TMI Tax Updates - e-Newsletter
December 9, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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Income Tax:
Claim of exemption on Rental income from Umed Bhawan Palace u/s 10(19A) - whether Ruler is entitled to claim exemption for the whole of his residential palace or such exemption would confine only to that portion of the palace which is in his actual occupation - Legislature did not intend to tax portion of the “palace” by splitting it in parts - SC
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Income Tax:
Nature of amount appropriated towards the Sinking Funds - The income was used by the assessee and for the assessee and the assessee retained the benefit arising therefrom - it is the part of rent and taxable as revenue receipt - HC
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Income Tax:
Speculation Loss - Trading in future and options - the amendment cannot be held as curative in nature or for that reason has a retrospective effect - HC
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Income Tax:
Additional depreciation u/s 32(1)(iia) - Running a canteen cannot be said to be manufacturing of an article or thing. - AT
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Income Tax:
Sales computation - goods under transit - We agree that the accounting policy, using the word ‘coincide’, is not very appropriately worded, but then the same is not to be read strictly, as one would read a provision of law, giving due emphasis to every word, but as conveying broadly the intent, as of transfer of ownership of goods in the present case. - AT
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Customs:
Confiscation of goods and imposition of redemption fine and penalty - The goods are not available for confiscation. The goods have not been seized or released against a provisional bond - concept of redemption fine does not arise - AT
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Customs:
The consequence of non-removal of warehoused goods within the permitted period or the permitted extension is, by virtue of the terms of Section 72, certain. - When the duty is, in fact, demanded is not relevant - AT
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Customs:
The HSN Explanatory Notes to chapter 8901 specifically excludes the vessels of heading 8903. It would mean that heading 8901 would exclude vessels which are specifically listed in the said heading of 8903 - boat has to be classified under heading 8903 as sports boat - AT
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Customs:
Import of Data Projector - item in question is to be classified under Chapter Heading 85286100 for which the benefit of Notification No. 24/2005-CUS under its entry No. 17 is admissible - AT
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Wealth-tax:
Chargeability of interest from the legal representative of the deceased assessee - the interest liability cannot be fastened on a legal representative - HC
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Service Tax:
Commercial concern - the appellant in his individual capacity has provided services and was not having any commercial concern for undertaking the business in regular course - no demand during the relevant period - AT
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Service Tax:
Cenvat Credit - mobile phones - use beyond factory premises - The rules are stringent in requiring the retention of capital goods at the factory of production but acknowledges that capital goods used for rendering of service may have to be taken outside the premises - AT
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Service Tax:
Imposition of penalty u/s 78 - the amount of service tax collected wrongly but not deposited with the government - due to the service being not taxable at the relevant time when the invoices were raised, no penalty could be levied - AT
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Service Tax:
Small service provider exemption - determination of turnover not exceeding ₹ 10 lakhs - the amount of services rendered to SEZ unit should be reduced to arrive at the threshold limit of exemption - AT
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Service Tax:
Refund claim by recipient of services - service tax discharged for rendering of ‘commercial and industrial construction service' in the bills - With that specific empowerment available in the statute, the need to prove that provider has deposited the tax is rendered superfluous - AT
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Central Excise:
Valuation - job work - inter-connected undertakings - rule 8 of Central Excise Valuation Rules 2000 - the valuation done by the appellant i.e. cost of raw material + job charges including profit of the job-worker is correct - AT
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Central Excise:
CENVAT credit - The service tax paid on reimbursable part of the consideration paid towards manpower supply services is denied for the reason that such contributions are for the personal use of the employee - the mandatory statutory contribution to PF and ESI is not for personal use - credit allowed - AT
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VAT:
Inter unit transfer of cotton and cotton yarn - two units of the same company having separate registration - cannot be treated as sale transaction - no tax liability - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2016 (12) TMI 418
Claim of exemption on Rental income from Umed Bhawan Palace u/s 10(19A) - whether Ruler is entitled to claim exemption for the whole of his residential palace under Section 10(19A) or such exemption would confine only to that portion of the palace which is in his actual occupation - Held that:- We find that in Section 10(19A) of the I.T. Act, the Legislature has used the expression "palace” for considering the grant of exemption to the Ruler whereas on the same subject, the Legislature has used different expression namely "any one building" in Section 5 (iii) of the Wealth Tax Act. We cannot ignore this distinction while interpreting Section 10(19A) which, in our view, is significant. In our considered opinion, if the Legislature intended to spilt the Palace in part(s), alike houses for taxing the subject, it would have said so by employing appropriate language in Section 10(19A) of the I.T. Act. We, however, do not find such language employed in Section 10(19A). As rightly pointed out by the learned senior counsel for the appellant, Section 23(2) and (3), uses the expression “house or part of a house”. Such expression does not find place in Section 10(19A) of the I.T. Act. Likewise, we do not find any such expression in Section 23, specifically dealing with the cases relating to “palace”. This significant departure of the words in Section 10(19A) of the I.T. Act and Section 23 also suggest that the Legislature did not intend to tax portion of the “palace” by splitting it in parts. It is a settled rule of interpretation that if two Statutes dealing with the same subject use different language then it is not permissible to apply the language of one Statute to other while interpreting such Statutes. Similarly, once the assessee is able to fulfill the conditions specified in section for claiming exemption under the Act then provisions dealing with grant of exemption should be construed liberally because the exemptions are for the benefit of the assessee. In the light of these reasonings, we are of the considered opinion that the view taken by the M.P. High Court in Bharatchandra Banjdeo’s case (1985 (1) TMI 38 - MADHYA PRADESH High Court ) and the Rajasthan High Court in H.H. Maharao Bhim Singhji’s case (1987 (8) TMI 12 - RAJASTHAN High Court ) is a correct view. This takes us to the last submission of learned counsel for the appellant who made a feeble attempt to question the legality and propriety of the requisition proceedings initiated by the Central Government (Ministry of Defence) in relation to portion of land. It was urged that even after expiry of the period of requisition, the Defence Ministry, continues to remain in possession of the land to the detriment of the interest of appellant. To say the least, in our view, this submission is wholly misplaced in this appeal. The appellant, in our view, has to raise this issue in appropriate proceedings before competent Fora for their adjudication and not in this appeal which arises out of income-tax proceedings and has nothing to do with requisition proceedings of the land. In view of foregoing discussion, the appeal succeeds and is accordingly allowed. The impugned order is set aside. As a consequence, the question referred to the High Court in the reference proceedings out of which this appeal arises is answered in favour of the appellant (assessee) and against the Revenue.
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2016 (12) TMI 417
Interest tax on interest receivable - non-taxable interest - accrual of interest - Held that:- Admittedly, prior to 1.10.1991, the assessee was not liable to interest tax. The interest tax is also collectible from the clients. It is confirmed by the assessee that no interest tax has been collected by it for the period prior to 1.10.1991. We, therefore, hold that even if the interest for the earlier period was collected after 1.10.1991, no interest tax was liable on the interest pertaining to the period when the assessee was not liable to interest tax. The conclusion reached by the Tribunal as above is correct, regardless of what the accounting system of the assessee may have been. The language of the Statute cannot be stretched to mean that even amounts prior to the date in the amendment dated 01.10.1991 could have been taxed. - Decided in favour of assessee
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2016 (12) TMI 416
Unexplained expenses in the marriage of daughter - Held that:- The Tribunal has given no reasons whatsoever for reducing it by half whereas the Commissioner (Appeals) has given good reasons for deleting the addition. The Tribunal also does not record any error or reasoning in the order passed by the Commissioner (Appeals). The order of the Tribunal is wholly without any reason. In view of the above, the order of the Tribunal is set aside and the order of the Commissioner is confirmed wherein held there is absolutely no basis for the estimates. No bills or vouchers have been collected from the person's concerned to show that appellant showed less expenses under any head. The bills and vouchers enclosed with the report are one, which have been produced by the appellant to support his claim. No valid addition can be made on the basis of presumption, surmises or conjecture. The addition has not been validly made and hence deleted - Decided in favour of assessee
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2016 (12) TMI 415
Exemption under Section 10(10C) entitled to retirees of the ICICI Bank under Early Retirement Option Scheme, 2003 - Held that:- Default in complying with the requirement was due to circumstances beyond the control of the assessee, the Board is entitled to exercise its power and relax the requirement contained in Chapter IV or Chapter VI-A. If such a power is conferred upon the Board, this Court, while exercising jurisdiction under Article 226 of The Constitution of India, would also be entitled to consider as to whether the petitioner's case would fall within one of the conditions stipulated under Section 119(2)(c). The petitioner, being a senior citizen, cannot be denied of the benefit of exemption under Section 10(10C) of the Act and the financial benefit that had accrued to the petitioner, which would be more than a lakh of rupees. Therefore, this Court is of the view that the third respondent should grant the benefit of exemption to the petitioner. Accordingly, the writ petition is partly allowed, the impugned order is set aside and the third respondent is directed to grant the benefit of exemption under Section 10(10C) of the Act and refund the appropriate amount to the petitioner, within a period of three months from the date of receipt of a copy of this order. Considering the facts and circumstances of the case, the prayer for interest is rejected.
