TMI Tax Updates - e-Newsletter
February 22, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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Income Tax:
Attachment and recovery of amount from PPF account u/s 226(6) - as long as an amount remains invested in a PPF account of an individual, the same would be immune from attachment from recovery of the tax dues - HC
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Income Tax:
Interest Expenditure - Since, no addition has been made on account of unexplained credit of loan in the earlier year under section 68, then no disallowance can be made out of interest in the present year - AT
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Income Tax:
Conversion of stock in trade into capital asset - period for which the shares were held as stock in trade by the assessee is to be excluded from the total period for which the shares were held by the assessee - AT
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Income Tax:
Disallowance of payment of premium under Keyman Insurance Policy maturity or surrender amount under the Keyman Insurance Policy was not exempted but taxable under different provision - deducation allowed - AT
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Income Tax:
Valuation of property u/s 50C(2) - The value adopted by stamp duty authority does not ipso facto become the real consideration or deemed consideration in the absence of any other cogent reason - AT
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Income Tax:
Exemption u/s 10(23G) of the Act benefit cannot be denied to the assessee/investor merely on the ground that the investee company has amalgamated/merged with another company, the process in which the assessee/investor has no role to play - AT
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Income Tax:
Addition made u/s 68 of the Act Applicability of peak credit theory The peak credit theory is not applicable - there are deposits in cash but as against the said cash deposited, various cheques were issued - AT
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Customs:
Whether it is mandatory to claim exemption notification under Customs - exemption from SAD under Notification 201/10 - Held no - AT
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Customs:
Constitutional Validity of Notification providing tariff value of edible oil - Simply because certain items which fall under Chapter 15 were not included for such exercise, in our view, cannot be stated to be violative of Article 14 of the Constitution - HC
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Customs:
Definition of importer as mentioned in Section 2(26) of Customs Act, 1962 would not cover the appellant, as it is undisputed that the appellant had not filed any Bill of Entry - AT
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Service Tax:
Levy of service tax on Management Education Course - aid Institute run by the Applicant, cannot be considered as a Vocational Training Institute as the Certificates/Diplomas imparted by the Applicant - stay granted partly - AT
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Service Tax:
Nature of activities of logistic arrangements for the yatra from Delhi through Kumaon region upto Indo China border in relation to Kailash Manasarovar Yatra - whether tour operators service - stay granted - AT
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Central Excise:
Availment of CENVAT Credit - Input Service Distributor - ISD should be distributed based on the template of sale revenue of individual unit, when other units are exclusively exempted unit. - AT
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Central Excise:
Remission of duty upon destruction of final product - there is no requirement to reverse the credit of inputs which have gone into manufacture of final product - AT
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Central Excise:
Whether the appellant would be eligible for Cenvat credit of service tax paid on the premium for Group Insurance Policy provided by the appellant to their workers - held yes - AT
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Central Excise:
Waiver of predeposit of duty - Freight charges incurred on behalf of the buyers cannot be included in the assessable value of goods sold on Ex-works basis - AT
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VAT:
GVAT - whether if a particular item falls in more than one of these sub-clauses, denial of tax credit can be applied more than once. - If such tax credit available to the respondent is reduced by eight per cent, it would bring about a situation where credit available is four per cent and what is reduced is eight per cent. - HC
Articles
Notifications
News
Case Laws:
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Income Tax
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2014 (2) TMI 867
Deletion of penalty u/s 272B of the Act - Failure to mention PAN Held that:- Section 272B of the Act is to be read in conjunction with section 139A(5B) of the Act - CIT(A) has restricted penalty to the tune of Rs. 30,000/- in all the appeal following the clarification embodied in the CBDT letter dated 05.08.2008 - Since this fact is not disputed by the revenue that CBDT has issued a clarification whereby it has been clarified penalty u/s 272B of Rs. 10,000/- is linked to the person and not with the number of defaults thus, there is no infirmity in the orders of CIT(A) Decided against Revenue.
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2014 (2) TMI 866
Penalty u/s 272B of the Act Failure to mention PAN - PAN were not furnished by the Truck owners - Held that:- assessee cannot be penalized under Section 272B. - Section 139A also imposes the obligation on the deductees to furnish PAN Number to the deductor. Secondly, the stand taken by the revenue is contrary to the stand taken by Central Board of Direct Taxes - Board in the letter dated 5.8.2008 vide No.275/24/2007-IT(B) has clarified that penalty of Rs.10,000/- under Section 272B is linked to the person who is responsible to deduct TDS, and not to the number of defaults regarding the PAN quoted in the TDS return. - Penalty cannot be imposed by calculating the number of defective entries in each return and by multiplying them with Rs.10,000/- This also appears to be a legislative intent, as in many cases, the TDS amount may be small or insignificant fraction of Rs.10,000/-. There is no substantial question of law arises from the appeal Decided against Revenue.
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2014 (2) TMI 859
Disallowance of loss on sale of paintings Held that:- The CIT(A) was of the view that the assessee has earned profit in respect of paintings sold to very same purchasers amounting to Rs.2.21 crores - the painting sold was constituting assessees stock-in-trade, had the assessee any intention to evade any tax, the assessee could have valued stock at cost price or market price, whichever is lower - the assessee has sold some of the paintings to the very same party at profit of Rs. 2.21 crores, which was more than the loss suffered by the assessee in respect of sale of other paintings to the very same party - Had the assessee any intention to reduce its profit or to evade any tax, he could have easily managed to show marginal profit in respect of transaction with the very same party and could have easily come out from the doubts raised by the AO by showing net profit the findings of the CIT(A) have not been controverted by the revenue by bringing any positive material on record thus, there is no reason to interfere in the order of CIT(A) in deleting the loss Decided against Revenue. Deletion made u/s 40A(2)(b) of the Act - Excess interest paid on unsecured loan Held that:- The prevailing market rate of interest even in respect of secured loan was @12% and in respect of unsecured and unguarateeed loan the rate of interest was ranging from 15-18% - the loan taken by the assessee was unsecured, the rate of interest paid by the assessee was very much reasonable - the rate of interest paid by the assessee was reasonable and no disallowance is warranted u/s 40A(2)(b) of the Act the findings of the CIT(A) have not been controverted by the revenue by bringing any positive material on record thus, there is no reason to interfere with the finding of the CIT(A) Decided against Revenue.
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2014 (2) TMI 851
Notice of reassessment u/s 147/148 of the Act Held that:- The Court refrains from making an enquiry, at a time when the AO has, in the first instance, failed to spell out clearly in the section 148 notice itself that such report was not on record - In other words the reasons to believe do not state that even in one sentence that the investigation report of 13.3.2006 was not with the AO when he completed the assessment - Relying upon CIT vs. Kelvinator (India) Ltd. [2010 (1) TMI 11 - SUPREME COURT OF INDIA] The circumstances of the case is based upon stale information which was available at the time of the original assessment and in fact appears to have been used by the AO at the relevant time i.e. during the completion of proceedings under section 143(3) thus, the attempt to reopen the proceedings under section 147/148 is really the result of a change of opinion and thus beyond the pale of the ADs jurisdiction - Decided in favour of Assessee.
