TMI Tax Updates - e-Newsletter
March 27, 2017
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:
Revision u/s 263 - nature of expenditure - revenue or capital - the issue of diversion of high tension lines of open cast mines of WCL is wholly and exclusively connected with facilitating the business of the assessee which is mining - allowed as revenue expenditure - AT
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Income Tax:
Reopening of assessment after 4 years - approval not taken u/s. 151(1) - non appropriate sanctions - the notice u/s. 148 is bad in law and is quashed - AT
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Income Tax:
Demand of TDS amount earlier deducted but returned later to the employees - Insurance company directed to pay/deposit amount deducted towards TDS - The poor workman, who is not even assessee and whose income at the relevant time was not taxable, cannot be made to undergo entire process of filing return and reclaim the amount - HC
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Income Tax:
Admission of Additional evidence by the ITAT - Tribunal had in fact considered contents of the documents on merits - Tribunal did not commit any error in the facts and circumstances of the present case in not having passed the order on the application for leading additional evidence contained in AEPB before proceeding to pass the order on merits - HC
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Income Tax:
Disallowing 100% of repairs & maintenance expenditure of buildings and plant & machinery - AO directed to treat 65% of the impugned claims as capital expenditure entitled for depreciation and balance 35% as revenue expenditure. - AT
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Income Tax:
Rejection of Grant of exemption u/s 10(23C)(via) - Merely because it charges fees for educational courses (as in the case of any school or college) or that it entered into arrangements with other institutions (again charitable) to set up satellite centers, to give medical treatment, or that its treatment involves a layered subsidization programme, would not justify rejection of its application. - HC
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Income Tax:
Rectification of mistake - interpretation and consequence of expression "from the date of orders sought to be amended," u/s 154 (7) - in the garb of remand order in relation to some other aspect, Assessee, could not have taken advantage of extension of limitation by seeking commencement thereof from the order passed by A.A. on the issue on which remand was made - HC
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Income Tax:
Revision u/s 263 - provisions of Section 68 as amended given retrospective operation - Asking for source of source can be relevant inquiry - Demands confirmed - HC
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Income Tax:
Penalty proceedings u/s 271(1)(c) - protective assessment - there can be a protective order qua assessment, there cannot be a protective order in respect of penalty - HC
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Income Tax:
Adjustment of refund with the dues / tax arrears - a proposal for adjustment, by way of a show cause notice, will have to be served on the person, to whom, refund is due. The proposal, to be meaningful, would have to set out the details and the reasons as to why adjustments is required to be carried out by the Revenue, against the refund due - HC
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Income Tax:
AO directed not to reduce interest payable to the partners on their capital contribution and remuneration from the eligible profits for grant of deduction u/s 80IB because, it is the discretion of the assessee to pay interest and remuneration to partners or not - AT
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Income Tax:
Addition made u/s. 43B - Customs duty liability - the entire amount of customs duty liability has been adjusted against export obligation before the due date for filing return of income - claim of deduction allowed - AT
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Customs:
Valuation of imported goods - market enquiry alone cannot become the basis of enhancement of the value unless the results of the market enquiry are corroborated by independent evidences which could be contemporary imports - enhancement of value not sustainable. - AT
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Customs:
Project import - moulds were cleared without availing the benefit of Project Import Regulations, the appellant have paid applicable custom duty therefore once the import were not made under Project Import Regulations in respect of 10 moulds, no contravention or violation of Regulation can be alleged - AT
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Customs:
Imposition of personal penalties u/s 112 of the CA, 1962 - both the appellants were indulged in purchase of fabrics in cash without any documents - the appellants’ claim of ignorance, is without any merits - levy of penalty confirmed though reduced - AT
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Customs:
