TMI Tax Updates - e-Newsletter
February 1, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
Unexplained money - in cases where unaccounted entries are found recorded in the books or documents seized, section 69A cannot be invoked. This provision can be invoked only when unaccounted cash, bullion, jewellery or any other valuable article or thing is found during search or otherwise - AT
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Income Tax:
Mine development expenses - deferred revenue expenditure - Though there is no reference in the Income-tax Act, 1961, the accounting principle recognizes such claim proportionately. Therefore, this Tribunal is of the considered opinion that the assessee has rightly claimed 1/5th of the expenditure during the year - AT
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Income Tax:
TDS u/s 194J - Non deduction of TDS on payment towards Internet charges (Band Width charges) - Although the amendment was given retrospective effect, legal maxim, lex non cogit ad impossibillia, meaning thereby that the law cannot possibly compel a person to do something which is impossible to perform - AT
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Income Tax:
When the assessee is registered as charitable institution and there is no change in the aims and objects of assessee in the impugned AY and the activities of assessee over the years remains the same, the proviso to section 2(15) cannot be applied to assessee to deny exemption u/s 11 - AT
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Income Tax:
Addition u/s 41(1) - it is undisputed fact that the remission of liability would be only of the amount payable and not of the amounts paid by the assessee. These amounts cannot be brought to tax, as the remission of liability, as there is no remission of liability of the amount already paid by the assessee. - AT
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Income Tax:
Exemption claimed u/s.10(23B) denied - development of khadi or village industries or both (KVIC) - the contention of the assessee that the assessee has made best efforts for obtaining the exemption certificate and in the light of its efforts, exemption may be granted, cannot be accepted, as before allowing exemption, assessee must have exemption certificate - AT
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Income Tax:
Expenses relating to setting up of new service lines - revenue v/s capital - all these expenses have been recovered subsequently in the normal billing cycle of the assessee - held as revenue in nature - AT
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Customs:
Claim of duty drawback - export of readymade garments, leather goods, etc. - either the supporting manufacturer did not exist or had not manufactured the goods - even in cases where goods were procured from the open market, the central excise portion of the drawback was admissible during the relevant period also. - AT
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Service Tax:
Valuation - inclusion of amount charged towards Study Material Package (SMP) supplied to students - coaching centre - clarification issued by the Board's circular No.59/8/2003 dt.20.6.2003 is illegal and contrary to the statutory exemption granted by the notification. - AT
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Service Tax:
Job work - Business Auxiliary services - it is seen that the appellant has collected service tax along with consideration from its principals for service rendered but failed to deposit the same in the government account. By this act of omission, the plea of leniency in the matter of penalties will not evoke a sympathetic response - AT
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Service Tax:
Export of services in relation of import of goods - In case of the commission received from foreign supplier for procuring orders from the Indian buyers to whom the goods were directly supplied by the foreign supplier, the service rendered clearly satisfies the requirement of the same being the export of service. - AT
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Central Excise:
Cenvat credit lying unutilized in stock on 1.3.2003 denied - appellant has availed credit after a gap of one year - There is no time limit prescribed under Cenvat Credit Rules, 2002 during the impugned period, therefore the appellant is entitled to take credit - AT
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Central Excise:
Central excise registration cancelled - Purchaser of land - Merely because the defaulter unit, though it had ceased to carry on business on the premises in question, had failed to apply for de-registration, the same should not, in any manner, come in the way of the petitioners in obtaining central excise registration in respect of the premises in question. - HC
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VAT:
Levy of purchase tax under Section 4(4)(iii) of the A.P. VAT Act on goods sold in the course of export out of the territory of India. - to occasion export there must exist such a bond, between the contract of sale and the actual exportation, that each link is inextricably connected with the one immediately preceding it. - HC
Articles
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2016 (1) TMI 1033
Provision for increment - Held that:- As the provision was made for known liability and therefore the approach by ITAT cannot be said to be unjust. Overloading charges - Held that:- The overloading charges or under loading charges are payable in terms of contract between the parties and it is not an offence. It is purely a commercial transaction. In this situation, we do not find any substantial question of law arising as the ITAT has allowed payment of overloading charges as expenditure which can be deducted under Section 37 of the Income Tax Act, 1961. Compensation expenditure - revenue v/s capital - Held that:- Since the acquisition of land results into displacement of land owners, as per the policy of resettlement and rehabilitation for land outstees, they are to be given employment in the assessee company and till such employment is given the assessee company is liable to pay subsistence allowance at the rate of ₹ 2,500/per month per person. It has no corelation with area or extent of land acquired. The company, as a prudent measure, has evolved the policy to pay a lump sum consideration to such land oustees in lieu of employment. If the company is not in a position to provide employment, then only the subsistence allowance at the rate of ₹ 2,500/was/ is being paid. Thus, this subsistence allowance is a liability which arises only after the land is acquired if employment cannot be offered. Therefore, the ITAT has rightly accepted it as the Revenue expenditure.
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2016 (1) TMI 1032
Revision u/s 263 - claim of allowance under the provisions of sec. 40(a)(ia) was not examined by the AO during the course of assessment proceedings - Held that:- The assessee could not demonstrate before us that the issue was examined by the AO during the course of assessment proceedings. It is settled principle of law that non-enquiry by the AO on an issue confers jurisdiction on the CIT to revise the assessment. The Hon’ble jurisdictional High Court, in the case of CIT vs. Infosys Technologies Ltd.(2012 (1) TMI 76 - KARNATAKA HIGH COURT) following the judgment of Malabar Industrial Co. vs. CIT (2000 (2) TMI 10 - SUPREME Court), held that where deduction was allowed by the AO without indicating the basis, that could be considered as an order both erroneous and prejudicial to interests of revenue. When the ld.CIT remanded the matter to the AO to examine the issue afresh, it cannot be termed as beyond the jurisdiction of the CIT. Respectfully following the judgment of the Hon'ble jurisdictional High Court in the case of Infosys Technologies Ltd.(supra), we hold that the ld.CIT(LTU) was justified in assuming jurisdiction u/s 263 of the Act and directing for de novo assessment. - Decided against assessee
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2016 (1) TMI 1031
Disallowance of wages - CIT(A) allowed relief to assessee - Held that:- The assessee has given a reasonable and plausible explanation that the assessee is a civil contractor and hires worker who are mostly illiterate and cannot sign and instead use their thumb impressions and wage register was duly audited by the auditors who have not pointed out any defect or deficiency in the wage register. The AO has also not also specified any authority of law whereby it is mandatory in India on the part of the payer to compulsorily have signatures of the payee's in the receipts/ vouchers instead of thumb impressions and taking of thumb impressions of the payee will invalidate or lead to inadmissibility/ rejection of the documents under prevailing laws in India nor the AO has brought any authority under Act that if revenue stamp is not affixed on cash payments exceeding the prescribed limit under law, will lead to disallowance of the said expenses under the Act. No doubt, this could be deficiency in the maintenance of records but that is not sufficient to disallow the claim of expenses of the assessee. Nor is the case of the revenue that these expenses are bogus or fictitious and have never been incurred or paid by the assessee. Thus, we are of considered view keeping in view the facts and circumstances of the case, that ad-hoc disallowance being 15% of the wages made by the AO cannot be sustained and we are not inclined to interfere with the orders of the CIT(A). - Decided against revenue Assessment u/s 144 - disallowance deleted by CIT(A) - Held that:- AO erred in not considering the replies filed till 16-12-2011 by the assessee during the course of assessment proceedings in tapal/dak counters before the finalization of the assessment u/s 144 of the Act on 16-12-2011 while the CIT(A) has rightly considered the replies filed by the assessee in tapal/dak counters till 16-12-2011 i.e. date of finalization of the assessment u/s 144 of the Act by the AO. The CIT(A) has adjudicated the appeal of the assessee on merits after considering the replies, documents and evidences furnished by the assessee till 16-12-2011. We found no infirmity in the orders of the CIT(A) which we uphold - Decided against revenue
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2016 (1) TMI 1030
Penalty u/s. 271(1)(c) - Held that:- The assessee has not furnished inaccurate particulars of income or concealed the income and there are no findings of the Assessing Officer and the CIT (Appeals) that the details furnished by the assessee in his return are found to be inaccurate or erroneous or false. Under these circumstances, in our view the penalty in dispute is totally unwarranted and deserve to be deleted. Accordingly, we delete the penalty made u/s. 271(1)(c) of the I.T. Act and cancel the orders of the authorities below on the issue in dispute. - Decided in favour of assessee.