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2016 (12) TMI 414
Reopening of assessment - capital gains on account of sale of tenancy/ lease hold rights - Held that:- In particular, the Petitioner has specifically pointed that the capital gains on account of sale of tenancy/ lease hold rights arose in the Assessment Year 2008-09 as is evident from ₹ 1.90 Crores being offered to tax in his return of income for Assessment Year 2008-09. Therefore, the impugned reopening notice is without jurisdiction to the extent it seeks to open the assessment for the Assessment Year 2009-10. Besides, in law, the Petitioner submitted that there could be no reason to believe that any income chargeable to tax has escaped assessment under Section 50C of the Act. This for the reason that it would have no application in case of transfer of tenancy/ lease hold rights. The order dated 28th July, 2016 disposing of Petitioner's objection does not even remotely refer to the Petitioner's above objections let alone deal with them. Nevertheless, the objections are rejected by order dated 28th July, 2016. In the above view, Mr. Kotangle, learned Counsel appearing for the Revenue very fairly states that the impugned order dated 28th July, 2016 may be set aside and restored to the Assessing Officer. This would enable the Assessing Officer to dispose of afresh the Petitioner's objection dated 6th June, 2016 on proper application of mind tn the objections raised. Order dated 28th July, 2016 is quashed and set aside.
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2016 (12) TMI 413
Reasons for re-opening the case u/s. 147 - as contended by assessee that the assessment is sought to be reopened on the audit objections only and there is no independent opinion formed by the A.O. - Held that:- We call for the original files from the office of the A.O. Mr. Parikh, learned counsel appearing on behalf of the revenue has produced the relevant files from the office of the A.O. On perusal of the files, noting and the relevant documents, it appears that after the audit party raised objections, A.O. in fact justified the assessment order and in fact requested to drop the audit objections. Even in the communication to the higher authority for approval to initiate proceedings under section 147, A.O. has reiterated and stated that according to him the audit objection is required to be dropped, however, remedial action is required to be taken as precautionary measures. Under the circumstances, there is no subjective satisfaction on the part of the A.O. that the income has escaped the assessment. Thus the impugned reopening proceedings cannot sustain and the same deserves to be quashed and set aside on the aforesaid ground alone. - Decided in favour of assessee
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2016 (12) TMI 412
Amount appropriated towards the Sinking Funds - whether was a part of the rent received by it and was in the nature of a revenue receipt ? - Held that:- Considering the order of this Court in M/s. M. Visvesvaraya Industrial Research and Development Centre Vs. Commissioner of Income Tax (2012 (11) TMI 235 - BOMBAY HIGH COURT), the above Reference related to Assessment Years 1989-90 and 1990-91 in respect of the applicant assessee itself wherein held The mere use of the term 'sinking fund' and the manner in which the assessee treats the same in its accounts is not decisive of the matter. The assessee is not a co-operative society in which case the question may well be answered entirely differently depending upon the facts of the case. The fact that depreciation has been claimed by the assessee in respect of the plant and machinery and other equipment required for extending the facilities indicates that the sinking fund was utilized for acquiring and maintaining the same for the benefit of the assessee. The income was, therefore, used by the assessee and for the assessee and the assessee retained the benefit arising therefrom An identical question raised therein as here was answered in favour of the Revenue and against the applicant assessee.
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2016 (12) TMI 411
Application of provisions of section 2(22)(e) - ITAT deleted the addition on deemed dividend - Held that:- Question (i) as framed by the Revenue stands concluded against the Revenue and in favour of the respondent assessee by the decision of this Court in Commissioner of Income Tax Vs. Universal Medicare Pvt. Ltd [2010 (3) TMI 323 - BOMBAY HIGH COURT and Commissioner of Income Tax Vs. Impact Containers (P) Ltd. (2014 (9) TMI 88 - BOMBAY HIGH COURT) wherein held no loan or advance was granted to the assessee, since the amount in question had actually been defalcated and was not reflected in the book of account of the assessee. Even assuming that it was a dividend, it would have to be taxed not in the hand of the assessee but in the hands of the shareholder. - Decided against revenue In view of the fact that the share holding of Mr. Sunil Mantri in respondent assessee is of no consequence in view of the decision of this Court in Impact Containers Pvt. Ltd. (supra). This is so as it is undisputed that respondent assessee is not a registered shareholder in the lending company viz. M/s. Sunil Mantri Reality Ltd.
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2016 (12) TMI 410
Recovery proceedings - attachment orders - 'Priority of Charge' - false claim on property in question - petitioner submitted a representation stating that they have purchased the property through a public auction conducted by the Recovery Officer, DRT, Chennai and as on date of sale, there was no attachment over the property - Held that:- Admittedly, the property was brought for public auction by the Dena Bank, which was a secured creditor. The question would be as to whether crown debts would have precedence over the debts payable to a secured creditor? This issue is no longer resintegra and has been answered by the Full Bench of this Court in the case of The Assistant Commissioner (CT) Vs. The Indian Overseas Bank and another [2016 (12) TMI 373 - MADRAS HIGH COURT]. Thus, by applying the decision of the Full Bench referred above, the law having come into force, governs the parties even in respect of litigations which are pending. Therefore, the Income Tax Department cannot claim any precedence over the secured creditor in proceeding against the subject property for the recovery of the income tax arrears in the light of the law laid down by the Full Bench, which was rendered taking note of the recent enactment viz., the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016. Writ Petition is allowed and the impugned order is quashed. The sixth respondent, viz., the Sub Registrar, Keelur, Tuticorin District is directed to delete the encumbrance which has been entered based upon the request made by the Tax Recovery Officer and the said direction be complied with, within a period of three weeks from the date of receipt of a copy of this order
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2016 (12) TMI 409
Unexplained investment in purchase of land - Held that:- From a perusal of the record it becomes clear on facts that assessee had taken a loan from one M/s City Developers Pvt. Ltd., Kolkata and it has also come on record that infact money had come from M/s City Developers into the account of assessee. There is no denial of this fact by the department. The department had at no place alleged that there was any doubt about the fact that money, which had come into the account of the assessee, were from its transaction made with M/s City Developers Pvt. Ltd., Kolkata. The monies were also found actually credited in the bank account of the assessee. No allegation of any fraudulent dealing from Kolkata have been alleged by the department. The genuineness of the transaction, therefore, is not in doubt. There is no finding whatsoever with regard to that. On the contrary it is clear that provisions of Section 69 of Act are not contrary in order to make an addition to the assessee's income. - Decided in favour of the assessee.
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2016 (12) TMI 408
Slump sale - genuine slump sale to qualify treatment under Section 50B - Held that:- So far as the Revenue’s contentions with respect to the retention of two assets that were not sold as a part of the going concern by the assessee is concerned, we find the argument is insubstantial. The sale transaction was reported for a total consideration of ₹ 45.83 crores. The sale was for a going concern, which included ongoing service contracts, employment contracts and other tangible assets, and intangible assets such as technical know-how etc. To expect a purchaser to buy and pay value for defunct or superfluous assets flies in the face of commercial sense. Unfortunately, the Revenue’s understanding is that in a going concern the buyer is bound to pay good money, transact and purchase bad and irrecoverable debts. Not only does it fly in the face of common and commercial understanding, but it is not even a pre-condition , as is evident from the definition of “undertaking”, cited in Explanation (1) to Section 2 (19) (A) of the Act. This definition of “undertaking” is what has been engrafted into by reference, under Section 2(42C) of the Act. Therefore, if certain assets or properties are left out because they would cause inconvenience or lead to some kind of a trouble for the purchasing party, it is well within its right to exclude it from the list of assets. For these reasons, the revenue’s contentions are rejected. The slump sale qualifies for treatment under Section 50(B) of the Act. - Decided in favour of assessee
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2016 (12) TMI 407
Speculation Loss - Trading in future and options - AO not allowing loss to be set off with the Profit of Share Trading in future and option segment - whether amendment is curative in nature and should be deemed to have a retrospective operation? - Held that:- In the case before us, we are concerned with the assessment year 2008-09 and the amendment carving out an exception in the explanation to Section 73 for the companies, which have dealings in shares as their principal business, was made effective only on 1st April, 2015, that is to say, almost 8 years after the assessment year under consideration. We, as such, are not inclined to take notice of the earlier submission. Further, it appears from the Memorandum explaining the provisions in the Finance Bill, 2005 (by which, inter alia, clause (d) to the proviso in sub-section (5) of section 43 was proposed to be inserted) that the Legislature deliberately refrained from enacting a corresponding amendment to the explanation in section 73. The submission that the amendment introduced on 1st April, 2015 is curative has not impressed us for the simple reason that the amendment to Section 43(5) was made by the legislature with effect from 1st April, 2006. For long 9 years they allowed that situation to continue not because of any accidental error or omission on their part. That was a well considered step. We are, as such unable to hold that the amendment made with effect from 1st April, 2015 shall have a retrospective effect on the plea that it is curative in nature. That can only be done by legislature and not by us. In the year 2006, dealings in derivatives ceased to a speculative transaction. But dealings in shares by a company, whose principal business was dealing in shares, were deliberately retained within the ambit of speculative transaction and has ultimately been lifted only in the year 2015. It cannot be said that this was a step to remedy any unintended consequences. The fact that in 2006 dealings in derivatives were treated as deemed business, but the dealings in shares were not similarly treated, is a pointer to show that the legislature intended to treat them differently. There is, as such no question of any unintended consequence. We are, as such, unable to hold that the amendment is curative in nature or for that reason has a retrospective effect.
