TMI Tax Updates - e-Newsletter
March 26, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
Taxability of Interest earned on the Central Government grant - the interest earned on the Central Government grant is to be included as a part of the grant received from the Central Government - HC
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Income Tax:
Compensation received cannot be treated as consideration because 'right to sue' is not a property under section 6(e) of the Property Act and thus did not become a capital asset u/s 2(14) - AT
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Income Tax:
Scope of Article 12(3)(a) of DTAA between India and Belguim the payment for software is for a copyrighted article and not copyright per se is not covered by the scope of payment for copyright - AT
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Income Tax:
Prior period expenditure - Assessee cannot be allowed to claim such expenditure as revenue expenses which is claimed to have been incurred to safeguard the long term interest of the assessee, which remains unsubstantiated - AT
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Income Tax:
Disallowance of expenditure - loss by embezzlement by employees should be treated as incidental to business and the same should be allowed as deduction in the year in which it is discovered - AT
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Income Tax:
Deletion made on non-deduction of tax u/s 40(a)(ia) - TDS u/s 192 - reimbursement of salary to the deputed personnel would not attract deduction of tax at source - AT
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Income Tax:
Validity of reassessment u/s 147 of the Act Income escapement Computation of cost of construction - inclusion of cost towards common area - excess claim of expenditure - decided in favor of revenue - AT
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Customs:
End use base import of Cannulae and Needles as duty free - A sketchy picture was drawn by him without year wise analysis. When there is fraud against Revenue no plea of time bar is available to appellant - AT
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Customs:
Revenue cannot first show laxity in investigation and then seek to shift the burden to prove that the goods are not smuggled especially when there is not even any evidence produced to show illegal importation of seized non-notified goods - AT
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Customs:
Suspension of license of CHA - regulations 20(2) of CHALR, 2004 read with regulation 19(i) of the CBLR, 2012 - he call to suspend CHA license by the authorities is belated and unwarranted - AT
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Indian Laws:
Whether or not the undisposed A-4 shop should be relocated are matters of legislative or executive policy and this Court would not sit in judgment over the policy decisions of the State. - HC
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Service Tax:
Export of services - the service has to be treated as partly performed in India and partly performed outside India and therefore, it is covered by Export of Service Rules, 2005 - AT
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Service Tax:
Whether service tax collected from the customers and kept in the escrow account and not paid to the Government would attract provisions of Section 73A of the Finance Act, 1994 or no - Demand set aside - AT
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Service Tax:
Demand of service tax - Erection, Commissioning and Installation Service - Agricultural dam or sluice gates thereto cannot be considered as a plant and machinery or equipment or structures thereof. - AT
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Service Tax:
Refund - whether unjust enrichment will be applicable in the refund of Service Tax once collected by the appellant but subsequently returned to the customers by issue of credit notes - Held no - AT
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Central Excise:
Condonation of delay - when the statute puts a lid on the number of days of delay that the Commissioner can condone beyond which the appeal simply cannot be entertained, it would not be possible to ignore such a long delay on mere explanation that under a bonafide impression that the consultant would have filed appeal - HC
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Central Excise:
Misuse of area based exemption - fraudulent showing expansion of manufacturing capacity - His basis for saying that no action has been taken against supplier for mis-declaration cannot ipso-facto result in granting unintended and fraudulent benefit to the respondent - AT
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Central Excise:
Evasion of duty - Clandestine removal of goods - charges of clandestine removal cannot be made on the basis of alleged consumption of one of the raw materials - AT
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Central Excise:
Valuation of goods - Inclusion of pre-delivery inspection charges and free maintenance expenses - Validity of CBEC Circular No.643/34/2002-CX - HC has already held that circular is contrary to the provisons - no additions - AT
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Central Excise:
Rule 16 of Central Excise Rules, 2012 - Mere presumption that goods received for repair has been replaced by another goods without evidence on record is not acceptable. - AT
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Central Excise:
Reversal of CENVAT Credit - Final product supplied under international competitive bidding to mega power projects. - no need to reverse credit - appeal allowed - AT
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VAT:
Chargeability of electromagnetic waves or radio frequency - The Authority was only justified in raising a demand based on the rental collected by the appellant whilst rendering services, as also charges collected for the equipment supplied to consumers - SC
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VAT:
UPTT, 1948 - Whether preoperative expenses in the form of payment of interest towards the advance loan taken from the financial institution would form part of additional fixed capital investment (FCI) - Held no - SC
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VAT:
Refund of the excess tax paid - reduction of rate of tax with retrospective effect - By amendment, though the rate of tax was reduced to 4%, the assessee cannot take advantage of the same and gain undue monetary advantage not due to him - SC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2014 (3) TMI 731
Allowability of expenditure - Fees paid to ROC, printing and postage in respect of bonus issue Held that:- The decision in Commissioner of Income-Tax Versus General Insurance Corporation [2006 (9) TMI 116 - SUPREME Court] followed - the expenditure on issuance of bonus shares is revenue expenditure Decided in favour of Assessee. Computation of business income - Disallowance of interest and additional expenditure Expenses incurred on account of exchange fluctuation Applicability of section 43A of the Act Held that:- The decision in Commissioner of Income-tax v. Woodward Governor India P. Ltd. [2009 (4) TMI 4 - SUPREME COURT] followed - paragraph 9 of AS-11 recognises exchange differences as income or expenses in the period in which they arise - Section 43A, as it stood originally, would have application in a case where an asset is acquired and the liability existed before the change in the exchange rate takes place - Adjustments in the cost are thus made depending on the fluctuation in the currency rate. There is no denial of fact that the amount drawn from the loan should be utilized for the purpose approved and strictly subject to the terms and conditions stipulated by the Reserve Bank of India vide their letter dated 21st September, 1994 - when the object and the purpose of loan clearly points out to the purpose of the loan given as for capital expenditure on modernization and expansion, the fact that the exchange fluctuation had been added on to the cost under Section 43-A(1), however, does not, lead to the inference that as far as the balance amount is concerned, the interest payment difference on exchange fluctuation would fall under Revenue head there was no ground to uphold the contention of the assessee that the difference in the interest on the balance of principal amount on account of exchange fluctuation to be treated as revenue expenditure. The Tribunal's findings are upheld that the assessee had failed to support its contention through any concrete evidence - The assessee in its accounts admitted the foreign exchange loan as capital for acquisition of machineries and assets and accordingly the scheme was capitalized - there was no evidence that the funds were utilized for the purpose other than what was stated in the annual accounts - in the cash flow statement and the balance sheet, the assessee could not point out that the assessee had obtained the foreign loan with the approval of the RBI for financing export operations meant for inter-corporate investments Decided against Assessee.