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2016 (1) TMI 1029
Unexplained money - Addition as income from other sources - Held that:- Section 69A is applicable where the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, and the assessee offers no explanation about the nature and source of acquisition, or the explanation offered by him is not satisfactory in the opinion of the Assessing Officer, then the money and the value of the bullion, jewellery Or other valuable article may be deemed to be the income of the assessee for such financial year. For this section to come into operation, the assessee must be found to be the owner of any money, bullion, jewellery or other valuable article. The terms money, bullion, jewellery or other valuable article signify concrete things and do not mean amounts recorded in books of account or documents. Therefore, in such cases where unaccounted entries are found recorded in the books or documents seized, section 69A cannot be invoked. This provision can be invoked only when unaccounted cash, bullion, jewellery or any other valuable article or thing is found during search or otherwise. We find that it is not the case of A.O. that the assessee has not offered any explanation. It is also not the case of A.O. that explanation offered by him with "regard to source and acquisition of money is not satisfactory. The nature of receipt is business income being advance against sales and source of receipt is the respective customers. The A.O. is very much satisfied with the nature and source of amount. Infact the nature and source of the unaccounted receipts is self-established from the seized material itself. Thus, the nature and source stands duly explained. Therefore, there is no applicability of provision of section 69A of the Act. We are of the view that the Income is different from "receipt". Even when the receipt is unaccounted, it is only the income which is taxable and income has to be computed in accordance with the provision of Act and in accordance with the method of accounting regularly followed by assessee. The assessee has been following the percentage of completion method regularly since inception. The A.O. has duly accepted the method even in assessment done u/s 153A. It is a settled law that once the method followed by assessee has been accepted, the income has to be computed in accordance with that regularly followed method. Therefore, it was not appropriate for the revenue to invoke section 69A to charge the amount to tax. Keeping in view of the facts and circumstances explained above, we are of the view that AO has wrongly made the addition in dispute and similarly, Ld.CIT(A) has also wrongly confirmed the same without going through the facts and circumstances of the case of assessee. Therefore, we are unable to upheld the impugned order and, hence, cancel the impugned order by deleting the addition in dispute. Accordingly, we delete the addition - Decided in favour of assessee
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2016 (1) TMI 1028
Addition on reversal of income arising on cancellation of sales tax assignment - Held that:- The reversal of the amount on cancellation of such assignment consequent upon the amalgamation of M/s Visaka Cement Industry Ltd with assessee-company is only a loss in the course of normal business, therefore, as rightly found by the CIT(A), it has to be allowed. The loss resulted to the assessee is due to cancellation of assignment of sales tax deferred. Since the profit resulting from the agreement has already been treated as income of the assessee, this Tribunal is of the considered opinion that the loss arising out of the cancellation of the agreement has also to be treated as loss in the course of regular business. Therefore, this Tribunal do not find any reason to interfere with the order of the CIT(A) on this issue and the same is confirmed. - Decided against revenue Addition being notional interest - CIT(A) deleted the addition - Held that:- As rightly submitted by the assessee even if the borrowed funds were diverted for making advances to subsidiary companies, this Tribunal is of the considered opinion that there cannot be any addition of notional interest since it is not the case of the Revenue that the subsidiary companies had misused the funds for any other purpose. In other words, since the subsidiary companies used the funds for their business this Tribunal is of the considered opinion that in view of the judgment of the Apex Court in S.A Builders (2006 (12) TMI 82 - SUPREME COURT) there cannot be any addition in the hands of the assessee. A bare reading of the order of the CIT(A) shows that similar addition was made by the Assessing Officer in assessment years 2003-04 and 2004-05. The CIT(A), however, deleted the addition correctly - Decided against revenue Computation of book profit u/s 115JB - Held that:- While entering into an agreement with M/s Trishul Investment Pvt. Ltd. assigning the sales tax liability, the assessee has taken the amount as income and it was charged to the Profit & Loss Account. Therefore, when the assignment was cancelled, the income which was already credited in the books of account and charged to the Profit & Loss Account has to be reversed. Therefore, this Tribunal is of the considered opinion that once the amount was reversed and it was considered to be a loss in the business, therefore, it has to be deducted while computing the book profit u/s 115JB of the Act. Therefore, as rightly submitted by the ld. Counsel, the judgment of the Apex Court in Apollo Tyres Ltd (2002 (5) TMI 5 - SUPREME Court ) supports the case of the assessee. This Tribunal do not find any infirmity in the order of the CIT(A) - Decided against revenue Interest on the advances made to subsidiary companies - Held that:- The subsidiary companies used the funds advanced by the assessee for business purposes. Therefore, in view of the judgment of the Apex Court in S.A. Builders Ltd (supra) even if the borrowed funds were diverted for making advances to subsidiary companies, there cannot be any disallowance of interest. In view of the above, this Tribunal is of the considered opinion that the CIT(A) has rightly deleted the addition made by the Assessing Officer to the extent of ₹ 20.08 crores.- Decided against revenue Disallowance of depreciation on the franchisee fee paid by the assessee - Held that:- the cost of franchise rights would be reduced to the extent of subsidy or discount, if any, given to the assessee. It is an admitted case of both parties that the cost of ₹ 364 crores was to be paid in 10 equal installments. Therefore, the cost of asset is ₹ 364 crores and not Rs. ₹ 36.4 crores. When the cost of block of assets was increased to the extent of ₹ 364 crores, this Tribunal is of the considered opinion that depreciation has to be allowed on the cost of block of assets increased. Therefore, the Assessing Officer is not justified in restricting the depreciation at ₹ 36.4 crores which was said to be paid during the year under consideration. This Tribunal is of the considered opinion that the entire cost of the franchise rights has to be taken into consideration for computation of depreciation. The assessee also filed appeal against the order of the CIT(A), restricting the depreciation on the amount actually paid by the assessee during the year under consideration. While adjudicating the assessee’s appeal at para 34 hereunder this Tribunal found that the assessee is entitled for depreciation on the cost of ₹ 364 crores. Accordingly, the order of the CIT(A) is modified and the Assessing Officer is directed to allow depreciation on the entire cost of ₹ 364 crores. - Decided in favour of assessee Disallowance of provision for leave encashment - Held that:- Sec. 43B(f) clearly says that the amount payable by the assessee as an employer in lieu of any leave at the credit of his employee cannot be allowed unless it is actually ‘paid’. In this case, admittedly, the amount is not ‘paid’ and remains to be ‘payable’. Therefore, it cannot be allowed u/s 43B(f) of the Act. - Decided against assessee Claim of the assessee for depreciation @ 25% - Franchise rights acquired by the assessee of Chennai Superking - Held that:- When the intangible asset was introduced for the first time, the cost of block of asset was increased to ₹ 364 crores and it may not be right to say that the assessee is entitled for depreciation only to the extent of amount paid by the assessee during the year under consideration. This Tribunal is of the considered opinion that the value of block of asset was increased to the extent of cost of asset introduced irrespective of the amount paid by the assessee during the year