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2016 (12) TMI 406
Additional depreciation under Section 32(1)(iia) - assessees were carrying out processing of iron ore - Held that:- On perusal of the order passed by the CIT(A) we find that it is clearly noted therein that the ITAT while allowing the additional depreciation for the Assessment Year 2002-03 had clearly considered that the respondent/ assessee was engaged in the business of extraction and processing of iron ore. It is also not in dispute that even for the relevant Assessment Years 2006-07 and 2007-08, the same activities were being carried out by the respondents/assessees. In such circumstances, the contention of Ms. Asha Desai, learned Counsel appearing for the appellant that the respondent/assessee were carrying out only processing of the iron ore and not carrying out extraction and processing of the iron ore cannot be accepted. Thus we find that the substantial questions of law proposed by the appellant would no longer survive for the reasons recorded in the case of Commissioner of Income-tax, Goa vs. Salgaonkar & Brothers (P.) Ltd., (2014 (4) TMI 1156 - BOMBAY HIGH COURT). - Decided in favour of assessee
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2016 (12) TMI 405
Foreign exchange gain - eligibility for exemption u/s 10A - AO observed that the gain is from reinstatement of balance in EEFC A/c - Held that:- The export turnover is always brought into India by way of foreign exchange deposited into the EEFC A/c. The assessee has kept the foreign exchange in the EEFC A/c as it did not require the same immediately for its business purposes. By virtue of the deposits remaining in the EEFC A/c, the assessee has gained on the foreign exchange fluctuation. Merely because the sale consideration is retained in the bank a/c, it will not lose the character of being export consideration. The gain is on a/c of conversion of foreign exchange. We find that similar issue had arisen in the case of Banyan Chemicals Ltd. before a third Member Bench reported in (2008 (12) TMI 296 - ITAT AHMEDABAD ). Thus we hold that the forex gain as on the date of deposit into EEFC A/c only is part of the export turnover Gain on account of the forward contracts has been held to be in the nature of the business income eligible for deduction u/s 10A of the Act. See Majestic Exports vs. JCIT [2015 (7) TMI 936 - ITAT CHENNAI ] Amount received from its AE towards the reimbursement of the expenditure - ALP adjustment - Held that:- Having regard to the rival contentions and the material on record, we find that the reimbursement of the expenditure by the AE to the assessee is also on international transaction. The TPO u/s 92CA of the Act, has not made any ALP adjustment to the reimbursement of expenditure which only shows that the genuineness of the transaction has been accepted. When there is no impact on the profit of the assessee by the said transaction, we agree with the contention of the assessee that it does not have any impact on the computation of income of the assessee. Levy of interest u/s 234A - Held that:- As assessee submitted that in the relevant A.Y, the CBDT has extended the time for filing of the returns till 15.11.2011 and the assessee had filed its return of income on 13.11.2011 itself and therefore, the interests u/s 234A of the Act is not chargeable. Since these facts need verification, we deem it fit and proper to remit the issue to the file of the AO for verification of the details and direct the AO to charge interest u/s 234A of the Act only if there is a delay in filing of the return of income inspite of extension of time by the CBDT. This ground is therefore, allowed for statistical purposes.
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2016 (12) TMI 404
Expenditure under the head “Repairs & Maintenance” - revenue v/s capital expenditure - Held that:- For the proposition that merely because the expenditure has been incurred on a new leased premises, it does not mean that the same amounts to capital expenditure and different treatment should be given. The assessee is into the business of setting up and running cinema theatres and in the earlier years, the assessee has carried out similar activities which has been considered by the AO as capital expenditure. ITAT has considered the factual and legal matrix of the case and has held the expenditure to be revenue expenditure. The decisions relied upon by the learned Counsel for the assessee also supported the case of the assessee - Decided in favour of assessee. Registration charges for lease deed - revenue v/s capital expenditure - Held that:- In the case of Gopal Associates (2008 (8) TMI 530 - HIMACHAL PRADESH) considering the nature of the incurred expenditure on stamp duty and registration charges at the time of execution of lease agreement for taking of land on lease for Fruit Processing Plant for 7 years and the Hon'ble High Court has held it to be in the nature of revenue expenditure. The above decisions, therefore, clearly hold that the expenditure incurred towards registration charges of leave and licence agreement is in the nature of the revenue expenditure and has to be allowed in the year of execution of the leave and licence agreement. - Decided in favour of assessee Additional depreciation u/s 32(1)(iia) - Held that:- In the case before us, the claim of the assessee is that it is running a canteen in the Cinema Theatre and therefore, is manufacturing food items and hence is eligible for additional depreciation u/s 32(1)(iia) of the Act. Running a canteen cannot be said to be manufacturing of an article or thing. Therefore, the claim of the assessee is not tenable. - Decided against assessee
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2016 (12) TMI 403
Denial of benefit of exemption claimed by the assessee u/s 10B - Held that:- Considering the copy of the circular of CBDT dated 08th October, 2014 No.14/2014 wherein it is clarified that mere transfer of redeployment of existing technical manpower from an existing unit to a new SEZ unit in the first year of commencement of business will not be construed as splitting up or reconstruction of an existing business so long as number of technical manpower so transferred does not exceed 50% of the total technical manpower actually engaged in developing software at any point of time in the given year in the new unit. It was demonstrated that in the case of the assessee, there was transfer of only 25% of technical employees from WWSPL to the assessee company. Thus, under these circumstances, we find force in the argument of the Ld. Counsel that transfer of the aforesaid employees from WWSPL to the assessee was within the limit prescribed in the CBDT circular and hence, such transfer of existing technical manpower from WWSPL to the assessee in the first year of commencement of business should not be construed as splitting up or reconstruction of an existing business. Thus, this contention of the Revenue also fails. We have gone through the other allegations made by the AO as well as the Ld. CIT(A). We find that these allegations are merely unsubstantiated doubts and, in any case, do not have any material bearing on the issue before us. Under these circumstances, we find that the lower authorities have mis-appreciated the facts and have not been able to bring any evidence on record on the basis of which the exemption u/s 10B could be denied to the assessee. Thus, after taking into account all the facts and circumstances of the case we find that deduction u/s 10B is allowable to the assessee and, therefore, the same is directed to be allowed - Decided in favour of assessee
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2016 (12) TMI 402
Disallowance of deduction u/s.80P(2)(e) - Held that:- From going through the order of ld. CIT(A) we find that he has agreed to the contentions of assessee for being eligible to claim deduction u/s 80P(2)(e) but while deciding the quantum of appeal it seems that he has not adjudicated the issue in the right perspective because in his appellate order he has mentioned that “appellant has not raised ground and submitted the explanation or detail in respect of other part i.e. if there is no net profit or gain i.e. positive income before allowance u/s.80P of the Act, then no such deduction u/s.80P(2)(e) of the Act can be allowed, It is therefore the ground raised is not specific against this contention of A.O., but from submission it is held that the same is only for one contention which is hereby allowed while for other contention the A.O. has not raised ground so disallowance for such contention by A.O. is upheld. This ground is treated as partly allowed.” The above observation of ld. CIT(A) is erroneous to the extent that assessee is having positive income from letting out godowns/warehouses at ₹ 11,40,187 and specific ground has been raised before CIT(A) against ld. Assessing Officer’s action for not allowing the claim u/s 80P(2)(e) of the Act. To this extent the order of ld. CIT(A) is cryptic which needs fresh adjudication. We are, therefore, of the view that in the given facts and circumstances of the case, the issue needs to be restored back to the file of ld. CIT(A) for fresh adjudication. - Decided in favour of assessee for statistical purposes.