Classification of imported goods - FOF (Fibre Optic Ferrule) - Revenue wants to classify the item under Chapter 6914 because of its constitution as it is made up of ceramics (zirconia oxide); but because of the reason that the identity of the article is associated with its primary function, when it is essential part of fiber optic connector of 8536; the item is to be classified under Chapter Heading 85389000. - AT
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Corporate Law:
Winding up petition - Whether an employee can maintain a Petition for winding up of a Company under section 439 r/w sections 433(e) and 434(1)(a) of the Companies Act, 1956 as a creditor based on the claim of the recovery of his unpaid salary and wages? - Held Yes - HC
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Service Tax:
Rejection of refund claim - the case of appellant is that the dispute pertains to the rejection of refund claim and not to a decision on taxability - SCN u/s 73 was not issued - the impugned order rejecting the refund claim on ground of taxability is not sustainable as taxability has not been asserted by appropriate process and is set aside - AT
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Service Tax:
Nature of Activity - provision of services or mere profit sharing arrangement - The amount received by the appellants, though called as “profit sharing” is only a consideration from the agents for promoting the business at agreed terms and is therefore very much a business auxiliary service - liable to service tax - AT
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Service Tax:
Taxability - Renting of immovable property service - vacant land - the levy of tax on the rental income derived by the appellant from the lessee is beyond the scope of taxability - AT
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Service Tax:
Refund - programme producers service - refund claim allowed on the ground that the service was taxable as “commercial use or exploitation of an event service” which was incorporated in FA, 1994 only w.e.f. 1st July 2010 and hence not liable to tax for the prior period - refund allowed - AT
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Central Excise:
Cenvata Credit - Once the credit of inputs used in exempted goods stands reversed, the demand for reversal of 8%/10% amount of value of exempted goods in terms of Rule 57 AH or Rule 6 of CCR does not sustain. - AT
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Central Excise:
Imposition of penalty u/r 25 - CENVAT credit - Even though the goods are not confiscated there is clear contravention of the provisions of the Rules/Notifications as provided under Sub-Clause (d) of Rule 25 of CER, 2002. Therefore, the penalty imposed is just and proper - AT
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Central Excise:
Imposition of penalty - reversal of credit for obtaining the Terminal Excise Duty (TED) benefit from the DGFT - Since the appellant has reversed the cenvat credit before issuance of SCN and also paid interest attributable to such late reversal of cenvat credit, the penalty cannot be imposed - AT
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Central Excise:
CENVAT credit - Concast blooms - structural cobbles - rail cuttings - The inferences based on possible loss on sale, lesser usage of electricity or gas etc. are not sufficient enough to deny credit on inputs which are otherwise legitimately available to the appellant - AT
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Central Excise:
SSI Exemption - clubbing of turnover of dummy units - non-issue of notice/non-participation of the other units whose turnover was added to turnover of main appellant, resulting in the present demand, puts the whole proceedings in legal jeopardy - AT
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Central Excise:
SSI exemption - exemption for own products, manufactured by SSI units, cannot be denied on the ground that the said unit undertaken manufacture and clearance of branded goods for which duty has been discharged by availing the Cenvat credit. - AT
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Central Excise:
Manufacturers of excisable goods – stainless steel patta/pattis - The closure of units admittedly, beyond the control of the assessee/appellant, is not to be treated as a failure to comply with the provisions and conditions of the notification during the period of forced closure of the units. The nonproduction of excisable goods during these two months can more appropriately termed as ceasing to work rather than failure to comply with the provisions. - AT
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Central Excise:
SSI exemption - dummy units - use of brand of others - Not knowing the excise provisions for duty liability is not a factor for setting aside the duty demand - AT
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Central Excise:
Imposition of penalty u/r 26 of CER 2002 on transporters - clandestine removal - there is no evidence to prove that the lorry drivers or the owners had involved themselves in clandestine clearance - The goods were accepted and carried by the drivers on the assurance that they would be issued invoices - No penalty - AT
Articles
Notifications
Customs-
10/2017 - dated
24-3-2017
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ADD