under consideration. When the cost of the asset is ₹ 364 crores, this Tribunal is of the considered opinion that the value of the asset increased by ₹ 364 crores. Therefore, depreciation has to be allowed on the value of the capital asset and not on the amount paid by the assessee. Hence, the observation made by the CIT(A) that the payment made by the assessee for the subsequent year has to be allowed u/s 37 may not be a correct legal position. Accordingly, the order of the CIT(A) is set aside and the Assessing Officer is directed to allow depreciation @ 25% on the entire amount. Expenditure on vastu services - Held that:- Once the assessee believes that the expenditure incurred by the assessee would increase the production and profit and also improve the harmony among the workers of the company, this Tribunal is of the considered opinion that there is no reason the disallow the claim of the assessee. However, the claim of ₹ 2,50,00,000/- is highly excessive. Irrespective of the belief and faith, the payment shall be reasonable. This Tribunal is of the considered opinion that vastu is just like astrology and the opinion of an expert in the field may be one of the guiding factors. Therefore, the payment for such opinion shall not be unreasonable and arbitrary. The claim of ₹ 2,50,00,000/- is highly excessive and unreasonable. However, this Tribunal is of the considered opinion that the claim to the extent of ₹ 50,00,000/- may be reasonable. Accordingly, the orders of the lower authorities are set aside and the Assessing Officer is directed to allow the claim of the assessee u/s 37 of the Act to the extent of ₹ 50,00,000/-. Hence, the disallowance to the extent of ₹ 2,00,00,000/- is confirmed. - Decided partly in favour of assessee. Disallowance of notional expenditure u/s 14A - CIT(A) deleted the addition - Held that:- The assessee being a corporate entity, without engaging manpower, would not have earned ₹ 2,11,76,000/- during the year under consideration. Therefore, a part of the expenditure incurred in the manpower and infrastructure facilities diverted for earning exempted income has to be disallowed. As rightly submitted by the ld. DR, the Assessing Officer has computed 0.5% of the average investment as expenditure by applying third limb of Rule 8D. Rule 8D(2)(iii) provides for disallowance of an amount equal to 0.5% of the average value of investment, income from which does not form part of the total income, shall be disallowed. Accordingly, the orders of the lower authorities are modified and the Assessing Officer is directed to disallow 0.5% of the average value of investment, the income from which does not form part of the total income.- Decided partly in favour of assessee. Disallowance of lease rent paid by the assessee u/s 40(a)(ia) - Held that:- It is not in dispute that the assessee has taken heavy earth moving equipment on lease from M/s SERI Infrastructure Finance Ltd. and paid a sum of ₹ 11,16,400/-. However, no tax was deducted. The assessee claims that it is not an operational lease but it is only a finance lease. In the case of finance lease, assessee would borrow money and the asset would be purchased in the name of the assessee . The fact remains that the asset was acquired on right to use basis, therefore, what was paid by the assessee is in the nature of rent. Hence, this Tribunal is of the considered opinion that the assessee has to deduct tax while making the payment to M/s SERI Infrastructure Finance Ltd.. Therefore, the CIT(A) has rightly confirmed the addition made by the Assessing Officer - Decided against assessee Addition of expenditure attributable to earning exempt income while computing the book profit u/s 115JB - Held that:- Since the disallowance under rule 8D was confirmed at 0.5% of the average value of investment, income from which does not form part of total income, both for regular computation as well as computation u/s 115JB of the Act, the Assessing Officer has rightly made the addition. However, the orders of the lower authorities are modified and the Assessing Officer is directed to disallow 0.5% of the average value of investment, income from which does not form part of total income. Disallowance of advertisement expenditure - Held that:- The assessee is not claiming the entire ₹ 60 crores as deduction. The assessee is only claiming proportionate amount of ₹ 1,59,38,000/-. The next objection of the Assessing Officer is that there was variation in telecasting the advertisement. It is for the assessee and the M/s Kalaignar TV Pvt. Ltd. to decide the time schedule for the advertisement. The Assessing Officer cannot suggest the assessee or M/s Kalaignar TV Pvt. Ltd. when to telecast the assessee’s advertisement in their channel. When the assessee and M/s Kalaignar TV Pvt. Ltd. decided to telecast the advertisement in a particular time, the Assessing Officer cannot doubt the genuineness of the transaction. The fact remains that there was a telecast of advertisement in respect of the product manufactured by the assessee. It is also not in dispute that the assessee has paid ₹ 60 crores being the cost of advertisement for five years and the assessee is claiming proportionate cost for the year under consideration. Therefore, the CIT(A) has rightly allowed the claim of the assessee. - Decided in favour of assessee. Revision u/s 263 - Held that:- he first issue is with regard to conversion of OCDs/Warrants, second issue is with regard to deduction towards payment of employees benefits superannuation fund and leave encashment and the third issue is unabsorbed loss of ₹ 1,53,16,83,957/-. As rightly submitted by the ld. DR, these issues are not discussed in the assessment order and the Assessing Officer has not made any proper enquiry before allowing the claim of the assessee. This Tribunal is of the considered opinion that the assessment proceedings before the Assessing Officer being a judicial proceeding, the reason for the conclusion reached therein shall be reflected in the assessment order itself. The Assessing Officer is expected to discuss each and every issue arises for consideration and record his own reasoning in the assessment order so as to enable the appellate/revisional authority to appreciate the reason on which the claim was allowed. Since no such exercise was done by the Assessing Officer, the CIT has rightly exercised his power u/s 263 of the Act. Hence, this Tribunal do not find any reason to interfere with the order of the CIT. Accordingly, the same is confirmed. - Decided against assessee Disallowance of lease rental on non deduction of tds - Held that:- whether it is a finance lease or operational lease, the assessee is expected to deduct tax. Since the asset was acquired for right to use basis, hence, the payment has to be construed in the nature of rent, therefore, the assessee is very much liable to deduct tax u/s 194I of the Act. This Tribunal do not find any reason to interfere with the order of the CIT(A).- Decided against assessee Disallowance made on brought forwarded losses consequent to amalgamation - Held that:- As rightly submitted by the ld. Counsel for the assessee, the unabsorbed losses and depreciation to the extent of ₹ 40.55 crores in the hands of M/s Visaka Cement Industries Ltd. before amalgamation will not get reduced or neutralized on account of revaluation, therefore, the assets and liabilities at the fair value during the course of amalgamation has to be considered in the hands of amalgamated company. In view of the above, this Tribunal is of the considered opinion that the brought forward losses and depreciation to the extent of ₹ 40.55 crores has to be allowed while computing the book profit in the hands of the assesseecompany. Mine development expenses - assessee claimed the same as deferred revenue expenditure - Held that:- As rightly observed by the CIT(A), once the assessee incurred the expenditure, the same has to be allowed in the year in which the expenditure was incurred. However, when the expenses were made and the benefits of such expenses would be spread over to following four assessment years, this Tribunal is of the considered opinion that there is nothing wrong in claiming the expenditure proportionately for all the assessment years in which the benefits would accrue to the assessee. Though there is no reference in the Income-tax Act, 1961, the accounting principle recognizes such claim proportionately. Therefore, this Tribunal is of the considered opinion that the assessee has rightly claimed 1/5th of the expenditure during the year under consideration and the balance amount has to be allowed in the next four years in equal installments. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority.