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2014 (3) TMI 730
Stay application - Stay on outstanding demand u/s 254(2A) of the Act Held that:- In KEC International Limited vs. B.R. Balkrishana [2001 (3) TMI 32 - BOMBAY High Court] court has laid down guidelines for disposal of stay application under the Act - the order of stay must record/set out briefly the case of the assessee and also look at the questions involved in the appeal and the amount required to be deposited considering the issue in appeal - The Tribunal has after considering Section 10 of the Act has prima face accepted the assessee's contention that income of Rs.442 Crores attributable to dividend, mutual fund and long terms capital gain would not be assessed to tax as it is not includable in income chargeable to tax - Section 10 and 11 of the Act are not mutually exclusive - It is the character/ nature of income that is to be excluded from total income u/s 10 of the Act - at this stage a complete stay on the tax attributable to income excluded u/s 10 of the Act is unexceptionable. The Tribunal has not followed the parameter laid down KEC International Limited vs. B.R. Balkrishana [2001 (3) TMI 32 - BOMBAY High Court] - A prima facie case does not mean mere disputing the liability to pay the tax - It would necessarily mean a strong arguable case - This could only be established by respondent assessee if it is pointed out why and how no tax would be payable on Rs.44 Crores there was no mention of the reason even prima facie in the order of the Tribunal - there has been no application of mind even prima facie in respect of the dispute as regards payment of Rs.44 lacs as tax by the respondent-assessee the order proceeds to grant a stay of recovery of Rs.290 crores on the ground that for a major part of outstanding demand, the assessee has a good prima facie case the appeal is scheduled for hearing, thus, no need for interference but if it is adjourned, then the assessee is required to submit 50% of the amount Decided partly in favour of Revenue.
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2014 (3) TMI 729
Extension of stay of outstanding demand - Prima facie merits not considered Held that:- The order of the Tribunal has refused to extend the stay not on the ground that it has no power to do so under Section 254 of the Act but only on the ground that the petitioner has no financial difficulty - the stay has been granted by the Tribunal from 27 July 2012 onwards and the petitioner has not in any manner contributed in the delay in disposing of the appeal by the Tribunal - when there is no change in circumstances which first led to granting of stay and continuing of the same by the Tribunal and accepted by the revenue, there is no reason as to why the stay should not be extended - it would be in the interest of justice if demands are stayed for assessment year 2006-07 and 2008-09 till the disposal of the appeal by the Tribunal Decided in favour of Assessee.
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2014 (3) TMI 728
Interest accrued on fixed deposits - interest earned on the Central Government grant - Whether the ITAT was right in not treating the interest accrued on Fixed Deposits as income of the assessee Held that:- What is important is whether the interest earned on the Central Government grant is to be treated as the income earned or not, and not what the assessee claimed - in the letter of the Central Government releasing the grant, which provides a condition that the interest earned on the central grant already released would form part of the central grant limit of ₹ 50 crore, the amount of ₹ 21,22,253 being interest earned on the fixed deposit of ₹ 16.70 crore which was the grant received by the assessee from the Central Government cannot be said to be its income - as per the condition of release of grant, the interest earned on the Central Government grant ie., ₹ 21,22,253 in the present case is to be included as a part of the grant received from the Central Government there is no error has been committed by the Tribunal in deleting the addition of ₹ 21,22,253 made by the Assessing Officer, treating it as the income of the assessee there is no substantial question of law arises for consideration Decided against Revenue.
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2014 (3) TMI 727
Scope of the Term capital asset u/s 2(14) of the Act Deletion made on account of LTCG earned - Receipt of compensation on relinquishment of right to obtain conveyance of land - Whether the CIT(A) has erred in holding that the rights held by the assessee were not 'property' u/s.6(e) of the Transfer of Properties Act and not a 'capital asset' as defined under the 1961 Held that:- The decision in Baroda Cement and Chemicals Ltd. vs. CIT [1985 (12) TMI 55 - GUJARAT High Court] followed - compensation received cannot be treated as consideration because 'right to sue' is not a property under section 6(e) of the Property Act and thus did not become a capital asset under section 2(14) of the Act - There is a divergent view of High Courts on the issue - The Bombay High Court and Madras High Court are against the assessee, whereas the Gujarat High Court, Delhi High Court are in favour of assessee - The law is well settled if there is two views are possible, the view which is in favour of assessee is to be adopted The decision in Pradip J. Mehta v. CIT [2008 (4) TMI 6 - Supreme Court] followed - It is well-settled that when two interpretations are possible, then invariably, the court would adopt the interpretation which is in favour of the taxpayer and against the Revenue - the order of the CIT(A) upheld Decided against Revenue.
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2014 (3) TMI 726
Treatment of data processing cost as Royalty Obligation to deduct TDS u/s 40(a)(i) of the Act - Whether the reimbursement of data processing cost amounts to royalty or not Held that:- The payment by the Branch for use of computer software is not the right in the copy right but only for doing the work from the said software which subsist in the copy right of the software - The branch is using the computer software and the I.T. resources installed at Belgium for which the payment is made by the Head Office towards the use of such software license - The character of payment towards royalty depends upon the independent use or the right to use of the computer software, which is a kind of copy right. In the present case, the payment made by the Branch is not for use of or right to use of software which is being exclusively done by the Head Office only, installed in Belgium - The payment made by the Branch to the H.O. towards reimbursement of cost of data processing cannot be held to be covered within the scope of expression royalty under Article 12(3)(a) of the India Belgium DTAA - thus, the data processing cost paid by the assessee does not amount to royalty, consequently, there is no requirement for deducting tax at source on such payment thus, the provisions of section 40(a)(i) will not apply the order of the CIT(A) upheld Decided against Revenue. Scope of Article 12(3)(a) of DTAA between India and Belguim Held that:- It covers only a payment for the use of, or the right to use of, any copyright, patent, design or model, plan, secret formula or process, trademark, or other like property or right - the payment made by the Indian company is not for the use of, or right to use of, software, the payment is for data processing - Be that as it may, even if stand of the revenue is to be upheld and it is to be concluded that the payment is made for software per se, that does not lead to taxability of receipt in the hands of the Australian company either - the payment for software is for a copyrighted article and not copyright per se is not covered by the scope of payment for copyright Relying upon Motorola Inc. v. Dy. CIT [2005 (6) TMI 226 - ITAT DELHI-A ] - It is not every property or right which can be covered by these expressions appearing in the end of article 12(3)(a), because, following the principles of ejusdem generis meaning of the general words following the specific words have to take colour from the specific words preceding it. When that property or right, even if it so exists, is not of the nature of any of the specific categories set out in article 12(3)(a), it cannot be covered by the general words following those categories either thus, the provisions of article 12(3)(a) cannot be invoked. Head office expenditure - Clubbing of data processing expenses with genera administrative expenses u/s 44C(iv) of the Act Held that:- Relying upon Inspecting Assistant Commissioner Versus Goodricke Group Limited [1985 (2) TMI 81 - ITAT CALCUTTA-E] - the Head Office expenses are restricted to executive and general administrative expenses only, as defined in Explanation (iv) to section 44C and it does not apply in respect of each and every expenses incurred by the H.O - The data processing cost pertains to allocation of expenses incurred by the Head Office on prorata basis for the banking application software acquired by the Head Office - expenditure does not fall within the meaning of Head Office Expenses as provided in section 44C - The nature of expenses as given in section 44C, has to be necessarily in the nature of executive and general administrative expenses only the order of the CIT(A) upheld Decided against Revenue. Disallowance of Interest Held that:- As decided in assessees own case for the previous year, it has been held that, CIT(A) has deleted the disallowance on merit but has also held that the amount has already been disallowed by the assessee on account of failure to deduct the tax at source the assessee had itself disallowed the said amount on account of failure to deduct the tax at source and further disallowance will lead to double disallowance - There was no merit in the grounds raised by the Revenue Decided against Revenue.
