TMI Tax Updates - e-Newsletter
February 12, 2015
Case Laws in this Newsletter:
Income Tax
Customs
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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Income Tax:
No interest under section 234A of the Act is chargeable on the amount of self-assessment tax paid by the assessee before the due date of filing of return of income. - Circular
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Income Tax:
Interest Tax Act - whether charges or amounts received from borrowers or subscribers of schemes, are truly, “interest” necessarily has to be dependent on a fact to fact determination, and cannot rest on the suspicions of the revenue officials. - HC
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Income Tax:
Advertisement expenditure - one of the functions to be performed was to incur the advertisement and promotion expenditure, then the expenditure incurred for the said purpose should be allowed u/s37(1) - However, adequate compensation/price should be paid for the same by the associated enterprise - HC
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Income Tax:
Penalty under section 271E - AO did not identify the loanee or depositor and has simply invoked the provisions in relation to an internal financial adjustment among the firms - no penalty - HC
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Income Tax:
Jobbing and arbitrage - The loss sustained by the assessee is a business loss which can be set off against the income from the other sources. Therefore, the prohibition under section 73 of the Act is attracted only to set off the loss in a speculative business against the profit from other business - HC
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Income Tax:
Revision u/s 263 - advance amount of sale of room nights - A capital receipt does not become the revenue receipt just because some expenditure is incurred on the same, and it is claimed by the assessee. - HC
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Income Tax:
Reassessment - notice served at old address - the new address was very much available on the record of the Assessing Officer on which earlier notices u/s 143(2) dated 22.10.2007 was served - reassessment framed u/s 147 r.w.s. 143(3) of the Act will be null and void - AT
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Income Tax:
Allowable expenditure - interest payment on custom duty are expenses allowable under the provisions of the Act - AT
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Customs:
Provisional release of goods - Condition for imposition of bank guarantee - revenue have not pointed out any circumstance that may raise an apprehension that the appellant will not discharge liability qua any amount that may be assessed at the time of final adjudication - HC
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Customs:
Import of construction machinery - MMRDA is not a road construction corporation within the scope and context of condition NO. 40(a) - not entitled ab initio for the benefit of the NTF 21/2002-Cus. - AT
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Service Tax:
Receipt of services from abroad - sales promotion and marketing activities - demand confirmed invoking extended period of limitation - AT
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Service Tax:
Delay in discharge of service tax liability - the deposit of service tax along with interest, subsequent to the investigations made by the Revenue, cannot be said to be covered by the provisions of Section 73(3) - penalty to the extent of 25% confirmed - AT
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Central Excise:
Instructions regarding adjudication of Central Excise and Service Tax Cases booked by DGCEI. - Circular
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Central Excise:
Refund of excess duty paid on account of change of duty rate for one day - this reasoning that once credit note is issued the manufacturer should be deemed to have absorbed the duty burden is to be rejected. - AT
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Central Excise:
Availment of CENVAT Credit - Bogus invoices - assessee has failed to prove any consumption of raw material much less its receipt and as the transport companies have been found to be fake - tribunal to readjudicate the case - HC
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Central Excise:
Area based exemption - Refund - Assessee did not take the available Cenvat credit during the period it was available and paid the excess from the PLA and took the refund thereof. Later on, they took Cenvat credit which was available and paid less duty - it is situation of revenue neutrality - refund allowed - AT
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Central Excise:
Availment of CENVAT Credit - Removal of goods as such without reversal of CENVAT Credit - Appellant failed to establish that the inputs received at their Unit-2 and had been utilized in or in relation to the manufacture of the final product - demand confirmed - AT
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VAT:
Retrospective levy of sales tax on works contract - the very basis on which Entry 25 of Schedule VI was declared as unconstitutional, has been found to be erroneous. In such circumstances, the legislature will be justified in enacting the law from the date when such a law was passed originally and that date is 01.07.1989 in the instant case - SC
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VAT:
Constitutional validity - works contract - levy of sales tax for processing and supply of photographs, photo prints and photo negatives - levy with retrospective effect sustained - SC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2015 (2) TMI 371
Reopening of assessment - re-computation of the capital gain on the basis of the 'Will' - Held that:- No reason to believe that true and full disclosure was not made by the assessee to come out from the bar of four years as provided by first proviso to section 147 of the Act. For an asset acquired prior to 1.4.1981 the indexed cost of acquisition would be the cost of acquisition multiplied by the ratio of the Cost Inflation Index in the year in which assessee's asset is transferred to the Cost of Inflation Index for the year beginning on 1.4.1981. It was therefore, that the Tribunal in our opinion correctly held that the indexed cost of acquisition shall have to be worked out with reference to 1.4.1981 since in the present case the asset was acquired by the previous owner of the property. There is nothing on record to show on what basis the Assessing Officer adopted the cost of acquisition of the property at 15.63 lakhs as on 23.5.1995. In the assessment year there is no indication whatsoever on what basis the Assessing Officer arrived at such a figure. Counsel doing some guess work submitted that the said figure may have been indicated in the sale deed itself or may have been the amount on which necessary stamp duty for the purpose of registration of the gift deed might have been computed. In absence of any provision in the Act enabling the Assessing Officer to adopt either of the said figures as the cost of acquisition of the property on the date of gift, simply cannot be accepted. - Decided in favour of assessee.
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2015 (2) TMI 370
Capital gain v/s business income - share transaction - CIT(Appeals) held that the sum of ₹ 1,97,17,460/-, reported during assessment year 2007-08, constituted capital gains - ITAT remitted the case for reconsideration by AO on the assumption that additional evidence had been filed - Held that:- The record itself would show that the CIT(Appeals) painstakingly looked into the nature of transactions and apparently analysed each one of them to conclude that the income derived from sale of shares was not business income but capital gains. In arriving at this decision, the CIT(Appeals) was guided by several binding decisions, such as CIT V. Associated Industrial Development Company (P) Ltd. (1971 (9) TMI 3 - SUPREME Court), Raja Bahadur Kamakhya Narayan Singh V. CIT (1969 (9) TMI 2 - SUPREME Court) and CIT V. Holck Larsen (1986 (5) TMI 30 - SUPREME Court). In fact the order of the CIT (Appeals) with respect to analysis of the facts covers a considerable part of the order. The ITAT apparently was mistaken in its assumption that some additional evidence was led before the CIT (Appeals). In fact, the order of the CIT (Appeals), in para 2.10 clearly records that the appellant had clarified that no additional evidence was filed during the appellate proceedings. Furthermore, a comparison of the details of the share transactions in question from the AO’s order and the CIT (Appeals) order would show that there is complete identity as to the details of the transactions i.e. the name of the companies, the duration of holding, date of purchase, date of sale etc. In fact, CIT (Appeals)’s order is a more elaborate analysis of some basic material. Furthermore, it was not pointed out during the course of the hearing as to what was the additional material or evidence reiterated before the CIT (Appeals) by the assessee, which necessitated the remand. we notice that the CIT (Appeals) had recorded that 29% of the transactions reported by the assessee could be treated as short term capital gain. In these circumstances, the remand directed by the ITAT is limited to enquiry on this aspect. - Decided in favour of assessee
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2015 (2) TMI 369
Applicability of the provisions of Interest Tax Act - amount claimed as processing charges was in fact interest, and liable to be treated as such for the purposes of the Interest Tax Act, 1974 as per AO - ITAT held that the financing charges could not be treated as interest - Held that:- In order to support the conclusions, the AO ought to have made further enquiries such as what was the ordinary rate which the assessee charged from non-members for similar services and what did other similar placed companies or entities charge from their members or borrowers. The conclusions, based on mere suspicion in such circumstances, could not have withstood the scrutiny of law. However, the Appellate Commissioner chose to give partial relief, based, again, on a similar line of logic. However, this cannot result in our holding that the ITAT can be faulted in its conclusions. As to whether charges or amounts received from borrowers or subscribers of schemes, are truly, “interest” necessarily has to be dependent on a fact to fact determination, and cannot rest on the suspicions of the revenue officials. Another important factor in the present case is that these financial charges were one time charges and were not recurring. - Decided against revenue.