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2016 (1) TMI 1027
Rectification of mistake - Carry forward and set off of losses in the case of certain companies - Held that:- There is no dispute with regard to the fact that the share holding pattern, now presented before us, was not available before the tax authorities as well as the Tribunal during the hearing of appeal. The assessee has accepted throughout the proceedings that there was change in share holding pattern by more than 51%. The decision on the issue of eligibility of the assessee to set off the brought forward losses was adjudicated on the basis of the above said facts originally presented by the assessee. Through this miscellaneous application, the assessee is bringing altogether a new fact, which has the effect of changing the position by 360 degrees. Further, as submitted by the Ld D.R, the same is a new fact, which was not available on record and which requires verification also. It is a well settled proposition that the Tribunal is empowered to rectify the mistakes apparent from record, i.e., mistakes available on the face of record. The assessee may also agree with the position that the order passed by the Tribunal does not suffer from any mistake on the basis of facts available on record at the relevant point of time. Only, if the new facts are taken into account, the decision rendered by the Tribunal may turn out to incorrect one. However, in our considered view, the same may not result in a mistake apparent from record as contemplated u/s 254(2) of the Act. In our view, the remedy lies somewhere else and not before the Tribunal. The case laws, on which the Ld A.R placed reliance, have been well distinguished by the Ld D.R and we fully agree with him that they do not support the case of the assessee. Hence, we are of the view that the Tribunal is not empowered to rectify its order on the basis of new facts, as the same does not fall in the category of mistakes apparent from record. Accordingly, we are not convinced with the petition filed by the assessee and accordingly dismiss the same. - Decided against assessee.
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2016 (1) TMI 1026
Levy of fee u/s 234E in the order u/s 200A - Held that:- The adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adjustments contemplated under section 200A. In view of these discussions, as also bearing in mind entirety of the case, the impugned levy of fees under section 234 E is unsustainable in law. We, therefore, uphold the grievance of the assessee and delete the impugned levy of fee under section 234E of the Act. - Decided in favour of assessee
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2016 (1) TMI 1025
TDS u/s 194J - Non deduction of TDS on payment towards Internet charges (Band Width charges) - CIT(A) deleted the disallowance - Held that:- the dispute with regard to the nature of payment made for purchase of software was settled at rest only by Finance Act 2012 through which Explanation-4 was added to Sec. 9(1)(vii). Although the said amendment was given retrospective effect, legal maxim, lex non cogit ad impossibillia, meaning thereby that the law cannot possibly compel a person to do something which is impossible to perform. As mentioned elsewhere, the amendment was given a retrospective effect but by that time the assessee has already done the transactions without deducting tax at source. On these facts, the assessee cannot be held to have violated the provisions of Sec. 194J of the Act. Our view is fortified by the decisions of the Tribunal in the case of Channel Guide India Ltd. Vs ACIT [2012 (9) TMI 95 - ITAT MUMBAI] and Rich Graviss Products (P) Ltd. [2014 (9) TMI 165 - ITAT MUMBAI ] and also by the decision in the case of New Bombay Park Hotel Pvt. Ltd Vs ITO [2014 (4) TMI 68 - ITAT MUMBAI ]. Respectfully following the decisions of the Coordinate Bench (supra), we do not find any reason to interfere with the findings of the Ld. CIT(A) - Decided against revenue
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2016 (1) TMI 1024
Eligibility for exemption under S.11 - CIT(A) allowed the claim - Held that:- As decided in assessee's own case for earlier years there being no dispute to the fact that dominant object of assessee is charitable in nature, proviso to section 2(15) cannot be applied to deny exemption to assessee u/s 11 of the Act. In our view, AO without examining the issue in proper perspective has abruptly concluded that assessee is not entitled to exemption u/s 11 of the Act only because proviso to section 2(15) was introduced w.e.f. 01/04/09. In our view, proviso to section 2(15) of the Act will not apply automatically to every trust or institution irrespective of the fact, whether the dominant object of the trust or institution is charitable purpose or earning profit. When in the present case assessee is registered as charitable institution and there is no change in the aims and objects of assessee in the impugned AY and the activities of assessee over the years remains the same, the proviso to section 2(15) cannot be applied to assessee to deny exemption u/s 11 of the Act. In view of the aforesaid, we do not find any merit in the submissions of the ld. DR so as to disturb the finding of the ld. CIT(A) on this issue - Decided in favour of assessee Disallowance u/s 40A(3) - Held that:- Once the claim of the assessee for exemption under S.11 has been accepted, the disallowance made by the Assessing Officer under S.40A(3) has no legs to stand, and the ground of the assessee before the learned CIT(A) becomes infructuous. - Decided in favour of assessee
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2016 (1) TMI 1023
Revision u/s 263 - CIT(A) directing AO to bring to tax a sum of under S.41(1) - interest payable to the institutions under S.43B - Held that:- The assessee had taken loans from various banks, such as IDBI Bank, Bank of India, SBI etc. and has also issued debentures to RCTC. The interest on these term loans and debentures was payable by the assessee and it has accordingly debited the same to the Profit & Loss Account on accrual basis. While computing the taxable income of the assessee, the assessee had made disallowance of interest payable to these institutions under S.43B of the Act and thus offered it as income. The four amounts which have been brought to tax by the Commissioner under S.263 being remission of interest payable to IDBI in assessment year 2000-01 and assessment year 2004-05; remission of interest liability payable to Bank Of India during the assessment year 2000-01; and remission of interest payable to RCTC in assessment year 2000-01. The assessee has filed the returns of income and the computation of income for all the relevant years. From the statement showing the computation of income for the year ended 31st March, 1999, we find that the net loss for the year ended 31st March, 1999, as per the Profit & Loss Account was (Rs.1,27,03,833) from which the assessee has reduced the disallowance under S.43B of interest of ₹ 51,08,897 payable to IDBI on term loan, interest of ₹ 1,11,933 on term payable to Bank of India, ₹ 7,16,716 as interest payable on debentures to RCTC, thereby reducing the net loss. From the statement showing computation of income for the accounting year ended on 31st March, 2000, we find that while the assessee has made the disallowance under S.43B and has reduced the same from the net loss, claimed the amounts disallowed under S.43B in the earlier years as deduction on payment basis, which included interest on IDBI term loan of ₹ 51,08,897, interest on Bank of India term loan of Rs,1,11,933, interest payable to RCTC of ₹ 4,25,000. Similarly, statement showing computation of income for the year ended 31st March, 2003, we find that the loss for the year ended on 31.3.2003 as per Profit & Loss Account was (Rs.5,24,55,821), which has been reduced by the disallowances under S.43B, being interest on term loan payable to IDBI of ₹ 2,26,38,281. From page 35 of the paper-book, which is the statement showing computation of income for the subsequent assessment year, i.e. assessment year 2004-05, we find that the assessee has claimed the said amount of ₹ 5 lakhs as amount disallowed under S.43B in the earlier years and now claimed as deduction on payment basis. From these details, it is clear that the assessee has, though accounted for the interest payable during the relevant assessment years and has made the disallowance of the same under S.43B, and offered the income for taxation during the relevant assessment years. However, on making the payment of interest in the subsequent years, the assessee has claimed the same on payment basis. It is undisputed fact that the remission of liability would be only of the amount payable and not of the amounts paid by the assessee. These amounts cannot be brought to tax, as the remission of liability, as there is no remission of liability of the amount already paid by the assessee. Therefore, we do not find any factual mistake in the order of the Assessing Officer passed under S.143(3) read with S.147 of the Act. Further, the learned counsel for the assessee has also drawn our attention to the chart drawn up by the CIT(A) in his impugned order, wherein the liability for the assessment year 2004-05 has not been considered by the Commissioner. Further, he has also filed a statement showing the interest claimed in computation on payment basis to demonstrate his point. We find that the Commissioner has not taken into consideration the interest payable on term loan to IDBI, Bank of India land RCTC for the assessment year 2004-05. From these facts, it is clear that the assessment order is neither erroneous nor prejudicial to the interests of the Revenue. We, therefore, quash the revision order under S.263 passed by the Commissioner. - Decided in favour of assessee.