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2014 (3) TMI 725
Deletion on account of mould expenses - Expense or rent on moulds relate to M/s Dart India & ITL and not to the assessee company Held that:- There is no change in the facts, situation or in law thus, the Revenue cannot be allowed to adopt a different stand the decision in Commissioner of Income Tax Versus M/s Excel Industries Ltd. and Mafatlal Industries P. Ltd. [2013 (10) TMI 324 - SUPREME COURT] relied upon - when in earlier asstt. years the revenue accepted the order of the tribunal in favour of the assessee, then Revenue cannot be allowed to flip flop on the issue and it ought let the matter rest rather than spend the tax payers money in pursuing litigation for the sake of it - the expenditure on mould is allowable in the hands of the assessee - The payment of mould rental was done by the assessee under a contractual obligation with the contract manufacturer. The company had to import the molds from overseas group company on hire basis and provide the same to contract manufacturers to enable them to manufacture the products - Once the contract manufacturer completes the order placed by the assessee, the molds are returned back to the company and therefrom to the molds owners in case the particular molds, is not required for use of manufacturer the contract and molds borrowed by the assessee can by no stretch of imagination be considered as a colorable device the CIT(A) rightly the expenses as Revenue expenses the order of the CIT(A) upheld Decided against Revenue. Provision written back towards obsolete stock Held that:- CIT(A) held that the appellant company has been making provisions towards obsolete stock and these provisions were claimed as expenditure in earlier years the contention of the assessee that certain provisions as detailed in written submissions were written back and hence the same are required to be taken out of the income declared for the assessment year so as to avoid double taxation of the same amount is accepted - the CIT(A) has asked the AO to make some factual verification regarding the correctness of claim of the assessee and also to take necessary undertaking from the assessee to grant assessee the desired relief there is no infirmity in the order of the CIT(A) Decided against Revenue. Prior period expenditure - Disallowance of Customs and excise Commission on contract manufacturers Held that:- Even if the assessee has contended that it has taken the liability since, these manufacturers are exclusively selling the goods to it so the liability is in the nature of additional cost, the liability does not relate to this year and the same pertains to earlier years - Assessee cannot be allowed to claim such expenditure as revenue expenses which is claimed to have been incurred to safeguard the long term interest of the assessee, which remains unsubstantiated the CIT(A) held that, this expenditure cannot be treated to be a revenue nature and hence, not allowable against the taxable income Decided against Assessee.
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2014 (3) TMI 724
Disallowance of expenditure - Claim on broken period interest Held that:- As decided in assessees case for the earlier assessment year, it has been held that, the assessing officer has disallowed the broken period interest by holding the HTM category of securities as investment and not stock in trade of the assessee by relying upon Board's Circular No.665 dated 5-10-1993 Relying upon American Express International Banking Corporation V/s. CIT [2002 (9) TMI 96 - BOMBAY High Court] - the broken period interest is an allowable deduction the order of the CIT(A) upheld Decided against Revenue. Scope of Section 35D of the Act - Disallowance of expenditure on account of amortization provided on Govt. securities Held that:- As decided in assessees case for the earlier assessment year, it has been held that, CIT(A) was of the view that HTM category constitutes stock in trade of the assessee bank - the method adopted by the assessee for amortizing the premium is as per the established accounting standards - the securities under HTM category is held by the assessee as stock in trade, the claim for amortization made by the assessee is valid - The CIT (A) however accepted the view of the assessing officer so far as the correctness of the computation of the claim made by the assessee is concerned by restricting the claim thus, there was no infirmity in the order of the CIT(A) Decided against Revenue. Disallowance of provision for staff frauds Held that:- As decided in assessees case for the earlier assessment year, it has been held that, the CIT (A) was of the view that staff frauds are similar to embezzlement by an employee and therefore qualifies as an allowable expenditure u/s 37 of the Act - The decision in ITO vs. J & K Bank Ltd [2005 (3) TMI 384 - ITAT AMRITSAR] and the CBDT's Circular No.35 dated 24-11-1965 followed - the loss by embezzlement by employees should be treated as incidental to business and the same should be allowed as deduction in the year in which it is discovered - the loss to embezzlement by an employee is an allowable expenditure u/s 37 of the Act thus, there is no infirmity in the order of the CIT (A) in allowing the expenditure claimed by the assessee on account of staff fraud Decided against Revenue. Addition made towards accrued interest on NPAs The Tribunal in the asseessees case for the earlier assessment year has not considered the decision of M/s Southern Technologies Ltd. Versus Joint Commnr. of Income Tax, Coimbatore [2010 (1) TMI 5 - SUPREME COURT OF INDIA] wherein it has been held that the RBI directives were only in the context of presentation of NPAs in the balance sheet and the balance sheet of NBFC has nothing to do with the taxable income, which has to be computed as per the provisions of the IT Act thus, the order of the CIT(A) set aside Decided in favour of Revenue. Disallowance of provision of gratuity Held that:- The CIT (A) rejected the claim of the assessee at the threshold without looking into the evidence produced before him but, the fact remains that the assessee has submitted certain documents in support of his claim that the group gratuity scheme of the SBI Life Insurance Company is an approved gratuity fund and it is also a fact on record that the payment to the said fund was made before the due date of submission of return of income for the relevant assessment year. the assessee's claim is required to be examined. The Tribunal has remitted the matter back to the file of the AO to consider the evidence filed by the assessee, such as, certificate issued by the IRDA and thereafter decide the issue - But, in the relevant AY the assessee has filed copy of certificate before the CIT(A) and the CIT(A) has allowed the claim of the assessee after considering the evidence filed by the assessee thus, there is no reason to remit the issue back to the file of the AO for the relevant AY and the order of the CIT(A) is confirmed Decided against Revenue. Disallowance of provision for SME Advances Held that:- The provisions of Sections 36(1)(vii) and 36(1)(viia) of the Act are distinct and independent items of deduction and operate in their respective fields - The bad debts written off in debts, other than those for which the provision is made under clause (viia), will be covered under the main part of Section 36(1)(vii), while the proviso will operate in cases under clause (viia) to limit deduction to the extent of difference between the debt or part thereof written off in the previous year and credit balance in the provision for bad and doubtful debts account made under clause (viia) - The proviso to Section 36(1)(vii) will relate to cases covered under Section 36(1)(viia) and has to be read with Section 36(2)(v) of the Act - Thus, the proviso would not permit benefit of double deduction, operating with reference to rural loans while under Section 36(1)(vii), the assessee would be entitled to general deduction upon an account having become bad debt and being written off as irrecoverable in the accounts of the assessee for the previous year - This, obviously, would be subject to satisfaction of the requirements contemplated under Section 36(2) - the issue needs reconsideration by the authorities below thus, the matter is remitted back to the AO for reconsideration Decided in favour of Assessee.