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2015 (2) TMI 368
Know how payment - revenue expense v/s partly or wholly capital expense - Power of the Commissioner under Section 263 - Held that:- The respondent assessee during the course of hearing had drawn our attention that the question whether model fee paid was revenue or capital in nature had arisen for the first time in the assessment year 1996-97. The Tribunal had held that the fee was revenue expenditure and, therefore, deductible under Section 37(1) of the Act in their decision reported as (2005 (5) TMI 265 - ITAT DELHI-G) titled Hero Honda Motors Ltd versus Joint Commissioner of Income Tax, decided on 13th May, 2005. The Delhi High Court did not entertain and frame any question of law on the said aspect in the appeal of the Revenue on the said issue. Revenue had preferred a Special Leave Petition but the same was also dismissed. For the assessment years 1997-98 and 1999-2000, similar expenditure of model fee was allowed as revenue expenditure by the Tribunal. Appeals filed by the Revenue on the said issue were not entertained by the High Court. We would not like to decide the present appeal for this ground and reason, as the High Court orders do not set out and indicate any ground or reason. We do not comment or express an opinion on whether the High Court under Section 260A of the Act can at the time of hearing, frame any additional question of law. Tribunal has held that payments made by respondent to Honda were revenue expenditure and not capital. On the said finding on merit, the Tribunal observed that there was no error in the order passed by the Assessing Officer. Power under Section 263 can be invoked by the Commissioner only when the order passed by the Assessing Officer is erroneous and not otherwise. It is in these circumstances, that no specific question of law with reference to power under Section 263 of the Act, has been framed in the appeal relating to assessment year 2001-02. - Decided in favour of assessee.
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2015 (2) TMI 367
Claim of deduction u/s 80HH, 80HHC and 80I - inclusion of unused and left over IDEB v/s notional figure in the turnover - ITAT allowed the claim of assessee to include only unused amount - Held that:- From the figure representing IDEB, the figure representing the actual availment of the import duty exemption must be deducted and it is only the remainder that would qualify for addition to the total turnover. Revenue is not able to convince us as to how the notional figure of IDEB in its entirety can be added to the export turnover. We have already extracted Clause (b) of explanation to Section 80HHC of the Act, which defines export turnover. It represents nothing more than the actual sale proceeds of exported goods. By no stretch of imagination, the incentives of duty exemption on imported goods can be treated as sale consideration for export goods much less can it become part of the export turnover. Once it cannot be added to the export turnover, the only possibility is to add it to the total turnover. There again, the proviso would govern the situation and amounts mentioned in the proviso cannot be added to the total turnover for the purpose of Section 80HHC. The IDEB partakes the character of the amounts covered by Clause (iii) of Section 28 of the Act. By operation of proviso to Clause (ba) of Explanation to Section 80HHC of the Act, it gets excluded from the total turnover.Tribunal has correctly taken the view that the balance of the unused IDEB can be added to the total turnover. - Decided in favour of assessee.
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2015 (2) TMI 366
Depreciation on cost of the shuttering material - AO allowed depreciation only to the extent of 25%. - Held that:- A legally binding precedent has its own strength and it does not depend upon the views of the Authors of Books and other persons connected with law. However, the view expressed in an otherwise respected Treatise cannot be ignored altogether. Though it may not effect the binding nature of the precedent, it may appeal in its own way to the Courts, wherever such a precedent is cited. Though we concede to the authors the right to express their reservation about the correctness of a Judgment, with due respect to them, we are of the view that the disagreement could have been expressed in more delicate manner, notwithstanding their concern about uncertainty in law. On our part, we are only making an effort to recognize certain aspects of law, which have already been propounded, than pointing out mistakes. On merits also, we are convinced that the irreducible minimum for the shuttering material is the individual plates, for providing support to the reinforced concrete and cement or the poles and bars that are used at the time of formation. We choose to fall in line not only with the judgment of this Court in Sri Krishna Bottlers Pvt. Ltd.s case (1988 (4)TMI 10 - ANDHRA PRADESH High Court), which in turn has drawn its conclusion based upon the judgment of the Supreme Court in Commissioner of Income Tax vs. Taj Mahal Hotel [1971 (8) TMI 2 - SUPREME Court], but also the judgments rendered by the other High Courts to allow 100% depreciation - Decided in favour of assessee.
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2015 (2) TMI 365
Deduction under Section 80HHC - deduction of interest in the context of determining the profits of business under Clause (baa) of Explanation to Section 80HHC - Held that:- In deducting such interest, the AO will take into account the net interest i.e. gross interest as reduced by expenditure incurred for earning such interest. The decision of the Special Bench of the ITAT in Lalsons [2004 (2) TMI 294 - ITAT DELHI-E ] to this effect is affirmed. We differ from the judgments of the Punjab & Haryana High Court in Rani Paliwal [2003 (10) TMI 18 - PUNJAB AND HARYANA High Court] and the Madras High Court in Chinnapandi [2006 (1) TMI 65 - MADRAS High Court ]. We are in agreement with the same. The only sentence, which we propose to added to Clause (i) is that by whatever terminology one may call it, it is the same component of interest that has gone into, while computing profits and gains of business or profession in whatever form, that would qualify for reduction to the extent of 90% under the Clause. - Decided in favour of assessee.