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2016 (1) TMI 1022
Exemption claimed u/s.10(23B) denied - development of khadi or village industries or both (KVIC) - Held that:- In AY 2008-09 an identical issue was raised before the Tribunal and the Tribunal has adjudicated the issue in the light of the relevant provisions of the Act and has concluded that the assessee is not entitled for the benefit of exemption u/s 10(23B) of the Income Tax Act as the assessee could not furnish exemption certificate for the impugned assessment year duly granted by the prescribed authority. He has simply placed reliance upon the earlier certificate granted for assessment year 2007-08. He has also placed reliance upon the recommendation of the U.P. Khadi and Village Industries Board, Planning Division, Lucknow vide letter dated 16.6.2009 to the State Director, Khadi and Village Industries Commission. This recommendation was made in June 2009 and till date exemption certificate has not been granted to the assessee. Therefore, it cannot be presumed or assumed that once recommendations are made, exemption certificate will certainly be granted to the assessee. Therefore, the contention of the ld. counsel for the assessee that the assessee has made best efforts for obtaining the exemption certificate and in the light of its efforts, exemption may be granted, cannot be accepted, as before allowing exemption, assessee must have exemption certificate as per provisions of section 143(3) of the Act. Moreover, this exemption certificate is to be granted for a particular assessment year, therefore, it cannot be used for other assessment year for which it was not granted. In the light of the totality of the facts and circumstances of the case, we are of the considered opinion that the ld. CIT(A) has rightly denied the benefit of exemption under section 10(23B) of the Act to the assessee - Decided against assessee
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2016 (1) TMI 1021
Expenditure in respect of project management study - revenue v/s capital - Held that:- The expenditure under consideration, in our considered view, did not give rise to creation of a capital asset. It would, at the most, give operational efficiency to the assessee company. The assessee company is already in business. The Ld. CIT(A) has also accepted these facts correctly. The only objection of Ld. CIT(A) that project management study is intended to drastically alter the assessee level of activities in India and therefore, these expenses should be treated as capital in nature, in our view is not acceptable in the eyes of law, especially in the given facts and circumstances of this case. Therefore, keeping in view the facts and circumstances of the case and the judicial pronouncements, as were relied upon by the Ld. Counsel in the submissions made before Ld. CIT(A) and before us, we hold that the expenses incurred by the assessee for an amount of ₹ 4.21 crores in respect of project management study, are revenue in nature. Disallowance made by the AO in this regard is deleted. - Decided in favour of assessee Nature of expenditure - revenue v/s capital - Held that;- CIT(A) has rightly observed that the AO has not questioned the revenue nature of these expenditure but held that as part of expenditure has been incurred for unutilized space, it had to be disallowed as capital in nature. The issue cropped up only because the assessee had furnished the details of expenditure to TPO to determine the appropriate transfer price in its transaction with foreign associates and the TPO had required the AO to determine the nature of some of the expenses. The assessee being in initial years of operations, was in expansion mode and necessarily had to take on lease extra space anticipating business in future. It appears that anticipated business took time while the assessee had to incur the expenditure which it had committed. In our view, Ld CIT(A) is legally and factually correct in holding that the fact that some space, which the assessee had taken on lease, remained unutilized, does not alter the nature of expenses it had incurred. We agree with the findings of Ld CIT(A) that the nature of expenses is revenue and have been incurred for the purpose of business, and therefore, the conclusion of the AO that expenses pertaining to unutilized space was capital in nature, is not correct.- Decided in favour of assessee Expenses relating to setting up of new service lines - CIT(a) treated as revenue - Held that:- CIT(A) has rightly held that the AO has dealt with the issue perfunctorily, and factual and proper analysis of these expenses has not been made by him to inquire whether these were incurred to acquire fixed assets or only to meet routine expenses. Moreover, as per the decision of Honble Supreme Court cited by the assessee, other relevant factors have to be taken into account. The assessee has stated that the three new lines are in the nature of IT enabled services, which is regular business run by it. The control and management is same for all the 17 lines, which constitutes the business activities. No fresh capital has been sourced to commence these new activities and the profits from all the activities are consolidated and reported together. It is worth noting that, as was submitted by the assessee company, all these expenses have been recovered subsequently in the normal billing cycle of the assessee. The AO has not brought anything on record to controvert these submissions. In our considered view, the findings of Ld. CIT(A) are also well reasoned and in accordance with law and facts, no interference is called for therein - Decided in favour of assessee
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2016 (1) TMI 1020
Addition u/s 68 - Held that:- Transactions were all made through account payee cheques through banking channels and creditors are identifiable and the loans were mainly obtained from them to deposit the TDS amount into government account in the course of carrying on the business. The loans were repaid through banking channels. Counsel submits that at that point of time the assessee could not produce creditors confirmations before the Assessing Officer . He pleads for one more opportunity for submission of confirmations before the Assessing Officer. Taking the totality of the facts and circumstances of the case into consideration, we are of the view that since the transactions are made through account payee cheques, the identity of the creditors cannot be doubted. However, the burden is on the assessee to produce creditors’ confirmations and to explain the sources of loans. In the interest of justice, we are inclined to give one more opportunity to the assessee to establish the identity, credit worthiness and genuineness of the transactions. Thus, we set aside the impugned order and restore the issue back to the file of the Assessing Officer and the assessee shall prove the identity, creditworthiness and genuineness of the transactions to the satisfaction of the Assessing Officer - Decided in favour of assessee for statistical purposes.
