabric itself. Both these processes are intended to give a clean and smooth appearance to the fabric and to control pill formation. The cropping or for that matter, shearing processes cannot be considered as being of the same genre as bleaching, mercerizing, dyeing, printing etc.
The process of "cropping", which merely involves cutting away mechanically loose ends from the fabric to give a clean and smooth appearance will not fall within the ambit of "or any other process" for the purposes of Chapter Note 3 of Chapter 52 or Chapter Note 4 of Chapter 55 of the Schedule to the Central Excise Tariff Act, 1985 - any conclusion that the impugned cotton / synthetic grey fabrics subjected to "cropping" are "processed" fabrics requiring classification under CETA 5207.39 & 5208.39 (under 5207.29 and 5208.29 till 28-02-2001) and 5511.29, 5512.29 and 5513.29 respectively, is surely a misinterpretation and hence consequential demand of duty made by the adjudicating authority is not supported by law.
Appeal allowed - decided in favor of appellant.
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2017 (12) TMI 1272
100% EOU - CENVAT credit - goods purchased from sister unit - whether the supplier being a sister concern had taken undue advantage of the benefit by charging duty which was paid by the respondent-assessee? - Held that: - this is not a case of an arm's length transaction as the supplier and the respondent-assessee were related to each other, but counsel for the Revenue has stated that they have not examined the said aspect whatsoever and it is not the pleaded case of the Revenue. The show cause notice and the order in original do not record that the supplier has taken undue benefit by asking the respondent-assessee to pay the duty. Even otherwise, the impugned order permits the Revenue to proceed in case of any wrongdoing in the case of the supplier.
The impugned order does not require any interference. Duty has been paid by the respondent-assessee to the supplier, hence they are entitled to benefit and refund on export - appeal dismissed - decided against appellant-Revenue.
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2017 (12) TMI 1249
Interest on delayed refund - case of appellant is that they are entitled to interest for the period starting from three months after the date of filing refund claim to the date of sanctioned of the said refund claim - Held that: - in terms of Circular F. No.275/37/2000-CX dated 2-1-2002 , which is applicable retrospectively, the refund would have been due immediately after Commissioner(Appeals) set aside the demand in respect of which the said pre-deposit was sustainable i.e. on 6-5-1999. Appellant filed refund claim 4-9-2000 and are seeking interest from the period three months thereafter till the sanction of refund - appellant become entitled to refund immediately after the said demand was set aside by Commissioner(Appeals) - refund allowed - appeal allowed - decided in favor of appellant.
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2017 (12) TMI 1248
Demand of duty and penalty - SCN was issued to the appellant on account of certain debit notes raised by the appellant to their dealers - Held that: - SCN contained list of debit notes issued to various dealers however it does not contains the exact nature of expenses. It is not understood as to how the Commissioner has quantified the demand in absence of said data - The appellant have also not cooperated with the Commissioner in giving prompt explanation.
While there was failure on the part of the appellant to proper defence of their matter, the impugned order also does not give any justification for quantification of duty - appeal allowed by way of remand for de novo decision.
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2017 (12) TMI 1247
CENVAT credit - Naptha - case of the department is that in terms of provisions of Rule 6(1) of CCR, Cenvat credit on duty paid on the Naphtha is not admissible to them as the same is used in the manufacture of exempted final products, viz. Fertilisers - Held that: - Ld. Counsel has raised the issue of quantification dispute of the Cenvat credit on Naphtha on the basis that other than the Naphtha some other fuel such as natural gas, furnace oil were used. Accordingly, quantum of Naphtha against total generation of steam will stand reduced, however this being matter of fact, has to be verified - matter may be sent to the adjudicating authority for verification of the re-quantification done by the appellant.
Penalty u/r 15 of CCR - Held that: - It is admitted that appellant have availed wrong credit as provision of Rule 6(1) is very explicit and there is no confusion that the Cenvat credit in respect of input used in the exempted goods is not available - there is clear contravention of the Rule 6(1) - penalty upheld.
Appeal allowed in part by way of remand.