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2015 (2) TMI 364
Eligibility for deduction under section 80-IB(10) - area of plot on which the following project is constructed is less than 1 acre - area of the flat constructed is more than 1,500 sq. ft. - Held that:- The Tribunal correctly negated the Departmental representative's contention the agreement indicates super built-up area of more than 1,500 sq. ft. cannot be accepted as super built-up area includes common areas, stair cases and also balcony. The the concept of super built-up area cannot be equated with the built-up area as per the regulations which refers to only to carpet area excluding the balcony and the terrace. The words "including projections and balconies" were inserted with effect from April 1, 2005, by the Finance Act of 2004. The question whether the definition of built-up area with effect from April 1, 2005, was prospective or retrospective in nature has been considered by in CIT v. Tinnwala Industries [2014 (7) TMI 90 - BOMBAY HIGH COURT] which holds that this definition which has been brought on the statute book with effect from April 1, 2005, would not apply to such projects which are completed prior to April 1, 2005. There are no distinguishing features brought on record which calls for any interference. The Tribunal view is a well reasoned and cannot be said to be perverse. Mr. Chhotaray's submission that the matter should be sent back to the Tribunal has no merit. In the present set of facts, even if the definition of built-up area is considered it makes no difference to the assessee's case. Area of entire project is more than one acre and the area of flat is within limit of 1,500 sq. ft. as has been observed by the Tribunal which is last fact finding authority - Decided in favour of assessee.
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2015 (2) TMI 363
Disallowance of Advertisement expenditure - Held that:- One of the functions being performed by the assessee was to advertise and promote the channels and to earn subscription revenue. Another function was to secure/procure advertisements. The assessee earned 15 per cent. commission for the last mentioned function. The assessee was earning revenue in view of the said functions being performed. Expenditure incurred on advertisement was clearly relatable and laid out for the purpose of business of the respondent-assessee and was not extraneous or unconnected with the same. Consequently, it could not have been disallowed as was done by the Assessing Officer on the ground that it was not laid out or incurred wholly or exclusively for the purpose of business. - Decided in favour of assessee. Transfer pricing adjustment - income earned, i.e., price paid for the service rendered, goods sold, etc - Held that::- The Transfer Pricing Officer is required to select appropriate method specified in section 92C of the Act and determine/compute the arm's length price. In the present case, the Transfer Pricing Officer did not make any adjustment and has accepted the transfer pricing between the respondent-assessee and the related enterprises, i.e., the compensation paid or retained by the respondent-assessee in view of the functions performed, risk assumed and asset deployed, etc. Once we hold that one of the functions to be performed by the respondent-assessee was to incur the advertisement and promotion expenditure, then the expenditure incurred for the said purpose should be allowed under section 37(1) of the Act, as incurred wholly and exclusively for purpose of the said assessee. However, adequate compensation/price should be paid for the same by the associated enterprise, with reference to the functions, risk and assets. In case, the respondent-assessee was not being paid adequate consideration or compensated by its associated enterprise, necessary adjustments could have been made by the Transfer Pricing Officer in accordance with the Act. - Decided in favour of assessee.
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2015 (2) TMI 362
Penalty under section 271E - loan or deposit - cash payment versus book adjustments in violation of section 269T - Held that:- Assessing Officer did not indicate the method of payment. It was simply mentioned that everything was done in cash. The very fact that from the same agencies, amounts were said to have been received and repaid, as reflected in the books, discloses that it was nothing but book adjustment. Further, he did not give any specific finding that the so-called receipts are in the form of loan or deposit or the repayment was made thereof. All the three orders passed by the Assessing Officer are silent about the payment made to Smt. Sarada Mohan. The Appellate Commissioner as well as the Tribunal proceeded on the same lines. They did not bestow any attention as to whether one of the sister concerns can take deposit, or loan, from another, without reflecting the same in the books of account Making book adjustment of the funds, by a firm vis-a-vis its sister concern, can by no means be said to be the one taken in clear violation or contravention of the said provisions. It is only when an assessee has taken a decision to mobilise loans or deposits and in the process it has received amounts exceeding ₹ 20,000, otherwise than through cash that the contravention can be said to have been taken place. Similarly, section 269T can be said to have been violated if only the repayment to a depositor or a loanee exceeding a sum of ₹ 10,000 was made otherwise than through crossed cheque or demand draft. In the instant case, the Assessing Officer did not identify the loanee or depositor and has simply invoked the provisions in relation to an internal financial adjustment among the firms. - Decided in favour of assessee.
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2015 (2) TMI 361
Jobbing and arbitrage - whether be considered as a speculative transaction? - Losses in speculation business - assessee is a share broker and a member of both National Stock Exchange and Bangalore Stock Exchange Ltd - Held that:- Section 73 has no application to a contract entered into by a member of the NSE or Bangalore Stock Exchange, whose business is in trading of shares on behalf of his clients, which is known as jobbing or arbitrage. Any loss which may arise in the course of such business, shall not be deemed to be a speculative transaction. If the nature of the transaction by the assessee is not a speculative transaction at all, then, the Explanation to section 73 of the Act has no application. The loss sustained by the assessee is a business loss which can be set off against the income from the other sources. Therefore, the prohibition under section 73 of the Act is attracted only to set off the loss in a speculative business against the profit from other business, because loss from speculation business should be set off only from a profit of speculation business. Therefore, the Tribunal was justified in setting aside the order passed by the authorities and allowing the claim of the assessee. - Decided in favour of assessee.
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2015 (2) TMI 360
Entitlement for the exemption under section 10(23C)(iiiab) - 'wholly or substantially financed by the Government' - Held that:- The word "wholly or substantially financed by the Government" cannot be confined only to the annual grants. Apart from providing annual grant, if the Government grants land, invests money in building and infrastructure and also running the educational institutions all that has to be taken into consideration to decide whether the institution is wholly or substantially financed by the Government. The facts of this case and the material on record clearly establishes that the assessee is wholly or substantially financed by the Government and, therefore, the assessee is entitled to the benefit of exemption under section 10(23C)(iiiab) of the Income-tax Act.- Decided in favour of the assessee.
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2015 (2) TMI 359
Revision u/s 263 - advance amount of sale of room nights - considering that the principal business of the assessee engaged in running of hotels, resorts and clubs is to provide accommodation and other facilities to tourist members, then a provision of the nature made cannot be said to be an allowable revenue expenditure - Held that:- The Tribunal correctly concluded that the accounting of advance sale of room nights must be determined having regard to the undisputed facts. The assessee had collected an advance and under promise to make available to the customers the rooms. The customer is entitled to surrender the room nights in case they are not utilised and opt for surrender value. When a customer opts for surrender value, he shall be paid in cash by the assessee, or in the alternative the customer may opt to buy or utilise the products and services of the company or group companies. The Tribunal referred to the chart and in relation to each assessment year giving a break-up of the advance amount collected showing more than 99 per cent. of the customers surrendered the room nights which is not only the amount paid but which is inclusive of a premium over and above of the collected value. Even if the refund is not made in its entirety, still that will not mean that the amount received is income. The Tribunal accepted the method adopted by the assessee. A capital receipt does not become the revenue receipt just because some expenditure is incurred on the same, and it is claimed by the assessee. The finding of fact that the schemes oblige the assessee to refund not only the advance but also the surrendered value, then the further conclusion that the assessee incurs a liability and no income accrues to the assessee on receipt of this advance, cannot be said to be perverse or vitiated by any error of law apparent on the face of record. Thus considering the sweeping nature of the directions issued by the Commissioner in exercise of his powers under section 263 of the Income-tax Act, 1961, the appeal to the Tribunal was competent and maintainable. The Tribunal has considered the matter from all angles, and while upholding the exercise undertaken by the Commissioner, has on the merits found that the Assessing Officer was not in any error. The interest of the Revenue are not prejudicially affected. - Decided against revenue.
