TMI Tax Updates - e-Newsletter
February 23, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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Income Tax:
Interest for defaults in payment of advance tax u/s 234B - even in absence of any direction by the A.O. while passing assessment order under section 143(3) of the Income Tax Act, which according to under section only for determining assessed tax, there can be demand of levy and demand of interest u/s 156 of the Income Tax Act - HC
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Income Tax:
Addition on interest paid on loans - the action of the assessee company to make advances at a lower rate of interest than the interest liability discharged by the assessee company in borrowing such funds was not shown to be in any manner actuated by business expediency. AO was perfectly justified in disallowing such component of interest. - HC
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Income Tax:
Expenses allowable as revenue expenditure u/s 37 - there is no concept of deferred revenue expenditure in the Act except under certain specified sections where amortisation is specifically provided. Normally, the ordinary rule would be that the revenue expenditure incurred in a particular year is to be allowed in that year - HC
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Income Tax:
Genuity of gift - One cannot be oblivious to the fact that such a large gift received from a foreign country is bound to raise suspicion but can not disregard the fact that suspicion and doubt cannot replace proof or translate into reasons, much less reasons for invoking a deeming provision to hold that gifts represent the income of the assessee, particularly in the absence of relevant facts. - HC
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Income Tax:
Non-deduction of tax at source u/s 194H - non-cash payment to dealers - impugned proceedings were beyond prescribed time limitation and thus the same deserve to be annulled. - AT
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Income Tax:
Addition u/s. 68 - if there was statement of a person or any other material indicating tax evasion by the assessee, or persons in control of its management, the material relied upon should have been made available to the assessee in its entirety - AT
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Income Tax:
Sale of investments - Short term capital gain V/S business income - The assessee has accounted for these investments in shares as capital asset in its books of accounts - The same has also been declared in the financial statements as capital asset - gain arising on sale of investment will be chargeable as capital gain and not as business income - AT
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Income Tax:
Validity of the assessment - notice u/s.158BC(c) has not been properly served - Once the assessee has been served the notice and in compliance to the same the assessee has responded by filing the return, now he cannot take a ground that the service of notice is improper. - AT
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Income Tax:
Addition on account of non-occupancy charges - The object of the society was to provide service, amenities and facilities to its members. In these circumstances, the principle of mutuality would apply and therefore non-occupancy charges were not taxable. - AT
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Income Tax:
Addition u/s 69A/68 - assessee has filed confirmations of the depositors/creditors with full address, PAN, complete details of cheque amount & number loans/deposits; etc. The assessee has also furnished the details of TDS amount on interest payment to different creditors/depositors; photocopy of bank statement showing the deposits of loan/borrowed fund; etc. - no addition - AT
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Customs:
Clim of interest on Refund - period of limitatiaon - refund arose on account of finalization of provisional assessment - As the refund is not sanctioned within 3 months from the said date, the appellants are also eligible for interest till the date of refund - AT
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Customs:
Levy of penalty - Provisional assessment and release of goods against P.D. bond - non supply of documents and information within prescribed period - violation of conditions of Bond - As there is no doubt that the appellants were negligent, we do find that there is sufficient reason to impose penalty on the appellants u/s 117 - AT
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Corporate Law:
Calculation of dues of the workers on winding up - the date of the last order of the winding up of the Company would be the date from which the workers dues would be calculated - HC
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Service Tax:
Refund of un-utilized CENVAT Credit - the assessee is not a registered Central Excise or Service Tax assessee and therefore cannot come under the purview of Cenvat Credit Rules, 2004 and therefore cannot claim refund under Rule 5 of the Cenvat Credit Rules, 2004 - AT
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Service Tax:
Refund - period of limitation - export of services - the rebate scheme under the said rules is a self-contained scheme and it nowhere invites the condition of one year for filing the application for rebate. - rejection of the appellants rebate claim on the ground of time-bar is not sustainable - AT
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Service Tax:
Receipt of incentive and commission - That the appellant chooses not to retain any of the commission and instead passes them on to the executives is an internal policy of the appellant that need not concern the tax authority. - demand confirmed on commission - AT
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Service Tax:
Demand of service tax - there was a great deal of confusion whether works contracts were vivisectable and liable to service tax prior to 01.06.2007, so much so that the issue was thus decided by the Larger Five-Member Bench of CESTAT in the case of L&T - allegation of wilful misstatement / suppression of facts not sustainable - AT
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Central Excise:
Valuation of goods manufactured by the appellant and transferred to their sister unit - when total is calculated the difference works out to negligible amount. There was some difference of opinion regarding allocation of overhead expenses - no ground for imposing penalty - AT
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Central Excise:
Denial of benefit of CENVAT Credit on Xerox copy of courier bill of entry - appellant have correctly claimed the CENVAT Credit on the photocopy of the courier bill of entry filed by them and CENVAT Credit cannot be denied on mere technical grounds. - AT
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Central Excise:
Abatement claim rejected - any act to be done on a particular date and if any holiday falls on that date, the next working day shall be treated as date within the period prescribed. Therefore, there is no delay on the part of the appellant in filing the intimation on next working day - AT
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Central Excise:
The cenvat credit of Central Excise duty paid on cement is not available to the appellant, owing to the fact that the same cannot be considered as input for manufacture/production of the final product. - AT
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Central Excise:
Extended period of limitation - duty demand - charge of deliberate evasion of duty has been alleged against the appellant - invoice price should be treated as cum duty price for the quantification of demand of duty and interest and penalty are to be quantified accordingly - AT
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VAT:
Whether a single Member of the Appellate Tribunal, Value Added Tax (AT) can legitimately function as the AT in terms of Section 73(1) of the Delhi Value Added Tax Act, 2004 - Held Yes - HC
Articles
Notifications
Customs-
5/2016 - dated
22-2-2016
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ADD
Seeks to amend notification No. 51/2015- Customs (ADD) dated 21.10.2015
FEMA-
362/2016-RB - dated
15-2-2016
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FEMA
Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Second Amendment) Regulations, 2016
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361/2016-RB - dated
15-2-2016
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FEMA
Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Amendment) Regulations, 2016
Income Tax-
8/2016 - dated
19-2-2016
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IT
Section 10(46) of the Income-tax Act, 1961 – Central Government notifies Competition Commission of India , a Commission established under sub-section (1) of section 7 of the Competition Act, 2002 (12 of 2003), in respect of the certain specified income arising to the said Commission
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7/2016 - dated
19-2-2016
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IT
Central Government hereby notifies the ‘Atal Pension Yojana (APY)’ u/s 80CCD of the Income-tax Act, 1961 –
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6/2016 - dated
18-2-2016
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IT
Amendments in Notification No. 59/2015 dated the 6th of July, 2015 - Authorised entities under Section 10(15)(iv)(h) of the Income Tax Act, 1961 - To issue tax-free, secured, redeemable, non-convertible bonds
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5/2016 - dated
17-2-2016
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IT
Income-tax (2nd Amendment), Rules, 2016 - Amendments in Safe Harbour Rules for Specified Domestic Transactions
Service Tax-
F. No. 137/22/2013 - dated
18-2-2016
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ST
Corrigendum - Notification No. 2/2015-Service-Tax dated 10-2-2015
SEZ-
S.O. 526(E) - dated
12-2-2016
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SEZ
Notifies additional ares to a sector specific Special Economic Zone for Information Technology and Information Technology Enabled Services at District Thane, Maharashtra