Seeks to order provisional assessment on imports of "1,1,1,2-Tetrafluoroethane or R-134a " ,originating in or exported from People's Republic of Chinaby M/s. Zhejiang Sanmei Chemical Ind. Co., Ltd. (Producer/Exporter) [China PR], M/s Zhejiang Sanmei Chemical Products Co., Ltd (Exporter) [China PR] and M/s Jiangsu Sanmei Chemical Ind. Co., Ltd (Producer) [China PR] into India, till the finalization of New Shipper Review initiated by DGAD, vide notification No.15/22/2016-DGAD dated 27.02.2017
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09/2017 - dated
24-3-2017
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ADD
Seeks to impose anti-dumping duty on the imports of Indolinone originating in or exported from the People's Republic of China up to and inclusive of 20th November, 2019
SEZ-
S.O. 919(E) - dated
17-3-2017
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SEZ
Central Government notifies 2.02 hectares (5.00 acres) area at Manikonda Village, Rajendra Mandal, Ranga Reddy District, in the State of Telangana and constitutes a Approval Committee
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2017 (3) TMI 1248
Penalty under section 271(1)(c) - non disclosure of the income for assessment year - Held that:- Income Tax Officer included the amount of ₹ 24,600/in the total income of the assessee for the assessment year 1950-51 and imposed penalty under the provisions of the Income Tax Act, 1922 though in the books of accounts relating to November 1948, certain cash credits aggregating to ₹ 24,600/were found. The High Court held in the aforesaid set of facts that the entries aggregating to the amount of ₹ 24,600/being made in the assessment year 1948-49 and the relevant assessment year being assessment year 1949-50, no penalty could be imposed on the assessee for non disclosure of the income for the assessment year 1950-51. - Decided in favour of the assessee
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2017 (3) TMI 1247
Admission of Additional evidence by the ITAT- exemption u/s 54F - an opportunity to the Appellant to rebut the detrimental conclusions - Held that:- In this case the appellant produced the additional evidence and admittedly after making submissions in support of it being allowed to be produced, also made submissions on merits. The petitioner/appellant did not call upon the Tribunal to pass an on order on his application to produce additional evidence contained in the AEPB before making his submissions on merits and therefore proceeded upon the understanding that the application has been allowed. The Tribunal has taken into consideration the submissions of counsel for the appellants based on the documents forming part of AEPB. There is no doubt in our mind that the Tribunal had permitted the appellants to make submissions on the basis of these documents. If that were not to be case, there may have been something to be said in favour of the appellants, however, in the present case the appellants were aware that the attention of the Tribunal had been invited to the documents in question and the Tribunal had in fact considered contents of the documents on merits and as to how it would affect the appellants' case. Having done so, in our view no injustice has been caused to the appellants. Had the Tribunal declined to consider the documents in our view it would have been appropriate that some reasons will have to be given by them for depriving the parties the benefit of the submissions to be made on the basis of such additional documents. This, in our view is necessary since the rules itself provide for the right to seek reliance upon additional documents. We have no doubt that in the present case the Tribunal did not commit any error in the facts and circumstances of the present case in not having passed the order on the application for leading additional evidence contained in AEPB before proceeding to pass the order on merits of the controversy in the appeal. - Decided in favour of revenue Applicability of Section 54F(1) juxtaposed with Section 54F(4) - non-completion of construction of the building in which the appellant – assessee had agreed to purchase flats - contiguity of three flats which the appellant – assessee had agreed to purchase - Held that:- We have already observed that we are not required to go into this aspect in order to answer the question, since on first principles, we find that the assessee had not complied with Section 54F. In our view it is not necessary to consider this aspect of challenge and hence reference to said decision is of no avail to the assessee. The other cases enlisted by us in this judgment have no bearing on the facts of the case of the Appellant herein. In the course of the submissions in support of the Appellants' case over exemption under section 54F Mr. Shah has strenuously argued and tried to draw a parallel between the provisions of Section 24(2) of the 1922 Act and Section 72 contending they are in pari materia. Likewise Sections 22 and 22(2A) were in pari materia with Sections 139 and 80 respectively of the 1961 Act. However, in our view this does not come to assistance of Mr. Shah inasmuch as the language of Section 54 will not admit of such an interpretation. We have already taken a view that the consequences of the amount of capital gains or difference between amount spent for purchase of house and the total amount of capital gains not being deposited in the specified account in the case of Humayun Suleman