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2017 (12) TMI 1280
Jurisdiction - entire case of the appellant M/s Garg Industries is that the SCN dated 20 February, 2008 was adjudicated earlier vide Order-in-Original dated 30 March, 2009. The said Order-in-Original having been withdrawn by the Department, in the appeal/proceedings before Hon’ble Supreme Court wherein the said appellant was not even party, the permission obtained for fresh adjudication will not apply in its case - whether the impugned order have been passed validly under jurisdiction and powers vested under the Central Excise Act?
Held that: - withdrawal of the earlier adjudication order dated 30 March, 2009, without reserving liberty to proceed from the stage subsequent to the stage of the show cause notice dated 20 February, 2008 against M/s Garg Industries and of other concerned parties, we find no lawful authority for proposing a fresh adjudication order viz., the impugned order.
We agree with the contentions of the appellant that in view of the withdrawal of the earlier adjudication order without reserving liberty to proceed from the stage of the SCN dated 20 February, 2008 against Garg Industries, we find no lawful authority for passing fresh Order-in-Original, being the impugned order. We hold that the Commissioner is not correct in passing a fresh Order-in-Original dated 31 March, 2013, in respect of the same subject matter for the same period, since the earlier Order-in-Original dated 30 March, 2009 was withdrawn in the separate proceedings, in which some of the present appellants were not even party. Therefore, there was no question of seeking permission from the Hon'ble Supreme Court in the case of appellant-M/s Garg Industries to pass a fresh adjudication order.
By withdrawing the earlier Order-in-Original dated 30 March, 2009, which was passed again Garg Industries and two individuals, without obtaining permission to pass fresh adjudication order against them, would amount to abandoning the proceedings against the said three parties. There is no provision under the Central Excise Act, 1944, which grants power to the Adjudicating Authority to re-adjudicate the SCN on same facts for same period relating to same clearances once again, the said SCN already having been adjudicated upon by passing of Order-in-Original dated 30 March, 2009.
The impugned Order-in-Original is not sustainable - appeal allowed - decided in favor of appellant.
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2017 (12) TMI 1246
Valuation - related party transaction - comparable goods sold to the independent customer - Rule 6(b)(ii) of Central Excise Valuation Rules, 1975 - Held that: - the Tribunal has categorically directed that valuation of the goods is required to be done in term of Rule 6(b)(ii) of Central Excise Valuation Rules, 1975 and on the basis of the principles enunciated as per CAS-4. This order attained finality and no challenge was made either by the Revenue or by the Assessee - It is observed that the adjudicating authority has revalued the goods on the basis of cost sheet as per CAS-4 therefore the Adjudicating authority has scrupulously followed the direction given by the Tribunal. In this position neither Revenue nor the assessee should be aggrieved by the impugned order - appeal dismissed - decided against appellant.
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2017 (12) TMI 1245
Demand of differential duty due to wrong calculation - intent to evade - extended period of limitation - Held that: - the differential duty demand was raised only due to difference in calculation for value as per CAS-4. This is not a case of clearance without payment of duty. The issue involved is only a calculation on value therefore it cannot be said that the appellant had any malafide intention with intent to evade payment of duty - the demand for the extended period, penalty and interest corresponding to the said demand is set aside - adjudicating authority is free to recalculate the duty if any arise for the normal period and recover for forthwith - appeal allowed by way of remand.
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2017 (12) TMI 1244
Penalty u/s 11AC - penalty not taking part in adjudication by adjudicating authority - Held that: - neither any discussion was made by the Commissioner on this issue nor any decision was given in the impugned order therefore issue of penalty has not been adjudicated by the adjudicating authority. In this scenario matter needs to be remanded to the adjudicating authority for passing a fresh order on the issue of penalty proposed u/s 11AC read with Rule 25 of Central Excise (No.1) Rules, 2001/Central Excise Rules, 2002 and Rule 173Q of the erstwhile Central Excise Rules, 1944 - appeal allowed by way of remand.
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2017 (12) TMI 1279
Liability of interest and penalty - CENVAT credit reversed - case of appellant is that demand of interest and penalty not justified as the credit was not wrongly availed but due to change over of management as the credit was availed by the earlier company which was amalgamated in company of the present appellant - Held that: - it is not a case of wrong availment of credit, this is due to amalgamation of old company to present company, records were not traceable. The appellant have admittedly reversed the credit, moreover credit so taken was not utilized - there is no reason to impose penalty u/s 11AC - penalty set aside.