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2015 (2) TMI 358
Disllowance u/s 14A 2) & (3) read with Rule 8D - assessee is engaged in the business of exporting goods and dealing in shares and securities - Held that:- No dispute about the fact that assessee was dealing in shares and securities and shares were held by him in stock in trade and therefore in view of the decision of Karnataka High Court in the case CCI Ltd. vs. Jt. CIT (2012 (4) TMI 282 - KARNATAKA HIGH COURT) and Apoorva Patni vs. ACIT [2012 (9) TMI 828 - ITAT, PUNE] wherein held that when the assessee has not retained shares with the intention of earning dividend income and the dividend income is incidental to his business of sale of shares, which remained unsold by the assessee, it cannot be said that the expenditure incurred in acquiring the shares has to be apportioned to the extent of dividend income and that should be disallowed from deductions. When no expenditure is incurred by the assessee in earning the dividend income, no notional expenditure could be deducted from the said income, thus no disallowance u/s 14A was called for - Following decision of assessee's own previous case [2013 (1) TMI 236 - ITAT AHMEDABAD] - Decided in favour of assessee.
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2015 (2) TMI 357
Disallowance of depreciation on assets. Trust registered u/s 12A - Held that:- In case of trusts registered u/s 12A, the claim of depreciation does not amount to double deduction. Following decision of M/s.Kongunadu Arts & Science College Council [2015 (1) TMI 310 - ITAT CHENNAI] - No infirmity in order of CIT(A) - Decided against Revenue.
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2015 (2) TMI 356
Reassessment - annulment of reassessment proceedings - Non service of notice - Held that:- The presumption of service as argued by the Ld. Sr. D.R. would have come to the help of the Revenue only if the notices u/s 148/143(2) would have been sent on the correct address of the assessee. Undisputedly, these notices were sent on the wrong address of the assessee, despite this fact that the new address was very much available on the record of the Assessing Officer on which earlier notices u/s 143(2) dated 22.10.2007 and u/s 115WE(2) dated 22.10.2007 for AY 2006-07 were sent by the same AO and assessment u/s 143(3) was also framed by the same AO for the said AY 2006-07 showing the new address. It is now well established preposition of law that in absence of service of notices u/s 148/143(2) of the Act, the reassessment framed u/s 147 r.w.s. 143(3) of the Act will be null and void. Under these facts and circumstances, the Ld. CIT(A) was justified in holding the assessment impugned as null and void. - Decided against Revenue.
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2015 (2) TMI 355
Disallowance u/s 14A r.w.r 8D - whether there is no finding by the AO that the assessee has incurred interest expenditure relatable to earning of exempt income? - Held that:- There is no charge to the profit and loss account on account of interest. The investments in equity shares were made in the earlier year and not during the current year. There is no fresh investment during the year. The AO by invoking the provisions of Rule 8D has disallowed interest expenditure of ₹ 59,485/- under Rule 8D(2)(ii). As already stated the assessee has not claimed any expenditure under the head interest expenditure. When the AO could not demonstrate that the assessee has incurred interest expenditure for earning income which does not form part of total income, the question of applying Rule 8D(2)(ii) does not arise. Thus the disallowance has to be necessarily deleted. . As regards disallowance computed under Rule 8D (2)(iii) on account of administrative charges, the Ld. CIT(A) has upheld the computation made by the AO. The argument of the assessee that the AO has not recorded his satisfaction while invoking rule 8D is not correct, thus the disallowance to the extent of ₹ 72,000/- is upheld. - Decided partly in favour of assessee. Assessment of interest income - "income from other sources" or "Business Income" - Held that:- The interest is not earned out of surplus money. The assessee had an obligation to repay its debentures holders etc. and was acting under the directions of the Hon’ble Delhi High Court and Hon’ble Mumbai High Court in the process of fulfilling its financial obligations certain interest is earned. On this factual matrix in our view the interest is assessable only under the head "income from business" but not under the head "income from other sources". The assessee is a NBFC and money in its stock in trade. Interest income received from fixed deposits, is business income. - Decided in favour of assessee.
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2015 (2) TMI 354
Transfer pricing adjustment - CIT(A) reducing the cost of goods received free of cost of ₹ 9.1O crore, from the total cost of goods of ₹ 14.76 crore and applying 6% mark up on such reduced amount of ₹ 5.66 crore, thereby allowing the assessee relief of ₹ 54,60,000/- - Held that:- Ld. CIT(A) did not commit any error in determining the arm’s length price. The impugned transaction is in accordance with the view point taken in respect of A.Y 2007-08 as it is in accordance with the principle of consistency, which is applicable to the Income-tax cases as per decision of Hon’ble Bombay High Court in the case of CIT vs. Gopal Purohit [2010 (1) TMI 7 - BOMBAY HIGH COURT] wherein their Lordships have held that there ought to be uniformity in treatment and consistency when the facts and circumstances are identical, particularly in the case of the assessee. In this case also, what Ld. CIT(A) has done is that he has brought uniformity in the treatment and consistency to bring the TP adjustment at par with the treatment adopted by the Department in respect of assessment year 2007-08. - Decided against revenue.
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2015 (2) TMI 353
Default for not deducting the TDS while making payments to the non resident Mrs.Zohra Moidin - demand of tax against the assessees as well as interest u/s 201(1A) - Held that:- From the date of payments, parties were aware that these payments would not be subject to taxes, because of exemption. Therefore, there was no need to deduct the taxes. In view of the above facts, we allow all the three appeals and hold that the appellants cannot be treated as assessee in default u/s 201. Consequently no interest u/s 201(1A) will be imposable upon them. - Decided in favour of assessee.