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2016 (1) TMI 1019
Entitlement to claim deduction u/s. 10A on the amount of foreign currency expenditure - Held that:- In the present case from the work flow of the activities provided by the assessee which has been reproduced in para 7 above, it is evident that the assessee is not providing any end product such as computer software or design to its parent company in Germany. The assessee is providing technical services to its holding company. In so far as the findings of Commissioner of Income Tax (Appeals) on this aspect of the issue is concerned we are in agreement with him. Whether the technical services provided by the assessee are outside India or from India? - Held that:- The assessee has its situs and work platform in India. Thus, in our considered opinion the assessee is providing technical services to its parent company from India. As far as first two components of the expenses i.e. IT expenses and technical consultancy services, are concerned undoubtedly they are the part of the expenditure required for the technical services performed by the assessee to its AE. These expenses as per the contentions of the assessee are mainly with respect to setting up of workstations i.e. Desktops/Laptops, Wide Area Network, leased line for data transfer between KSB AG and the assessee, printers, internet etc. Applications such as Unigraphics, Autocad, SAP, Ms-office, various other softwares, etc. Payment for technical consultancy services include, technical consultancy fees, off-shore salary paid by KSB AG to its technical representative deputed with the assessee, etc. As far as the third element i.e. reimbursement is concerned they relate to expenses incurred by holding company on behalf of the employees of the assessee when they visited Germany for training. These expenses include mainly rent, accommodation, conveyance, training etc. Therefore, these reimbursements do not form part of the expenditure eligible for deduction u/s. 10A. In the definition of the term “export turnover” it has been specifically stated that expenses incurred in foreign exchange in providing technical services outside India. Thus, the scope of the exclusion from the word “export turnover” cannot be enlarged by excluding the expenses incurred in foreign exchange in providing the technical services from India. Exclusion of foreign currency expenditure from “export turnover” as well as “total turnover” while computing deduction u/s. 10A confirmed
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Customs
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2016 (1) TMI 1003
Claim of duty drawback - export of readymade garments, leather goods, etc. - On enquiry, it was found that either the supporting manufacturer did not exist or had not manufactured the goods and were simply traders. On account of such fraudulent declaration, the proceedings were initiated which culminated into the impugned order. - Held that:- even in cases where goods were procured from the open market, the central excise portion of the drawback was admissible during the relevant period also. The issue is squarely covered in favour of the appellants by the judgements of CESTAT in the case of Kultar Exports [2014 (1) TMI 531 - CESTAT NEW DELHI]. Accordingly, following the binding precedent and for the reasons alike, we set aside the impugned order and allow the appeals. - Decided in favor of assessee.
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2016 (1) TMI 1002
Confiscation and penalty - Re-import of cheese curd which was exported earlier due to quality deficiency - On re-import, the said goods were subjected to mandatory FSSAI test and it was revealed that the goods did not conform to the parameters as specified for the product. - it was held that the goods were liable to confiscation under section 111(d) of the Customs Act, 1962 and the appellant importers were liable to penal action under section 112(a) of the Customs Act, 1962. Held that:- Since many of the issues raised and which have not been answered are based on facts as well, I cannot independently deal with it in the Tribunal. Since the order is not a speaking order, it is set aside and the matter is remanded to the Commissioner (Appeals) for giving findings on all the grounds which have been raised before him. - Matter remanded back.
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2016 (1) TMI 1001
The present writ application, in fact, has been filed after almost eight months of the aforesaid dismissal of the review application on the ground that only on 07.09.2010 the petitioner could get a copy of the release order of sale of consignment of the petitioner dated 04.08.2005 which according to him had given him new cause of action for the relief sought in this writ application. This Court however fails to understand as to how the present writ application can be held to be maintainable specially when the finding of the learned single Judge as with regard to that very auction sale, whose quashing is being sought herein, was approved in no uncertain terms by this Court. This Court is not inclined to now allow the petitioner to reagitate the same issue in a different manner specially when the seized goods in the year 2001 has already been disposed of by the auction sale in the year 2005 and the writ application, appeal, Special Leave Petition and two review applications one before the Division Bench and another before the learned single Judge of this Court, have been dismissed on the same issue. This writ application is, accordingly, dismissed with a cost quantified at ₹ 10,000/- which must be deposited by the petitioner in the Patna High Court Legal Services Authority.
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2016 (1) TMI 1000
Validity of assessment - without issuing a demand under Section 28 of the Act the importer could not be made liable to differential duty even if the department's appeal in terms of Section 129D decided in favour of revenue - Revenue appeal against the decision [2005 (10) TMI 105 - GUJARAT HIGH COURT] - Apex Court dismissed the appeal Since the tax effect involved is only ₹ 3.75 lakhs.
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2016 (1) TMI 999
Central Excise - Paper - Cork tipping base paper for cigarettes - Classification - Appeal against the decision of tribunal in [2006 (5) TMI 16 - CESTAT, MUMBAI] - Apex Court dismissed the appeal on the ground that, The tax effect involved in the instant appeal is approximately ₹ 2 lakhs only and therefore, it is not necessary to deal with the question of law raised in this appeal.
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Corporate Laws
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2016 (1) TMI 995
Scheme of Arrangement - Demerger and transfer of Roorkee Division of Alpha Packaging Private Limited into Alpha Plastomers Private Limited - Held that:- Having heard Mr.Navin K. Pahwa, learned advocate for Thakkar and Pahwa, Advocates, learned advocate for the petitioner Companies, Mr.Kshitij Amin, learned Central Government Standing Counsel on behalf of Mr.Devang Vyas, learned Assistant Solicitor General of India for the Regional Director and upon perusal of the report of the Regional Director, the reply filed on behalf of the petitioner Resulting Company and having considered the Scheme of Arrangement together with relevant documents on record, the Court finds it appropriate to grant sanction to the present Scheme of Arrangement. In view of the above, the Scheme of Arrangement is sanctioned. The costs of these petitions are determined at ₹ 7,500/each payable to Shri Devang Vyas, learned Assistant Solicitor General of India. The petitioner Companies shall lodge a copy of this order and the Scheme duly authenticated by the Registrar, High Court of Gujarat, with the concerned Superintendent of Stamps, for the purpose of adjudication of Stamp Duty, if any, on the same within 60 (sixty) days from the date of the order. The petitioners are directed to file a copy of this order along with a copy of the Scheme with the Registrar of Companies, electronically, along with requisite Form in addition to the physical copy as per relevant provisions of the Act.
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2016 (1) TMI 994
Scheme of Amalgamation appears to be fair and reasonable and is not violative of any provisions of law. Nor is it contrary to public policy. As noticed earlier, none has come forward to oppose the Scheme. All requisite statutory compliances have also been substantially fulfilled.
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Service Tax
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2016 (1) TMI 1017
Outdoor caring services - appellant provided coffee vending machine in corporate sector to provide coffee to the employees thereof - Held that:- This prima facie brings the appellant to the character of caterer. - Prima facie, keeping in view, the abatement pleaded is in question and also the plea that VAT has been paid, which is altogether levied under a different statute not touching the service, as well as the revenue's interest, we direct the appellant to deposit ₹ 15,00,000/- (Rupees fifteen lakhs only) within eight weeks from today and make compliance on 22.1.2016. - stay granted partly.
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2016 (1) TMI 1016
Valuation - inclusion of amount charged towards Study Material Package (SMP) supplied to students - coaching centre and Franchise service - Held that:- It is not disputed that the appellant has shown the sale of value of study material separately in the invoice. The only argument raised is that these textbooks do not qualify as Standard Textbooks as clarified in the Board's circular. The Tribunal in the case of M/s. Cerebral Learning Solutions Pvt.Ltd. [2013 (4) TMI 527 - CESTAT NEW DELHI] had occasion to consider similar issue and held that the clarification issued by the Board's circular No.59/8/2003 dt.20.6.2003 is illegal and contrary to the statutory exemption granted by the notification. The said judgement squarely covers the issue in the present case. - Decided in favor of assessee.