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2014 (2) TMI 850
Scope and power of rectification u/s 154 of the Act Held that:- The decision in Honda Siel Power Products Limited Vs. Commissioner of Income-tax [2007 (11) TMI 8 - Supreme Court of India] followed the fundamental principle has nothing to do with the inherent powers of the Tribunal/authority - the important reason for giving power of rectification is to see that no prejudice is caused to either of the parties appearing before it by its decision based on a mistake apparent from the record - the first appellate authority rightly entertained the application under Section 154 and rectified the error solely on the ground that as per the law, which holds the land, at the relevant point of time, no penalty was imposable when a loss has been incurred by the assessee - the term "income" in Section 271(1)(c) was interpreted to mean "prospective income" - the assessment order disclose loss to be carried forward thus, the Commissioner was justified in entertaining the application and rectifying the mistake thus, the order of the Tribunal set aside. Levy of Penalty u/s 271(1)(c) of the Act Held that:- The Tribunal had allowed the Department's appeal only on the question of jurisdiction under Section 154 of the Income-tax Act thus, it would be proper to remit back the matter for decision on the question of levy of penalty The appeal allowed only on the aspect of jurisdiction of the CIT(A)Decided partly in favour of Assessee.
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2014 (2) TMI 849
Attachment and recovery of amount from PPF account u/s 226(6) of the Act Held that:- Considering the benevolent provisions of the PPF Act, 1968 and taking harmonious construction of the relevant provisions of the PPF Act read with the provisions of the Civil Procedure Code and the provisions contained in the Income-tax Act, 1961 for recovery of the tax dues, it clearly emerges that as long as an amount remains invested in a PPF account of an individual, the same would be immune from attachment from recovery of the tax dues - The situation may change as and when such amount is withdrawn and paid over to the subscriber, which is not the situation in the present case - the clarification issued by the CBDT does not take into account the provisions of Rule 10 of the Second Schedule to the Income-tax Act, 1961 and the provisions of Section 60(1) of the Code of Civil Procedure - The said clarification is contrary to such statutory provisions thus, the action of revenue of attaching and withdrawing the sum of PPF account is set aside Decided in favour of Assessee.
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2014 (2) TMI 848
Claim of depreciation u/s 32 - ownership of truck given on hire - Whether there was any material before the Tribunal to come to the conclusion that the trucks in question were given on hire and the claim of depreciation on the trucks can be accepted or not Held that:- The Tribunal was of the view that the trucks can be got registered only when necessary formalities about the completion of the body building, insurance, etc. were completed - the trucks were registered during the period from 14.03.1986 to 28.03.1986 thus, the finding of the Tribunal that the assessee was owner of the trucks cannot be disputed. The Tribunal has noted that the assessing officer, before whom the affidavit was filed did not summon Sardar Inder Singh to verify the correctness of contents of the affidavit nor did he make any inquiries through the Inspector - There are other materials on the basis of which the Tribunal held that the assessee did receive hire charges for letting out the trucks on hire - It has noted that the hire charges received by the assessee in the accounting year relevant to the assessment year 1986-87 were assessed as the assessees income - The sale consideration was found by the Tribunal to have been received by the assessee directly from the finance companies - the Tribunal did not find any justification to doubt the genuineness of the sale of the trucks. The Tribunal came to the conclusion in all the three years that the assessee was in receipt of hire charges and thus satisfied the second condition of Section 32(1) i.e. that the asset owned by the assessee should be used for the purpose of the business of the assessee - the assessing officer was not able to discredit or impeach the evidence adduced by the assessee to show that it was in receipt of hire charges - The assessing officer was not able to show that the claim was bogus thus, there was material before the Tribunal to come to the conclusion that the trucks in question were given on hire - There is no substantial question of law framed on the aspect of whether the assessee was the owner of the trucks - Thus both the conditions of Section 32(1) stand satisfied thus, the Tribunal was correct in law in accepting the assessees claim for depreciation on the trucks Decided against Revenue.
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2014 (2) TMI 847
Rejection of books of accounts u/s 145 of the Act Estimation of GP rate @2%, whether on lower side or higher side - Held that:- The AO as well as the Tribunal noticed a rather irregular pattern of output by the assessee in comparison to the electricity consumption - the average production from using of power consumption widely fluctuated from month to month - The explanation rendered by the assessee was not accepted - the Tribunal noted that in addition to such fluctuation in the output ratio, the assessee also did not record the work in progress in its books of accounts - The Tribunal has rightly recorded that the CIT (Appeals) thus effectively and essentially rejected the books of accounts of the assessee - In addition to wide fluctuation in the productivity compared to the electricity consumption, significant factor was that the assessee had not recorded the work-in-progress in the books of accounts. The assessee has produced no evidences - If the oil output was vastly different for different oil seeds, which was the reason for fluctuation in productivity, the assessee could have easily demonstrated from the books of accounts and other literature - Merely suggesting that the Gujarat Electricity Board would issue the bills for minimum contracted units without full consumption, is merely stating the obvious thus, the ground does not involve any substantial question of law Decided against Assessee. Addition on account of gross profit ratio Both Revenue and Assessee are in appeal regarding the estimation of GP ratio Held that:- In the absence of any satisfactory explanation, the fact provides a reasonable basis for working out the suppressed production on the basis of units of power consumed in remaining months of the year thus, the additions made were sustained by the Tribunal - The issue is based on appreciation of material on record - The Tribunal having given its consideration and having adopted the GP rate of 2% by giving its own reasons thus, no substantial question of law arises for consideration Appeal Rejected for both revenue and assessee.
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2014 (2) TMI 846
Disallowance of claim u/s 11(1) Explanation 2 of the Act - Nature of grant received Held that:- The decision in CIT v . Gujarat State Disaster Management Authority [2014 (2) TMI 789 - GUJARAT HIGH COURT] followed - the amount received by the assessee by way of grant cannot be said to be an income thus, the ITAT has rightly deleted the addition made by the Assessing Officer - when the amount received by the assessee by way of grant from the State Government cannot be said to be an income and consequently the additions made by the Assessing Officer is deleted, then there is no need to interfere in the order of ITAT Decided against Revenue.
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2014 (2) TMI 845
Penalty u/s 271(1)(c) of the Act - Inflation in expenses Concealment of income - Expenses debited not connected with the business Held that:- The CIT(A) held that the appellant has not been able to place any evidence on record that Mr. Jayanti Mehta, in fact, travelled abroad on behalf of the assessee firm and procured the business for the appellant firm - Merely having vast experience in the line of the business of the firm, is not a sufficient criteria to allow an expense incurred on a person, who is otherwise not connected in any way with the business operations of the appellant firm. The assessee has also failed, both during the course of assessment proceedings as well as in the penalty proceedings to substantiate its claim that the travelling expenses of Mr. Jayanti mehta was incurred for business purposes - the disallowance was related to the interest genuinely incurred for the purposes of business and the disallowance was made u/s 14A of the Act - the assessee has failed to prove that the travel expenses of Shri Janti Mehta for the purposes of its business, i.e., the assessee has failed to address the view of the AO that the expenses were inflated, which has resulted in concealment of income thus, there is no reason to interfere with the order of the CIT(A) Decided against Assessee.