Interest - Held that: - Since Rule 14 was amended from 1-4-2012 interest thereafter would be chargeable only when Cenvat credit was taken and utilized. Therefore after 1-4-2012 interest would not be chargeable when the credit was not utilized - interest on the Cenvat credit is chargeable upto 31-3-2012 and interest from 1-42012 is set aside.
Appeal allowed in part.
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2017 (12) TMI 1240
CENVAT credit - duty paying documents - it was alleged that the invoices, accompanying the inputs and the Cenvat showed therein is doubtful and/or fraudulent - Held that: - the issue is squarely covered by the decision in the case of The Commissioner of Central Excise Customs & Service Tax Versus M/s. Juhi Alloys Ltd., Anil Kumar Shukla [2014 (1) TMI 1475 - ALLAHABAD HIGH COURT] - Similar to the facts of Juhi Alloys Ltd., appellant M/s RSIL have also lead evidence of usage of road permits (under sales tax law) i.e. for transportation of goods. The road permits are pre-authenticated documents issued by the Trade Tax Department and assessee is required to maintain proper records of their usage. The appellant also filed road permit issued by to M/s M. K. Steels Pvt. Ltd for transport of MS Ingots in question. Further, the appellants have lead evidence that payment for the purchase of the input was made by cheque.
It was held in the case of Juhi Alloys Ltd that The assessee, was found to have duly acted with all reasonable diligence in its dealings with the first stage dealer, and the credit was allowed - following the same, credit allowed - appeal allowed - decided in favor of Revenue.
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2017 (12) TMI 1277
Business Auxiliary Services - whether Service Tax under the category of Business Auxiliary Services have been rightly demanded on sales and other incentives received from Tata Motors, Commission received from banks/financiers, levy of Service Tax on hire purchase Commission/other charges, Job-work charges and demand of Service Tax on Freight earned from Tata Motors Limited.?
Commission from bank/financial institution - Held that: - incentive or discount or commission received from the banks and institutions does not lead to the conclusion that the appellant provided service to them. At the most, it may be in the nature of business support service which is not the case made out in the SCN - Service Tax is not payable on commission bank/financial institution.
Hire purchase commission - Held that: - such charges are being received from the buyers of vehicles for assisting in registration insurance etc. of the vehicles which is an essential requirement under the Motor Vehicle Act and the said receipts are not chargeable to Service Tax.
Repossession charges - Held that: - they are received by the owners of the vehicle, whose vehicles are repossessed by the financiers and for safekeeping are entrusted to the appellant - For such service or parking, the appellant received an amount from the vehicle owners which is not taxable under BAS. Further, these receipts are on principle to principle basis and on that score also are not liable to Service Tax.
Job-charges - Held that: - the learned Commissioner has himself held that the same is not taxable under BAS but under Authorized Service Station charge, which was not the case made out in SCN and as such the demand of service tax on these charges is not tenable.
Service of commercial vehicle - Held that: - the receipts for service of commercial vehicle is not taxable under the category of Authorized Service Station.
Freight received from customers/Tata Motors - Held that: - essential element of GTA that issuance of consignment notes was not done by the appellant and thus, the same cannot be liable to Service Tax as a GTA. Accordingly, no Service Tax is payable on this score also.
Appeal allowed - decided in favor of appellant.
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2017 (12) TMI 1276
Whether ethyl alcohol and rectified spirit are two different commodities or one and the same commodity?
Held that: - Hon’ble Supreme Court in the case of State of Uttar Pradesh Vs M/s Modi Distillery and others [1995 (8) TMI 300 - SUPREME COURT] has held that ethyl alcohol and rectified spirit are one and the same - rectified spirit which is not used for human consumption is nothing but ethyl alcohol and is finding place in tariff item no. 22072000 - appeal dismissed - decided against Revenue.