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2016 (12) TMI 401
Disallowance of sum incurred in order to increase assessee’s authorized share capital - Held that:- This sum comprises of franking charges of ₹ 1,77,500/- for filing Form V followed by the letter head of filing fees amounting to ₹ 25000/-. Both the lower authorities quote hon’ble apex court’s decision in Brooke Bond India vs. CIT (1997 (2) TMI 11 - SUPREME Court ) as followed in case of M/s. Vareli Textiles Industries vs. CIT (2006 (2) TMI 102 - GUJARAT High Court ). Learned counsel for the assessee vehemently argues in favour of assessee’s grievance pleaded in the instant ground. He however fails to rebut application of the above case law squarely covering the issue. This first substantive ground is accordingly rejected. Addition on account of reconciliation of receipts with TDS certificate - Held that:- We are in assessment year 2008-09. Both the lower authorities quote Rule 37BA(3) to conclude that the impugned income not declared in the impugned assessment year deserves to be added so as to ensure compliance of this rule. We observe in these facts that this action on part of both the lower authorities goes contrary to the above stated Rule. It mainly talks about credit for TDS deduction at source and paid to the Central Government for the assessment year for which such income is assessable and not vice versa since the authorities below rather added the income in the impugned assessment year. We further notice that clause (ii) of sub-Rule 3 of Rule 37BA envisages that credit for tax deducted at source shall be allowed across those years in the same proportion in which the income is assessable to tax. We repeat once again that this clause no where prescribes addition of income component since dealing with TDS credit issue only. We rather observe that these expressions make it clear that main endeavor in the Rule in question deals with an issue wherein an income is split over in more than one assessment year as against facts of the case wherein there is no such circumstance. We thus conclude that the impugned addition is not sustainable. The same stands deleted. Section 14A disallowance comprising of proportionate interest and administrative expense - Held that:- Jurisdictional high court’s decision in CIT vs. Torrent Power Ltd. (2014 (6) TMI 185 - GUJARAT HIGH COURT ) and CIT vs. Suzlon Energy Ltd.[2013 (7) TMI 697 - GUJARAT HIGH COURT] deleting identical disallowances in case of surplus interest free funds. Ld. Departmental Representative fails to rebut this factual position. We accordingly hold that the impugned proportionate interest disallowance of ₹ 1,93,297/- is not sustainable. The same stands deleted. For Administrative expenses component there is no dispute that the Assessing Officer has not rebutted assessee’s main contention to have not incurred any administrative expenditure in earning the dividend income in question. Neither of the lower authority rebuts this contention by referring to facts of the case. We notice in this backdrop that hon’ble jurisdictional high court in PCIT vs. India Gelatine & Chemicals Ltd. (2015 (11) TMI 392 - GUJARAT HIGH COURT ) upholds tribunal’s order deleting administrative expenditure disallowance in similar circumstances. We draw support therefrom to delete this component of the impugned Section 14 disallowance as well. Allowability of enhanced deduction u/s.35B over and above the original claim made in the return of income - Held that:- The instant Revenue’s appeal does not satisfy the threshold tax effect limit of ₹ 10 lacs as provided in Board’s circular no. 21/2015 dated 10.12.2015. We further notice that Revenue’s arguments on merits quote hon’ble apex court’s decision in Goetze India Ltd. vs. CIT (2006 (3) TMI 75 - SUPREME Court) that assessee’s above claim is not admissible for want of revised return. A perusal of the said case law makes it clear that their lordships conclude that the above pre-condition of revised return does not impinge upon jurisdiction of appellate authorities including this tribunal under the provisions of Income Tax Act. We thus reject this Revenue’s appeal on merits as well.
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2016 (12) TMI 400
Sales computation - assessment year - method of valuation - Held that:- There is ostensibly no sale agreement/s in-as-much as there is no reference thereto. The goods under reference are under transit as on 31.03.2011, the last date of the relevant previous year, and the physical delivery of the goods effected only in the following year. How, then, we wonder, could be goods be regarded as sold in/during the current year? Surely, it could not merely be on the basis of raising sale invoices or of passing entries recording sales in the books of account, which may be done as a matter of course or as a matter of expediency. We agree that the accounting policy, using the word ‘coincide’, is not very appropriately worded, but then the same is not to be read strictly, as one would read a provision of law, giving due emphasis to every word, but as conveying broadly the intent, as of transfer of ownership of goods in the present case. Then, again, could an accounting policy override substance when no sale, either in law or as per the accounting norms, can be said to have taken place? Surely, not. Revenue has not raised any issue qua the valuation of the goods under reference, which is stated by the ld. A.R. as being in conformity with the method of valuation regularly followed, so the same cannot be regarded as open for review. The matter, in view of the foregoing, shall travel to the file of A.O. for determination on the terms afore-said, i.e., with reference to the insurable interest in the goods under transit as at the year-end. We may also clarify that in the event of the assessee’s claim being not allowable on the said terms; it having offered the income under reference to tax for the following year (Gd. 3), it is at liberty to press its’ claim for the said year u/s. 154 in-as-much as the issue at heart, therefore, is the correct year of assessability of the income under reference; each year being a separate and independent unit of assessment (refer: CIT v. British Paints India Ltd., [ 1990 (12) TMI 2 - SUPREME Court ]
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Customs
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2016 (12) TMI 379
Classification of imported item - Data Projector - classified under 85286100 with exemption under Notification No. 24/2005-CUS dated 01/03/2005 or under Custom Tariff Heading 85286900 as multi purpose projector to which the benefit of Sl. No. 17 of Notification No. 24/2005 CUS dated 01/03/2005 is not applicable - Held that: - the specifications of the imported goods are for the projectors which are meant for use as data projectors and not as video projectors; therefore, goods would be covered by the description Projectors of a kind solely or principally used in an automatic data processing system of heading 8471, which is the description of the Customs Tariff Heading 85286100 for which the benefit of Notification No. 24/2005-CUS under its entry No. 17 would be available. The subject issue is covered by the CESTAT, Chennai decision in the case of Acer India Pvt. Ltd. vs. CC, Chennai [2009 (11) TMI 931 - CESTAT AHMEDABAD], where it was held that - item in question is to be classified under Chapter Heading 85286100 for which the benefit of Notification No. 24/2005-CUS under its entry No. 17 is admissible. Appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 378
Confiscation of goods and imposition of redemption fine and penalty - doubtful nature of REP licence - forged shipping bills - the appellant had purchased the said licences at a premium of 3-4% which was less than the market rate of premium which was 6% - Held that: - The licences have transferred hands a number of times in open market without endorsement of DGFT before it reached the appellant. The appellants have paid a premium of 3.4% of these licences. There is no allegation on the appellant of being involved in the fraudulent issue of licence. The licences were valid at the time of import of goods. Hon'ble apex court in the case of East India Commercial Co. Ltd. [1962 (5) TMI 23 - SUPREME COURT OF INDIA] has examined the issue in similar set of facts, where it was held that Nor is there any legal basis for the contention that licence obtained? by misrepresentation makes the licence non- est, with the result that the goods should be deemed to have been imported without licence in contravention of the order issued under Section 3 of the Act so as to bring the case within Clause (8) of Section 167 of the Sea Customs Act. Assuming that the principles of law of contract apply to the issue of a licence under the Act, a licence obtained by fraud is only voidable: it is good till avoided in the manner prescribed by law. In the instant case the goods which were imported against the licence have been processed and disposed of by the appellant. The goods are not available for confiscation. The goods have not been seized or released against a provisional bond. In these circumstances, the decision of the Hon'ble High Court of Bombay in Finesse Creation Inc. [2009 (8) TMI 115 - HIGH COURT OF JUDICATURE AT BOMBAY] is squarely applicable in the said decision, the Hon'ble High Court has observed that the concept of redemption fine arises in the event the goods are available and are to be redeemed. Appeal allowed - decided in favor of assessee.
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2016 (12) TMI 377
Refund claim with interest - amount encashed by the Revenue invoking the Bank Guarantee - time bar - Section 27(1) of C.A. 1962 - Held that: - the encashment of the Bank Guarantee by the department on 17.12.1999 despite they are being an interim order of the Hon'ble High Court not to encash the Bank Guarantee; is an illegal step of the department which amounts to holding back of an amount for which department had no legal sanction and can be termed as an amount retained by the department without authority to law. The office of the Jt. DGFT have subsequently accepted the contention of appellant and held that appellant had to only discharge the differential Customs duty along with interest and composition fees, which enables them to get the export obligation discharged certificate, which would mean that the consignment imported duty free are consumed by the appellant for export of the goods as agreed upon by them when they procured advance licence - averment of the appellant that they have completed the export completion is not contested by the Revenue. The appellant was well within his legal rights to claim the refund of the amount encashed by the Revenue invoking the Bank Guarantee. An application filed by the appellant on 13.10.2001 was correct application which remained unprocessed by the Revenue till 11.05.2005 and the refund was sanctioned on 13.05.2005. In our considered view, appellant is entitled to interest in accordance with law after three months from 13.10.2001 till 13.05.2005 as per Board Circular dated 02.01.2002 - appeal allowed - decided in favor of appellant.
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2016 (12) TMI 376
Revocation of the CHA Licence - forfeiture of the entire amount of security deposit - violations of provisions of CBLR 2013 - Embroidery Machine Needles imported from China - Evasion of ADD - mis-declaration of quantity of needles - needles was misdeclared as 20,000 pieces instead 1,00,00,000/- of pieces - undervaluation of goods - Held that: - We find that there is no dispute that large scale evasion of anti dumping duty by the importer is established and also misdeclaration of the quantity and value of the goods. As regard the charges of violation of various regulations alleged and confirmed by the lower authority, we find that the appellant before accepting the job of clearance of the goods has taken authority letter from the importer. From authority letter and the verification of the signature by the bank, we do not see any difference in the signature. Moreover whether the signature is correct or not if there is any doubt the same cannot be established without getting it certified from the forensic expert which department has failed to do. Moreover there are other documents like certificate of registration from Maharashtra Sales Tax Department in favour of the importer 'M/s. Jai Ambey Impex' also submitted therefore the identity of the importer is not under doubt. The entire objective of taking authority letter and KYC is for the purpose to establish the identity of the importer. In the present case the importer is very much existing all the time and he came forward to claim the goods imported therefore except mala fide intention on the part of the importer there is no doubt about the identity of the importer. As regard the dealing of CHA with the importer, we do not find anything malafide which led to offence of evasion of anti dumping duty. It is very important to note that when the appellant filed the Bill of Entry thereafter when they came to know about evasion of anti dumping duty and also there is a misdeclaration of quantity and value of the goods, he advise the importer for payment of anti dumping duty when he felt that the importer is not complying his advise. He immediately withdrawn himself as CHA vide his letter dt. 10.5.2013 i.e. within four days of filing Bill of Entry. As regard the mention by the Ld. Commissioner that the licence of the appellant was also revoked in the past, we are of the view that we cannot be influenced by any other case which is not before us. We have to consider the facts of the present case and if we found that in the present case no offence is established as per the facts and circumstances of this case then any other case cannot have a bearing in the present case. With our above discussion, we do not see that the conduct of the appellant is such that any of the violation of regulation as held by the Commissioner sustains. We are therefore of the considered view that from the facts and circumstances of the case, Revenue could not make out a case of revocation of the licence of CHA - We therefore set aside the order and allow the appeal.