Merchant (2016 (9) TMI 70 - BOMBAY HIGH COURT). We find no reason to take a different view in the facts and circumstances of the present case. - Decided in favour of revenue Tribunal infringed the principles of natural justice in not providing an opportunity to rebut the conclusion of the Tribunal based on circular no.495 - Held that:- It becomes evident that the appellant had argued his appeal entirely. Therefore we believe that if the appeal had been decided in favour of the appellant the appellant, he probably may not have considered the procedure followed by the Tribunal as ad-hocism. The Revenue could have possibly objected to the course followed by the Tribunal. In the circumstances we do not find that the Tribunal infringed upon the principles of natural justice in not providing an opportunity to the Appellants to rebut the conclusions described as detrimental. In any event this Court is not in a position to verify whether in fact the contents of the circular were put to the assessee or whether the assessee had dealt with the submissions before the Tribunal. These are matters within knowledge of the Tribunal and if a diligent assessee would have approached the Tribunal for rectification, if he felt there was justification.However, that not having been done, we do not find that the Tribunal can be faulted in present set of facts - Decided in favour of revenue
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2017 (3) TMI 1246
Nature of interest income - income of the assessee was assessable under the head 'business' rather than income from 'other sources' - Held that:- It is not disputed that the assessee had advanced loan to about eight parties in the 1970s, as could be gathered from the facts incorporated in the order of the Income Tax Appellate Tribunal in the appeal pertaining to the assessment year 1984-85. Since the loans were not recovered and the business of banking and money lending was being wound up, the assessee had to continue with its establishment at Nagpur and also had to incur expenses for the business establishment. The facts involved in the case before the Gujarat High Court and the present case are similar and it would be necessary to hold in the circumstances of the case that the activity of advancing money to about eight parties by the assessee was a sort of an organized activity based on the object mentioned in the Memorandum and Articles of Association of the company and the income that was derived by the assessee was liable to be taxed as income from business and not income from other sources. It would be necessary to note that the assessee had advanced a sum of ₹ 2,00,000/to Shri Ramprasad in the year 1975 on a pronote with interest of 12% per annum. Ramprasad paid the interest to the assessee only till 31.03.1978 and thereafter did not pay a single pie towards interest or principal. As nothing could be recovered from the party, the loan was ultimately written off in the year 1984 by the assessee. The assessee claimed that since no real income was earned by the assessee, nothing could be assessed in respect of the same. In the aforesaid set of facts, we find that the Income Tax Appellate Tribunal was not justified in adding accrued interest on the loan advanced to Shri Ramprasad, which was ultimately written off in the year 1984. An addition in respect of the accrued income of the nonperforming asset could not have been made. The income of the assessee was assessable under the head 'business' and not income from 'other sources'. Having answered the aforesaid question in favour of the assessee, we hold that in the circumstances of the case, there was no justification in law for the disallowance of 20% of the establishment expenses. We further hold that the set off of losses of earlier years could be allowed as deduction during the relevant assessment year. We also hold that in the circumstances of the case, no income from interest on the loan to Shri Ramprasad could be assessed during the relevant assessment year on accrual basis when the loan was written off in the year 1984.
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2017 (3) TMI 1245
Grant of exemption under Section 10(23C)(via) rejected - Held that:- In the facts of the present case, it is seen that the objects of the assessee society are solely for the purposes of education and medical care and not for purpose of profit. It is only if it is found that the assessee has been carrying on its activities for the purposes of profit, contrary to its objects, the prescribed authority would be justified in rejecting the application for approval under Section 10(23C)(vi) of the Act. Merely because it charges fees for educational courses (as in the case of any school or college) or that it entered into arrangements with other institutions (again charitable) to set up satellite centers, to give medical treatment, or that its treatment involves a layered subsidization programme, would not justify rejection of its application. For these reasons, the impugned order, denying exemption under Section 10(23) was not justified; the order dated 27 April,2012 is hereby quashed. The Revenue is directed to consider the petitioner's application, process it and pass necessary orders in accordance with law, within four weeks from today. The writ petition is allowed in these terms.