News
Case Laws:
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Income Tax
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2016 (2) TMI 633
Interest for defaults in payment of advance tax u/s 234B - demand raised in the notice issued under section 156 - Held that:- Considering the totality of the facts and on conjoint reading of the aforesaid provisions of sections 143, 234B and 156 of the Income Tax Act and when levy of interest under section 234B of the Act is held to be mandatory and automatic, and the same is on the difference between the advance tax paid and assessed tax and as observed hereinabove, A.O. has no discretion to levy any other interest other than provided under section 234B of the Act. Thereafter, levy of interest under section 234 of the Act would be consequential only and only arithmetically amount of interest is required to be calculated, we are of the opinion that even in absence of any direction by the A.O. while passing assessment order under section 143(3) of the Income Tax Act, which according to under section only for determining assessed tax, there can be demand of levy and demand of interest under section 156 of the Income Tax Act. It would have been a different fact if the A.O. had any discretion with respect to rate of interest and/or to levy any interest considering the facts and circumstances of the case. As observed hereinabove, as such, A.O. had no such discretion and moment he determines the “assessed tax” and on the eventuality as mentioned in section 234B, i.e. (i) an assessee who is liable to pay advance tax under section 208 has failed to pay such tax, or, where advance tax paid by such assessee under the provisions of section 210 is less than 90% of the “assessed tax”, assessee shall, be liable to pay simple interest at the rate of 1% for every month or part of a month comprised in the period from the first day of April next following such financial year to the date of determination of total income under sub-section (1) of section 143 and (ii) where regular assessment is made to the date of such regular assessment, on the amount equal to assessed tax, or, as the case may be, on the amount by which advance tax paid, as aforesaid, falls short of assessed tax. Under the circumstances and considering the subsequent decisions of the Hon'ble Supreme Court in the case of Anjum M.H. Ghaswala (2001 (10) TMI 4 - SUPREME Court) and in the case of Karanvir Singh Gossal (2012 (9) TMI 334 - SUPREME COURT ), question of law posed for consideration of this Court is to be answered in favour of the revenue and against the assessee.
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2016 (2) TMI 632
Addition on interest paid on loans - loan advanced to the several companies at lower rate of interest - Held that:- We do not find that the Assessing Officer applied the principles analogous to Section 40A(2) of the Act by holding that the interest paid by the assessee was excessive. In fact the Assessing Officer applied the deduction to the extent the rate of interest at which the advances were made by the assessee. However, the action of the assessee company to make advances at a lower rate of interest than the interest liability discharged by the assessee company in borrowing such funds was not shown to be in any manner actuated by business expediency. The Assessing Officer was perfectly justified in disallowing such component of interest. - Decided in favour of revenue
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2016 (2) TMI 631
Expenses allowable as revenue expenditure u/s 37 - assessee has treated the same as deferred revenue expenditure - Held that:- The issue is squarely covered by the decision of Supreme Court in case of Taparia Tools Ltd. v. Joint Commissioner of Income tax reported in (2015 (3) TMI 853 - SUPREME COURT ) wherein held the assessee had issued non convertible debentures in which option was given to the subscribers to receive interest periodically over a period of debenture or one time lumpsum payment of lower amount payable immediately. The one time payment of interest was however, shown by the assessee in the books as deferred expenditure to be written off over the entire period of debentures. The assessee however, claimed the entire expenditure under section 36(1)(iii) of the Act during the year under consideration upon which the Revenue objected. The Supreme Court held that under section 36(1) (iii) of the Act any amount paid on account of interest becomes an admissible deduction if the same was paid on the capital borrowed by the assessee and the borrowing was for the purpose of business or profession. While examining the allowability of such deduction, the Assessing Officer is to consider the genuineness of the business borrowing and that the borrowing was for the purpose of business and not an illusionary and colourable transaction. It was further held that the amount would be said to have been paid even if same is not actually paid but incurred on the basis of method of accounting. It was further held and observed that there is no concept of deferred revenue expenditure in the Act except under certain specified sections where amortisation is specifically provided. Normally, the ordinary rule would be that the revenue expenditure incurred in a particular year is to be allowed in that year. If the assessee claims the expenditure in the year when the same was made, the department cannot deny it. - Decided in favour of assessee
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2016 (2) TMI 630
Genuity of gift - whether gifts represent the income of the assessee? - Held that:- The Tribunal has held that there is no evidence or material to link Varinder Sharma to the assessee and that findings have been recorded on mere suspicion, conjectures and surmises. The Tribunal has also held that the assessee, who accepted the gift for and on behalf of his daughters, was not privy to any information regarding the source of funds with Mr. B.P.Bhardwaj. One cannot be oblivious to the fact that such a large gift received from a foreign country is bound to raise suspicion but can not disregard the fact that suspicion and doubt cannot replace proof or translate into reasons, much less reasons for invoking a deeming provision to hold that gifts represent the income of the assessee, particularly in the absence of relevant facts. A further perusal of orders passed by the Assessing Officer reveals that he proceeded as if the entire onus lay upon the assessee, ignored the material received from the Central Board of Direct Taxes from the Inland Revenue Service, Great Britain and failed to follow the matter any further with respect to Shri Varinder Sharma and on the basis of suspicion, held that gifts are not genuine. Having already held that it was for the revenue to proceed to investigate the matter further, I find no error in the opinion recorded by the Tribunal, which has been reproduced in detail in preceding paragraphs or that in the facts and circumstances of the case, a different opinion could be recorded. Consequently, the substantial question of law is answered against the revenue. Also Tribunal has rightly opined that the gift could not be treated as a deemed income of the assessee. Consequently, the substantial questions of law are answered against the revenue
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2016 (2) TMI 629
Non-deduction of tax at source u/s 194H - non-cash payment to dealers - CIT(A) deleting the demand raised u/s 201(1) treating the same as incentives and discounts - whether the initiation of proceedings u/s 201 of the IT Act against the assessee in respect of FY 2001-02 was barred by limitation? - Held that:- We are inclined to hold that the present case of the assessee is also concerned with the FY 2001-02 pertaining to assessment year 2002-03 wherein notice for initiation of proceedings u/s 201(1) of the act was issued on 9.2.2011 which were admittedly initiated beyond eight years and 10 months from the end of FY 2001-02 and obviously much beyond the period of 3 years from the end of relevant assessment year and also beyond the period of 4 years from the end of relevant Financial Year 2001-02. In this situation, we are inclined to hold that the conclusion of the CIT(A) also gets strong support from the dicta laid down in the case of CIT vs. Hutchinson Essar Telecom Ltd. ( 2010 (4) TMI 45 - DELHI HIGH COURT) and it was rightly concluded by the first appellate authority that impugned proceedings were beyond prescribed time limitation and thus the same deserve to be annulled. Therefore, we are unable to see any ambiguity, perversity or any other valid reason to interfere with the impugned order. - Decided in favour of assessee
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2016 (2) TMI 628
Disallowance u/s 36(1) - denial of claim of bad debts - Held that:- We are of the view that assessee has complied with the requirement of the provisions of Section 36(1)(vii) of the Act and therefore the amount is allowable as deduction as bad debts and therefore we direct the A.O. to allow the same. - Decided in favour of assessee
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2016 (2) TMI 627
Levy of fees under section 234E - intimation issued under section 200A in respect of processing of TDS - Held that:- We find that the issue in all these appeals is now squarely covered in favour of the assessee by the decision of ITAT Amritsar Bench in the case of Sibia Healthcare Private Limited vs. DCIT [2015 (6) TMI 437 - ITAT AMRITSAR] adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adjustments contemplated under section 200A. As intimation under section 200A, raising a demand or directing a refund to the tax deductor, can only be passed within one year from the end of the financial year within which the related TDS statement is filed, and as the related TDS statement was filed on 19th February 2014, such a levy could only have been made at best within 31st March 2015. That time has already elapsed and the defect is thus not curable even at this stage. In view of these discussions, as also bearing in mind entirety of the case, the impugned levy of fees under section 234E is unsustainable in law. We, therefore, delete the impugned levy of fee under section 234E of the Act. - Decided in favour of assessee.