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2014 (3) TMI 723
TDS on salary to person on Deputation - Deletion made on non-deduction of tax u/s 40(a)(ia) of the act Payment made to HPCL and GAIL Held that:- The payment cannot be considered as payment towards work executed by GAIL and HPCL in the course of work contract the decision in United Hotels Ltd Vs ITO 2004 (11) TMI 293 - ITAT DELHI-E] followed it has been held that reimbursement of salary to the deputed personnel would not attract deduction of tax at source thus, reimbursement of expenses are not subject to tax deduction at source the order of the CIT(A) upheld Decided against Revenue.
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2014 (3) TMI 722
Disallowance of entire expenditure Entire expenses treated as income Genuineness of the expenses - Held that:- There are some employees who are regularly paid over a period of 12 months and some of them for some period - Most of them are having bank accounts with continuous numbers - This indicate that these persons must have employed in group concerns and at the instance of the management, they may be called in to work in different places and their salaries were paid by different firms at the convenience of the management - There are many inconsistencies in the disbursement of salaries as the same person is not figuring in next month's list consistently - Due to influx of time it is not possible to examine each and every amount as the assessee has done business only in one year and has closed down its operations by the end of March, 1997 - 30% of the expenditure claimed is allowed, other than the expenditure on dealers meet and interest, could justify in the facts of the case and accordingly thus, the AO is directed to disallow 30% of the various expenditure claimed, other than interest and expenditure on dealers meet which are separately dealt with. Claim of Interest Held that:- Interest was paid to the partners along with an amount to Dhanalakshmi Bank - The amount paid to bank can be allowed in full - The amount paid to partners would get taxed separately in their hands, so there is no need to disallow as it was only appropriation. Dealers meet expenses Held that:- The whole arrangement was a make believe arrangement as observed by the A.O. and confirmed by the CIT(A) - the claim of dealers meet in its entirety, disallowance of 30% of various expenditure claimed (other than interest) would meet the ends of justice on the given set of facts - The order should not be taken as a basis for considering the allowance of expenditure in the hands of the company, which we were informed is pending for adjudication Decided partly in favour of Assessee.
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2014 (3) TMI 721
Validity of reassessment u/s 147 of the Act Income escapement Computation of cost of construction - inclusion of cost towards common area - excess claim of expenditure - Held that:- The assessee has not disclosed truly and completely all the material facts necessary for the completion of the assessment in its case - By working out the cost of construction per sft. on an incorrect basis, assessee has furnished inaccurate particulars of income, the provisions of S.147 are clearly applicable - In a summary assessment under S.143(1), assessing officer cannot be said to have taken any view for or against the assessee, on the basis of material furnished with the return - since original assessment in this case has been done only under S.143(1) of the Act the decision in Assistant Commissioner of Income-Tax Versus Rajesh Jhaveri Stock Brokers P. Limited [2007 (5) TMI 197 - SUPREME Court] followed - merely because summary assessment has been done earlier in terms of S.143(1), it cannot be said that the assessing officer, has already applied his mind to the material furnished by the assessee along with the return, and it is only on the basis of mere change of opinion, that he has invoked the provisions of S.147 of the Act - the reopening of assessment is very much legal and valid, and the contentions of the assessee is without any merit. Cost of construction per sft has to be determined by dividing the total area received by it in terms of the development agreement, and there is no justification for adopting only the area which the assessee is claiming to be the saleable area - As observed by the CIT(A) in the order, after development, assessee has sold various flats and also sold the parking areas to the flat owners and as such it is not correct to say that there is less expenditure in developing a parking area and a lot more expenditure in developing the kitchen - it is neither practical nor feasible to break up the cost of construction and the sale price into individual elements like fittings, bedrooms etc. and to calculate capital gains on such individual elements - Such an exercise would also be redundant, since a flat consist of all areas which belong to the purchaser including common areas which are used by various purchasers - A lot of developers incorporate common swimming pools, clubs and many other facilities in their integrated development and charge each flat owner a corresponding price, even though by way of advertisement or selling technique, a builder would state that certain portions are free, while other is being charged - The reasons discussed by the Revenue authorities in the orders for making the impugned addition are sound an valid the order of the CIT(A) upheld Decided against Assessee.
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2014 (3) TMI 720
Disallowance u/s 40(a)(ia) of the Act Non-deduction of tax u/s 194J of the Act Whether the expenditure laid out or expended wholly or exclusively for purpose of business so as to allow the expenditure as a deduction - Held that:- The expenditure incurred by Manorama Films towards purchase of telugu picture remake rights of the Hindi Film Lage Raho Munnabhai, which was paid to M/s Vinod Chopra Films Pvt. Ltd. - The AO invoked the provisions of section 40(a)(ia) as expenditure is otherwise allowable as deduction while computing the income of the assessee - the AO did not carry out detailed enquiry regarding allowability of expenditure before invoking provisions of section 40(a)(ia) of the Act thus, the matter is remitted back to the AO for fresh assessment Decided in favour of Assessee.
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Customs
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2014 (3) TMI 718
End use base import of Cannulae and Needles as duty free for use in the manufacture of Disposable syringes with or without needles - despite request no details were provided in respect of needles - But entire quantity of Cannulae was claimed to be waste as no finished goods were produced out of this quantity. - Similarly 2,24,19,597 pcs of Needles claimed to be waste and scrap was beyond the permissible limit of 5% during the period December, 2000 to April, 2003. - Extended period of limitation - Held that:- It is strange that the ld. Authority below has not looked into arise of waste and scrap relating to each financial year covering November 1996 to April 2006. He only looked into the wastage for the financial year 2002-2003. When he made a finding that no records were maintained by the appellant to establish generation of waste and scrap, quantum of goods destroyed does not provide any basis to pass a summary order by him. His order is not self speaking. Appellant after providing information for solitary period again requested to ignore the same having mistakes crept therein. No records being maintained by the appellant to provide year wise reconciliation, ld. Authority should have carefully examined quantum of import of input and issue thereof for use in manufacture, arise of output out of such manufacture and quantum of loss occurred in the process in each case to apply the low. A sketchy picture was drawn by him without year wise analysis. When there is fraud against Revenue no plea of time bar is available to appellant following the ratio laid down in CC Vs. Candid Enterprises [2001 (3) TMI 101 - SUPREME COURT OF INDIA] since fraud nullifies every solemn act. Matter remanded back with a direction that the Adjudication Authority to look into the quantity of input (both goods) imported in each financial year, quantity there of issued and waste and scrap generated out of use thereof in manufacture of finished goods during different financial years covered by the period from November 1996 to April 2006 and ascertain whether each years wastage was within the prescribed limit of SION. - Decided in favor of revenue.