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2015 (2) TMI 352
Allowable expenditure - Debit in P&L A/c as interest on custom duty - Disallowance of penalty on Government duties - Held that:- there is no dispute that the payment debited by the assessee in its P & L account relates to interest on custom duty and not related to any penalty amount as is evident form copy of settlement order. This fact is also establishes from paper book page 13 which specifically mentions the amount as interest - interest on indirect taxes takes the shape of taxes and are allowable under the provisions of the Act - Delhi High Court in the case of CIT vs Enchante Jewellery Ltd. in [2012 (12) TMI 169 - DELHI HIGH COURT] has clearly held that payment of interest on custom duty is not hit by explanation below section 37(1) of the Act and had decided the issue in favour of assessee. - interest payment on custom duty are expenses allowable under the provisions of the Act - Decided in favour of assesse.
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Customs
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2015 (2) TMI 379
Imposition of penalty u/s 112 - illegal imports of the goods which were diverted into domestic market without payment of duty - Held that:- Imports has been made duty free and the goods have been diverted into domestic market which were not required so by the importer. Therefore, it is an admitted case of fraud played by the importers. But we find in this case for the imports made from through ICD, TKD the purchasers of the imported gods approached to the Settlement Commission and settled the case there. We also find that Shri Virender Bansal the appellant also approached to the Settlement Commission but the Settlement Commission passed the following order for the reasons given above the Bench in exercise of Commissions powers under Section 127-I of the Act sends the case with regard to the applicant Shri Virender Bansal back to the proper officer who shall dispose of the same in accordance with the provisions of the Act as if no application under Section 127B of the Act had been made by the said applicant. As the observation of the Settlement Commission is that Shri Bansal had no way approached the Settlement Commission. Therefore the case of Shri Bansal is equated with the other appellants before us. If the case has been settled before the Settlement Commission, the proceedings against all the co noticees come to an end. Therefore, it was held that penalties not imposable under Section 112 of the Customs Act. In these circumstances, following the decision of S.K. Colombowala (2007 (7) TMI 514 - CESTAT, MUMBAI) we hold that for the imports made through ICD, TKD the penalties on the appellants are not imposable. - appellants before us were not the parties to the imports made through Mumbai port. As the appellants were not the parties to the Show Cause Notice, therefore, the question of imposing penalty on the appellants do not arise. - for the imports made through Mumbai port, the appellants are not to be penalised. - Decided in favour of assessee.
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2015 (2) TMI 378
Import of second hand digital multifunction print and copying machines as per the Bills of Entry - Non clearance of goods - Respondent treat the goods as in the nature of E-waste and thus qualify as hazardous waste - Held that:- most appropriate course would be to direct respondent no.3 to determine as to whether or not the goods in issue i.e., the aforementioned machines are hazardous waste, as per the 2008 Rules. In arriving at its conclusion, respondent no.3 will take into account the judgment of the Madras High Court in the case of Shrishti Digital Solution [2013 (6) TMI 273 - MADRAS HIGH COURT] as also the following judgment of the City Office Equipments Vs. The Commissioner of Customs (Seaport-Import) [2014 (11) TMI 325 - MADRAS HIGH COURT]. - writ petition and the pending application are disposed of.
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2015 (2) TMI 377
Provisional release of goods - Condition for imposition of bank guarantee - Held that:- A due consideration of the facts of this case reveals that the appellant has paid ₹ 30 lacs and undertaken to deposit the differential duty. The respondents have not pointed out any circumstance that may raise an apprehension that the appellant will not discharge liability qua any amount that may be assessed at the time of final adjudication. The petitioner has agreed to furnish a bond/personal guarantee/undertaking to discharge this liability. Consequently, we quash the condition requiring the assessee to furnish a bank guarantee and direct the petitioner to pay the differential duty as determined and to furnish a personal bond as well as an undertaking that in the eventuality of any other amount being found due, it would discharge its liability without any protest or demure subject however, to its right to file an appeal. The goods if not released, be released within 48 hours of the petitioner complying with this order. - Petition disposed of.
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2015 (2) TMI 376
Entitlement of entitled for DEPB benefit at declared export price - export of Man Made Filament Yarn with or without embroidery and made ups - overvaluation - Held that:- Commissioner (Appeals) has passed the order totally unaware of the facts and figures involved in the case as pointed out by the Revenue. His finding that there was no significant difference between the maximum market price of ₹ 80 per yard and export price of ₹ 102 per yard was based on the imaginary figures as the actual figures involved in the present matter are market price of ₹ 20-22 per metre and FOB value of ₹ 132 per metre. The FOB value was discovered by the Revenue through market enquiry. It is also observed that the Commissioner (Appeals) has passed the order based on the wrong facts and figures. Obviously when he was unmindful of the correct facts and figures, he could not appreciate the context of applicability of judgement quoted by the Revenue and the respondents/exporters. As consequence, it would be inappropriate for us as final fact finding authority to base our decision on Order-in-Appeal which does not take into account the facts involved, the extant of law, value of exported goods, administrative guidelines on the issue of applicability of judgement quoted by both sides. - Matter remanded back - Decided in favour of Revenue.
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2015 (2) TMI 375
Import of construction machinery - Denial of benefit of the Notification 21/2002-Cus - violation of the post-importation condition - Held that:- As regards the imports of stone crushing plant, the same was used for a project awarded by MMRDA. The issue, whether MMRDA is a road construction corporation on envisaged in condition No. 40(a) of Notification No. 21/2002-Cus was examined at length by this Tribunal in the case of Shreeji Construction (2013 (4) TMI 654 - CESTAT MUMBAI) and it was held that MMRDA is not a road construction corporation within the scope and context of condition NO. 40(a). This conclusion was arrived at after careful and detailed analysis of the constitutional and organizational architecture of MMRDA and on a critical analysis of the constitutional and generic statutory functions entrusted to MMRDA. Therefore, the appellant was not entitled ab initio for the benefit of the Notification 21/2002-Cus. It is an admitted position that after using the equipment for a period of 1 to 1 ½ years, the imported goods were diverted for use by others, namely M/s. Balaji Tollways Pvt. Ltd. and by Indian Equipment Infrastructure Ltd. In other words the appellant did not utilise the goods for a period of five years for the construction of roads by himself. Thus, there is a clear violation of the post-importation condition. An exemption Notification has to be construed strictly, the same being in the nature of an exception. Inasmuch as the conditions of the exemption Notification has been violated, the appellant is, obviously not eligible for the benefit of exemption and consequently the appellant becomes liable to pay the differential duty at the rate prevailing at the time of importation of the goods. Appellant is liable to pay the differential duty of ₹ 1,44,11,453/- in respect of stone crushing plant imported vide Bill of Entry No. 512887 dated 16/11/2004 and differential duty of ₹ 88,63,329/- in respect of hot mix plant imported vide Bill of Entry No. 528443 dated 03/01/2005 under the proviso to Section 28(1) of the Customs Act, 1962 and also in terms of the bond/undertaking executed by the appellant at the time of importation. Inasmuch as the appellant had suppressed the fact of diversion, extended period of time is rightly invocable for demand of differential duty and we hold accordingly. Consequently, the appellant is also liable to pay interest under Section 28AB of the Customs Act, 1962. As regards the confiscation, inasmuch as the appellant had diverted the goods before the completion of five years, the same are liable to confiscation for violation of post-importation condition and, therefore, the provisions of Section 111(o) of the Customs Act are clearly attracted. Therefore, the confiscation of the goods cannot be faulted at all. However, redemption fine is reduced. Penalty on appellant is reduced and Penalty on the Managing Director Shri Rajhoo Barot is set aside. - Decided partly in favour of assessee.