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2016 (2) TMI 626
Addition u/s 68 - Held that:- The assessee not only gave the confirmation but also furnished the balance sheet of the creditors and also the acknowledgement of the filing of income tax return by the creditors. Therefore, if the Revenue was not satisfied about the creditworthiness of the creditors, it could have examined the creditors as they were assessed to income tax and all particulars relating to them were with the Assessing Officer. Addition deleted - Decided in favour of assessee Addition on account of long term capital gain - applicability of 45(4) - Held that:- Section 45(4) of the Act would be applicable if there is transfer of capital asset by way of distribution of capital asset on dissolution of firm or otherwise. Such profit and gain would be chargeable to tax as income of the firm in the previous year in which said transfer took place and, for the purpose of Section 48, the fair market value of the asset on the date of such transfer shall be deemed to be full value of the consideration received or accrued as a result of such transfer. However, the sine qua non of the applicability of this Section is the transfer of capital asset by way of distribution of capital asset. In the case under appeal before us, it has not been pointed out by the Assessing Officer or the learned DR whether there was any distribution of capital asset. The Assessing Officer levied the capital gain tax in respect of land but the land was owned by the partnership firm before and after the change in the constitution of the firm. Admittedly, land was not distributed amongst the three partners who retired from the partnership firm. When there was no distribution of the capital asset viz., land, Section 45(4) would not be applicable. Though both the parties have relied upon some judicial pronouncements in support of their arguments but, in our opinion, when the basic facts with regard to transfer of capital asset by way of distribution of capital asset is not fulfilled, Section 45(4) is not applicable. - Decided in favour of assessee
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2016 (2) TMI 625
Deemed dividend under Section 2(22)(e) - Held that:- It is only the payment by a company during the relevant previous year which could be brought to tax (when it satisfies other conditions of section 2(22)(e) as deemed dividend. The phrase used u/s 2(22)(e) is "any payment by company”. In case the AO's action is to be upheld, then the appellant becomes liable to tax every year as long as the opening balance of advance continues in his books of accounts. This could not be the meaning of section 2(22)( e). Therefore, find no merit in the addition made by the AO under this head - Decided in favour of assessee Addition under Section 36(1)(iii) - Held that:- The appellant company had taken TOD (Temporary Over Draft) from Central Bank of India on which it has paid ₹ 72,618/- Bank of Punjab. The AO has not established in his order-that the borrowed funds have been diverted for making investment. In fact the AR has submitted that except for the TOD no loan was raised and just ₹ 72,618/- was expended on the same. An investment of ₹ 4.5 crores has been made during the previous year relevant to current assessment year and no fresh loans have been raised. There are fresh funds in the form of sundry creditors & advances from customers which more or less match with the fresh quantum of investment. The secured loan at the year end was Nil. All these facts go to show that the AO has not been able to show-that the borrowed funds have not been utilized for the purpose of business and that they have been diverted to finance the non-business tax exempt activity. Therefore the disallowance u/s 36(1 )(iii) cannot be made - Decided in favour of assessee Disallowance u/s 14A - applicability of rule 8D - Held that:- Assessing Officer has not complied with the requirement of recording dissatisfaction as to the correctness of claim of the assessee as held in Judgement of Delhi High Court in the case of Maxopp Investement [2011 (11) TMI 267 - Delhi High Court] the action of the AO in invoking rule 8D was not justified. Despite the observation, the CIT(A) has upheld disallowance of ₹ 4,22,000 towards administrative expenses. In view of the above discussion, we find that the order of ld. CIT(A) on the issue in dispute is well reasoned and, therefore, no interference is required - Decided against revenue
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2016 (2) TMI 624
Addition u/s. 68 - addition based on statement of third party - Held that:- As assessee during the course of proceedings has discharged its by submitting necessary evidence available to establish the bonafide of the transactions. Thereafter, the onus shifted on the revenue to prove that the claim of the assessee was factually incorrect. Simply by pointing out that the applicant companies did not have sufficient income or that the bank accounts indicated credits and debits in rapid succession leaving little balance does not discharge the burden cast upon the revenue to take an adverse view in the matter. Moreover, if there was statement of a person or any other material indicating tax evasion by the assessee, or persons in control of its management, the material relied upon should have been made available to the assessee in its entirety. We find that this was not done. Therefore, we are in agreement with the Ld. CIT(A) finding that this is not the case where addition should have been made u/s. 153C, but u/s. 147/ 143(3) after making proper enquiries. In the present facts of the case, the addition is not legally sustainable and therefore, was rightly deleted by the Ld. CIT(A), which does not need any interference on our part, hence, we uphold the same and decide the issue against the Revenue. - Decided in favour of assessee
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2016 (2) TMI 623
Sale of investments - Short term capital gain V/S business income - Held that:- As per Section 45(1) of the Act, any gain arising on transfer of a capital asset is to be taxed as capital gain. Further section 2(14) define capital asset to mean property of any kind held by an assessee whether or not earmarked for his business or profession, but does not include any stock in trade, consumable stores or raw material held for the purpose of business. Thus the gain arising on capital asset falling within the meaning as defined in Section 2(14) is to be charged as capital gain. In the present case as is evident from the facts on record, the investments in shares were held as capital asset. The assessee has accounted for these investments in shares as capital asset in its books of accounts. The same has also been declared in the financial statements as capital asset. These financial statements have been audited and also have been approved by the shareholders filed with the Registrar of Companies. The books of accounts and the audited financial statements have evidentially value and what is recorded therein cannot be disturbed lightly. The income arising on sale of capital asset, as stated hereinabove, has to be assessed under section 45(1) as capital gain and accordingly the CIT(A) was right in holding that gain arising on sale of investment will be chargeable as capital gain and not as business income.