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2014 (3) TMI 717
Misdeclaration of goods - Smuggling of goods - Difference between mark on goods and description on documents - Confiscation of goods - whether Commissioner (Appeals) is right in concluding that the department has failed to prove that the imported Betel Nuts are smuggled one - Held that:- in view of the fact that the betel nuts are non-notified items, the onus to prove that the goods are smuggled lies heavily upon the Revenue and which required to be discharged by production of positive evidences - Revenue cannot first show laxity in investigation and then seek to shift the burden to prove that the goods are not smuggled especially when there is not even any evidence produced to show illegal importation of seized non-notified goods - Actually availability of bill of entry and transfer of Betel nuts from torn bags to new bags could not prove that possession was illegal. Thus onus did not shift to the respondent - Accordingly the Department could not discharge the burden cast upon them. Furthermore, the department has no evidence to prove that goods were imported in violation of Section 111(b) of the Customs Act, 1962 - Decided against Revenue.
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2014 (3) TMI 716
Suspension of license of CHA - regulations 20(2) of CHALR, 2004 read with regulation 19(i) of the CBLR, 2012 - Held that:- the action of suspending CHA license by the Commissioner in Nov 2013 is an order which is incorrect, in as much as when the statements of the officers of importer Binani Cements Ltd and individuals of the appellants firm were recorded in October/November 2012, the authorities did not find it necessary to suspend the license at that time. The call to suspend CHA license by the authorities is belated and unwarranted in the facts of this case. - Decisions in the case of National Shipping Agency [2008 (1) TMI 400 - HIGH COURT OF JUDICATURE AT BOMBAY] and RS Kandalkar [2013 (7) TMI 248 - CESTAT MUMBAI] followed - Commissioner of Customs Kandla Customs House, Kandla directed to reinstate the CHA license of the appellant and permit them to function as CHA. - Decided in favor of CHA.
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Corporate Laws
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2014 (3) TMI 715
Winding up petition - Is an ex-parte default summary judgment obtained in a nonreciprocating foreign country against an Indian company a debt due and payable by it within the meaning of Section 433(e) of the Companies Act, 1956? - Held that:- The entire petition is based on, and only on, the Houston decree. There is no mention in the petition of the original cause of action. Mr. Narulas submission that the Houston decree was on merits is not one that I am prepared to accept. There is no reference to Coastal Marine in any part of the preceding discussion. The only discussion on summary judgment evidence is at internal page 5, and none of it is in relation to Coastal Marine, which is not mentioned even once. Section 13 uses the words any matter thereby directly adjudicated upon. The word matter means the right claimed, not the subject-matter. The Houston court decree has not been made a rule of an Indian court. It has not been subjected to the discipline of Section 13 of the CPC. It is not possible to hold that there is any debt due within the meaning of Section 433 and Section 434 of the Companies Act, 1956. - petition dismissed - Decided against the petitioner.
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FEMA
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2014 (3) TMI 719
Illicit sale and purchase of foreign exchange from and to unknown persons. - contravention of Sections 8(1) and Section 8(2) read with Section 64(2). - retraction of statement by the accused as having been given under the duress and coercion. - Held that:- for the statement by one noticee under Section 40 FERA to be used as evidence against another co-noticee it must be shown that the said statement inculpates the person making it. Otherwise such statement has no value whatsoever. The statement of Shri Parveen Kumar in the present case does not inculpate him at all. Even when he admits to making the entries in the diaries, he seems to wriggle out by explaining that he did it at the instance of Shri Rikabh Chand Jain. He also does not seem to have been aware of the implications of making of those writings. It is futile for the department in the present case to rely on the statement of Shri Parveen Kumar Mehta as substantive evidence to hold him and the co-noticee guilty of contravention of Sections 8 (1) and 8 (2) of the FERA. The proposition noted by the SD that corroborative evidence is needed to make the retraction meaningful and worthy of credence is also erroneous. In fact, since the said admissional statements were retracted even the admissible portion, if any, of the said statements would require corroboration by other independence evidence. This legal position was entirely missed by both the SD as well as the AT What is also striking in the present case is that while the Indian currency was recovered from the residence and dicky of the scooter, no foreign exchange was recovered. The mere fact that Indian currency was recovered does not establish the violation of the FERA by the Appellants. It had to be shown that the said money was related to illegal transactions falling within the ambit of FERA. For all the aforesaid reasons, the AO dated 30th August 1990 passed by the SD and the impugned order dated 15th June 2007 passed by the AT are hereby set aside. - Decided in favor of appellant.
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Service Tax
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2014 (3) TMI 736
Export of services - service of verification of antecedents, financial credibility, copy right infringement, etc. for Indian and foreign clients - Ground on which service tax was demanded is that the entire service was performed in India - Held that:- there is absolutely no evidence to show as to where exactly the report has been delivered or by what mode it has been delivered. - It can be seen from the portion of the order-in-original extracted above that the Commissioner has not at all taken the issue as to whether the delivery of report to the client located abroad and where it is used amounts to part performance abroad or not. He has simply gone on the assumption that delivery of report is not a part of performance at all. According to him, since service has been rendered only in India even though report has been delivered to the client abroad, it has to be treated as entire service performed in India and not part service performed abroad - in this case also the service has to be treated as partly performed in India and partly performed outside India and therefore, it is covered by Export of Service Rules, 2005 - Following decision of Commissioner of Service Tax Versus BA Research India Ltd. [2009 (11) TMI 213 - CESTAT, AHMEDABAD] - Decided in favour of assessee.
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2014 (3) TMI 735
Application of Section 73A - Whether service tax collected from the customers and kept in the escrow account and not paid to the Government would attract provisions of Section 73A of the Finance Act, 1994 or not - Held that:- It can be seen that if a person has collected any amount as service tax, that amount has to be paid to the Government. In this case, question is whether that amount can be said to have been collected. Admittedly, the meaning of escrow account is that amount is kept with a third party and has to be disbursed to a person who is eligible to get the same as and when the issue attains finality. It is stated that the amount collected by the appellant was kept in escrow account and he has given an assurance to the buyer that if the amount is not liable to be paid, the same shall be paid with interest. It is only a deposit which is not taken into account of the appellant and kept in a separate account to ensure safety of money and to ensure disbursement to the ultimate customer. Needless to say that if the liability exists and if it is held that the appellant is liable to pay, the amount will have to be paid to the Government since it is in escrow account. Therefore Commissioner should have determined the liability and if there was liability, the amount in escrow account would have been paid to the Government. Therefore, at this stage, we cannot say that the amount has been collected as service tax and therefore, the clause (2) of Section 73A is attracted and the amount should have been paid to the Government by the appellant. It is not the case of the department that the appellant is liable to pay service tax on the service rendered - Decided in favour of assessee.