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2016 (1) TMI 1015
Mandap Keeper services - appellants had availed exemption under Notification No. 12/2003-ST dated 20.6.2003 - short payment of service tax - It is urged by the counsel that prior to this amendment, marriage being a religious function would not fall into the category of social function mentioned in the definition - Held that:- . It is seen that though appellant had pleaded this ground before the authority below, the same has not been considered taking the view that Krishnapur Mutt is a temple and the premises is used for religious purposes only. We are not able to fully agree with this view taken by the Commissioner (Appeals) Marriages whether conducted in a premises of temple or in the premises of a hotel have the same character. Marriage functions cannot be differential on the premises where they are conducted. After 16.5.2007 marriages have been expressly brought within the ambit of social functions. This necessary implies that marriages having taint of religious function was outside the purview of definition of Mandap Keeper prior to 16.5.2007. However, the plea has to be established by the appellant by documentary evidence that the functions conducted during the period was marriage functions and not subject to levy of service tax. We therefore, are of the considered opinion that this is a fit case for remand. In view thereof, the case is remanded to the adjudicating authority for de novo adjudication directing the authority to consider all the pleas raised by the appellant.
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2016 (1) TMI 1014
Job work - Business Auxiliary services - Default in discharging their service tax liability even though they continued to bill their principals for service tax. - financial difficulties - The appellant claims that their activity is manufacture and hence not liable to be taxed as "business auxiliary service", that they were eligible for exemption under notification no. 8/2005-ST dated 01/03/2005. Held that:- appellant had applied for registration as provider of ''business auxiliary services"; rendering of job-work is one of the activities within its ambit. At no stage have they contended that this was a classification decided upon by tax authorities. Having registered themselves as a service provider and paid taxes as provider of "business auxiliary service" for a certain period, they are bereft of any ground to claim error in classification. In the absence of any justification, procedurally or substantively, to seek a revisit of classification of the service rendered by the appellant, there is no legal provision to do so. The plea of taxability and any exemption from service tax is irrelevant in the context of the inclusion of service tax in the amounts billed to their principals as job-work charges. It is seen that the appellant has collected service tax along with consideration from its principals for service rendered but failed to deposit the same in the government account. By this act of omission, the plea of leniency in the matter of penalties will not evoke a sympathetic response - demand confirmed.
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2016 (1) TMI 1013
Export of services in relation of import of goods - commission received from the foreign suppliers in respect of the imports into India - The Indian buyers made payments directly to the foreign seller and the foreign seller paid commission to the appellant. In some cases buyers opted to pay the commission directly to the appellant and in such cases commission part shown in the invoice was not paid on to the seller by the buyer. - Held that:- In case of the commission received from foreign supplier for procuring orders from the Indian buyers to whom the goods were directly supplied by the foreign supplier, the service rendered clearly satisfies the requirement of the same being the export of service. In the case of J. B. Boda [1996 (10) TMI 70 - SUPREME Court] the Supreme Court has deemed such payments to be in foreign exchange. Thus we find that the issue is covered in the appellant’s favour by the judgment of CESTAT in the case of Paul Merchants [2012 (12) TMI 424 - CESTAT, DELHI (LB)] read with judgement of the Supreme Court in the case of J. B. Boda. - Demand set aside - Decided in favor of assessee.
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Central Excise
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2016 (1) TMI 1012
Benefit of Exemption Notf No. 182/87-CE dt 10/7/87 denied - manufacturing of Coal Tubs in the mines. - demand confirmed - Held that:- Appellant is a public sector undertaking and it is not ethical on their part now to agitate the time bar aspect afresh after conceding the same before us in the earlier proceedings. Reliance by the appellant on the Apex Court’s case law in the case of Union of India Vs Madhumilan syntax Ltd (2006 (2) TMI 170 - SUPREME COURT OF INDIA ) is misplaced because the order passed by the Apex court was as a result of a writ petition against an order of the lower authorities without affording any opportunity to the assessee. In the present case before us the concession was given after the adjudicating authority decided the case after following the principles of natural justice and the case was argued at length before this bench before remand order dt 1/5/2000 was passed. Therefore, the ratio laid by Hon’ble Apex Court is not applicable to the present factual matrix when appellant is a Public Sector undertaking and principles of natural justice have not been violated earlier. In view of the above observations appeal filed by the appellant on the grounds of limitations again, when not even agitated before the Adjudicating authority in remand proceedings, can not be entertained & is required to be dismissed. So for as imposition of penalty upon the appellant is concerned in this case it is a case of imposing penalty under Rule- 9 (2), read with Rule-173 Q, of the erstwhile Central Excise Rules 1944. Appellant being a large company did not bother to check whether duty liability got attracted during the relevant period. It is now a well understood legal proposition that ignorance of law is no excuse. However, looking to the facts on record and appellant being a Public Sector Undertaking we are of the opinion that penalty of ₹ 10 lakh, imposed upon the appellant, is excessive we accordingly reduce this penalty from ₹ 10, lakh to ₹ 10,000/- (Ten thousand only)
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2016 (1) TMI 1011
Cenvat credit lying unutilized in stock on 1.3.2003 denied - appellant has availed credit after a gap of one year - Held that:- As per Rule 3(1) of Cenvat Credit Rules, 2002 the appellant is entitled to Cenvat credit on the inputs in question which were either available in stock or in process or were contained in the final product lying in stock as on 1-3-2003, Thus, viewing the problem from any angle the appellant is entitled to claim Cenvat credit under Rule 3 of Cenvat Credit Rules, 2002. Accordingly, the issue is decided in favour of the Appellant. Reasonable time for availing the credit - Held that:- There is no time limit prescribed under Cenvat Credit Rules, 2002 during the impugned period, therefore the appellant is entitled to take credit. Decided in favour of the appellants.
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2016 (1) TMI 1010
Denial of CENVAT credit - appellant submits that there is no dispute that the appellant received the inputs and recorded in RG23A Pt. I register within 6 months as provided under Rule 57 G of the erstwhile Central Excise Rules, 1944 and therefore, there is no reason to deny the CENVAT credit - Held that:- There is no dispute that the appellant received the inputs in their factory in the month of May 1999 and recorded in RG23A Pt.-I register. Rule 57G of erstwhile Rules, 1944 provides credit cannot be taken by the manufacture after 6 months of the date of issue of any documents supplied in Sub Rule 3 of the said Rules. The Tribunal in the case of Commissioner of Central Excise, Hyderabad vs Aurobindo Pharma Ltd. (2000 (10) TMI 93 - CEGAT, CHENNAI) held that time limit of 6 months from the date of issue of duty paying document applied to receipt of goods in the factory and not to the process of taking the credit. - Decided in favour of assessee
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2016 (1) TMI 1009
Shortage of raw tobacco and coloured tobacco - clandestine removal - demand under proviso to Section 11A(2) and also imposed a penalty of equal amount under Section 11AC along with interest - Held that:- Revenue has tried to prove the charge of clandestine removal merely on the basis of presumptions and assumptions and when the shortage has been explained with verifiable facts with regard to raw tobacco and coloured tobacco, but the Revenue did not verify the facts and in the absence of proper verification of factual aspects, we are of the considered view that the Revenue has failed to prove the clandestine removal and also the demand is time barred. Consequently, we allow the appeal of the appellant by setting aside the impugned order. - Decided in favour of assessee
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2016 (1) TMI 1008
Central excise registration cancelled - Purchaser of land - Held that:- Merely because the defaulter unit, though it had ceased to carry on business on the premises in question, had failed to apply for de-registration, the same should not, in any manner, come in the way of the petitioners in obtaining central excise registration in respect of the premises in question. The stand adopted by the respondent authority that in respect of the same premises, two persons cannot be registered being contrary to the provisions of law, cannot be accepted. See Jagdish Enterprise P. Ltd. and others V/s. Union of India and others [2014 (11) TMI 700 - GUJARAT HIGH COURT] Under the circumstances, impugned order dated 26.11.2015 is quashed. Resultantly, the Central Excise Registration of the petitioner would be revived and restored. It is clarified that if the Department has any doubt about the actual manufacturing activity at the site, it is always open for the Department to examine the issue from the angle of any other provisions of the Central Excise law. Petition is allowed and disposed of accordingly
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2016 (1) TMI 1007
Application for waiver of the predeposit under Section 35F dismissed - Held that:- In the absence of any counter affidavit by the Respondent, the Court considers it appropriate to make absolute the order passed by this Court [2015 (10) TMI 788 - DELHI HIGH COURT]. The impugned order passed by the CESTAT is, accordingly, modified by directing that the appeal of the Petitioner would be heard without requiring pre-deposit of 7.5% in the category of “Supply of Tangible Goods for use”. The Petitioner’s appeal now be heard on merits in accordance with law.