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2016 (2) TMI 622
Validity of the assessment - notice u/s.158BC(c) has not been properly served - Held that:- The stand taken by the assessee about the criteria of the notice u/s.158BC is not acceptable. We do not find any infirmity in the order of the CIT(A) on this issue. Once the assessee has been served the notice and in compliance to the same the assessee has responded by filing the return, now he cannot take a ground that the service of notice is improper. Further, the Ld. counsel for the assessee could not prove that the notice was not served by registered post, a finding given by the CIT(A). He has not addressed as to in which manner the notice was served otherwise than by Registered Post. In view of the above, the various decisions relied on by the Ld. Counsel for the assessee are not applicable to the facts of the present case. - Decided against assessee Transaction and sale of land - business income OR long term capital gain - CIT(A) confirming the transaction as business income - Held that:- It is an admitted fact that during the course of search the audited books of accounts were not found. The assessee in the block return declared long term capital loss for first 2 years, i.e. A.Yrs. 1994-95 and 1995-96 whereas for A.Yrs. 1996-97 and 1997-98 the assessee declared long term capital gain. The AO considering the continuous purchase and sale of land by the assessee treated the same as adventure in nature of trade. The Ld.CIT(A) after considering the facts of the case and on proper appreciation of the seized documents vis-ŕ-vis reply of the assessee from time to time has enhanced the income of the assessee by ₹ 4,75,000/-. We do not find any infirmity in the order of the CIT(A) in absence of any material brought to our notice to take a different view. Addition u/s 68 - Held that:- ind in the instant case the AO made addition of ₹ 4 lakhs to the total income of the assessee u/s.68 on the basis of the statement recorded from the assessee that he had taken loan of ₹ 4 lakhs on different dates during F.Yrs. 1994-95 to 1997-98 in cash from Shri P.S. Puslori. We find the CIT(A) deleted the addition on the ground that while the AO has recorded the statement of Shri P.S. Puslori, however, the AO did not confront the same to the assessee which was utilized against the assessee. The information collected at the back of the assessee which was utilized against him was not confronted to the assessee for which the Ld.CIT(A) held that the addiction made by the AO is incorrect. Since admittedly the assessee was not confronted with the adverse findings collected by the AO at the back of the assessee, therefore the principles of natural justice have been violated. In view of the detailed reasoning given by the Ld.CIT(A) and in absence of any contrary material brought to our notice against the order of the CIT(A) deleting the addition we find no infirmity in the order of the CIT(A). - Decided against revenue Addition u/s 69 - repayment of loan - Held that:- CIT(A) after proper appreciation of the facts of the case directed the AO not to make any addition u/s.68 . However, he directed the AO to make addition of ₹ 1,01,506/- u/s.69 of the Act in absence of any plausible explanation given by the assessee towards the repayment of the above loan. The Ld. Counsel for the assessee before us also could not give any proper explanation nor he could explain how the order of the CIT(A) is erroneous. Since the Ld.CIT(A) on the basis of analysis of the seized document and on the basis of the various statements recorded from the assessee u/s.132(4) as well as u/s.131 has given valid reasons, therefore, in absence of any contrary material brought to our notice by either side we do not find any infirmity in the order of the CIT(A). - Decided against revenue and assessee
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2016 (2) TMI 621
Refund of taxes paid under the VDIS, 1997 along with interest - Held that:- The assessee is not entitled to the immunity and benefits of VDIS, 1997, in respect of the additional income surrendered by the assessee during the course of search and consequently, is to be assessed as undisclosed income in the hands of assessee. Further, following the directions of the Hon’ble High Court, we hold that since the assessee is entitled to the refund of taxes paid under the VDIS, 1997 along with interest @ 6% from September, 1999, the same may be adjusted against the demand raised under the block assessment order.
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2016 (2) TMI 620
Addition on account of non-occupancy charges - Held that:- The charges are received at the prescribed rates as per the byelaws of the society and are spent for the common purposes of the society for the benefit of the members. In the case of Mittal Court Premises Co-operative Society Ltd. v/s Income Tax Officer [2009 (7) TMI 689 - BOMBAY HIGH COURT] held that the bye-laws themselves provided for non-occupation charges. The contribution, therefore, was by the members for the purpose of mutual benefit. The object of the contribution was the purpose of increasing the society’s funds, which could be used for fulfilling the objects of the society. The object of the society was to provide service, amenities and facilities to its members. In these circumstances, the principle of mutuality would apply and therefore non-occupancy charges were not taxable. In our opinion the case of the assessee case is squarely covered by the aforesaid decision. We, therefore, respectfully following the decision of the Juridictional High Court delete the addition - Decided in favour of assessee Rejection of claim of the assessee u/s 80(P)(2)(d) - interest on deposits with other Coop. Societies being Coop. Banks. - Held that:- Honble Supreme Court in the case of Totagar’s Co-operative Sale Society Ltd.(2010 (2) TMI 3 - SUPREME COURT ) held that a society has surplus funds which are invested in short term deposits where the society is engaged in the business of banking or providing credit facilities to its members in that case the said income from short term deposits shall be treated and assessed as income from other sources and deduction u/s 80(P)(2)(a)(i) would not be available meaning thereby that deduction u/s 80(P)(2)(a)(i) is available only in respect of income which is assessable as business income and not as income from other sources. Whereas in distinction to this , the provisions of section 80(P)(2)(d) of the Act provides for deduction in respect of income of a coop society by way of interest or dividend from its investments with other coop society if such income is included in the gross total income of the such coop society. In view these facts and circumstances we are of the considered view that the assessee is entitled to the deduction of ₹ 14,88,107/- in respect of interest received/derived by it on deposits with coop. banks and therefore the appeal of the assessee is allowed by reversing the order of the CIT(A) - Decided in favour of assessee
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2016 (2) TMI 619
Denial of deduction of cost of selling - denial on the ground that in the agreement to sale with DSKDL there is no mention of this cost to be incurred by the assessee and that the amount has not been quantified at all - Held that:- We find an identical issue had come up before the Tribunal in the case of other group members namely Smt. Shilpa M. Kulkarni and other connected appeals has decided the issue in favour of the assessee and against the Revenue observing as when the AO in the case of D.S. Kulkarni & Co. has also raised similar queries as raised by the present AO and after elaborately recording the various details submitted by the assessee in the order sheet, copies of which are placed at pages 329 to 343 of the paper book has accepted the MOU as genuine and no addition/disallowance was made on account of such development expenditure which was claimed by the assessee as cost of selling, therefore, we find no reason as to how and why the AO in the case of the present assessee held that the socalled MOU was an afterthough and self-created and self-serving document especially when the order passed in the case of D.S. Kulkarni & Co. is prior to the assessment order passed in the instant case and the same has not been disturbed by the CIT u/s.263 of the I.T. Act till now. As following the decision of the Coordinate Bench of the Tribunal in the case of other group members and in absence of any contrary material brought to our notice by the Ld. Departmental Representative against the order of the Tribunal, we find no infirmity in the order of the CIT(A) allowing the claim of cost of selling amounting - Decided against revenue
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2016 (2) TMI 618