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FEMA
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2015 (2) TMI 374
Seizure of currency - cash balance found from factory premises - Held that:- Currency notes constitute property of the petitioner within the meaning of Article 300A of the Constitution of India. No person can be deprived of his property save by authority of Law. There is no explanation at all as to the circumstances in which the property of the petitioner has been seized. - writ application is disposed of by directing the respondents-authorities to return the cash seized on February 22, 2011 along with interest that has accrued on the aforesaid sum of ₹ 10,00,000/- to the petitioner within a fortnight from the date of communication of this order. - Decided in favour of petitioner.
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Service Tax
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2015 (2) TMI 393
Extension of stay order - Held that:- Following Larger Bench of the Tribunal in the case of M/s Haldiram India Pvt. Limited & others Vs Commissioner, Central Excise & Service Tax - [2014 (10) TMI 724 - CESTAT NEW DELHI (LB)], held that the Stay Order passed by the Tribunal may be extended after considering the necessary facts as it would authorize the exercise of discretion by the Tribunal for grant of such extension - Stay extended.
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2015 (2) TMI 392
Receipt of services from abroad - sales promotion and marketing activities - Penalty u/s 77 & 78 - Suppression of facts - Bar of limitation - Held that:- From the agreement dated 03/01/2008 with MBT International Inc., USA it is clear that the said agreement was for market promotion of the services rendered by the appellant who is situated in India. Such sales promotion and marketing activities fall within the definition of 'business auxiliary services' which was taxable from 2003 onwards - A perusal of the section 66A makes it absolutely clear that the service tax liability is attracted when taxable services are received from a foreign service provider and the service recipient is situated in India and has its fixed establishment/permanent residence in India. - the liability to service tax on the consideration paid for the services received for the period on or after 18/04/2006, is beyond challenge and if there is a delay in payment of such service tax, the appellant would be liable to pay interest thereon on the service tax liability. Consequently, the demand of service tax in respect of 'business auxiliary services' received for the period 2006-07 has to be upheld and this amounts to ₹ 2,69,94,321/- and interest liability therein works out to ₹ 1,48,95,196/-. The demand for the period prior to 18.04.2006 is not sustainable in law in view of the decision of the hon'ble Bombay high Court in the case of Indian National Shipowners' Association [2008 (12) TMI 41 - BOMBAY HIGH COURT]. Extended period of limitation - Held that:- It is a fact on record that the appellant did not disclose this information in the ST-3 returns filed. The contention of the appellant that there was no specific column for declaration of the amounts paid lacks merits for the reason that the appellant has to declare the amounts received as the amounts billed or charged as the appellant is deemed as a service provider. Even otherwise, the appellant could have disclosed this information in the return with suitable remarks in this regard. Therefore, the non-disclosure of the details of the transaction in the ST-3 returns in spite of specific statutory mandate in this regard clearly amount to suppression of facts. Court have perused the balance sheets and the balance sheets do not reflect the payments made for the various transaction separately. It only gives the gross amount of the expenditure incurred in terms of foreign currency. From that information it cannot be gathered, for what purpose the expenditure was incurred, whether it was for a taxable service or otherwise. Therefore, unless the details of the expenditure incurred are given, it is not possible to make any conclusion one way or other. It is on record that the appellant had not provided copy of the agreement to the department in respect of the services received from abroad and these were provided only in 2010 when the investigation commenced. Further, the exact details of the payments made in respect of the marketing promotion activities were given to the department for the first time only in January 2011 vide letters dated 05/01/2011 and 07/01/2011. The show cause notice has been issued on 24/04/2011 and, therefore, it cannot be said that the show cause notice is barred by limitation of time. Wavier of penalty u/s 80 of the Finance Act, 1994. In the present case also, since clarity on the matter came with the decision of the hon'ble Bombay High Court in the case of Indian National Shipowners' Association (supra), the benefit of doubt could be extended to the appellant for non-disclosure of the information at the relevant time. Therefore, invoking the provisions of Section 80, we waive the penalty imposed on the appellant under Sections 76, 77 and 78 of the Finance Act, 1994. - Decided partly in favour of assessee.
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2015 (2) TMI 391
Waiver of pre deposit - consulting engineers service or manpower supply service - Service tax not paid - Held that:- claim of the appellant that the service rendered was covered by manpower supply service has some validity. However this aspect has not been examined in detail by going through the concerned orders, schedules to the orders and the relevant invoices. Further the claim that subsequent to 16/06/2005, they have paid the tax under consulting engineers service was not made before the original adjudicating authority. Moreover, a small amount relates to IT support service which is also required to be considered since the IT service came into statute only in 2008 for the purpose of levy. Since the issues have not been examined in detail, the matter has to be remanded at this stage itself. - Matter remanded back - Decided in favour of assessee.
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2015 (2) TMI 390
Delay in discharge of service tax liability - Penalty u/s 77 & 78 - Held that:- No plausible reason or explanation stands submitted by the appellant for non-payment of service tax in respect of the services in question. When the appellant was registered with the Department and was aware of his liabilities and was also paying service tax in respect of other services, the non-payment of service tax in respect of the present disputed services can only be a clear mala fide on his part. The fact of non-payment has, admittedly, come to surface on account of investigations conducted by the Revenue. As such, the deposit of service tax along with interest, subsequent to the investigations made by the Revenue, cannot be said to be covered by the provisions of Section 73(3) of the Finance Act inasmuch as the same cannot be held to be a voluntary payment. An assessee is compelled to accept and deposit the tax liabilities after it has come to the notice of the Revenue on account of investigations conducted by them. Such a course of action adopted by the appellant cannot save him from the penalty provisions. - appellant is admittedly liable to penalty. However, as they have deposited the service tax along with interest prior to issuance of the show-cause notice, I reduce the penalty amount to 25% of the tax - Decided partly in favour of assessee.
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2015 (2) TMI 389
Cenvat Credit - Denial of input service credit on the ground that appellant is a output service provider as well as engaged in the activity of trading- Penalty u/s 78 - Held that:- appellant is not entitled to take Cenvat credit of the common services used by them attributable to trading activity. - the appellant is not entitled to take Cenvat credit to the tune of ₹ 17,718/- attributable to trading activity. Further, I find that the appellant were under bonafide belief that prior to 1.4.2011, trading activity was not an exempted services. Therefore, penalty on the appellant is not imposable. In these circumstances, penalty imposed on the appellant is set aside. - Following decision of Orion Appliances Ltd. vs. CST, Ahmedabad [2010 (5) TMI 85 - CESTAT, AHMEDABAD] - Decided partly in favour of assessee.