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2014 (2) TMI 844
Confirmation of net profit - Whether the CIT(A) was justified in confirming the amount of net profit estimated by the AO Held that:- The year wise expenditure incurred by the assessee shows that the progress made by the assessee in the implementation of the project for the year under consideration was very little - it has incurred expenditure towards the bank liability - The year wise expenditure details substantiate the claim of the assessee that it did not make much progress in the assessment year 2009-10 - there was a valid reason for not offerring income in assessment year 2009-10 - the assessee was justified in not offering any income for the assesment year 2009-10 - The claim of the assessee that it has made considerable progress in subsequent years and it has also offered income in those years requires verification at the end of the assessing officer the matter remitted back to the AO for fresh adjudication Decided in favour of Assessee.
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2014 (2) TMI 843
Reduction in capital advances given to suppliers - Acquisition of land from Capital-Work-in- Progress Held that:- The assessee has merely given the advances to the suppliers/contactors/sellers and the expenses have not been actually incurred - Nor any bills have been raised by the persons to whom the advances have been made the CIT(A) has rightly held that the said advances given by assessee towards expenditure that may arise or may arise in future cannot be said to be capital in nature -there is no confirmation regarding expenditure incurred or to be incurred by assessee Decided against Assessee. Disallowance u/s 14A r.w Rule 8D of the Act Held that:- The contention of the assessee has merits that no borrowed funds were used by assessee for making the said investment - the borrowed money was taken by assessee from IDFC as secured loan which the assessee could utilized only for setting up hotel project the disallowances of out of interest is not justified - AO has made disallowance of expenses as per Rule 8D(iii) of the Rules, the formula prescribed by Legislature which is applicable from assessment year under consideration - there is no arbitrarily disallowance, made by AO but has followed the statutory formula to make the disallowance towards attributable administrative expenses there is no need to interfere in the decision of CIT(A) in confirming the disallowance Decided partly in favour of Assessee.
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2014 (2) TMI 842
Opportunity of being heard Assessment completed u/s 144 of the Act - Held that:- The assessment proceedings were completed u/s 144 of the Act and the appeal of the assessee was dismissed by the CIT(A) in absence of the assessee by passing a very short and cryptic order the assessee made repeated written request to the Assessing Officer with a humble request that the copies of the impounded documents are needed to place the actual factual matrix of the case the assessee could not get required copies of the documents impounded during the survey conducted on the premises of the assessee on 10.2.2009 - neither the original books of accounts and record nor its copies were provided to the assessee enabling him to submit its explanation during the assessment and appellate proceedings - The assessee could not get due opportunity of hearing before the authorities below and the assessee could not offer a suitable explanation and other evidence and documents to support its case either before the Assessing Officer or before the appellate authority - the Commissioner of Income Tax(A) decided the appeal in a cryptic manner without giving a suitable notice of hearing to the assessee - thus, the matter remitted back to the AO for fresh adjudication Decided in favour of Assessee.
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2014 (2) TMI 841
Disallowance of interest Expenditure - Loan confirmatory letters not furnished - Interest debited in the workinprogress - Revenue was of the view that the assessee could not prove the genuineness of the loan and, accordingly, the interest has been disallowed and had been deducted from workinprogress Held that:- Once the loan has been received in the earlier assessment year which are duly reflected in the Balance Sheet filed along with the return of income and the same has not been disturbed by the Department, then such a loan taken in the earlier years cannot be held to be nongenuine in this year - If the interest has been paid / payable in the earlier years, as well as in the present assessment year, then there cannot be a question of doubting the genuineness of the loan in this year, only for the purpose of disallowing the interest in this year. Since, no addition has been made on account of unexplained credit of loan in the earlier year under section 68, then no disallowance can be made out of interest in the present year - the assessee has duly deducted TDS on such payment of interest and has been deposited with the Government account, the details of which are already there in the record thus, disallowance of interest by way of reducing the workinprogress as on 31st March 2007, cannot be sustained Decided in favour of Assessee.
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2014 (2) TMI 840
Additions made u/s 68 of the Act Unexplained credits Creditworthiness of documentary evidence - Held that:- The Assessee has demonstrated the identity and creditworthiness of the creditors and genuineness of the transactions as the transactions done through banking channel - the Assessee repaid the loans taken by him from the creditors - There is also no incriminating material in the search proceedings and all the credits were old and repaid by the time of search thus, the additions made by the AO and the CIT(A) is not proper Decided in faovur of Assessee.
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2014 (2) TMI 839
Expenditure incurred on construction of compound wall Held that:- The Assessee has not proved the cost on the improvement made to the property and even the cash flow statement filed does not show any expenditure incurred - in the absence of any evidence of incurring the amount, the same cannot be considered as deduction while computing capital gain - To that extent, the order of the AO/ CIT(A) is confirmed the AO made the addition to total income returned where as he has to adjust the same in capital gain computation the AO is directed to exclude the amount as a direct addition to the total income returned and to compute capital gain separately, as capital gain tax rate is lesser than the tax on other incomes Decided against Assessee. Addition towards domestic expenses on estimate basis - Held that:- No evidence was furnished against the withdrawal from any other source towards domestic expenditure - in view of smallness of the personal expenditure claimed, it would be reasonable to restrict the disallowance Decided partly in favour of Assessee. Addition made u/s 68 of the Act Advances against sale of shop and agricultural land Held that:- Assessee contended that the documentary evidence submitted by him has not been properly verified by the AO - it is better to examine the parties concerned and also the cash flow statement furnished by Assessee, which was not done by AO thus, the matter remitted back to the AO Decided in favour of Assessee. Disallowance of expenditure - Leveling of land and construction of compound wall claimed as cost of improvements for the purpose of capital gains Held that:- The amount has not been shown as expenditure in ways and means statement thus, in the absence of explanation about source / evidence of having spent the amount of expenditure by way of documents, it cannot be allowed to that extent Decided against Assessee. Addition on account of interest receipt Held that:- The decision in G. Venkat Rao & Others Versus Asstt. Commissioner of Income-tax, Circle 8(1), Hyderabad [2012 (10) TMI 530 - ITAT HYDERABAD] followed - assessee submitted that there is income for the year under consideration and the profit & loss account does not debit any interest paid to the partners - Even the capital account does not have any credit under the head 'interest' - Interest paid to partners, which has been disallowed in the hands of the partnership firms cannot be assessed in the hands of the partners thus, the matter remitted back to the AO for fresh adjudication Decided in favour of Assessee.
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2014 (2) TMI 838
Transfer pricing adjustments - Classification of assessee company - Whether the assessee was one of ITES company only when the assessee is both in the activities of IT as well as ITES Held that:- The assessee has been categorised as ITES Company - According to the TPO, companies within the category of data processing services come within the back office operation as per the CBDT Circular No. SO 890 (E) dated 26-9-2000 - the overall business of the assessee is ITES - This view of the TPO was also upheld by the DRP - the matter is required to be considered afresh by the TPO thus, the matter remitted back to the TPO for fresh adjudication Decided in favour of Assessee. Selection of comparables Held that:- Since the issue relating to classification of the assessee remitted back to the TPO and since the final classification of the assessee IT and ITES company or only ITES Company, would have an impact on the selection of comparables thus, this matter also remitted back to the TPO for adjudication. Claim of pre-operating expenses as part of operating cost Held that:- The assessee's claim cannot be accepted as the facts and materials on record shows that the assessee was incorporated as a company on 17-1-2007, it has been clearly mentioned that the assessee company has commenced its operations from 1st April, 2007 and hence when the assessee company has commenced its operations from 1st April, 2007, the assessee's claim of prior period expenses for the period subsequent to the commencement of operation cannot be accepted. We therefore dismiss the grounds raised by the assessee. Computation of deduction u/s 10A of the Act Exclusion of communication charges Held that:- The decision in CIT v. Gem plus Jewellery India Ltd. [2010 (6) TMI 65 - BOMBAY HIGH COURT ] followed thus, the AO is directed to re- compute the deduction claimed u/s 10A of the Act after reducing communication charges both from the export turnover as well as total turnover Decided in favour of Assessee.