Disallowance u/s 14A - CIT(A) allowed the claim - grievance of the revenue is that the Rule 8D should be followed and prorate interest payable on borrowings should disallowed, even if the Assessee had sufficient owned funds for making the investments - Held that:- As from a reading of the ratio of various High Courts on this aspect only actual expenditure which can be attributed to Investments and that too only investments from which exempt income has been earned and excluded in the assessment, has to be disallowed u/s 14A. In the circumstances we have no hesitation in upholding the decision of the CIT(A) deleting the notional disallowance of interest expenditure made u/s 14A by the AO. - Decided against revenue Disallowance of interest being interest payable by the Assessee on account of interest free advances - CIT(A) therefore held interest attributable is not disallowable and deleted the addition - only grievance of the Revenue is that the facts relating to the Interest free advance given to BSSL Ltd was not submitted before AO - Held that:- even if it is assumed that this advance was given out of borrowed funds, no part of the interest payable on such notional amount of borrowings cannot be disallowed as the advance was given in the course of business. Therefore on the facts of the case, Applying the ratio of the decisions of the Bombay High Court in the case of CIT v. Reliance Utilities And Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT ] we hold that the interest free advance of ₹ 7.5 Crores to BSSL was made by the Assessee out of own funds and the advance was for the purpose of the business of the Assessee in the course of Joint development of property with BSSL. Hence no part of interest payable on borrowings can be disallowed on grounds of interest free advance of ₹ 7.5 Crores to BSSL. The revenue’s appeal on this issue is dismissed. - Decided against revenue
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2016 (2) TMI 617
Addition u/s 69A/68 - CIT(A) allowed the claim - Held that:- Assessing Officer has summarily made addition without discussing as to why he was not convinced with a particular credit entry and before the ld. CIT(A). The assessee has filed all the relevant evidence and the ld. CIT(A) has called a remand report on the written submissions and evidence filed before him, but the Assessing Officer did not submit his remand report in time. The ld. CIT(A) has also observed that the Assessing Officer sought time which was allowed to him, but despite time allowed, he has not submitted the remand report. He simply objected the admission of evidence before the ld. CIT(A). The ld. CIT(A) himself has observed that the AO has not produced the assessment record despite directions. All these facts clearly demonstrate that despite sufficient time afforded to the Assessing Officer, he did not make any effort to demolish the evidence furnished by the assessee in support of its claim. The ld. CIT(A), however, has examined the details furnished before him and he has observed that before him assessee has filed confirmations of the depositors/creditors with full address, PAN, complete details of cheque amount & number loans/deposits; etc. The assessee has also furnished the details of TDS amount on interest payment to different creditors/depositors; photocopy of bank statement showing the deposits of loan/borrowed fund; etc. Since the assessee has furnished all the relevant evidence to prove the genuineness of the transaction and identity & creditworthiness of the creditors, we find no infirmity in the order of the ld. CIT(A) who has rightly accepted the claim of the assessee. Since no specific infirmity is pointed out in the order of the ld. CIT(A), we approve the same. - Decided in favour of assessee
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Customs
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2016 (2) TMI 652
Export of antique items - old metallic coins - silver kamar band - confiscation and penalty - relied upon documents are not provided to the appellant - appellant stated that his cross-examination is absolutely crucial because he needs to be questioned on several aspects including (i) whether he was duly authorised by D.G., ASI as required under Section 24 of AAT Act, (ii) the methodology which was adopted by him for coming to a finding that the impugned goods were antiques and (iii) how was it ensured that the goods which were examined by him were actually those which were seized. Held that:- not permitting cross-examination of Mr. Manjhi is grossly violative of the principles of natural justice and therefore the impugned order is not sustainable. However, we may add here that violation of principles of natural justice is a curable defect - however cross examination of panchas not allowed - as we have already come to a conclusion that denial of cross-examination of Mr. Manjhi is grossly violative of principles of natural justice and consequently the impugned order cannot be sustained and would need to be remanded for de novo adjudication, we refrain from expressing any view with regard to the liability of confiscation of the impugned goods seized at Pamposh Enclave. - Matter remanded back - Decided partly in favor of appellant.
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2016 (2) TMI 651
Clim of interest on Refund - period of limitatiaon - refund arose on account of finalization of provisional assessment - Held that:- refund should be sanctioned within 3 months from the date of assessment of duty finally, and if not done so, then the interest shall be paid till the date of refund of such amount. In the instant case, it is undisputed that provisional assessment was finalized vide letter no. F.No. V Misc(30)23/IOCL/B.E./2005 dated 22.02.2008. Therefore, the appellants are eligible for refund consequent to the said finalization. As the refund is not sanctioned within 3 months from the said date, the appellants are also eligible for interest till the date of refund. - Decided in favor of assessee.
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2016 (2) TMI 650
Recovery of refund - refund alleged to have been erroneously paid to the appellants, on the ground that the appellants have not satisfied that they have not passed on the incidence of duty - Held that:- It is thus clear that the Re-assessment was done immediately and also that the appellants had shown the excess payment of safeguard duty as refund receivable in their books of accounts. It is also certified that the said excess duty element has not been taken into the costing of the final products. Therefore, it is transparent that the excess duty has not been passed on and the principle of unjust enrichment has not been violated. The appellants are clearly eligible for the refund of the excess payment of duty. - Demand set aside - Decided in favor of assessee.
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2016 (2) TMI 649
Levy of penalty for transportation of contraband goods - contraband Red Sanders wood was found concealed in 4508 kgs of potatoes - Retracted statement. - Held that:- The argument of the appellant is that a driver not knowing the mobile number, itself indicates that Sh. Sanjay Saha is wrongly implicated. The argument taken by the appellant is not convincing as Sh. Chabi Monkal is also not able to recall his son in laws number. It is also not correct to say that investigation deliberately booked Sh. Sanjay Saha & left Sh. Chabi Mondal untouched. Investigation has also proposed the penal action against the driver and a penalty has also been imposed upon Sh. Chabi Mondal by the Adjudicating authority. Accordingly the stand taken by this appellant is on afterthought and is required to be rejected because cases of smuggling and intended export of goods seized within the country has to be based on the statements of those involved in a particular case and the circumstantial evidences. Levy of penaty on the owner of vehicles who has leased out the vehicle waived - Levy of penalty on all other appellants confirmed.
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2016 (2) TMI 648
Levy of penalty - Provisional assessment and release of goods against P.D. bond - non supply of documents and information within prescribed period - violation of conditions of Bond - appellants submits that there was no intention to evade duty nor was there any loss to Revenue in this matter. It is purely a technical issue, and therefore, pleaded for waiver of complete penalty. - Held that:- the appellants had not taken the appropriate steps at the appropriate time that they had not submitted the documents in time as prescribed in the P.D. Bond executed by them nor had they approached the Department for extension of time. This has resulted in Revenue issuing a show cause notice, which set the adjudication process and present litigation in motion. As there is no doubt that the appellants were negligent, we do find that there is sufficient reason to impose penalty on the appellants under Section 117 of the Customs Act, 1962. - Levy of penalty (though reduced) confirmed - Decided partly in favor of appellant.
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2016 (2) TMI 647
Levy of redemption fine and penalty - seizure of foreign currency carried by appellant in person as a passenger - Held that:- considering the fact that the appellant was already arrested and remanded to judicial custody for 15 days and he was also prosecuted in the criminal proceedings by the lower court and also considering that where the profit margin is determined based on market price and value of currency is purely based on fluctuation of foreign exchange rate, we find that RF and penalty is on higher side. - imposition of RF reduced from ₹ 11,00,000/- to ₹ 7,00,000/- (Rupees Seven lakhs only) and personal penalty reduced from ₹ 2,50,000/- to ₹ 1,00,000/-. Accordingly, the appeal is partly allowed - Decided partly in favor of appellant.