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2016 (1) TMI 1006
Reversal of cenvat credit after finished goods become exempted goods - Demand of CENVAT Credit on inputs lying in stock and inputs contained in finished goods lying in stock - Revenue appeal against the decision of HC in [2014 (12) TMI 905 - MADRAS HIGH COURT] - Apex court dismissed the appeal
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2016 (1) TMI 1005
Valuation (Central Excise) - Additional consideration - Related person - Revenue appeal against the decision of tribunal in [2005 (6) TMI 149 - CESTAT, MUMBAI] - Held that:- the issue is squarely covered by the two judgments of this Court in Commissioner of Central Excise, Hyderabad v. Detergents India Limited and Another [2015 (4) TMI 358 - SUPREME COURT] as well as Commissioner of Central Excise, Aurangabad v. M/s. Goodyear South Asia Tyres Pvt. Ltd. and Ors. [2015 (8) TMI 61 - SUPREME COURT]. - Appeal dismissed.
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2016 (1) TMI 1004
100% EOU - Interpretation of the expression "allowed to he sold in India" - Revenue appeal against the decision of tribunal in [2005 (5) TMI 153 - CESTAT, MUMBAI] - Tribunal is right in holding that the matter is squarely covered by the judgment of this Court in ‘SIV Industries Limited v. Commissioner of Central Excise and Customs [2000 (3) TMI 162 - SUPREME COURT OF INDIA]. - Appeal dismissed.
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CST, VAT & Sales Tax
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2016 (1) TMI 998
Levy of purchase tax under Section 4(4)(iii) of the A.P. VAT Act on goods sold in the course of export out of the territory of India. - The petitioner claims that, since purchase of chillies by the Secunderabad branch constitutes purchase in the course of export out of the territory of India, the States of Andhra Pradesh and Telangana lack jurisdiction to levy purchase tax in view of the constitutional prohibition in Article 286(1)(b) of the Constitution of India, and Section 5(b) of the A.P. VAT Act. Held that:- to constitute a sale in the course of export, it may be said that there must be an intention on the part of both the buyer and the seller to export, there must be an obligation to export, and there must be an actual export; the obligation may arise by reason of statute, contract between the parties, or from mutual understanding or agreement between them, or even from the nature of the transaction which links the sale to export; and to occasion export there must exist such a bond, between the contract of sale and the actual exportation, that each link is inextricably connected with the one immediately preceding it. It is wholly unnecessary for us to examine whether the chillies purchased by the Secunderabad branch of the petitioner, and then transferred to its Cochin branch in the State of Kerala, were exported to foreign buyers; and whether such exports satisfy the requirements of Section 5(1) of the CST Act; as these are all matters to be examined by the assessing authority. Matter remanded back.
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2016 (1) TMI 997
Recovery proceedings under TNVAT - Revenue neither accepting nor rejecting the reply filed by the petitioner, passed a distraint order for recovery, without passing any order of assessment for the year in question. - Held that:- Admittedly, the provisional assessment order has been passed by the respondent, but the same has not been served on the petitioner. In such circumstances, the action of the respondent by issuing distraint order for recovery of tax, cannot be justified and the same is liable to be set aside. Since the assessment period relating to the months in question was already over, this Court directs the Assessing Officer concerned to pass assessment order for the whole year, after following the procedure prescribed under the Act. the distraint order in Form No.I dated 15.09.2015 issued by the respondent set aside - The respondent is directed to pass assessment order for the year 2014-15 on merits and in accordance with law, after issuing proper notice and after affording due opportunity of personal hearing to the petitioner. - Decided in favor of assessee.
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2016 (1) TMI 996
Purchase of light diesel oil by the assessee which was used in manufacture of taxable goods. The Department holds belief that such fuel is neither raw material nor consumable goods in manufacturing such items. - Held that:- Mere pendency of the dispute by the Department before the Supreme Court would not permit us to hold back these proceedings. We are therefore not inclined to entertain this petition in which challenge to a judgment of the Tribunal where the Tribunal has merely followed the decision of the High Court. We also notice that the revenue implications in this petition is also not very high. - Petitions dismissed - Decided against the revenue.
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Wealth tax
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2016 (1) TMI 1018
Inclusion of cash-in-hand in the wealth tax assessment - It is argued that “Receivable” is recorded in the balance filed with the Department before income tax scrutiny proceedings for A.Y 2009-10. Simply, the nomenclature changed from “Receivable” to “cash-in-hand” with custodians does not amount the concealment of wealth. However the WTO has disregarded the claim of the assessee and confirmed penalty @ 200% of the tax sought to be evaded - bonafide ignorance, Held that:- The assessee is running a good business in the brand name of ‘Raja Group’ and paying huge taxes. Therefore on merit we find that the assessee has defaulted in the payment of wealth tax. However we find from the order of the AO that the penalty has just been initiated without recording the reason whether it is for the concealment of the wealth or furnishing in accurate particulars of income. The penalty under section 18(1)(c) of the Act can be imposed on the two counts i.e. Firstly, for concealment of wealth and secondly for furnishing the inaccurate particulars of wealth. However the AO has not recorded his satisfaction in the assessment order for levying the penalty but just initiated penalty proceedings. - the orders imposing penalty in all the assessment years have to be held as invalid and consequently penalty imposed is cancelled. - Decided in favor of assessee.
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Indian Laws
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2016 (1) TMI 993
Complaint against the offence punishable under Section 138 of the Negotiable Instruments Act - Appellant requested the Court to permit him to examine ten witnesses - Out of ten witnesses named in the application, the trial Court permitted the applicant to examine three witnesses. - Held that:- Having heard the learned counsel appearing for the parties and having considered the materials on record, I am of the view that no error, not to speak of any error of law, could be said to have been committed by the Courts below in passing the impugned orders. No good ground has been made out to interfere, in exercise of my supervisory jurisdiction under Article 227 of the Constitution of India. - Application rejected - Decided against the applicant / appellant.
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