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2014 (2) TMI 837
Conversion of stock in trade into capital asset - Computation of period of holding - AO held that trading in shares is not incidental activity but main business activity of the assessee Held that:- It is the prerogative of the assessee to manage the affairs of his business - the assessee has to follow consistent method in accounting policies and treatment of his assets Relying upon CIT Vs. N.S.S. Investments P. Ltd. [2005 (4) TMI 45 - MADRAS High Court ] - the profit on sale of shares held as investment is to be treated as capital gains instead of 'Business Income' and that the assessee can hold some shares as capital for the purpose of earning dividend and some shares as stock in trade for the purpose of doing business of buying and selling - when shares were sold by the assessee, they were converted into capital asset the gain arising there from on sale would be assessable as capital gain - where the property-in-question is held by the assessee as stock in trade for the purpose of its business and the same had been converted by the assessee into investment, the period for which the said property was held as stock in trade cannot be reckoned for ascertaining as to whether it was a 'Long Term Capital Asset' or a 'Short Term Capital Asset' within the meaning given in Section 2(29A) and 2(42A) of the Act. The period for which the shares were held as stock in trade by the assessee is to be excluded from the total period for which the shares were held by the assessee - Since, the date of acquisition of shares is not forth coming from the records the matter is remitted back to the AO for determination of total period of holding of shares as capital asset Decided in favour fo Assessee.
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2014 (2) TMI 836
Revision u/s 263 - Deductibility of expenses u/s 37(1) of the Act Fluctuation in rate of exchange - Held that:- The decision in CIT v. Woodward Governor India (P.) Ltd. [2009 (4) TMI 4 - SUPREME COURT] followed the loss suffered by the assessee is on revenue account towards foreign exchange difference as on the date of balance sheet and is an item of expenditure deductible u/s 37(1) - The loss due to foreign exchange fluctuation in foreign currency transactions in derivatives has to be considered on the last date of accounting year and it is deductible u/s 37(1) of the Act - the view taken by AO to allow loss while making assessment u/s 143(3) on account of derivative contract outstanding is not an erroneous view taken by AO, nor the action of AO is prejudicial to the interest of revenue - the order of Commissioner of Income Tax u/s 263 of the Act to hold that the action of AO is erroneous to the extent the loss considered as allowable on account of derivative contracts outstanding as on the date of balance sheet i.e. 31.3.2008 is neither justified nor in accordance with law the order of the CIT set aside Decided in favour of Assessee.
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2014 (2) TMI 835
Disallowance of payment of premium under "Keyman Insurance Policy The decision in ITO Versus Ashoka Dyeing & Printing Mills [2010 (9) TMI 430 - ITAT, AHMEDABAD ] followed - Held that:- The existence of employer-employee relationship is a sine-qua-non for the deductibility of keyman insurance premia - CIT(A) held that maturity or surrender amount under the Keyman Insurance Policy was not exempted but taxable as "Salaries" u/s.17(3)(ii) of the Act or as "Profits and Gains of Business" u/s.28(vi) or as income from Other Sources" u/s.56(2)(iv) of the Act in the hands of the recipient - the legislature did not intend that such premium be allowed only where "employer employee relationship existed" - the disallowance made on account of premium paid towards Keyman Insurance Policy in respect of partner of the appellant firm is set aside. Expenditure on premia of keyman insurance for a firm on life of partners bestows personal benefits to the partners -The amount on claim or maturity under a keyman insurance policy is not exempt under section 10(10D) of the Income Tax Act when the company pays the premia, because in such situation the benefits received acquire the nature of capital receipts decided against Revenue.
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2014 (2) TMI 834
Adoption of amount as valuation of the second property Valuation of property u/s 50C(2) of the Act - The AO has not considered and appreciated the provisions of section 50C of the Act in its correct perspective - the value adopted or assessed by any authority of a state government for the purpose of payment of stamp in respect of land or building or both, shall for the purpose of section 48 be deemed to be the full value of the consideration received or accruing as a result of transfer - The value adopted by stamp duty authority does not ipso facto become the real consideration or deemed consideration in the absence of any other cogent reason - the assessee had disputed the value adopted by the stamp duty authority, therefore, provisions of section 50C(1) are not applicable at the time of filing of return deduction or at the time assessment of income by the AO - the construction was got done by assessee's father and not by him - the construction was completed earlier but official permission was granted in that area was granted later on by clearance of the issue related to permission of construction in the area situated nearby lakes in Udaipur the order of the CIT(A) upheld Decided against Revenue.
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2014 (2) TMI 833
Disallowance u/s 10(23G) of the Act Long Term Capital Gain on sale of shares Held that:- The approval given u/s 10(23G) has not been withdrawn as provided in rule 2E of the Income Tax Rules - the benefit which has accrued to the investor/assessee cannot be taken away just because of the reason that the investee company which has originally been approved u/s 10(23G) by the government has amalgamated into another company - by providing the approval for an investee company, the investor is entitled to the benefit which cannot be denied to the assessee/investor merely on the ground that the investee company has amalgamated/merged with another company, the process in which the assessee/investor has no role to play thus, the authorities are not justified in holding that the assessee is not eligible for exemption under the provisions of section 10 clause 23G of the Act - the exemption claimed by the assessee u/s 10(23G) of the Income Tax Act in respect of long term capital gain of on sale of shares of M/s RSPCL to M/s BSES/REL is allowed Decided in favour of Assessee.
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2014 (2) TMI 832
Addition made u/s 68 of the Act Held that:- The decision in Shri Sudhir Kumar Sharma Vs ITO[2014 (2) TMI 418 - ITAT CHANDIGARH] followed - The modus-operandi explained during the course of survey was that the assessee was receiving the amount in cash and the same were being returned vide cheques through bank accounts - the assessee failed to produce the books of account nor give any explanation vis-ΰ-vis the source of cash deposits in the bank account - In the absence of any explanation or any evidence being produced by the assessee - The onus cast upon the assessee not being discharged, the said cash credits are to be included as income of the assessee in view of the provisions of section 68 of the Act. The assessee failed to file any confirmation in respect of the said cash credits nor any of the persons were produced for examination before the Assessing Officer, though specific direction in this regard was given by the Assessing Officer within the course of recording of statement of the assessee, during assessment proceedings - The assessee even failed to produce the books of account - In the absence of the assessee having discharged his onus of proving the identity, credit worthiness and genuineness of the cash transaction of the cash credits in the bank account, there was no merit in the plea of the assessee - the provisions of section 68 of the Act are applicable. Applicability of peak credit theory Held that:- The peak credit theory is not applicable as the assessee had deposited cash in the bank account and thereafter, cheques were issued to different parties - there are deposits in cash but as against the said cash deposited, various cheques were issued and the assessee was unable to explain the source of cash deposited in his bank account there was no legal infirmity in the order of the Tribunal Decided against Assessee.