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Corporate Laws
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2016 (2) TMI 645
Calculation of dues of the workers on winding up - from the date of actual winding up or from the date of appointment of the Provisional Liquidator with full powers to sell the assets or from the date on which there is cessation of work on account of various valid legal reasons? - Held that:- While calculating the cut off date the facts in each case have to be taken into consideration. The Amendment Act of 1985 which amended various provisions of winding up proceedings is a beneficial piece of legislation which was brought about to give equal priority to the workers who had contributed to accumulation of capital and revenue of the Company. The Parliament amended the Act and held that the workers dues had a pari passu charge over the secured creditors' dues. The import of the said amendment was to give equal status to workers as that of secured creditors. In a winding up proceedings, there could be two possible results viz (1) that after selling the assets of the Company and distributing the assets for paying off liabilities, the Company may still have surplus amount or in the alternative the liabilities would outweigh the amount realized by the sale of assets in which case even though both, workers and secured creditors had priority would have to accordingly rateably get their share out of assets and whatever remains would be distributed ratably amongst the other creditors. Therefore, in our view, the Official Liquidator would have to then consider whether there would be any surplus of assets over liabilities to see whether paripasu benefit could be given to the workers and take it to its logical conclusion. The Official Liquidator in such a case therefore would have to consider the last order of actual winding up of the Company as the order from the date of which the workers dues would have to be calculated. In our view, such purposive interpretation or “purposes & objectives” approach could harmonize the intention of the legislature in giving paripasu benefit to workers alongwith the secured creditors. Since the immovable property of Svadeshi Mills admittedly has not been sold and it has a land of almost about 50 acres in the heart of the City which is a prime residential and commercial area, the Official Liquidator would receive substantial amount (approximately ₹ 1000 crores) to say the least by sale of these assets. The Grandview Estates Private Limited which is a majority shareholder of the Company and whose SLP is pending in the Apex Court, if it is permitted to develop this property it would make substantial profit by developing the said land since it is a developer and builder and earn profit and also get its dues as per the decree passed by DRT wherein they are entitled to get the decretal amount with compound interest. Taking into consideration these facts, in our view, the legislative intention therefore would be taken to its logical conclusion. Therefore, it will have to be held that the date of the last order of the winding up of the Company would be the date from which the workers dues would be calculated and not the earlier date on which much emphasis is laid by the learned Senior Counsel appearing on behalf of the Appellants.
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2016 (2) TMI 644
Arbitration and Conciliation - Held that:- As per the principles of tracing benefits acquired by fraud, breach of confidence, breach of fiduciary relationships or by other wrong doings therefore do not get benefit under the defence of change of position. Further change of position as a defence has to be causally linked to the receipt that makes it inequitable for the recipient to make restitution. Mere fact that the recipient has spend the money whole or in part, does not make it inequitable because expenditure might have been incurred by him in any event in ordinary course of things. But a bona-fide recipient is entitled to establish the defence that he had increased his outgoings as a result of the receipt. [See, para 168, Halsbury’s Law of England, Vol. 40(1), 4th Edition] Since analogous principles need to be applied in the instant case, the sketchy pleadings and no material save and except the shareholding pattern in Southend does not entitle VSL to any order against Southend, which is an independent entity. On the question whether the interim measure granted adequately secures an interest of VLS pending adjudication of objections to the award, the pleadings in FAO (OS) No.295/2015 have not even attempted to make any reference to the value of the assets covered by the sweep of the interim measure against the Guptas, Jains and BMS. Thus, even FAO (OS) No.295/2015 is liable to be dismissed and the prayer that the Guptas and the Jains be directed to furnish a bank guarantee to secure the sum as per the award is rejected.
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Service Tax
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2016 (2) TMI 660
Commercial Training or Coaching Services - activity of providing flying training to the students for obtaining pilot licence under various categories. - request to extend cum-tax-benefit - Held that:- the Instruction aforesaid holding the petitioner to be assessable to Service Tax is contrary to Section 65(27) and the Notification dated 25th April, 2011 - Demand set aside - Decided in favor of assessee.
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2016 (2) TMI 659
Adjustment of excess amount paid towards demand - Service tax liability on the value of SIM cards sold by the appellant to their mobile subscribers - Held that:- Demand of service tax withe interest confirmed - levy of penalty waived - however, credit of excess amount of service tax paid allowed to be adjusted with the demand. - Lower authorities directed to work out the tax liability and the interest thereof and adjust the same against the deposit made and excess amount, if any, be refunded to the appellant. - Decided partly in favor of assessee.
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2016 (2) TMI 658
Refund of un-utilized CENVAT Credit taken under Rule 5 of the Cenvat Credit Rules, 2004 - Applicability of Rule 6A of the Export of Service Rules, 2005 and Notification No. 39/2012-ST - Revenue argued that the appellants are not entitled to avail CENVAT Credit as they are not registered manufacturer or service provider. - Held that:- CENVAT Credit can be availed by only a registered Central Excise or Service Tax assessee. In the current case, the assessee is not a registered Central Excise or Service Tax assessee and therefore cannot come under the purview of Cenvat Credit Rules, 2004 and therefore cannot claim refund under Rule 5 of the Cenvat Credit Rules, 2004 - Decided against the assessee.
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2016 (2) TMI 657
Refund - period of limitation - export of services - Notification No. 11/2005 - ST - The period covered for the rebate was August 2005 to January 2006 and the application for refund was filed on 29.6.2007. - Held that:- A combined reading of Rule 5 of Export of Service Rules, 2005 and Notification 11/2005 -ST makes it clear that the rebate scheme under the said rules is a self-contained scheme and it nowhere invites the condition of one year for filing the application for rebate. - rejection of the appellants rebate claim on the ground of time-bar is not sustainable - refund allowed.
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2016 (2) TMI 656
Receipt of incentive and commission from the Maruti Udyog Limited while providing providing “authorised service station” and “business auxiliary service” - commission /remuneration received by the appellant from the financial companies. - Held that:- It is seen that the records do not indicate that the claim of the appellant that they are mere provider of “table space” and that these receipts are in the nature of consideration for such allocation can be controverted. Therefore, the tax levied on such remuneration is liable to be set aside. The commission paid through the appellant to their executives is, admittedly, remuneration for the efforts made by the employees of the appellant to promote the products of the finance companies. Admittedly, they are employees of the appellant and, thereby, not free agents. Their promotional efforts cannot be delinked from that of the appellant; the fact that payments are made over to the appellant is sufficient to deduce so. That the appellant chooses not to retain any of the commission and instead passes them on to the executives is an internal policy of the appellant that need not concern the tax authority. Processing fees are the consideration for handling the loan applications and it is, undoubtedly, incidental to promotion of the service that is offered by the finance companies. Decided partly in favor of assessee.