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2016 (12) TMI 375
Demand - goods manufactured in bonded warehouse - relinquishment of the title of goods - Held that: - the issue in the instant appeal is squarely covered by the decision of the Hon'ble High Court of Karnataka in the case of i2 Technologies Software Pvt. Ltd. [2007 (8) TMI 49 - HIGH COURT, BANGALORE], where Department contended that respondent company liable to pay the duty along with interest and penalty on the ground that goods have outlived the warehousing period – Held that department contention was not valid and set aside demand, interest and penalty. The 2nd issue which arises is the quantification of the demand for the purposes of interest. We find that the matter has been clarified by the Hon’ble Supreme Court in the case of Kesoram Rayon [1996 (8) TMI 109 - SUPREME COURT OF INDIA], where it was held that The consequence of non-removal of warehoused goods within the permitted period or the permitted extension is, by virtue of the terms of Section 72, certain. The date on which it comes to end is the date relevant for determining the rate of duty. When the duty is, in fact, demanded is not relevant. The appellants have a right to relinquish the goods. However, the interest can be recovered from the date of warehousing of the goods left in the warehouse to the date of relinquishing of the title by the appellants. Rate of duty for calculation of interest would be determined in terms of the decision of the Hon’ble Supreme Court in the case of Kesoram Rayon - appeal disposed off - decided partly in favor of appellant.
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2016 (12) TMI 374
Classification of imported boats - classified under heading 89011030 as excursion boats or under heading 89039200 as sports boat? - Held that: - the declaration of conformity filed by the manufacturer of the boats before the authorities in United States indicates that the boats which are imported by the appellant, are recreational craft. This particular declaration is annexed at page 24 of the appeal memoranda. The said declaration of conformity also states that the craft is powerboat. In addition to that, we find that the certificate of registration as issued by the Port officer, Government of Goa, specifically registered these boats as motor boats mars, mercury etc. and relies upon the declaration filed by the manufacturer i.e. Regal Marine Industries, Florida, though the description of the boat has been stated as excursion boats. We find that the adjudicating authority in order-in-original has reproduced the photographs of the boats which are imported. On casual perusal of the said reproduction of the photographs, we find that the boats which are imported by the appellant would merit classification only under heading 8903 as motor boats, other than outboard motor boats which is a specific entry indicated in the Customs Tariff Act. The HSN Explanatory Notes to chapter 8901 specifically excludes the vessels of heading 8903. It would mean that heading 8901 would exclude vessels which are specifically listed in the said heading of 8903. In 8903, motor boat is mentioned as specific vessel under specific heading. The impugned order is correct and legal and does not suffer from any infirmity - boat classified under heading 8903 - appeal rejected - decided in favor of Revenue-respondent.
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Corporate Laws
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2016 (12) TMI 367
Neglect to discharge of debt payable under a loan transaction - winding up petition - Held that:- The explanation offered by the company of a sale transaction and that the parties proceeded on a misconception that the area is larger than 2.73 acres and, accordingly, an excess amount was paid by the petitioning creditor which subsequently on ascertainment of the actual area was refunded without refund of the excess stamp duty and registration cost paid is difficult to accept. The survey alleged to have been conducted on 28th May, 2004 without notice to the petitioner. The consideration for sale of land was paid by separate cheque subsequent to the loan transaction. If the contention of the company were to be accepted then there would be no requirement to issue separate cheques on 15th April, 2014 and May 30, 2014 for ₹ 48,00,000/- and ₹ 1,74,000/-. The said sum of ₹ 1.90 crores ought to have been mentioned in the Memo of Consideration. The necessity to prepare a survey report allegedly on 28th May, 2014 without notice to the petitioner and significantly coinciding with the date of execution of the sale deed is something more that it meets the eyes. The survey report was not at all necessary or required as the recitals of the sale deed would clearly show that the vendor purchased 2.73 acres of land on 14th December, 2005. The very fact that the said sum of ₹ 1.90 Crores was not mentioned in the Memo of Consideration in the sale deed shows that the parties never intended to treat the said amount as sale consideration. Accordingly, the company upon making payment of a sum of ₹ 86 lakhs to the petitioner and furnishing cash security for a sum of ₹ 52 lakhs in favour of the Registrar, Original Side, High Court, Calcutta within a period of four weeks from date with intimation to the petitioner shall be entitled to stay of winding up petition and the petitioning creditor would be required to file a suit for the remaining balance amount of ₹ 52 lakhs together with interest within a period of four weeks thereafter. However, if the petitioner fails to institute such proceeding notwithstanding the compliance of this order by the company, the Registrar, Original Side, High Court, Calcutta shall refund the said amount together with interest of the company on payment without any further reference. The Registrar, Original Side, High Court, Calcutta shall deposit the said amount with the United Bank of India, High Court Branch in a suitable fixed deposit account yielding highest return and shall keep the said account renewed till the disposal of the suit.
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2016 (12) TMI 366
Maintainability of appeal - non admitting the liability to pay the remaining amount - winding up petition - Held that:- The petition deserves to be dismissed because of the disputed questions of fact about the deliver of goods purchased by the respondent for which the Division Bench has held that if the triable issues are raised, the summary jurisdiction of the Company Court cannot be invoked in order to compel the company to pay the amount on pain of being wound up.
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Service Tax
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2016 (12) TMI 398
Commercial concern - business auxiliary services - During adjudication the original adjudicating authority took a view that as the appellant was providing such services to M/s. Amar Products as an individual and not under the name of any commercial concern he would not be covered by the definition of Business Auxiliary Services as appearing in section 55 (105)(zzb) of the Finance Act 1994 - Held that: - the appellant in his individual capacity has provided services to M/s. Amar Products and was not having any commercial concern for undertaking the business in regular course. As such we find no infirmity in the views adopted by Commissioner (A) or the original adjudicating authority which is based upon boards circular and the precedent decisions. Time bar - Held that: - during the relevant period there was a lot of confusion. All the activities undertaken by the appellant were a part of the reflection made in the balance sheet and income tax return in which case no suppression or malafide can be attributed to the assessee. Revenue has not been able to produce any evidence on record to show that the tax, which according to the revenue was payable, was not being paid on account of any malafide. As such we agree with the lower authorities that the extended period would not be available to the Revenue. Appeal rejected - decided against appellant-Revenue.
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2016 (12) TMI 397
Cenvat Credit - credit of CVD paid on import of capital goods being mobile phones - nexus between these and the output service - extended period of limitation - Held that: - The rules are stringent in requiring the retention of capital goods at the factory of production but acknowledges that capital goods used for rendering of service may have to be taken outside the premises. - There is no allegation that the 'fixed wireless phones' were not received at the premises of the appellant. Indeed, it would have been well nigh impossible for the appellant to have provided the phones to subscribers from some other premises. This aspect has not been considered in the impugned order. Flexibility in assigning a meaning to the expression ‘premises’ should have found a place in the impugned order. The lack thereof may be attributed to the digression to matters not contemplated in the notice. This want of proper disposal of the show cause notice must be remedied before we can take a decision on the legality and propriety of the disposal of the allegations in the show cause notice. Demand set aside - Matter remanded back.