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2017 (3) TMI 1244
Rectification of mistake - interpretation and consequence of expression "from the date of orders sought to be amended," under Section 154 (7) - Held that:- In our case there may exist more than one orders. As is evident from the fact that Section 154 (7) used expression "order sought to be amended" meaning thereby for the purpose of attracting Section 154 (7), such order which is sought to be amended, would determine period of limitation. In the present case, subsequent orders dated 31.12.2009 and 25.01.2011 were not in respect to assessment of other items but confined to limited issue of "long term capital gain" since that was the only aspect whereupon, Tribunal has remanded matter to A.A. Issue of set off etc. was not subject matter of consideration before A.A. when he passed orders dated 31.12.2009 and 25.01.2011. Assessee, in fact, wanted amendment in the "original order" dated 31.03.2006 and hence limitation would count from that order. We may also notice at this stage that Supreme Court's judgment in Hind Wire Industries Ltd. (1995 (1) TMI 2 - SUPREME Court) has been considered in Commissioner of Income-Tax Vs Alagendran Finance Ltd. (2007 (7) TMI 304 - SUPREME Court ) and it has been said therein that there may not be any doubt or dispute that once an order of assessment is reopened, previous assessment would be held to be set aside and the whole proceedings would start afresh but the same would not mean that even when the subject matter of reassessment is distinct and different, the entire proceedings would deem to have been reopened. Learned counsel for Assessee also could not dispute that mistake regarding set off loss had occurred in the assessment order dated 31.03.2006 but on this aspect Assessee did not either carry dispute in appeal before CIT (A) or Tribunal or filed application for rectification within the period of limitation under Section 154 (7). Therefore, in the garb of remand order in relation to some other aspect, Assessee, could not have taken advantage of extension of limitation by seeking commencement thereof from the order passed by A.A. on the issue on which remand was made. - Decided against Assessee and in favour of Revenue
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2017 (3) TMI 1243
Income arising on the sale of shares - capital income or business receipt - Held that:- Tribunal has also recorded a finding that A.A. did not state anything in assessment orders as to on what basis it held that shares held by Assessee are stock in trade though throughout, the same were shown in respective balance sheets, as investment. Before us also it has not been explained by learned counsel for appellant as to how and on what basis aforesaid shares, held and sold by Assessee could be treated as "stock in trade" and otherwise concurrent finding has been recorded by CIT (A) and Tribunal, is not shown incorrect. However record shows that, Assessee admitted that from A.Y. 1994-95 it has started business of shares dealings and speculation in shares. The stock of shares held by him, why should not become stock in trade income, and same thereof be treated as business income, we find no consideration by Tribunal on this aspect. The matter require reconsideration in light of the aforesaid fact by Tribunal and question no. 1 would depend on aforesaid finding recorded by Tribunal. Disallowance of interest payment - Held that:- Similar question has been considered by this Court Commissioner of Income Tax Central Vs M/S Jai Prakash Industries Pvt. Ltd. [2017 (3) TMI 1160 - ALLAHABAD HIGH COURT] as answered in favour of Assessee and against Revenue
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2017 (3) TMI 1242
Revision u/s 263 -provisions of Section 68 as amended given retrospective operation - C.I.T. to direct an enquiry to ascertain the source and genuineness of the sums being projected by the appellants as capital receipts - Held that:- We have already observed that the judgment in the case of Rajmandir Estates Private Ltd. (2016 (5) TMI 801 - CALCUTTA HIGH COURT ) was delivered considering the unamended provision of Section 68 of the Act. In the case of the assessees before us, there is no differing feature so far as applicability of the said statutory provision is concerned, even though the Tribunal in Subhalakshmi Vanijya Pvt. Ltd. (2015 (8) TMI 174 - ITAT KOLKATA) had held that the provisos to Section 68 of the Act are retrospective in their operation, and delivered the decision against the assessee in that case that reasoning. In the appeal of Rajmandir Estates Private Ltd. (supra), the Coordinate Bench did not consider it necessary to examine the question of retroactivity of the aforesaid provision. The Coordinate Bench found the order of the C.I.T. to be valid examining the order applying the unamended provision of Section 68 of the Act only. We do not find any other distinguishing element in these appeals which would require addressing the question as to whether the amendment to Section 68 of the Act was retrospective in operation or not. Neither do we need to address the issue that if the inquiries, as directed, revealed that share capital infused were actually unaccounted money, whether the same could be taxed in accordance with Section 56(2) (vii b) or not. It is not necessary in these appeals to deal with the question of retroactivity of the aforesaid provisions, for which that authority was cited. Asking for source of source can be relevant inquiry. - Decided against the assessee