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Central Excise
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2015 (2) TMI 387
Refund of excess duty paid on account of change of duty rate for one day - respondents raised invoices indicting higher rate of duty and collected the same from their customers - unjust enrichment - Held that:- If the contention of the assessee is accepted, it would be lead to a situation that after years also they would claim that they are taking over the burden of duty initially passed on to their customers by issuing of credit notes. If the credit notes issued after four months can be accepted, there is no bar to accept the credit notes issued after a few years also. Therefore, this reasoning that once credit note is issued the manufacturer should be deemed to have absorbed the duty burden is to be rejected. - Decided against assessee.
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2015 (2) TMI 386
Extension of stay order - Held that:- appeal was not taken for hearing by the Tribunal as there is huge pendency of the appeals. It is noted that lot of appeals have already been listed and therefore it is difficult to take up the appeals hearing at this stage. - we grant extension of stay till the disposal of the appeal. - Stay extended.
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2015 (2) TMI 385
Availment of CENVAT Credit - Bogus invoices - Invoices issued without actual transfer of goods - Held that:- The appellant, unearthed a fraud allegedly perpetuated by one Shri R.K.Gupta, proprietor M/s R.K.Enterprises whereby MODVAT/CENVAT credit was passed on without any actual transaction. A search of the residential premises of Shri R.K.Gupta led to recovery of voluminous incriminating evidence in the shape of slips, fake GR books, numbering machines, blank cheques, stamps of various officers of the department and it also transpired that the alleged office in Faridabad was a single room rented out by Shri R.K.Gupta without any godown from where he could have transferred these goods. Shri R.K.Gupta made a statement on 16.01.2001 under Section 14 of the Central Excise Act, 1944 stating that parties from whom he procured goods are located in Delhi, Hisar, Gurgaon, Mathura, Baddi and Faridabad. The GR books of M/s Paradise Tempo Transport Service, Bata Chowk, Faridabad and Golden Transport Company, Nehru Ground, NIT Faridabad, recovered from his office were printed by him as these companies do not exist. Admittedly, the respondents received goods which were less than six metric tonnes. A perusal of the provisions of the statue reveals that initial onus to establish culpability or violation vis-a-vis provisions of the Act lies upon the department but once the department prima-facie proves the culpability of a dealer, the onus to prove that the transaction is legal and valid shifts to the dealer. A perusal of the original statement made by Shri R.K.Gupta as detailed in the order in original, reveals that the respondents were not named as beneficiaries of fraudulent MODVAT/CENVAT credit. A perusal of the record reveals that the respondent has failed to prove any consumption of raw material much less its receipt and as the transport companies have been found to be fake, the judgment in Garima Enterprises's case (2004 (8) TMI 291 - CESTAT, NEW DELHI) cannot be relied as a precedent . The CESTAT, however, failed to consider these significant facts and by placing implicit reliance upon the judgment in Garima Enterprises's case (2004 (8) TMI 291 - CESTAT, NEW DELHI), wrongly allowed the appeal. Consequently, the appeals are allowed, the impugned orders are set aside and the appeals are restored to the CESTAT for adjudication afresh and in accordance with law after examining the entire material on record particularly whether there is any material on record to prove that the goods allegedly received by the respondents was consumed/utilised. The CESTAT shall grant an opportunity to the respondent to adduce evidence to prove receipts of goods, their consumption and use and only thereafter decide the appeals. - Decided in favour of Revenue.
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2015 (2) TMI 383
CENVAT Credit - Vehicle nos mentioned in invoices were found to be not transported vehicles such as motor cycle, scooter, moped, etc. and in some cases, registration of the vehicles were fake as these were not issued jurisdictional transport authority - Commissioner (Appeals) set aside the Order-in-Original on the basis that the appellants have made payment for the inputs received from the dealer through accounts payee cheque and used the inputs in the manufacture of the final products - Held that:- Following decision of Adhunik Steels Ltd. Vs.CCE, Chandigarh [2009 (7) TMI 1207 - CESTAT NEW DELHI] - Matter remanded back - Decided in favour of Revenue.
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2015 (2) TMI 382
Benefit of exemption under Notification 10/2002 dated 1.3.2002 - Activity of cutting and slitting of various sizes of paper from paper roll purchased from paper manufacturing unit - Held that:- As regards the fact that the respondent is engaged in the activity of conversion of paper sheet from paper roll by the process of cutting and slitting, mere cutting and slitting of paper roll and conversion into sheets does not change the identity of the paper. Therefore, this activity does not fall under the purview of manufacture as defined under section 2(f) of the Central Excise Act, 1944. On this particular issue, much water has flown and by the judgments relied upon by the learned Commissioner (Appeals), the issue has been settled and the Hon'ble Supreme Court [1997 (12) TMI 110 - SUPREME COURT OF INDIA], [1999 (11) TMI 74 - SUPREME COURT OF INDIA] and [2004 (11) TMI 107 - SUPREME COURT OF INDIA] and the Tribunal in those judgments [2000 (11) TMI 787 - CEGAT, NEW DELHI] and [1998 (11) TMI 650 - CESTAT NEW DELHI], have consistently held that cutting and slitting of paper roll into sheets of various sizes does not amount to manufacture. - No infirmity in the impugned order and the same is upheld - Decided against Revenue.
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2015 (2) TMI 381
Denial of excess claim of refund - area based exemption under Notification No. 56/2002-CE in the State of Jammu & Kashmir - Held that:- Though during February 2006 to April 2006 period, the appellant for whatever reason, did not take Cenvat credit of ₹ 10,72,419/- in respect of SAD resulting in higher quantum of exemption under Notification No. 56/2002-CE and thus higher quantum of refund, in December 2006 as soon as this was pointed out, they took the Cenvat credit of this amount, as a result of this in the month of December 2006 their refund claim was lesser to that extent. Thus, overall there was no excess availment of exemption under Notification No. 56/2002-CE, as the excess quantum of refund under Notification No. 56/2002-CE during February 2006 to April 2006, was neutralized by lesser quantum of refund under this notification during December 2006. - Assessee did not take the available Cenvat credit during the period it was available and paid the excess from the PLA and took the refund thereof. Later on, they took Cenvat credit which was available and paid less duty. In that case, the excess refund availed by the assessee during the initial period was sought to be denied. In that case, this Tribunal held that it is situation of revenue neutrality, therefore denial of refund is not sustainable. Fact of non-availment of Cenvat credit was in the month of December, 2006 itself and no show cause notice has been issued by invoking extended period of limitation. The same is also required to be issued by invoking extended period of limitation. - show cause notice is barred by limitation as well as the appellant succeeds on merit as it is a revenue neutral situation as per the decision of this Tribunal in the case of New India Wire and cables. - Decided in favour of assessee.