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2016 (12) TMI 396
Imposition of penalty u/s 78 of the Finance Act, 1994 - the amount of service tax collected wrongly but not deposited with the government - after being pointed out by the department, same was deposited with interest - Held that:- The said amount collected by appellant does not fall under any of the category of the services that are taxed as at the most the said collection of amount by appellant for permitting to use the road can be under rent/lease of open space which is not taxable for the reason, during the relevant period hence tax liability on the amounts received on leasing of open spaces is itself in question. The provisions of Section 78 of the Finance Act, 1994 does not envisage any penalty on the amount collected as service tax and not paid to the Government treasury covered under Section 73A of the Finance Act, 1994 - In the case in hand none of the provisions of the Section 73A of the Finance Act, 1994 are applicable, as appellant has collected an amount which is representing service tax. In view of this, the provision of Section 78 would not apply in the case in hand. Similar issue fell for consideration by the Hon'ble High Court of Punjab & Haryana in the case of Ajay Kumar Gupta [2015 (5) TMI 566 - PUNJAB & HARYANA HIGH COURT] wherein the Lordships held that Once the service tax was not leviable under Section 68 at that point of time and the liability was only to deposit the tax under Section 73A(2), which has been done on 15.11.2008, after delay, but due to the service being not taxable at the relevant time when the invoices were raised, we are of the opinion that the case would not fall under the provisions of Section 78 for invoking of the penalty, as has been held by the Tribunal. It was the categorical stand of the appellant before the First Appellate Authority that the service tax had been collected by mistake, on account of the new provision and the office of the appellant was not fully acquainted with the interpretation of the statute due to which the default had occurred and therefore, in view of the defence taken, the Tribunal was not justified, in the present facts and circumstances, to hold that there was a wilful suppression of facts, to bring it within the ambit of Section 78. Penalty u/s 78 set aside - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 395
Small service provider exemption - determination of turnover not exceeding ₹ 10 lakhs - Notification No.6/2005-ST dated 01.03.2005 as amended by Notification 8/2008-ST dated 01.03.2008 - Held that: - It can be that explanation which was amended to read the amount as Ten lakhs that the first consecutive payments received during a financial year towards the gross amount needs to be considered for the aggregate value not exceeding ₹ 10 lakhs - In the case in hand we find that at page No.66, income and expenditure account of appellant for the year ended 2010 records receipt of ₹ 10,50,790/- which have to be considered as consecutive payments received out of which an amount of ₹ 78,669/- needs to be deducted as value for the services rendered to SEZ units. This value of ₹ 78,669/- has been rendered to SEZ unit is undisputed. In our view for the year ended 2009-10 appellant has not exceeded the threshold limit of ₹ 10 lakhs as prescribed under Notification No.6/2005-ST as amended by Notification 8/2008-ST. In view of this the demand raised for the year 2009-10 are unsustainable and liable to be set aside. Consequently, the demands raised for the year 2010-11 are also unsustainable as the entire demand has been worked out on the basis that appellant is not eligible for the benefit of Notification No.6/2005-ST as amended as for the proceeding financial year the turnover were more than Rupees Ten lakhs. Appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 394
Levy of tax - renting of earthmoving equipment, such as Caterpillar, Excavators, etc. - the activity of renting of earthmoving equipment would come under the purview of service tax under the taxable service category of “business auxiliary service” for the period prior to 16-5-2008 and under the category of “supply of tangible goods for use” with effect from 16-5-2008? - While the assessee contends that what they have transferred is right to use which is a deemed sale, the Revenue’s contention is that the right of possession and effective control remained with the assessee and hence, the transaction has to be treated as service. Held that: - A similar issue arose for consideration before the Hon’ble High Court of Andhra Pradesh in the case of G.S. Lamba & Sons v. State of A.P. [2011 (1) TMI 1196 - Andhra Pradesh High Court], where it was held that the transaction involved was a transfer of right to use Transit Mixers and not transport service and the petitioners had transferred the “right to use goods” to Grasim - If we apply the ratio of the above decision to the facts of the present case, the transaction involved herein is “transfer of right to use” which is a deemed sale and not “supply of tangible goods for use” service. The assessee’s activity of giving various equipments on hire does not fall under the category of “Supply of tangible goods for use”, hence the same is not liable to service tax w.e.f. 16.05.2008. Now coming to the Revenue’s appeal, we find that the Ld. Commissioner dropped the demand for the period prior to 16.05.2008 mainly on the ground that the service is of “Supply of tangible goods for use” which came into effect on 16.05.2008, therefore prior to that date the service was not taxable. However, we, in our above findings, held that the service in question is not the service of “Supply of tangible goods for use”. In this position the main ground of the Ld. Commissioner for dropping of demand does not exist and not relevant. Though the Ld. Commissioner in a passing reference mentioned in the impugned order that the service prior to 16.05.2008 does not fall under the “Business Auxiliary Service” but not given the detailed findings. Therefore when the main ground for dropping of demand does not exist. The issue relates to demand prior to the period 16.05.2008 needs reconsideration. Appeal allowed by way of remand.
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2016 (12) TMI 393
Refund claim by recipient of services - service tax discharged for rendering of ‘commercial and industrial construction service' in the bills raised during the execution of the project and, having ascertained in 2006 that such projects were not liable to tax owing to the exclusion provision in the definition of the service on section 65 (25b) of Finance Act, 1994, applied for refund of ₹ 2,53,65,007 charged from them towards service tax for the period from 1st September 2004 to 31st July 2006 - unjust enrichment - is claim of refund justified? - Held that: - The scheme of section 11B of Central Excise Act, 1944 does not specify that duty has to be credited to the Central Government as a pre-requisite for eligibility. It merely requires that duty be paid and, as far as recipient of service is concerned, that obligation is discharged by making over the amount in the invoice that separately identifies the tax component. The claimant is not required to enforce tax-payment; that is the responsibility of tax officials who are vested with power to recover such tax which has been collected in excess. With that specific empowerment available in the statute, the need to prove that provider has deposited the tax is rendered superfluous. It is sufficient to evince that invoices, incorporating the tax amount, has been honoured in full. The bank statement and invoices furnished do evidence that tax liability has been discharged along with consideration for services received. The impugned order has found that the payments made prior to September 2005 is barred by limitation. We hold that this finding is in accordance with the time-line laid down in section 11B of Finance Act, 1994, Learned Counsel for appellant attempted to forcefully argue that this, being tax not liable to be paid, is not a refund envisaged in section 11B of Central Excise Act, 1944. - it is well-settled that the powers of the Tribunal are circumscribed by the statute. The extraordinary powers vested in High Courts and the Hon'ble Supreme Court cannot be exercised by us. We, therefore, uphold the rejection of the claim for the period prior to September 2005 on grounds of limitation but allow the appeal to the extent of ₹ 1,08,95,273 to be refunded to appellant, being the subsequent period discharged amount. Appeal disposed off - decided partly in favor of appellant.
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Central Excise
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2016 (12) TMI 392
Valuation - job work - inter-connected undertakings - rule 8 of Central Excise Valuation Rules 2000 - Held that: - valuation of goods manufactured on job-work under Rule 8 can only be done in a case where the goods are used for captive consumption within the factory or if it is used by other company on their behalf. In the present case, the goods manufactured on job-work by the appellant is neither used by themselves for captive consumption whereas the same is used by other company i.e. M/s Unique Sugar Mills Limited and use by M/s Unique Sugar Mill is not on behalf of the appellant. Therefore, the ingredient of Rule 8 does not exist in the transaction of the present case. Therefore the valuation done by the appellant i.e. cost of raw material + job charges including profit of the job-worker is correct - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 391
CENVAT credit - Fabricated Steel Base Plate / Base Rails - Held that: - In Shree Laxmi Iron & Steel V CCE, Kolkata [2014 (2) TMI 1093 - CESTAT KOLKATA] credit availed on rails which were used in movement of hot rolled fish plates from the furnace was held to admissible. In the instant case appellants had purchased fabricated Base plates. From the facts and evidence placed before me and from the totality of the discussions, I am of the view that Base Plates/Base rails being accessories to capital goods, credit is admissible - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 390
CENVAT credit - manufacture of Printing Inks, Resins etc falling under Chapter 32 and 39 of Central Excise Tariff Act, 1985 and registered with the Central Excise Department w.e.f. 29.05.2009 - After Registration, on receiving various inputs, they availed CENVAT Credit on the same and later, the said inputs were removed as such to their sister concern, on reversal of credit availed on such quantity of input due to delay in commercial production which commenced only in October 2010 - whether CENVAT credit availed is correct? - Held that: - I find that because of non-receipt of various statutory permissions as well as electricity and water connections, the Appellants could not commence the commercial production during the said period, accordingly, to avoid the damage to the inputs received and lying in stock were cleared to their sister concern on reversal of credit availed on such inputs under proper excise invoices mentioning the relevant rule 3(5) of CCR,2004. All these facts have been disclosed by the Appellants in their statutory ER1 returns. The sample copy of ER1 return filed by the Appellant for the month of March 2010 duly acknowledged by the Department reveals that they have discharged the credit availed by them during the relevant period on clearance of inputs. Also, the statement furnished by the learned Chartered Accountant for the Appellant, which was submitted along with reply to the Show Cause Notice, indicates that receipt of inputs and clearance of the same as such were made on payment of appropriate duty/reversal of credit initially availed. Besides, it is also not in dispute that the commercial production started from Oct. 2010 - demand set aside - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 389
Demand - CENVAT credit - bulk drugs and intermediates falling under Chapter 29 of the CETA - non-existent raw materials - Held that: - The allegations are founded on investigation conducted against other parties and the appellants herein have been implicated merely on the basis of assumptions drawn in regard to the evidences/materials pertaining to such parties. It is also to be mentioned that Shri S. Vinod Kumar who is associated with M/s Aerochem has deposed that he has been working with these companies for the last 18 years and was looking after loading and unloading of material at the godowns. This statement is in total contradiction to the case setup by department that no goods at all were supplied by M/s Aerochem and that all the transactions were being fabricated by issuing fake invoices only. This together with the fact that appellant has been discharging huge amount of duty and the invoice being only a single invoice, which the appellant has been able to establish with documentary evidence maintained in the course of business, that the goods have been received in the factory, I am of the view that the allegation raised against the appellant in the show cause notice cannot succeed. The department has failed to establish conclusively that the appellant has not received the goods in to the factory with regard to the disputed invoice - demand not sustainable - appeal allowed - decided in favor of appellant.