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Customs
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2014 (2) TMI 831
Permission to take vessel outside India - Inspite of compliance with the direction and conditions of the Stay order, it is submitted that the Customs Authorities are not permitting the appellant to take the vessel out of India for executing certain urgent work for which they had got - Held that:- all proceedings pursuant to adjudication order have been stayed by this Tribunal and, therefore, the Customs authorities cannot refuse to release the vessel or allow the vessel to be used by the appellant as they wish. However, no written order passed by the Customs Authorities has been placed - Commissioner (AR) directed to ascertain the facts and inform this Tribunal on or before 24.01.2014 - If the Customs do not want the appellant to take vessel out of India, they should pass a written order stating the reason therefor and cannot pass any oral instructions - Decided in favour of assessee.
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2014 (2) TMI 830
Denial of refund claim - Whether it is mandatory to claim exemption notification under Customs - exemption from SAD under Notification 201/10-cus. dt. 27.10.2010 - Claiming Refund claim of SAD Notification No.102/07-Cus. dt. 14.9.07 - Held that:- two grounds taken are that once any goods are exempt from any type of customs duty, importer has no option to pay such customs duty thereon - in the absence of any specific prohibition under section 25 of the Customs Act to the effect that importer cannot pay import duty when goods are exempted,an importer cannot be forced to avail such exemption in view of the various decisions of the courts. It was also observed in the said order that after such decisions were given by the courts an amendment was made in section 5A of the Central Excise Act by introducing sub-section (1A) but no such provision has been introduced in section 25 of the Customs Act which implies that decisions given by the court on this issue continues to be in force in the matter of exemptions issued under section 25 of the Customs Act, 1962. Ruling given in the order dt. 23.9.2013 is that in the case of goods, for which there is no exemption from SAD, when refund is being granted under notification No.102/07 dt. 14-09-07 after payment of VAT on sale of the goods and on submission of documents prescribed under the said notification, it is not taken as a case of reassessment. Such objections are not raised while administering benefit of notification 102/07-Cus for normal goods imported on which SAD is paid. Therefore is no reason to take such objection in the case of goods which were exempted from SAD under Notification 201/10-cus. dt. 27.10.2010 (Sl.No.1) but on which the respondent paid duty without availing exemption. We find no reason to change our earlier decision - Decided against Revenue.
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2014 (2) TMI 829
Constitutional Validity of Notification providing tariff value of edible oil - Effective date of notification - proof of date of publication of notification in the official gazette - Violation of Article 14 - Held that:- in the affidavit dated 20-8-2012 filed by Shri Manish Kumar Chavda, Assistant Commissioner of Customs, Jamnagar, he stated that It is, therefore, submitted that the documents and facts clearly show that the notification was issued by the C.B.E. & C. on 2-9-2002, was sent for publication in the Official Gazette on 2-9-2002 itself and the same was received by the Government Press for publication in the Official Gazette on 2-9-2002. The allegation of the petitioner that the Notification No. 60/2002-Cus (N.T.), dated 2-9-2002 was published in the Official Gazette on or after 3-9-2002 is far from truth - Thus, we have clear and unequivocal assertion and denial on the part of the respondents on affidavit that such notification was not only issued on 2-9-2002 but was also published in the Official Gazette on the same date. We have no reason to disbelieve such clear statement made on oath. In fact, the respondents have also produced a copy of the Government Gazette publishing such notification on 2-9-2002. Section 14(2) of the Act does not insist on any further requirement than publication of the notification in the Official Gazette. In view of the decision of the Apex Court in the case of B.K. Srinivasan (1987 (1) TMI 483 - SUPREME COURT) thus, the statute prescribes the mode of publication which has been complied with. In absence of any additional requirement that such notification must also be published in the Government Press, we wonder whether non-compliance with such additional requirement, even if found desirable, would invalidate the notification itself. - We are satisfied that the respondents have discharged their burden to show that the notification in question was also published in the Government of India Press on the same day in addition to publishing the same in the Official Gazette on 2-9-2002. - Decided against the assessee. Whether the was not placed before both the Houses of Parliament as required under Section 159 - Held that:- the case of the petitioners is that neither of the two notifications of 2001 or 2002 were placed before the Parliament as required under Section 159 of the Act. Since there was no specific answer from the respondents on this issue, we had called upon the Central Government counsel to supply files pertaining to such notifications. She had, under the condition of confidentiality of such documents, as desired by the Government, produced in a sealed cover, authenticated copies of the files. We find that there are documents to suggest that both notifications were placed before the Parliament as required under Section 159 of the Act. - Decided against the assessee. Power to provide tariff value of edible oil - challenge to a piece of legislation albeit a delegated legislation - Held that:- both the notifications were issued by the Board in valid exercise of the power under Section 14(2) of the Act. The decision of the Board would be based on subjective satisfaction of the requirement that it was necessary to fix such tariff value. - Decided against the assessee. Constitutional validity - whethter notifications being ultra vires Article 14 of the Constitution - Held that:- We do not see how the entire Chapter Heading 15 can be stated to be forming a homogeneous class of goods with respect to which further sub-classification is not permissible. The Chapter itself contains several sub-headings and classifications. As we already noted, the rule making authority found it necessary to fix tariff value in case of some of these goods since the price rigging was found prevalent. Simply because certain items which fall under Chapter 15 were not included for such exercise, in our view, cannot be stated to be violative of Article 14 of the Constitution. Essentially, we do not think that edible oils as a class form one homogeneous category of goods in which further sub-classification was not permissible. - Decided against the assessee.
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2014 (2) TMI 828
Evasion of antidumping duty - mis-declaration of country of origin in the import of vitrified tiles falling under CTH No.6907 - Imposition of interest and penalty - Interpretation of the definition of importer as given in Section 2(26) of the Customs Act, 1962 - Held that:- there is no categorical admission of the appellant herein that he had financed the entire operation, on the contrary it is otherwise. In view of the factual finding hereinabove, we find that the adjudicating authority recording the finding as to the finances relating to import are done by the appellant, seems to be incorrect. It is also to be recorded that investigating authorities have not traced one Shri Danny of Singapore and recorded any statement. Definition of importer as mentioned in Section 2(26) of Customs Act, 1962 would not cover the appellant, as it is undisputed that the appellant had not filed any Bill of Entry - importer under Section 2(26) is a person who has filed the Bills of Entry for the clearances and has paid the Customs duty - Decided in favour of assessee.
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2014 (2) TMI 827
Suspension of CHA licenses - No enquiry proceedings were initiated and no chargesheet was issued to the appellant against the said suspension - Tribunal set aside suspension of assessee in previous order - Held that:- action of the Commissioner is in complete defiance of the order of this Tribunal - Therefore, we direct the Commissioner to forthwith implement the Tribunal's order - Decided in favour of appellant.