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2014 (3) TMI 734
Demand of service tax - Erection, Commissioning and Installation Service - Held that:- The Chief Engineer, Water Resources Department of the Government of Maharashtra is not a commissioning and installation agency as they do not undertake these activities for anybody else except themselves. Further, the erection and commissioning or installation should be in relation to plant, machinery, equipment or structures. As clarified by CEBC vide circular No. 790/09/2004 # dated 17/09/2004 erection of structures referred to therein means civil works to installation/commissioning of a plant and machinery. Agricultural dam or sluice gates thereto cannot be considered as a plant and machinery or equipment or structures thereof. They are in the nature of infrastructural construction catering to the needs of agriculture. They are excluded from the purview of service tax levy both under the category of commercial and industrial construction service and Works Contract services specifically. - activity undertaken by the appellant falls outside the purview of service tax, and therefore, the appellant is not liable to pay any service tax - Decided in favour of assessee.
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2014 (3) TMI 733
Denial of refund claim - Unjust enrichment - whether unjust enrichment will be applicable in the refund of Service Tax once collected by the appellant but subsequently returned to the customers by issue of credit notes - Held that:- unjust enrichment is not applicable to the Service Tax refunds when the amount has already been paid to the customers by issuing credit notes or is not paid at all by the customers - Following decision of CST Ahmedabad Vs. Poornima Advertising & Promotion Pvt. Ltd. [2009 (11) TMI 456 - CESTAT, AHMEDABAD] - Decided in favour of assessee.
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Central Excise
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2014 (3) TMI 714
Condonation of delay for filing an appeal before Commissioner (Appeals) - Denial of rebate claim - Bar of limitation - though the petitioner has challenged the appellate Commissioner's order rejecting the appeal of the petitioner on the ground of delay, a separate prayer has also been made challenging the very order of adjudication passed by the Deputy Commissioner. - Held that:- we cannot view the limitation imposed under the statute leniently so as to bring through the backdoor the concept of sufficient cause flowing from section 5 of the Limitation Act. Even otherwise, the delay remains largely unexplained. The statute provided for a limitation of 60 days with a maximum possible extension of further 30 days. The statutory scheme thus recognizes that the right to appeal beyond the said period would be lost without any possibility of extension. Had there been some extraordinary circumstances preventing the petitioner from presenting the appeal within such time coupled with the gross injustice on account of termination of appellate remedy, we would have still considered the case of the petitioner for invoking the extra ordinary writ jurisdiction. In the present case, however, we find that the explanation for delay itself is insufficient. Counsel for the petitioner stated that the consultant was instructed to file appeals on behalf of both the entities and only due to oversight, he preferred one appeal. - Such general statement would not explain such inordinate delay. Particularly when the statute puts a lid on the number of days of delay that the Commissioner can condone beyond which the appeal simply cannot be entertained, it would not be possible to ignore such a long delay on mere explanation that under a bonafide impression that the consultant would have filed appeal or that the appeal of Gujarat Polyfilms would cover the case of the petitioner as well - Decided against assessee.
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2014 (3) TMI 713
Duty demand - misuse of area based exemption - fraudulent showing expansion of manufacturing capacity - Benefit of Notification No.49-50/2003 dated 10/6/2003 - Notification No.76/2003-CE dated 5.11.2003 - Mis dclaration of goods - Penalty u/s 11AC - Held that:- Commissioner (Appeals) has not appreciated finding of adjudicating authority where investigations conducted by department have clearly brought out that fake transaction had been undertaken with the sole motive of showing procurement of machines and subsequently to show 25% expansion of existing capacity which was requirement of for eligibility for availment of exemption under Notification no..49-50/03 as amended. Above transaction could not be possible without Shri Ramesh Gupta who organized paper transaction with sole motive to avail benefit of area based exemption. I have no hesitation to hold that findings of Commissioner (Appeals) are erroneous as the Commissioner (Appeals) held that no doubt two machines actually supplied which were found installed in the factory. These observations are without any evidence and contrary to the investigations reported above. His basis for saying that no action has been taken against supplier for mis-declaration cannot ipso-facto result in granting unintended and fraudulent benefit to the respondent - Revenue has clearly made out a case for non-grant of exemption under Notification No.49-50/03 against the respondent - Decided in favour of Revenue.
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2014 (3) TMI 712
Duty demand - Clandestine clearance on account of removal from another factory - Revenue contends that there are sufficient evidences on record that M/s. Pearl Pack was working as an individual unit prior to 31.03.05 and their factory was closed only with effect from 01.04.2005 - Held that:- adjudicating authority has erred in not taking the cognizance of the evidence produced by the appellants in support of the fact that M/s. Pearl Pack was an independent manufacturing unit prior to 31.03.2005 and confirming the demand of duty against appellant No. 1 based upon the presumptions of the investigating officers without placing on record any direct and positive evidence in support of the allegations levelled against the appellant No.1. In view of the various evidence produced by the appellants, I hold that M/s. Pearl Pack was an independent manufacturing unit prior to 31.03.2005 and Central Excise duty on the clearances effected by M/s. Pearl Pack cannot be demanded from appellant No. 1 for the period prior to 31.03.2005 and demand of Rs. 23,16,658/- is set aside. Consequently, penalty of Rs. 23,16,658/- imposed under Rule 25 read with Section 11 AC ibid by the adjudicating authority is also set aside. As against the entire evidences taken into account by the appellant authority, the revenue has not rebutted the same with production of effective counter evidences. They have merely reiterated the stand that even prior 01.04.2005 the clearances of both have to be clubbed. Inasmuch as, the Commissioner (Appeals), has taken into account the various evidences as detailed above, I find no infirmity in the view adopted by him - Decided against Revenue.
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2014 (3) TMI 711
Reversal of CENVAT Credit - Destruction of goods - Held that:- inputs were admittedly issued from the raw materials stock and were destroyed when the same were in the blow room. As such it can be held that the inputs were under process. Further the appellant have also claimed the expenses towards dying and process purchases thus lending support to their stand. In view of the above, there is no legal obligation on the part of the appellant to reverse the Cenvat credit so availed by them - Decided in favour of assessee.