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2016 (12) TMI 388
Availment of CENVAT credit twice - inputs - Vacuum Interrupter Tubes - job work - Held that: - I find that the Respondent had cleared the input VIT to the job worker M/s BMC Electroplast Pvt Ltd who ultimately on assembling with other components, converted the said product into TSA. While clearing TSA, the job worker instead of paying duty only on the items procured by him and used in the TSA, but paid duly on the entire value of the TSA, which included the value of the VIT. Ultimately, the Respondent had availed Cenvat Credit on the TSA including duty paid on VIT which has gone into the manufacture of said assembly. To avoid complication, the appellant could have followed the procedure laid down under Rule 3 (5) of Cenvat Credit Rules while clearing inputs as such viz., VIT but that itself cannot be the ground for recovery of Cenvat Credit on the said Input, which was received back by them from the job worker contained in the TSA, on which appropriate duty was paid by the job worker. I find that the Ld Commissioner(Appeals) has recorded the same reasoning while allowing the Appeal of the Respondent and setting aside the order of adjudicating authority - Availment of CENVAT credit in order - appeal dismissed - decided against Revenue.
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2016 (12) TMI 387
Rejection of refund claim - pre-deposit - unjust enrichment - Held that: - I find that the appellant had given evidence that the same is not hit by unjust enrichment by producing a photograph of Ledger Account maintained in their system, which indicated that the appellant had not expressed out the amount deposited on the direction of the Tribunal. I also find that the appellant had produced a Chartered Accountant’s certificate dated 3.5.2011 which also indicates that the appellant had maintained that this amount is receivable from the Excise Department and not expressed out. I find that the first appellate authority has overlooked to these crucial evidences, which supported the claim of the appellant that there is no unjust enrichment. In my considered view, the appeal of the appellant is on strong footing and needs to be allowed as he is able to demonstrate that they have not collected the amount from their customers and indicated the same in Balance-sheet as receivable from the Excise Department. Refund allowed - appeal allowed - decided in favor of appellant.
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2016 (12) TMI 386
Refund claim - N/N. 17/2009-ST dated 07.07.2009 - export of goods - whether the rejection of refund claim on the ground that the appellant had availed CENVAT credit of the specified services used for export, is justified? - Held that: - the appellant had not specifically brought out on record that during the relevant period they had complied with the condition of the notification by not availing the CENVAT credit on input services - Accordingly, I do not see any discrepancy in the order of the Commissioner (Appeals). In the result, the appeals being devoid of merit are dismissed - decided against appellant-assessee.
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2016 (12) TMI 385
CENVAT credit - GTA Services - input service as defined in Rule 2(l) of Cenvat Credit Rules, 2004 - Held that: - I find that the appellants, in their appeal memo has enclosed sample copies of invoices and respective purchase orders wherefrom it is prima facie clear that the sale is on FOR basis. Therefore, it is necessary that all these documents need examination to ascertain the condition of sale before arriving at any conclusion whether CENVAT credit is admissible on the outward transportation up to the place of removal. Therefore, the mater is required to be remanded to the adjudicating authority to examine these evidences. Accordingly, the impugned order is set-aside, and matter is remanded to the adjudicating authority for deciding the issue afresh on the basis of evidences on records and the evidences that would be produced during the course of hearing. Needless to mention that a reasonable opportunity of hearing be allowed to the Appellant - appeal allowed by way of remand.
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2016 (12) TMI 384
Demand - the appellant is located in the state of Himachal Pradesh and availed exemption under Notification 50/2003-CE dated 17.07.2006 - reversal of credit availed - Held that: - As facts of this case has not been disputed and the Ld. AR disputed only the quantum of input service credit reverse. In that circumstance, it would be in the interest of justice and the matter is remanded back to the adjudicating authority to verify the fact that whether the appellant has reversed on proportionate cenvat credit attributable to input service used in manufacturing of final exempted product or not? If the appellant has reversed cenvat credit attributable to input service used in exempted final product, no proceedings shall be warranted against the appellant. If any, discrepancy is found, in that circumstance, the appellant shall reverse the cenvat credit along with interest - appeal disposed off by way of remand.
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2016 (12) TMI 383
Demand - Section 35R of the Central Excise Act, 1944 - instructions dated 17.12.2015 issued by the CBEC, fixing monetary limits below which appeal shall not be filed in the Tribunal - I also find that the Hon'ble High Courts of Madras, Karnataka and Gujarat have held that the litigation policy containing monetary limit for filing appeals will apply to pending appeals also - the decision of the Madras High Court referred, The Commissioner of Central Excise And Service Tax Versus M/s Kannappa Corporation [2015 (11) TMI 168 - MADRAS HIGH COURT] - appeal dismissed - decided against Revenue.
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2016 (12) TMI 382
CENVAT credit - manufacture of writing and printing paper - inputs - cement, TMT bars, Aluminium coils, SS sheets/coils, Hydrogen peroxide, caustic soda plate, dyes, fiber drums etc - suppression of facts - Held that: - It is stated that the appellant were under bonafide belief that credit is admissible and therefore had availed the credit. The department has no case that the appellant has not disclosed the details of credit availed in the ER- 1 Returns. So also, there is no positive act alleged against the appellant of suppression or willful mis-statement with intent to evade payment of duty. Period of limitation - Held that: - The show cause notice dated 08-04-2011 covers the period from 4/2006 to 2/2008, which is beyond the normal period. The Tribunal in the case of Ultratech Cement Ltd Vs CCE, Raipur [2016 (1) TMI 520 - CESTAT NEW DELHI] had occasion to analyse a similar situation where the show cause notice was issued invoking extended period - I find that there are no ground for invoking extended period of limitation and the demand, in my opinion is time barred. Appeal filed by assessee is allowed on the ground of limitation. Appeal dismissed - decided against Department.
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2016 (12) TMI 381
Denial of CENVAT credit - manpower supply services - reimbursement of statutory contribution to PF and ESI for manpwoer supply service - whether the appellant is eligible for credit availed on man power recruitment service engaged for carrying out maintenance of railways tracks? - Held that: - It is not disputed that the appellant used railway track for transportation of finished goods/bulk cement and also for inward transportation of inputs. Therefore it is evident that railway tracks are integrally connected for carrying out the activity of manufacture. The denial of credit stating that the manpower service used for maintenance of railways tracks does not have nexus with the manufacturing activity is against all cannons of reasoning. Further, the first part of definition of input service states,- input service means “any service - used by a manufacturer, whether directly or indirectly in or in relation to the manufacture of final products and clearance of final products upto the place of removal” . Therefore, any services used directly or indirectly in or in relation to the manufacture of final products would fall within the definition of input services. Since transportation of inputs into the factory as well as transportation of finished goods is an indispensable activity in the process of manufacture it can be concluded without doubt that manpower services used for maintenance of railway tracks qualify as an input service and is eligible for credit. The service tax paid on reimbursable part of the consideration paid towards manpower supply services is denied for the reason that such contributions are for the personal use of the employee. It has to be stated that such contributions are mandatory and the appellant can avail the services only by making payment of such mandatory obligations. Further, such payments cannot be considered as primarily for personal use or for consumption of employees because the employees in this regard are supplied by the contractor and they do not fall under the category of employees of the appellant. In CST, Mumbai Vs Reliance Capital Asset Management Ltd. [2015 (3) TMI 560 - CESTAT MUMBAI], the Tribunal has held the above service to be eligible for credit. Denial of credit is unjustified - appeal allowed - decided in favor of appellant.
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2016 (12) TMI 380
Demand - Shortage in inputs and finished products - clandestine removal - Held that: - The activities of clandestine nature is required to be proved by sufficient positive evidence. However, the facts presented in each individual case are required to be scrutinized and examined independently. The department in this case has relied upon the confessional statement of the Director which is also supported by the mentioned entries in the private records. There is no averment that the statement has been taken under duress. The assessee also does not appear to have asked for cross-examination during the process of adjudication - I find that the Commissioner (Appeals) order setting aside the demand is not proper. The demand is based on evidence which stands admitted by Director based on private records recovered from the assesses’ factory. There is nothing on record to the effect that statements relied upon have been extracted under duress. The Director also has voluntarily stated that he is satisfied with the manner of stock taking and search. Demand justified - appeal allowed - decided in favor of Revenue.