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Corporate Laws
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2014 (2) TMI 826
Winding up of company - Bar of limitation - Whether the issuance of C Form under the Central Sales Tax Act constitutes an acknowledgment of the subsisting liabilities as well as the jural relationship giving fresh life of limitation under Section 18 of the Limitation Act - Held that:- though, a Form C certainly indicates the existence of jural relationship at some point of time, of seller and purchaser, it does not acknowledge the existence, in praesenti of a debtorcreditor relationship or the existence of a liability on the date of the making/execution of the Form C - where the Transfer of Property Act was not in force, and this Court had affirmed the judgment of the Punjab High Court determining the claim of the redeeming co-mortgagor for contribution against the non-redeeming co-mortgagors on principles of justice, equity and good conscience. The plea of limitation is one of the defence available to the other side which is well-recognized in law. Section 18 can be pressed when there is a valid acknowledgment of the subsisting liability and not the past liability. The words used in the acknowledgment must sufficiently indicate the circumstances of the jural relationship as that of her debtor and creditor and there must be a manifest intention to admit such jural relationship. The object behind the issuance of the Sales Tax Declaration Form is to avail of the reduce rate of sales tax. The Declaration Form does not require to contain the statements relating to the payments already made or to be made but can at best be a best piece of evidence relating to the contract of sale and the goods being sold and delivered at a price agreed upon. The letter which contains the Declaration Form does not indicate the acknowledgment of the liability as well as the admission of the existence of a jural relationship. There is no express intention of the Company to acknowledge the liability in a letter containing the Declaration Form. The present matter can be viewed from another angle as well. The petitioning creditor have grossly suppressed the fact that subsequently an agreement was entered into between the parties whereunder it was agreed that a sum of ₹ 29 lakhs, if paid by the Company, would satisfy the outstanding dues. Admittedly, the said sum of ₹ 29 lakhs had been paid by the Company - Court, therefore, does not find that the Company should be wound up and, therefore, orders that the Company Petition shall remain permanently stayed - Stay granted.
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FEMA
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2014 (2) TMI 865
Recovery of Foreign Exchange from Lockers - Acquisition and sale of foreign exchange to the extent of US$ 72,800 without any previous general or special permission of the RBI - Proceedings under FERA / FEMA - opportunity of cross-examining the witnesses - Held that:- Neither the AO nor the impugned order of the AT, have dwelt on the recovery of the foreign exchange from the guest lockers, and connected those recoveries with the Appellants. The specific case of Rakesh Kapoor was that he did not have in his possession the keys of Guest Locker No. 55 and the duplicate key was provided by the hotel management though the locker was not found to be allotted to any person. It is only from the statements of the co-accused which were in any event retracted, that the connection between Rakesh Kapoor and Locker No. 55 was sought to be made. Therefore, the evidence in this regard was weak and not corroborated by other independent witnesses. Moreover, it is not as if all the lockers were checked by the ED to determine which of the guest lockers were in fact being used by the Appellants, if at all. The statements by Rajeev Wadhwa and Arun Sharma have been retracted. Consequently the ED cannot take advantage of Section 72 FERA as regards presumption of the correctness of those documents. The presumption was a rebuttable one and in the present case must be held to have stood rebutted on account of the statements of the co-accused being retracted. There appears to be no reliable and independent evidence to show that Arun Sharma acquired foreign exchange worth ₹ 6 lakhs and sold foreign exchange of that value to Rakesh Kapoor or that Rajeev Wadhwa acquired foreign exchange of US$ 72,800 and sold them to Rakesh Kapoor or that Rakesh Kapoor acquired foreign exchange of the above worth from Arun Sharma and Rajeev Wadhwa. The orders against the appellant are not sustainable and accordingly set aside.
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Service Tax
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2014 (2) TMI 864
Appeal against and order dismissing the appeals on the ground that the assessee did not comply with the condition of pre-deposit as imposed in the order dated 05.08.2013. - providing ground handling services to M/s.Sri Lankan Airlines Pvt. Ltd., and other non-scheduled airlines. - held that:- Prima facie the conduct of the assessee appears to be not in accordance with law, since they are bound to remit the service tax collected from the customers within the time prescribed under the Finance Act. Having not done so, the Adjudicating Authority has levied interest and penalty. The levy of interest being automatic, the assessee cannot be granted any indulgence on the said aspect. Assessee directed to make pre-deposit of entire interest amount and penalty amount of Rs. 10 lakh instead of Rs. 25 lakhs - order of tribunal modified.
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2014 (2) TMI 863
Waiver of pre-deposit - Levy of service tax on Management Education Course - scope of commercial coaching and training service - vocational service - Held that:- the services, namely, imparting of management courses to the students rendered by the Applicant for the period from 2004-05 to 2008-09, are covered by the definition of Commercial Training or Coaching Services. Prima-facie, we also find that the said Institute run by the Applicant, cannot be considered as a Vocational Training Institute as the Certificates/Diplomas imparted by the Applicant - Institute do not enable the students to seek employment or to undertake self-employment after such training and coaching ; also few courses viz. corporate training are admittedly registered under the category of Commercial Coaching and Training. - stay granted partly.
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2014 (2) TMI 862
Waiver of pre-deposit - Valuation - reimbursement of expenses - clearing and forwarding agent service/Customs House Agent service - Held that:- in view of decision of the Honble Delhi High Court in Intercontinentals case [2012 (12) TMI 150 - DELHI HIGH COURT] that once Rule 5 (1) of the Service Tax (Determination of Valuation Rules, 2006) has been struck down as ultra vires to Section 67, then question of fulfillment of conditions laid down under Sub-Rule (2) of Rule 5 of the Service Tax Valuation Rules, 2006, do not arise. - stay granted. Regarding on the issue of making available the cargo space by Airlines to its clients, we are at this prima facie stage not fully satisfied with the argument advanced by the Ld. Chartered Accountant that the same cannot come under the scope of Business Auxiliary Service provided as held by the Ld. Commissioner in the order with a detailed analysis of the respective work orders issued by the Airlines and the services rendered by the applicant. - stay granted partly.
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2014 (2) TMI 861
Waiver of pre-deposit - Cenvat Credit - 100% credit as per Rule 6(5) of CCR, 2004 while providing taxable and exempted services of service tax paid by Indian Hotels Limited - Revenue entertained a view that the service rendered by Indian Hotels Limited were not Management or Business Consultancy services but were franchisee services. - Held that:- it is a well settled proposition of law that classification cannot be changed in the hands of the service recipient. - stay granted. Availing Cenvat Credit while availing abatement - mandap keeper services - Notification No. 12/2004-ST and Notification No. 1/2006-ST - Held that:- the appellant has a good prime-facie case for the period prior to 1.3.2006. However, as the demand also falls under March 2006 period, we are of the view that the appellant is required to deposit the said demand. Ld. Advocate clarifies that the same would be around ₹ 3.11 lakhs. - stay granted partly.
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2014 (2) TMI 860
Nature of activities of logistic arrangements for the yatra from Delhi through Kumaon region upto Indo China border in relation to Kailash Manasarovar Yatra - The department was of the view that the appellant are providing tour operators service which would attract service tax under Section 65 (105) (n) readwith Section 65 (115) of the Finance Act, 1994 - extended period of limitation - Held that:- the letter dated 30/5/08 of the Joint Secretary, Ministry of External Affairs to the CBEC giving details about the role of Kumaon Mandal Vikas Nigam in organizing Kailash Manasarovar Yatra and the rates being charged in respect of the same and also requesting the CBEC to exempt this activity from service tax, it is clear that the department was aware about the activity of Kumaon Mandal Vikas Nigam in respect of Kailash Manasarovar Yatra. - stay granted.
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2014 (2) TMI 857
Waiver of pre deposit - Demand of service tax - Extension of time - Held that:- time already prescribed by this bench ran out on 07.02.2013 and hence any extension of time for pre-deposit should run from that date - extension of time granted by 6 weeks from 07.02.2013 to enable the appellant to pre-deposit the balance amount - Decided in favour of assessee.