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2016 (2) TMI 646
Demand of service tax was confirmed on the ground that the appellant had provided “Commercial or Industrial Construction Service” (CICS), “Maintenance and Repair Service”, and “Site formation and clearance, excavation and earthmoving and demolish Service” to Giral Lignite Thermal Power Project during the period 08.06.2005 to 17.10.2008 but did not pay service tax on the gross amount received from the service recipient. Held that:- it is evident that the appellant was not unjustified in holding the reasonable belief that works contracts were not taxable under the Finance Act, 1994prior to 01.06.2007 because even the speech of the Hon'ble Finance Minister quoted above gave the same impression. Indeed there was a great deal of confusion whether works contracts were vivisectable and liable to service tax prior to 01.06.2007, so much so that the Hon’ble President CESTAT setup Larger Bench of five Members to decide the issue and the issue was thus decided by the Larger Five-Member Bench of CESTAT in the case of L&T - In these circumstances, it is not possible to sustain the allegation of wilful misstatement / suppression of facts on the part of the appellant. - Demand set aside - Decided in favor of assesee.
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Central Excise
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2016 (2) TMI 642
Valuation of goods manufactured by the appellant and transferred to their sister unit - Penalty imposed - captive consumption - whether further manufacture of finished goods has not been properly done in terms of Rule 8 of the Central Excise Valuation [Determination of Price of Excisable Goods] Rules, 2000? - Held that:- Commissioner examined the report submitted by the Assistant Director (Cost) and the CAS-4 details submitted by the appellants. He found that when total is calculated the difference works out to negligible amount. There was some difference of opinion regarding allocation of overhead expenses. Thereafter, the Ld. Commissioner gave his finding in respect of each SCN. He applied the particulars available in the CAS-4 Certificates submitted by the appellant and after analyzing the various details came to the conclusion as found in the impugned order. In such a situation we find there is no ground for imposing penalty under Rule 25 of the Central Excise Rules. In Saurashtra Cement Ltd. [2010 (9) TMI 422 - GUJARAT HIGH COURT] held that the ingredients mentioned in Section 11AC are also required to be considered while determining the question of levying of penalty under Rule 25 of the Central Excise Rules. We find that the Original authority did not substantiate the reason for imposing penalty under Rule 25 specially when he has found that there is no ground to allege any malafide on the part of the assessee for, payment of duty at the time of clearance. The issue involved is the application of correct accounting principles based on records maintained by the appellant. There is no scope for penalty in such circumstances. In fact the duty discharged is, overall on the higher side than finally determined and confirmed in the impugned order. Penalty deleted.
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2016 (2) TMI 641
Application for settlement - Rejection of application on the preliminary ground of ineligibility in terms of Section 32E(1) of Central Excise Act, 1932 (non obtaining of Central Excise Registration) - Held that:- It will be fit and proper for the original authority to examine the case afresh with the appellants’ defense in respect of second SCN dated 16.04.2004. This is necessary as there was no defense for the appellants during the original proceedings and the appellants made elaborate submissions on facts covering among other things- duty calculation based on correct MRP on the seized goods, eligibility of cenvat credit based on documents now submitted and their eligibility to SSI exemption for own products as well as branded products. These aspects require examination of all the documents now being first time submitted by the appellants in appeal. Here, we take note of the submissions by the Ld. AR that the matter is already 10 years old and all the records and documents which were part of investigation were already made available to the appellants at the time of original adjudication proceedings itself. Hence, the appellants may be given specific time limit to furnish their defense so that the adjudication could be completed expeditiously. The Ld. Counsel for the appellants submitted that they are in possession of all the relevant records and the reply along with supporting evidence will be submitted within 4 weeks.
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2016 (2) TMI 640
Demand of central excise and equal amount of penalty confirmed - Held that:- The goods were supplied by the appellant against the Purchase Orders issued by the Electricity Board. The Purchase Orders clearly show the ex factory price, sales tax, freight and insurance charges separately. The appellant have entered into an agreement with the Transport Company providing for payment of compensation on account of loss and damage to the goods direct to the consignee. The only issue which may have to be looked into is whether the price of the goods is being collected in the guise of cost of transportation. On going through the case records, we find that no such case has been made out therefore the argument that the transporting company is a related person and consideration realised by the transporting company for transportation should form part of the assessable value and has no legal support. Section 4 of the Central Excise Act refers to “related person” only in the context of a sale to a related person. The Revenue has not been able to prove that the partnership firm of M/s Miracle Trading Co. is a proxy with no separate entity. Neither is any case made out that part of the price of the goods is being realised by the transporting company for the benefit of the Appellant company. Therefore in the facts of the case we do not see any merit in the orders of the lower authorities and we are in agreement with the argument of the Appellants that the proceeds realised by M/s Miracle Carrier and Trading Co. towards transportation of the goods will not form part of the assessable value of the goods cleared by Appellants.
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2016 (2) TMI 639
Eligibility of credit on the full quantity of coal bought on payment of duty from coal mines - Department denied the credit attributable to the invisible losses that occur due to washing of the coal to make it fit for use - Held that:- There is no allegation in any proceedings that certain quantity of inputs have been diverted or contained in some other product that arose during the processing of the coal. The admitted fact is that the 3% loss is solely attributable to washing. Considering the above factual position, find no ground to restrict the Cenvat credit when the appellants bought and paid for the quantities of coal cleared from the coal mines. Thus find the impugned order is unsustainable and accordingly allow the appeal.
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2016 (2) TMI 638
Denial of benefit of CENVAT Credit on Xerox copy of courier bill of entry - Held that:- There is no dispute that the material on which the credit has been taken was imported by the appellant and was used for manufacturing of the product. The objection of the department is that the appellants have not produced the original bill of entry and the photocopy of the courier bill of entry or consolidated courier bill of entry is not admissible for denying credit under Rule 9. Thus hold that the appellant have correctly claimed the CENVAT Credit on the photocopy of the courier bill of entry filed by them and CENVAT Credit cannot be denied on mere technical grounds. - Decided in favour of assessee
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2016 (2) TMI 637
Interest on delayed payment of interest - Held that:- Since there is no provision in the Act to allow the interest on delayed payment of interest the appeal is dismissed.