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2014 (3) TMI 710
Evasion of duty - Clandestine removal of goods - Private register showing the production and sale of three months recovered from the assessee office - Held that:- sugar was being used in other preparations also besides preparation of basic mix such as chikki, orange bar syrup, crunchy chocolate, ripples etc. In this regard I find that the Range Superintendent of Central Excise range-IV Bhopal vide his letter dated 26.04.2001 has verified the assessees claim and certified that sugar was being used by them for the preparation of basic mix, orange bar syrup, for making chikki for butter scotch and crunchy chocolate, for making ripples. He has also certified the total sales of orange bars, butterscotch, and crunchy chocolate and ripple flavor ice creams as submitted by the assessee. Thus after going through the report of the range Superintendent I find that the quantity of ice cream manufactured cannot be determined correctly by taking consumption of sugar because sugar is being used in manufacture of other goods also which have a high sugar base. Assessee was also engaged in the manufacture of various types of other products, requiring use of sugar, the said fact cannot be made the basis for clandestine activities. Otherwise also, I find that it is well settled law that charges of clandestine removal cannot be made on the basis of alleged consumption of one of the raw materials - As regards the challans recovered from the dealers of the assessee I find from records that the investigating officers have not brought any evidence to co-relate the same with any other evidence such as transportation of goods, receipt of payment for such supplies - Decided against Revenue.
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2014 (3) TMI 709
Valuation of goods - Inclusion of pre-delivery inspection charges and free maintenance expenses - Validity of CBEC Circular No.643/34/2002-CX dated 1.7.2002. - Held that:- In Tata Motors Ltd. [2012 (9) TMI 244 - BOMBAY HIGH COURT], it was held that, as per Section 4(3)(d) of the Central Excise Act, 1944 the PDI and free after sales services charges can be included in the transaction value only when they are charged by the assessee to the buyer. - The circulars, inter alia, purport to hold that where the assessee sells the motor vehicles to a dealer (buyer) at a given price and the dealer in turn sells the said motor vehicles to a customer at a price with dealers margin which includes the PDI charges and after sales service charges, then, the assessable value for determining the Central Excise duty payable by the assessee has to be determined by including the PDI and after sales service charges even if they are not been charged by the assessee to the dealer, which in our opinion is contrary to the provisions of Section 4(3)(d) of the Central Excise Act, 1944. In the case of Tata Motors Ltd. [2012 (9) TMI 244 - BOMBAY HIGH COURT], HC had taken note of the decision of the Larger Bench in the case of MARUTI SUZUKI INDIA LTD [2010 (8) TMI 49 - CESTAT, NEW DELHI] and yet came to the conclusion favourable to the appellants in that case. - Decided in favor of assessee.
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2014 (3) TMI 708
Duty demand - Revenue contends that as per Rule 16 of the Central Excise Rules, after carrying out the repair work, appellant is required to pay appropriate duty or pay duty equivalent to the CENVAT credit taken - Held that:- statement of the General Manager of the appellant is on record who stated that the appellant has undertaken the process of annealing, drawing and pickling, which also does not amount to manufacture. It is also stated by the appellant that they have not taken the CENVAT credit on these goods when they received for repair. In these circumstances, they are not required to pay any duty or required to reverse the credit taken, as they have not taken CENVAT credit. These facts are on record and not rebutted by the revenue. Mere presumption that goods received for repair has been replaced by another goods without evidence on record is not acceptable. In these circumstances, the statement recorded by the department during the course of investigation is admissible. Therefore, as the appellant has not taken CENVAT credit on the goods received from repair, they are not required to pay duty at the time of clearance after repair - Decided in favour of assessee.
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2014 (3) TMI 707
Reversal of CENVAT Credit - Whether the appellant is required to reverse the input credit availed by them for manufacturing of excisable goods which became exempted later-on - Held that:- when the input credit was taken by the appellant the final product was dutiable which became exempted later-on, therefore the appellant is not required to reverse the credit and the provisions came into effect from 01.03.2007 are not applicable retrospectively - Following decision of CCE Bangalore vs. Gokaldas Intimate Wear - [2011 (4) TMI 1123 - KARNATAKA HIGH COURT] - Decided in favour of assessee.
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2014 (3) TMI 706
Benefit of Cenvat credit - Availment of Cenvat credit of excess quantity on pig iron, scrap, CPC production without actual use of the same in the manufacture of their final product - difference of opinion - Held that:- matter referred to larger bench with the following questions: Whether following previous decision of CESTAT in Aditi Ispat partial waiver of pre-deposit is to be ordered as held by Member (Judicial) with a direction to deposit Rs.Thirty lakhs. Or Whether based on the basis of analysis and use of carbon required in manufacture of M.S.Ingots, use of extra carbon utilization through extra consumption of pig iron is to be considered not feasible and thus prima facie partial pre-deposit of Rs.1.25 crores is to be ordered as held by Member (Technical).
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2014 (3) TMI 705
CENVAT Credit - Whether the process of printing as well as on lamination of printed poly film amounts to manufacture or not - Held that:- even if the printing amounts to manufacture, the final product which emerges would be printing under Printing Industries Act, thus classifiable under Chapter 49 which attract nil rate of duty. We also find prima facie favour with the appellant's contention that the extended period of limitation would not be available to the Revenue. However, taking into consideration that a part of the demand would be within the limitation period and considering that the appellant has already deposited an amount of Rs.40 lakhs, we find offer of learned advocate to further deposit of amount of Rs.20 lakhs as fair offer - Conditional stay granted.
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2014 (3) TMI 704
Demand of duty on intermediate products - captive consumption - Final product supplied under international competitive bidding to mega power projects. - Since final products were exempt under notification 6/06-CE (S.No.91), revenue denied exemption Notification 67/95-CE - Arguing for the applicant, learned advocate submits that as per notification No.67/95-CE, they are not required to pay excise duty in situations excluded in the second proviso to said notification. One of the exclusion clauses is in respect of goods for which obligation under rule 6 of Cenvat Credit Rules, 2004 is discharged. - Held that:- Following decision of assessee's own previous case we grant waiver of pre-deposit of dues arising out of the impugned order for admission of appeal. Further there shall be stay on collection of such dues during pendency of appeal - Stay granted.
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2014 (3) TMI 703
Reversal of CENVAT Credit - Final product supplied under international competitive bidding to mega power projects. - Exemption under Notification No. 6/2006, S. No. 91 - Held that:- , there are exceptions provided under Rule 6(6) of CENVAT Credit Rules. One such exception under Rule 6(6)(vii) applies to goods supplied against international competitive bidding. In the present case, not only the circuit breakers have been supplied against international competitive bidding but also the mandatory spares. It was the Governments policy to treat supply against an international competitive bidding on par with exports and grant exemption. In the case of exports, the goods are not only supplied duty-free but also the exporter is allowed to either get a refund of the duty on the inputs or a drawback. Equity demands that the appellants who have supplied the impugned goods against international competitive bidding are not burdened with the duty on the inputs which have been supplied along with the main equipment as mandatory spares, without which they could not have fulfilled their obligation under the international competitive bidding - Decided in favour of assessee.
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2014 (3) TMI 702
Waiver of predeposit of duty - applicant removed the capital goods as such without reversal of the credit from the applicants other units - Held that:- On perusal of the appeal, most of the capital goods were used approximately within a span of 3 to 6 months. Hence prima facie these decisions relied upon by the learned advocate would not apply to this case. In those decisions, the capital goods were cleared after a long use and the dispute was whether the credit initially taken is to be reversed or whether the credit of transaction value is to be reversed - Conditional stay granted.