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2017 (12) TMI 1239
CENVAT credit - SAD @4% paid/reversed by M/s HSCIL and the credit was availed by the appellants - supplementary invoices - Sub-section (2B) of Section 11A of Central Excise Act, 1944 - Held that: - provisions of Sub-section (2B) of Section 11A of Central Excise Act, 1944 are applicable since the explanation 1 below the said Sub-section is not invokable in the present case for the reason that Revenue could not establish that there was intention to pay less amount as compared to required amount because the whole exercise was revenue neutral - also, the question of imposition of penalty on said alleged violation does not arise - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (12) TMI 1274
Deletion of assessment of sale - sale of imported Cement - reduction of turnover of Iron & Steel, Shutters and Channels - revisionist treated as "Manufacturer" under Section 2 (ee) of the Act, 1948 without any evidence on record or any purchase from the unregistered dealer - whether there is any finding by any of the authorities that the revisionist has sold any goods after "Manufacturing" or "Importing" the same?
Held that: - The perusal of records shows that there is no finding by any of the authorities that the revisionist has sold the goods in question after "Manufacturing" or "Importing" the same - it appears that the submission of learned counsel for the revisionist has substance. The, learned Standing Counsel could not dispute the aforesaid submission of learned counsel for the revisionist.
The Hon'ble Supreme Court in the case of Commissioner of Customs (Preventive) vs. Vijay Dasarath Patel [2007 (3) TMI 11 - SUPREME COURT OF INDIA] has held that where the order has been passed without adverting to the facts raised, then it is a question of law. Further, where the order is based on no evidence on record, it is liable to be interfered.
The matter is remanded back to the learned Tribunal with the direction to consider and decide the matter afresh in accordance with law after taking into consideration the points raised by the revisionist - revision allowed by way of remand.
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2017 (12) TMI 1273
Levy of entertainment tax - folk musical festival, namely, Amarrass Desert Music Festival - sponsorship money - Held that: - There is no evidence to show that the event was sponsored by any organization or corporate house. No details of sponsorship stand noticed or adverted to in the assessment order and the appellate orders. The FIR and the report of the raiding team does not refer to sponsorship or any evidence.
The orders passed by the Entertainment Tax Officer or the appellate authorities proceed on surmises and conjecture that sponsorship money of ₹ 10,00,000/- must have been received. In the absence of any such evidence or material, we do not think that the Entertainment Tax Officer could have made any assumption and arrived at a finding - we partly modify the assessment order and the appellate orders to the extent that the petitioner had been asked to pay entertainment tax, penalty and interest on sponsorship fee of ₹ 10,00,000/-. The respondents would accordingly recompute of entertainment tax, penalty and interest - we have not interfered with the quantum/percentage of penalty which has been imposed.
Appeal allowed in part.
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Wealth tax
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2017 (12) TMI 1267
Wealth tax assessment reopened u/s. 17 - assessing the value of 10 acres of land - AO adopted the taxable wealth at ₹ 3.35 Crores based on the adoption of market value for the 10 acres of land stated to be in the ownership of assessee as per the agreement of sale - Held that:- It is interesting to note that assessee has entered into an agreement of sale with the said persons for sale of 10 acres of land on his own. In that agreement, in para 1 of the recitals, it was clearly stated that ‘The Vendor hereto being the sole legal heir of the said original owner Sri G. Bharat Reddy inherited and succeeded the Schedule Property as absolute owner and possessor thereof in perpetuity in evidence of which the Hon'ble High Court of Andhra Pradesh in WP No. 18422 of 2006 by its order dt. 11-09-2006 directed the District Collector, RR district and MRO Balanagar to issue Pattedar Pass books and title deeds……………..’
The fact is that there is no such order by the Hon'ble High Court and the copy of Hon'ble High Court placed on record do indicate that writ petition was dismissed with a direction to appropriate authorities to pass necessary orders on the application of petitioner within a period of four weeks from the date of receipt of copy of the order. The report of the Dy. Collector do indicate that the claim of assessee is not correct and the land is shown as Government land and in fact, was allotted to various other persons by the Government. Therefore, the very ownership of the land is in dispute. Since similar issue in Income tax proceedings was restored to the file of AO for examination in the Revenue appeal, we are of the opinion that this matter also should be restored to the file of AO to examine the facts afresh and decide the wealth tax liability, after giving due opportunity to assessee.
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