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CST, VAT & Sales Tax
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2016 (12) TMI 373
Priority of Charge - mortgage of property - whether the Financial Institution, which is a secured creditor, or the department of the government concerned, would have the 'Priority of Charge' over the mortgaged property in question, with regard to the tax and other dues? - Held that:- Considering the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016, Section 41 of the same seeking to introduce Section 31B in the Principal Act, there is, thus, no doubt that the rights of a secured creditor to realise secured debts due and payable by sale of assets over which security interest is created, would have priority over all debts and Government dues including revenues, taxes, cesses and rates due to the Central Government, State Government or Local Authority. This section introduced in the Central Act is with ''notwithstanding'' clause and has come into force from 01.09.2016. The law having now come into force, naturally it would govern the rights of the parties in respect of even a lis pending.The aforesaid would, thus, answer question (a) in favour of the financial institution, which is a secured creditor having the benefit of the mortgaged property. Status and the rights of a third party purchaser of the mortgaged property - Held that:- The same is stated to relate only to auction sales, which may be carried out in pursuance to the rights exercised by the secured creditor having a mortgage of the property. This aspect is also covered by the introduction of Section 31B, as it includes ''secured debts due and payable to them by sale of assets over which security interest is created''.
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2016 (12) TMI 372
Benefit of concessional rate of tax - duplicate part of the C-Forms produced by the petitioner not considered - Held that: - The Hon'ble Division Bench of the Madhya Pradesh High Court in the case of Manganese Ore (India) Ltd. Vs The Commissioner of Sales Tax [1989 (1) TMI 351 - MADHYA PRADESH HIGH COURT] considered an identical issue and held that where the dealer filed the duplicate part of Form C instead of the original, there was sufficient compliance with the provisions of Section 8(4) of the Central Act and those of Rule 12(1) of the Central Sales Tax (Registration and Turnover) Rules, so as to entitle the dealer to get the benefit of concessional rate of tax under Section 8(1) of the Central Act - the petitioner's case can be considered by taking into account the duplicate part of C-Form instead of the original. The matter is remitted back to the respondent for fresh consideration. The respondent shall take note of the duplicate part of the C-Form instead of the original part, examine the correctness of the same and proceed further in accordance with law - appeal allowed by way of remand.
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2016 (12) TMI 371
Rejection of Refund of the ITC u/s 18 of the TNVAT Act, 2006 - making moulds for the manufacture of valves - Held that: - In Sara Leathers vs. Commercial Tax Officer, Tambaram I Assessment Circle, Chennai [2009 (10) TMI 848 - MADRAS HIGH COURT], this Court considered the scope of Section 18 of the TNVAT Act with particular reference of Section 18(2) of the TNVAT Act and pointed that Section 18(2) of the TNVAT Act is emphatic in its wording, the dealer referred to therein to claim a refund is one who had paid the tax on purchase of those goods that are exported and such consumed goods used in the manufacture of other goods which are exported and are specified under sub-section (1) and in the said case, the petitioner was held to be entitled to the total refund. Thus, the respondent should consider the petitioner's case based on the stand taken by them that the raw materials purchased by them are used in the manufacture of other goods that are exported as specified in sub-section (1) of Section 18. This aspect having not been considered, the matter requires re-consideration. Appeal allowed by way of remand.
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2016 (12) TMI 370
Imposition of penalty u/s 45(6) of GVAT Act - exemption u/s 49(2) of the Act - the department could not have levied the penalty after lapse of 9 years is concerned, at the outset, it is required to be noted that as such there is no time limit prescribed under the statute - Held that: - by the delay in initiation of the proceedings and / or imposing the penalty belatedly the assessee is benefited to the extent that the appellant will make the payment of penalty subsequently which otherwise the assessee was required to pay at the time of passing of the assessment order. It is required to be noted that the authority imposed the penalty of 90%, which came to be reduced by the learned Tribunal to 50%. Therefore, even interest of the assessee has also been protected to the aforesaid extent. However, at the same time the appellant may not be saddled with liability to pay the interest on the penalty for the interregnum period and the liability to pay interest on the penalty, if any, shall commence from the date of penalty i.e. in the present case 11.4.2001. To the aforesaid extent, present appeal is required to be partly allowed and the impugned judgment and order passed by the learned Tribunal is required to be modified to the aforesaid extent. The order passed by the competent authority imposing penalty under Section 45(6) of the Act is hereby confirmed, subject to modification of the same to the extent that in the peculiar facts and circumstances of the case, liability to pay interest on the amount of penalty, if any, shall commence from the date of order of penalty i.e. 11.04.2001 only - appeal disposed off
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2016 (12) TMI 369
Benefit of second sale exemption - Section 10 of the TNGST Act - the petitioner Agency was that they have failed to prove the movement of goods, with the details of freight paid, loading and unloading charges paid, way bill number with date, name and address of the transporters, etc. Further they have not produced any proof for the turnover for which they have claimed exemption and they refused to sign the statement including the stock reconciliation statement. The burden of proving that any transaction or any turnover of a dealer is not liable to tax lies on the dealer who is claiming exemption. Held that: - the purchases effected from other companies i.e. other than SAIL have been denied the second sale exemptions. However, the Assessing Officer did not go into the merits of the assessment, but was solely carried away by the dispute with regard to the constitution of the petitioner and devoted much attention to the said contention and by over ruling the objections raised by the petitioner, confirmed the proposal in the pre-revision notice. Thus, the impugned orders are flawed for reasons that the merit of the assessments were not gone into by the Assessing Officer. So far as the constitution of the petitioner-M/s Steel Exchange House is concerned, various factual issues have been raised by the petitioner in the affidavits filed in support of the Writ Petitions which cannot be adjudicated in a Writ proceedings - the issue relating to the constitution of the erstwhile proprietary concern also requires to be considered afresh. Petition allowed by way of remand.
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2016 (12) TMI 368
Whether the petitioners herein, which are two units of National Textile Corporation Ltd., could be treated as two different entities and the transfer of yarn from one of the entity to the other, for the purpose of manufacture of cloth, which is an exempted commodity, would amount to sale? - Held that: - registration under the Sales Tax Act does not necessarily mean that the registered dealer becomes a separate legal entity different from its creator, namely, the company proper. In the instant case, there can hardly be any doubt on this issue, because the registration certificate issued to both the petitioners mentions that they are units of National Textile Corporation Ltd. This being not in dispute, ought not to have been brushed aside by the respondent. The registration certificates of both the units state that they are units of National Textile Corporation Ltd. Thus, this Court has no hesitation to hold that the impugned proceedings, insofar as treating both the petitioners as distinct legal entities and treating the inter units transfer of cotton and cotton yarn to the transferee, cannot be treated as sale transaction and the finding that merely, because there are two TIN numbers to treat both the units as separate units and the finding rendered by the respondent in this regard is wholly untenable. Petition allowed - decided in favor of petitioner.
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Wealth tax
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2016 (12) TMI 399
Chargeability of interest from the legal representative of the deceased assessee - deceased assessee having not filed his return within prescribed time and in his life time - Held that:- It is settled law that a fiscal statute has to be strictly construed. It is the plain language of the provision, which has to be preferred and specially where the language is plain and is capable of one definite meaning, strict interpretation is to be given, there is no rule for intendment. Purposive interpretation can be given only when there is some ambiguity in the language of the statutory provision to read the statute, in any other way would lead to absurd results. Having heard learned counsel for both the sides & having perused the materials available on record and case laws cited before us, we are of the opinion that the reasoning adopted in the decisions of the Allahabad High Court in Rameshwar Prasad Versus Commissioner Of Wealth-Tax [1980 (3) TMI 78 - ALLAHABAD High Court] and Ved Prakash Narang Versus Commissioner Of Wealth-Tax [1987 (11) TMI 41 - ALLAHABAD High Court ] insofar as they interpreted the liability of a legal representative is correct, and even otherwise, we hold that the interest liability under Section 17 B of the Act cannot be fastened on a legal representative just like that. - Decided in favour of assessee
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Indian Laws
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2016 (12) TMI 365
Entitlment to sell the properties - auctioning the secured assets in exercise of powers under Section 13(4) of the SARFAESI Act - Held that:- In the present case, as noted a clear remedy of Appeal is available under Section 17 of the Act. The dispute between the parties fall in the commercial realm where the dispute of such nature, namely commercial, are to be agitated, rule of alternative remedy has to be adhered to steadfast. As the alternative forum would be expert body equipped and competent to dealt with the factual aspects and investigate into the matters into the special realm. Therefore, it is trite that the petitioners are relegated to the alternative remedy. Accordingly the petitioners cannot be allowed to invoke writ jurisdiction of this Court straightway. The petitioners are hereby relegated to approach the Tribunal to avail alternative remedy of Appeal. All the contentions which are raised in this petition may be raised in accordance with law while pursuing the alternative remedy. This Court has not gone into the merits of the case of the petitioners and this petition is not entertained on the aforesaid ground alone.
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2016 (12) TMI 364
Notice under SARFAESI Act challenged - Held that:- It is trite that the High Court exercising jurisdiction under Article 226 of the Constitution would be loath to entertain the petition straightway when aggrieved person has got an alternative statutory remedy. The remedy before the Tribunal is not only statutory remedy available, it is efficacious remedy where the parties can lead evidence in support of their case. All the contentions which are sought to be raised in this petition by the petitioners could well be raised and agitated in the Appeal before the Tribunal. The matter in commercial realm. In such cases, rule of availment of alternative statutory remedy has to be adhered to steadfast. This petition is not entertained and is hereby dismissed. It is clarified that this Court has not gone into the merits of the case of the petitioners. It will be open for the petitioners to raise all the contentions and prayers before the Tribunal in the Appeal which they may opt to prefer. Dismissed as above.
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