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2014 (3) TMI 701
Waiver of pre-deposit of duty - cenvat credit in respect of capital goods such as M.S. Plates, Angles, Channels, Joist etc. - Held that:- Applicant had pleaded in a general nature that the items in question for use in the fabrication of capital goods or for the repair of capital goods without naming the capital goods. In these circumstances demand is rightly made. - following the decision in the case of Vandana Global (2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)), applicant had not made out a fit case for total waiver of duty - Conditional stay granted.
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2014 (3) TMI 700
Denial of exemption in terms of Notification No. 125/84-C.E., dated 26-5-1984 - Clearances against DFRC - Clearances under the permitted DTA quota by Development Commissioner - Held that:- Supply of goods to DFRC holders are considered to be as deemed export as per EXIM Policy and the same are not covered by the permission given for DTA sales and as such have to be treated as goods not allowed to be sold in India. Consequently, all the decisions have held that such clearances attract exemption in terms of Notification No. 125/84-C.E., dated 26-5-1984 - in any case, such clearances were exempt under Notification No. 125/84-C.E., dated 26-5-1984. Accordingly, the duty confirmation against the appellant is not called for and the same is, accordingly, set aside - Decided in favour of assessee.
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2014 (3) TMI 699
Waiver of pre deposit - Held that:- deposit under Section 35F is not a payment of duty - appellant has made out strong prima facie case for waiver of pre-deposit and grant of stay and accordingly, the requirement of pre-deposit of the amounts involved is waived and stay of recovery is granted during the pendency of the appeal - Stay granted.
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CST, VAT & Sales Tax
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2014 (3) TMI 739
Assessment of sales tax Chargeability of electromagnetic waves or radio frequency - Whether it was open to the AO to assess sales tax by including charges pertaining to electromagnetic waves or radio frequency? - Held that:- Judgment in BHARAT SANCHAR NIGAM LTD. (BSNL) Versus UNION OF INDIA [2006 (3) TMI 1 - Supreme court] followed - It was not open to the AO to assess the appellant to sales tax by including charges pertaining to electromagnetic waves or radio frequency - Yet, in terms of the decision in the earlier Judgment, the said component was taken into consideration for raising the demand under reference - The earlier assessment, out of which the instant proceedings have arisen, was partly unjustified - The Authority was only justified in raising a demand based on the rental collected by the appellant whilst rendering services, as also charges collected for the equipment supplied to consumers It is just and appropriate to set aside the proceedings initiated by the Sales Tax Authorities and require the Assessing Authority to re-determine the sales tax in the matter - The entire proceedings initiated against the appellant are set aside, with liberty to the Assessing Officer to re-compute the sales tax and raise a demand thereon Decided in favour of assessee.
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2014 (3) TMI 738
Fixed capital investment - assessee had sought for exemption under diversification, modernization/expansion programme - UPTT, 1948 - Whether preoperative expenses in the form of payment of interest towards the advance loan taken from the financial institution would form part of additional fixed capital investment (FCI) - Held that:- Judgment in Commissioner of Trade Tax, U.P. & Anr. vs. M/s.Kajaria Ceramics Limited [2005 (7) TMI 351 - SUPREME COURT OF INDIA] followed The legislature has consciously used the expression "means" immediately after the expression "fixed capital investment" to imply and ensure that the definition is exhaustive. Further, the Court has observed that the language employed by the legislature while defining the meaning of the expression "fixed capital investment" is unambiguous and therefore, no inclusion can be made in the definition by means of interpretation - That portion of the order wherein the High Court had granted relief to the assessee requires to be set aside Decided in favour of revenue. Whether the transformer/C.V.T. installed for regulating voltage for running of the machinery in the factory premises would fall within the meaning of the expression "fixed capital investment" - Held that:- Explanation 4(b) (i) of Section 4-A speaks of investment made on machinery/apparatus, components etc. for establishment or running of the factory would fall within the meaning of the expression "fixed capital investment" - The appellant has purchased the aforesaid machinery used by the respondent for the purpose of controlling the fluctuation in the supply of electrical energy to the machinery/equipment installed in the factory premises Thus, the investment that is made by the assessee would certainly fall within explanation (4)(b)(i) of Section 4-A - Appeal allowed in part and set aside the judgment and order of High Court insofar as the relief that is granted to the respondent in payment of interest - Judgment and order passed by the High Court insofar as the purchase of the transformer for erection in the business premises for running of the machinery confirmed Decided partly in favour of revenue.
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2014 (3) TMI 737
Refund of the excess tax paid - reduction of rate of tax with retrospective effect - What is the meaning to be assigned to and scope of the expression "tax, if any, already collected at the higher rate shall be paid over to the government and tax, if any, already paid shall not be refunded" - Held that:- The plain reading of the notification would make it apparent that the State Government has expressly made it clear that if, for any reason, the assessee had collected and had paid the higher rate of tax to the State Government the same shall not be refunded - The prohibition of refund is only in respect of the tax collected at the higher rate by the dealer and remitted to the State Government - The intention of the State in issuing the said notification has been reflected in the clarification issued by the CC Taxes, Thiruvananthpuram in Civil Appeal No. 1827 of 2004 - It states that the notification is based on the intention of the State that retrospective operation given to the notification must not result in outflow of money from the Government exchequer - Having paid the higher rate of tax to the State the assessee is not entitled for refund of the aforesaid amount - We say so for the reason that the rate of tax at the relevant point of time was 8% - The appellant had paid that amount - By amendment, though the rate of tax was reduced to 4%, the assessee cannot take advantage of the same and gain undue monetary advantage not due to him - Assessing authority was justified in passing the order of rectification rectifying his earlier order wherein he had ordered for refund/adjustment of the excess tax paid for the future demands - The High Court has rightly concurred with the view of the assessing authority and rejected the claim of the assessee Decided against assessee.
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Indian Laws
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2014 (3) TMI 732
Validity of notifications issued by District Collectors, inviting applications for grant of licences for the relocated A-4 excise shops - whether arbitrary, illegal and contrary to the A.P. Excise (Grant of licence of selling by shops and conditions of licence) Rules, 2012 - Jurisdiction of the High Court - Held that:- Whether or not the undisposed A-4 shop should be relocated are matters of legislative or executive policy and this Court would not sit in judgment over the policy decisions of the State. The Excise Policy for the year 2014, while permitting the Commissioner to relocate undisposed shops, requires an intensive campaign to be undertaken to educate the public about the evil effects of drinking and for steps to be taken to initiate establishment of de-addiction centres in each district. The manner in which the revenue needs of the State should be balanced with the need to educate the public of the evil effects of drinking are also not for this Court to adjudicate in proceedings under Article 226 of the Constitution of India. This contention urged by the petitioners, who are carrying on trade in the sale of IMFL and FL in retail shops, is akin to the devil quoting the scriptures, and does not merit acceptance. - Writ petition dismissed.
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