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2016 (2) TMI 636
Abatement claim rejected - procedure lapses on which the abatement was rejected are as the appellant failed to declare closing balance of stock, intimation for resumption of production was filed belatedly on 17-01-2000 whereas the production was resumed on 15-01-2000 and failure to declaration continuous closer period - Held that:- All the above lapse are the minor procedure lapse, on that basis abatement could not have been rejected. As regard the lapse of non-declaring the closing stock, we agree with the appellant that the closing stock is otherwise recorded and available in the stock account i.e. RG-1 register. It is also declared in monthly returns and both these records are statutory records. Therefore though the appellant did not declare the closing stock specifically, the same stands complied with as the same was declared in the RG-1 and monthly returns. Appellant's production was resumed on 15-1-2000, however the intimation was filed on 17-1-2000, it is observed that 15th and 16th being Saturday and Sunday were holidays. Therefore, filing of intimation on 17-1-2000 cannot be treated as belated in terms of provision of General Clauses Act, accordingly to which any act to be done on a particular date and if any holiday falls on that date, the next working day shall be treated as date within the period prescribed. Therefore, there is no delay on the part of the appellant in filing the intimation on 17-01-2000. Regarding non-declaration of continuous closing period, it is a minor lapse, as from the intimation date of the closure and date of resumption of production, the period of closure can be easily ascertained. Therefore, it cannot be said, the period of closure is not in the knowledge of the department.- Decided in favour of assessee
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2016 (2) TMI 635
Cenvat credit of Central Excise duty paid on cement denied - Held that:- It is an admitted fact on record that the receipt of disputed goods in the appellant's unit and the duty paid character of those goods have not been disputed either in the Original or in the Appellate Order. Thus, denial of cenvat credit for mere technical lapse of non-obtaining the registration certificate at the time of issuance of invoice, cannot be a defensible ground to deny the cenvat credit. Thus, it is of the view that cenvat credit being a beneficial piece of legislation intended for arresting the cascading effect, cannot be denied to the appellant, in view of the fact that the disputed goods have suffered duty and have received/used in the appellant's factory for production of the final product. However, the cenvat credit of Central Excise duty paid on cement is not available to the appellant, owing to the fact that the same cannot be considered as input for manufacture/production of the final product. Thus, the appellant is liable to reverse the cenvat credit alongwith interest taken on cement. Since taking of cenvat credit on cement is not attributable to fraud, collusion etc. with intention to evade payment of duty, it is of the view that imposition of penalty is not justified. In view of the above, the appeal is partly allowed to the extent of allowing cenvat credit to the disputed goods other than cement taken by the appellant. The appellant is liable to reverse Cenvat Credit taken on cement and also to pay interest for wrongly availed Cenvat Credit.
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2016 (2) TMI 634
Extended period of limitation - duty demand - charge of deliberate evasion of duty has been alleged against the appellant - Held that:- The facts of the case in Mehta & Co. (2011 (2) TMI 2 - SUPREME COURT OF INDIA ) are squarely applicable to the facts of this case. In these circumstances, hold that duty is correctly demanded from M/s. Samleshwari Packaging Pvt. Ltd. along with interest and penalty imposed is correct. As contended by the learned Counsel that demand of duty should be calculated as cum duty price which is correct as the appellant has not charged any duty over the above invoices price. Therefore, invoice price should be treated as cum duty price for the quantification of demand of duty and interest and penalty are to be quantified accordingly. The adjudicating authority is directed to re-quantify the duty, interest and penalty accordingly. With regard to the imposition of penalty on M/s. Rohini Polymers, find that penalty under Rule 26 clearly mandates that if the goods are liable for confiscation and in the show cause notice there is no proposal for confiscation of the impugned goods in question, therefore, question of imposition of penalty on M/s. Rohini Polymers does not arise. Therefore, set aside the duty on M/s. Rohini Polymers.
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CST, VAT & Sales Tax
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2016 (2) TMI 655
Whether a single Member of the Appellate Tribunal, Value Added Tax (AT) can legitimately function as the AT in terms of Section 73(1) of the Delhi Value Added Tax Act, 2004 - Held that:- the single Member (Judicial) could validly function as the AT between 1st August 2013 and 20th July 2014. Further, even assuming that during the aforementioned period he lacked jurisdiction, the de facto doctrine would apply and the decisions taken by him during the said period shall not be invalidated.
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2016 (2) TMI 654
Non processing of refund application - The petitioner purchases goods in the State of Haryana and the said goods suffered tax at a higher rate than 2%. The goods were sold in interstate sales and the transactions were subjected to 2% tax. The petitioner sent a reminder dated 11.9.2015 (Annexure P-2) to respondent No.3 for provisional refund for the quarter ending 30.6.2013 to 31.3.2014, but all in vain. - Held that:- without expressing any opinion on the merits of the case, we dispose of the present petition by directing respondent No.2 to take a decision on the application dated 3.12.2015 (Annexure P-5) followed by a reminder dated 25.12.2015 (Annexure P-6), in accordance with law by passing a speaking order and after affording an opportunity of hearing to the petitioner within a period of one month from the date of receipt of certified copy of the order.
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2016 (2) TMI 653
Evasion of sales tax / value added tax (VAT) - levy of penalty - transaction is in the court of interstate sale and not local sale - jurisdiction of state government - proceedings based on the statement of the Driver - Held that:- The appellant relies upon the invoice and challan outward to substantiate that the transaction with the Government organization NAFED was bonafide and genuine. The Tribunal has not looked into the entire documents to record a finding that any attempt of evasion was made or that the documents were not genuine and had merely gone by the alleged admission of the driver. In our opinion, the order of the Tribunal cannot be sustained as the Tribunal was required to examine the entire material on record before concluding whether there was any attempt to evade tax on the part of the dealer. - Matter remanded back.
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Indian Laws
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2016 (2) TMI 643
Concept of restitution - SARFAESI Act - possession of the subject mortgaged property - Held that:- DCHL has failed to comply with the conditional order passed by the DRT to deposit ₹ 10 crores, and has merely deposited ₹ 1 crore that too long after the time stipulated therefor had expired. They have repeatedly used the judicial process to deny the petitioner their right to enforce the mortgage in terms of the provisions of the SARFAESI Act, to take possession of the subject mortgaged property, and to put it to sale. They have also violated the solemn undertaking given to this Court more than a year and a half ago to remove the machinery from the premises by 28.02.2014, and have continued to retain possession of the subject property in brazen defiance, and utter disregard, of the order of the Chief Metropolitan Magistrate and the order of the Division bench of this Court The judicial adventures of DCHL, to somehow or the other retain possession of the subject property culminating in the order of the Debt Recovery Appellate Tribunal have all come to naught. Yet they have not removed their machinery from the subject premises, possession of which was handed over to the petitioner by the advocate commissioner on 15.05.2013 more than two years. The petitioner has been unable either to recover its debt in excess of ₹ 62 crores, or to take exclusive and absolute control over the subject property. Even though sale of the subject property was confirmed in favour of the highest bidder in the auction held on 27.05.2015, the petitioner has not been able to deliver possession to him till date. The only way in which the petitioner can be restituted for the loss and injury suffered by them, on account of the interim order is if a direction is issued to the respondent police officers to provide them necessary assistance in taking absolute and exclusive control of the subject property, and to have the machinery and movables of DCHL removed therefrom. A writ of mandamus shall be issued accordingly. Notwithstanding the intransigence of DCHL, in failing to vacate the premises and remove the machinery therefrom, this Court cannot ignore the possibility of the expensive printing machinery of DCHL, lying in the subject premises, suffering extensive damage if sufficient safeguards are not taken while removing it therefrom. We consider it appropriate, therefore, to permit DCHL to remove its machinery and moveables from, and vacate, the subject premises by 31.08.2015. If they fail to do so by then, the respondent police officers shall, on a written request from the petitioner, provide them necessary assistance in having the machinery and other movables of DCHL removed from the subject premises without interference from either DCHL or any one else on their behalf. This order shall also not preclude the petitioner from initiating appropriate legal proceedings for damages on account of the loss and injury suffered by them as a result of the repeated, albeit unsuccessful, forays by DCHL into the portals of this Court. Both the Writ Petitions are allowed with exemplary costs of ₹ 25,000/-, which DCHL shall pay the petitioner-bank within four weeks from today. The miscellaneous petitions pending, if any, shall also stand disposed of.
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