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2015 (2) TMI 380
Availment of CENVAT Credit - Removal of goods as such without reversal of CENVAT Credit - alleging violation of various provisions of CENVAT Credit Rules, 2004 - Held that:- Undisputedly the Applicant had cleared inputs as such from their Unit No.1 to Unit No.2 without following the procedure laid down under Rule 3(5) of CENVAT Credit Rules, 2004. Also, I find that while rejecting their Appeal Ld. Commissioner(Appeals) has discussed the issue in detail and recorded a categorical finding relating to the applicability of revenue neutrality to the present situation also made a categorical observation that the Appellant failed to establish that the inputs received at their Unit-2 and had been utilized in or in relation to the manufacture of the final product. - Reason to interfere with the aforesaid finding of the Ld. Commissioner(Appeals). Further, I am of the opinion that the decision cited by the learned representative for the Appellant is not applicable to the facts of the present case, inasmuch as in that case the inputs which were cleared as inter-mediate product, received back in the factory and utilized in the manufacture of final product. - Decided against assessee.
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CST, VAT & Sales Tax
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2015 (2) TMI 388
Constitutional validity of Entry 25 of Schedule VI to the Karnataka Sales Tax Act, 1957 - levy of sales tax for processing and supply of photographs, photo prints and photo negatives - competence of State Legislature given in Entry 25 of List II of Schedule VII of the Constitution to impose sales tax on the contract of processing and supplying of photographs, photo frames and photo negatives - Retrospective effect - Held that:- after insertion of clause 29-A in Article 366, the Works Contract which was indivisible one by legal fiction, altered into a contract, is permitted to be bifurcated into two: one for “sale of goods” and other for “services”, thereby making goods component of the contract exigible to sales tax. Further, while going into this exercise of divisibility, dominant intention behind such a contract, namely, whether it was for sale of goods or for services, is rendered otiose or immaterial. It follows, as a sequitur, that by virtue of clause 29-A of Article 366, the State Legislature is now empowered to segregate the goods part of the Works Contract and impose sales tax thereupon. It may be noted that Entry 54, List II of the Constitution of India empowers the State Legislature to enact a law taxing sale of goods. Sales tax, being a subject-matter into the State List, the State Legislature has the competency to legislate over the subject. Entry 25 of Schedule VI to the Act which makes that part of processing and supplying of photographs, photo prints and photo negatives, which have “goods” component exigible to sales tax is constitutionally valid. Mr. Patil and Mr. Salman Khurshid, learned senior counsel who argued for these assessees/respondents, made vehement plea to the effect that the processing of photographs etc. was essentially a service, wherein the cost of paper, chemical or other material used in processing and developing photographs, photo prints etc. was negligible. This argument, however, is founded on dominant intention theory which has been repeatedly rejected by this Court as no more valid in view of 46th Amendment to the Constitution. For being classified as Works Contract the transaction under consideration has to be a composite transaction involving both goods and services. If a transaction involves only service i.e. work and labour then the same cannot be treated as Works Contract. It was contended that processing of photography was a contract for service simplicitor with no elements of goods at all and, therefore, Entry 25 could not be saved by taking shelter under clause 29-A of Article 366 of the Constitution. The first thing in regard to retrospectivity which is to be kept in mind is that Entry 25 was inserted for the first time by amendment of the Act w.e.f. 01.07.1989. This amendment was post 46th Constitutional Amendment. However, the High Court of Karnataka [2005 (8) TMI 633 - KARNATAKA HIGH COURT] declared the said Entry to be unconstitutional and the SLP was also dismissed. Undoubtedly, it was because of the judgment in Rainbow Colour Lab [2000 (2) TMI 2 - SUPREME COURT OF INDIA], which judgment was declared as not a good law in ACC Ltd. [2001 (1) TMI 248 - Supreme court of India] (which position is repeated in BSNL [2006 (3) TMI 1 - Supreme court] as well as M/s Larsen and Toubro cases [2013 (9) TMI 853 - SUPREME COURT]). Thus, the very basis on which Entry 25 of Schedule VI was declared as unconstitutional, has been found to be erroneous. In such circumstances, the legislature will be justified in enacting the law from the date when such a law was passed originally and that date is 01.07.1989 in the instant case. We have to keep in mind the fact that on the basis of this amendment, there have been assessments made by the assessing authorities. This was admitted by the learned counsel for the respondents at bar at the time of the arguments. High Court in the impugned judgment has not dealt with the mater in its correct perspective. The reason given by the High Court in invalidating Entry 25 is that this provision was already held unconstitutional by the said High Court in Keshoram's case [1999 (9) TMI 938 - KARNATAKA HIGH COURT] against which the SLP was also dismissed and in view of that decision, it was not permissible for the legislature to re-enact the said Entry by applying a different legal principle. According to us, this was clearly an erroneous approach to deal with the issue and the judgment of the High Court is clearly unsustainable. The High Court did not even deal with various facets of the issue in their correct perspective, in the light of subsequent judgments of this Court with specific rulings that Rainbow Colour Lab is no longer a good law. - The impugned judgment of the High Court is accordingly set aside - Decided in favour of Revenue.
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2015 (2) TMI 372
Deletion of interest and penalty - Carried forward ITC - Held that:- From the observation of the Tribunal, it appears that though the assessing officer had raised additional tax demand of ₹ 76,010/and imposed interest and penalty on such basis, the Tribunal was of the opinion that the assessee had sufficient Input Tax Credit and those tax credits could have been adjusted against the assessee’s additional assessed tax liability. That being the position, the Tribunal correctly held that the interest could not be charged. Further, we notice Section 34(7) of the Gujarat Value Added Tax Act, which pertains to the power of the Commissioner to impose penalty, begins with the expression “if a Commissioner is satisfied that the dealer, in order to evade or avoid payment of tax........” Under the circumstances, the basic intention of attempting to evade or avoid payment of taxes would be necessary for imposing penalty. - When the Tribunal found on facts that in view of availability of input tax credit as against the assessed additional tax, there was no intention on part of the assessee to avoid payment of taxes, no question of law arises - Decided against Revenue.
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Indian Laws
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2015 (2) TMI 373
Non disposal of appeal - Held that:- matter was listed on several days but the Tribunal has not taken up those appeals. The fact remains that the appeals are still pending and has not been disposed of by the CESTAT. The Judicial Member of the CESTAT is directed to file affidavit disclosing the reasons why the aforesaid appeals have not been disposed of within the time frame indicated in the order dated 29th January, 2014. Such affidavit shall be filed within a week from the date of communication of this order.
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