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2014 (2) TMI 856
Denial of cenvat credit - Credit taken of service tax and education cesses paid on sales commission paid - Waiver of pre-deposit Held that:- Following CCE, Ahmedabad-II Vs. M/s. Cadila Healthcare Ltd. [2013 (1) TMI 304 - GUJARAT HIGH COURT] - the services rendered by a commission agent would not fall within the ambit of the expression activities relating to business and consequently CENVAT credit would not be admissible on the commission paid to such commission agent - the appellant has not made out prima facie case on merits - the factum of having taken CENVAT credit on sales promotion was suppressed by the appellant willfully with an intention to avail CENVAT credit irregularly - They might have filed returns periodically but those returns did not disclose the above material fact to the department - The plea of bona fide belief has not been substantiated - the appellant has not made out prima facie case in their favour the appellant directed to pre-deposit an amount of Rupees Ten lakhs as pre-deposit upon such submission rest of the duty to be stayed till the disposal Partial stay granted.
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2014 (2) TMI 855
Demand of service tax - Goods Transport Agency Service - Appellant contends that the services of GTA were received by NEPC Wind Energy Division and not by the appellants - Held that:- appellants have not made out a prima facie case for total waiver of predeposit because the payments for the services in question were made by the appellant complying that they have received the service - Conditional stay granted.
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2014 (2) TMI 854
Waiver of pre deposit - Demand of service tax - Held that:- appellant paid an amount of Rs. 50,00,000/- before issue of the show-cause notice and this payment was appropriated by the adjudicating authority. We have also found three challans evidencing payment of an amount of Rs. 18,09,569/- after issue of the impugned order Thus, the appellant has paid a total amount of Rs. 68,09,569/- towards full satisfaction of the impugned demand of service tax and education cesses - Stay granted.
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2014 (2) TMI 853
Waiver of pre deposit - Demand of service tax - Held that:- claim was not raised before the lower authorities, nor has it been incorporated in the appeal or stay application - Conditional stay granted.
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Central Excise
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2014 (2) TMI 852
Waiver of pre deposit - Demand of Special Additional Duty - Reversal of the CENVAT credit - Held that:- Prima facie, the appellants have made out a case inasmuch as it has not been specifically held by the adjudicating authority that the price shown in the domestic sale invoices produced by the assessee did not incorporate therein the element of SAD. The adverse findings recorded against the assessee appear to be consequential to lack of correlation and are not based on to total rebuttal of the assessees contention. In this view of the matter, we take into account the consistent claim of the appellants to have paid more duty than the sum total of CVD and SAD paid on the imported goods, at the time of domestic sale clearances - Hence there will be waiver and stay as prayed for - Stay granted.
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2014 (2) TMI 825
Waiver of demand for pre-deposit of interest confirmed under Section 11AB of the Central Excise Act, 1944 - Held that:- in the light of the decisions in the case of Eicher Demm vs. CCE-(2001 (9) TMI 192 - CEGAT, COURT NO. I, NEW DELHI) and W.S. Industries vs. CCCE- (2001 (12) TMI 112 - CEGAT, BANGALORE), the applicant has made out a case for 100% waiver of pre-deposit. Accordingly, I grant waiver of the requirement of pre-deposit of interest and stay recovery thereof during the pendency of the appeal - Stay granted.
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2014 (2) TMI 824
Rejection of refund claim - Unjust enrichment - Duty under protest - Held that:- It is a case where duty has been paid under protest by the appellant on persuasion of the department on intermediate product. It is also an admitted fact that although duty has been paid under protest but the same has not been shown by the appellant in their account as receivable - appellant has not produced any evidence before this tribunal for remanding the matter to the lower authorities for reconsideration. Therefore, in the absence of any cogent evidence, the matter need not to be remanded. As the appellant has failed to produce any cogent evidence in support of their claim. I do not find any infirmity in the impugned order - Decided against assessee.
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2014 (2) TMI 823
Availment of CENVAT Credit - Input Service Distributor - Violation of Rule 7 of Cenvat Credit Rules, 2004 - Denial of excess input service credit - Held that:- other units of input service distributor are exclusively engaged in the manufacture of exempted goods. But, ISD issued cenvat invoice on the basis percentage of overhead expenses to the total expenses. Thus, the total expenses would include expenses of other units engaged exclusively in the manufacture of exempted goods, which is in clear violation of the condition of Rule 7 (b) of Cenvat Credit Rules - prima facie there is violation of condition of Rule 7 of the said Rules. In our considered view, the adjudicating authority rightly proceeded on the basis that in this case, ISD should be distributed based on the template of sale revenue of individual unit, when other units are exclusively exempted unit. Prima facie, there is no material available that the method of distribution of service tax credit was known to the department - The applicant failed to make out a prima facie case for waiver of predeposit of entire amount of duty along with interest and penalty - Conditional stay granted.
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2014 (2) TMI 822
Interest demand - Reversal of CENVAT Credit under Rule 3(5) of the Cenvat Credit Rules, 2004 - CENVAT Credit taken on such inputs was not reversed at the time of removal of inputs as such, which resulted in short reversal of CENVAT Credit - Recovery of interest under Rule 14 of the Cenvat credit Rules, 2004 read with Circular No. 897/17/2009-CX dated 3.9.2009 - Held that:- provision of limitation are applicable to the recovery of interest - where the credit has not been utilized, the same would not attract the interest provisions - Following decision of Hindustan Insecticiedes Ltd. Vs. CCE, Ltu [2013 (8) TMI 225 - DELHI HIGH COURT], CCE & ST, Bangalore Vs. Bill Forge Pvt. Ltd. [2011 (4) TMI 969 - KARNATAKA HIGH COURT] whereas said decision was passed after considering the decision of Union of India Vs. Ind-Swift Laboratories Ltd. [2011 (2) TMI 6 - Supreme Court] - Decided in favour of assessee.
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2014 (2) TMI 821
Remission of duty upon destruction of final product - Whether the manufacturer is required to reverse the Cenvat Credit on the inputs used in manufacturing such final product - Held that:- destruction of goods due to natural cause of accident, the inputs can be considered to have been put to intended use for manufacture of final product. Therefore, there is no requirement to reverse the credit of inputs which have gone into manufacture of final product - Following decision of Grasim Industries vs. CCE Indore [2006 (8) TMI 69 - CESTAT,NEW DELHI] and CCE Ahmedabad vs. Intas Pharmaceuticals Ltd. [2013 (4) TMI 532 - GUJARAT HIGH COURT] - Decided in favour of assessee.
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2014 (2) TMI 820
Eligibility to CENVAT Credit - Whether the appellant would be eligible for Cenvat credit of service tax paid on the premium for Group Insurance Policy provided by the appellant to their workers - Interest under Rule 15 - Held that:- Cenvat credit in respect of Medical Insurance Policy provided by the Appellant to their employees is sought to be denied only on the ground that the same has no nexus with the manufacture of final product and is not an input service. In the show cause notice, there is no allegation that the medical insurance cover also includes the family members of the employees and for this reason the Cenvat credit would not be admissible - prima facie, it is not disputed that the entire cost of Medical Insurance Policy is included in the cost of production of the goods and for this reason also, the Cenvat credit would be admissible - appellant have a prima facie case in their favour. The requirement of pre-deposit of Cenvat credit demand, interest thereon and penalty , therefore, is waived for hearing of the appeal and recovery thereof is stayed till the disposal of the appeal - Stay granted.
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2014 (2) TMI 819
Setting aside of penalty under Rule 209A of Central Excise Rules, 1994 for non confiscation of goods - demand of duty with interest and penalty was confirmed earlier - Held that:- nowhere in the show-cause notice nor in the adjudication order, proposal for confiscation of the impugned goods has been made. Without any proposal for confiscation, penalty under Rule 209A of the Central Excise Rules, 1944 is not imposable. - order of penalty set aside - Decided in favor of assessee.
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2014 (2) TMI 818
Waiver of pre deposit - clandestine clearance of M.S. ingots - Imposition of equal penalty - Purchase the raw materials in the name of the Applicant No.(1) - Credit taken on purchases - Held that:- Applicant No.(1) has taken the Central Excise Registration for manufacture of excisable goods. They are also furnishing various returns to the Department in respect of excisable goods manufactured from their said registered premises. CENVAT Credit was also availed by them. We also find that on 12.06.2008, the Officers of Bolpur Headquarters (Anti-Evasion) took physical stock in the factory of the Applicant No.(1) and detected shortage of 1036.427 MT of M.S. Ingots. Shri Ashok admitted the shortage and clarified that some clearances were made by them without proper accounting and accepting the duty liability of such shortage quantity, he made an advance deposit of Rs.36.00 lakh in nine post-dated cheques. In these circumstances, they cannot take a plea that the duty liability in respect of clearances without payment of duty for the impugned period, they were not liable to pay the same - Applicants could not be able to make out a prima facie case for full waiver of the predeposit of the dues adjudged - Conditional stay granted.
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2014 (2) TMI 817
Eligibility to CENVAT Credit - Assessee took Cenvat credit of duty paid on the capital goods used for setting up plant for generating electricity - about 87% of the electricity generated by the plant was sold to TNEB and only about 13% was used captively by the factory producing sugar and molasses - Therefore, Revenue denied CENVAT Credit - Held that:- order has not considered all the submissions made by the appellant with regard to eligibility of Cenvat Credit on capital goods and input services as specified in Rule 6 (4) and Rule 6(5) of the Cenvat Credit Rules. Therefore, we set aside the impugned order and remit the matter back to the adjudicating authority for fresh consideration, keeping all issues open - Decided in favour of assessee.
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2014 (2) TMI 816
Waiver of predeposit of duty - Imposition of equal penalty u/s 11AC - Determination of assessable value of goods - Inclusion of freight value - Held that:- It is the claim of the Revenue that even though certain quantities of goods were sold on ex-works basis through railways but in fact, the same were delivered from the Branch Offices and hence, the railway freight charges incurred in transferring the goods from the factory to their Branch Offices, should be included in the value of such goods. On a preliminary analysis of the evidences adduced by both sides, prima-facie, we find that the customers take constructive delivery of the goods at their factory of the Applicant as is evident from the Internal Price Circular of the Applicant, which indicates two channels of sale; one from the factory gate and the other one from the stockyard of the Applicant. Prima-facie, thus the Applicant could able to show that besides stockyard sales, there were also ex-works sale, but in relation to ex-works sales, the freight charges were incurredinitially by the Applicant in transferring the goods from the factory to a place other than the factory, where from their customer take delivery of the goods, but the freight charges were ultimately borne by the customer, which was a condition of sale. Freight charges incurred on behalf of the buyers cannot be included in the assessable value of goods sold on Ex-works basis. In these circumstances, the Applicants are able to make out a prima-facie case for waiver of all dues adjudged, accordingly, pre-deposit of all dues adjudged is waived andits recovery stayed during pendency of the appeal - Stay granted.
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CST, VAT & Sales Tax
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2014 (2) TMI 858
Waiver of pre deposit - whether requirement of 20 per cent of disputed tax by Assessee having not been stayed by the authorities below, have they committed any patent error of law and can it be said that impugned orders have been passed without any application of mind or proper application of mind - Held that:- occasion to pass provisional assessment order has been derived by Deputy Commissioner from the factum that in the checking conducted by Mobile Squad on 22.8.2013, vehicle no. HR 38Q 1200 was found loaded with 46.360 metric ton of H.R. Coils. The driver of vehicle possessed consignment notes, and, besides other documents, Form-38 having Column 6 completely blank. It did not mention bill number and date in both the copies possessed by Driver. Keeping Form-38 blank in the above column may help Assessee in reuse of Form to evade tax and, therefore, in addition to violation of Section 50 of Act, 2008, it is also in contravention to the Commissioner's Circular No. 0910015 dated 3.6.2009. The Mobile Squad Officer issued a show cause notice and ultimately required Assessee to furnish security of ₹ 8 lacs and odd on the estimated value of goods and thereafter the same was released. All these aspects have been taken note by the Assessing Authority and the existence of these facts is not disputed. The requirement of prima facie case, to be shown by appellant, is one but initial factor which would justify exercise of power of stay by Assessing Authority, but then to what extent stay order should be granted, it shall depend on multiple factors and reasons, which may vary from case to case - discrepancy in respect to one of the important document is admitted. Though the Assessee has attempted to explain it, but it has not been believed by the authority at the initial level. Now its credibility has to be examined by Appellate Authority. At the stage of granting stay order, it cannot be presumed that credibility must be believed by Appellate Authority, without anything more. In all the authorities cited at the bar in support of questions raised in these revisions to seek favour for Assessee, it has been held that Appellate Authority should apply its mind to the question whether stay order should be granted and if so, to what extent. The power should not be exercised mechanically or on conjectures and surmises or in an arbitrary manner. Simultaneously, it also cannot be said that mere existence of a prima facie case, bereft of all other relevant factors, would justify grant of stay order to the extent of 100 per cent. After all, Appellate Authority has to adopt a balancing approach in favour of both the parties and cannot proceed to go out and out to support appellant's case though correctness of the order passed by authority below is yet to be examined by it - revisionist, however, has failed to satisfy this Court also that Assessee must have been granted 100 per cent stay - Decided against assessee.
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2014 (2) TMI 815
Interpretation of section 11(3) (b)(ii) and (iii) of the Gujarat Value Added Tax Act, 2003 - whether if a particular item falls in more than one of these sub-clauses, denial of tax credit can be applied more than once. - Assessee purchasing furnace oil, natural gas and light diesel oil for manufacturing activity and transferring manufactured goods to branches outside state - Held that:- reduction of tax credit under section 11(3)(b) would in no case exceed four per cent If the interpretation put forth by the State is accepted, a dealer who has availed of tax credit of four per cent would end up surrendering credit by 8 per cent or may be in a given case by 12 per cent. Surely, the Legislature could never have intended the reduction to exceed the tax credit itself. In the present case, this is precisely what would happen if the interpretation of the State is accepted. We have noticed that the furnace oil invites tax at the rate of four per cent. The tax credit thus available to the respondent as a dealer would be limited to such amount. If such tax credit available to the respondent is reduced by eight per cent, it would bring about a situation where credit available is four per cent and what is reduced is eight per cent. Surely, the Legislature never envisaged any such situation while framing section 11(3)(b) of the VAT Act - Decided against Revenue.
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