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2017 (3) TMI 1241
Penalty proceedings u/s 271(1)(c) - protective assessment - Reopening of assessment - amounts reflected in the FDRs and the interest accrued thereon, on a protective basis to the income of the assessee - adjustment of refund claim with the dues - Held that:- As under Section 91 of the Scheme, a designated authority is empowered to grant waiver from imposition of penalty and interest in respect of income, which is subject matter of the declaration. Since, penalty and interest was levied in the instant qua tax, which was in arrears, as on 31.3.1998, the declaration issued by the designated authority, according to the Board's circular, would cover the penalty and interest, determined at a later point in time. The circular, to my mind, was binding on the Revenue. Especially, in the circumstance, that, it seeks to explain as to how the Scheme is to operate - UCO Bank V. CIT [1999 (5) TMI 3 - SUPREME Court] .Having regard to the aforesaid, it cannot be argued by the Revenue that, since, the penalty order was issued on 25.06.1998, i.e., after 31.3.1998, it would not covered by the certificate issued to the petitioner under the Scheme. The other submission advanced on behalf of the petitioner, which, in my view, also, has merit, is that, the respondents/Revenue, on 25.06.1998 could not have issued an order of "protective" penalty, as order dated 10.03.1997 itself was an order that added the amounts reflected in the FDR (along with interest accrued therein) in the hands of the petitioner on a protective basis. As rightly argued by the learned counsel for the petitioner, while there can be a protective order qua assessment, there cannot be a protective order in respect of penalty. See Metal Stores Versus Commissioner Of Income-Tax. See Metal Stores Versus Commissioner Of Income-Tax [1990 (8) TMI 131 - GAUHATI High Court ] To my mind, a careful reading of the provisions of Section 245 of the 1961 Act would show that the refund could, perhaps, have been adjusted against any amount remaining payable under the Act, provided intimation in writing is given to the concerned person, (in this case, the petitioner) of the action "proposed to be taken", under the said provision. Therefore, quite clearly, in my opinion, what is envisaged, is that, in the first instance, a proposal for adjustment, by way of a show cause notice, will have to be served on the person, to whom, refund is due. The proposal, to be meaningful, would have to set out the details and the reasons as to why adjustments is required to be carried out by the Revenue, against the refund due. Only after issuance of such a proposal/show cause notice and upon consideration of reply, if any, received - could a decision be taken as to whether or not an adjustment of refund is necessitated. Anything short of such minimum opportunity would, to my mind, result in a complete breach of principles of natural justice. Writ Petition has to be allowed in favour of assessee. Consequently, the notice of demand and penalty order dated 25.06.1998 and the consequential order of interest dated 22.10.2012 are quashed.
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2017 (3) TMI 1240
Recall of orders - rectification of mistake - Held that:- Tribunal is a creature of the statute and therefore, it can exercise only those powers, which are specifically conferred upon it. The Tribunal, to our minds, has no inherent power to recall judicial orders. Besides the aforesaid, in our opinion, a clear perusal of Section 254 (2) of the Act, would show that the Tribunal has been vested with the power, to rectify any mistake apparent from the record, both on its own, and also, when a mistake is brought to its notice, either by the assessee or the Revenue. In both cases, the limitation prescribed under the said Section would apply. The first proviso clearly indicates, that any amendment made to the order which has the effect of enhancing an assessment or reducing a refund or increasing the liability of the Assessee, shall not be made, under the said sub-section, i.e., sub-section (2) of Section 254 of the Act, unless the Tribunal, gives notice to the Assessee, of its intention to do so and allows the Assessee, a reasonable opportunity of being heard. Clearly, the recall of orders dated 20.08.2007 and 21.01.2008, could have the effect of enhancing the liability of the Assessee.The Tribunal, therefore, to our minds, was required to issue notice to the assessee, before recalling its orders dated 20.08.2007 and 21.01.2008.Thus, for all these reasons, we are of the view that the order dated 31.07.2015, need not be disturbed.
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2017 (3) TMI 1239
Demand of TDS amount earlier deducted but returned later to the employees - Insurance company directed to pay/deposit amount deducted towards TDS - amount payable and paid to the original claimant so as to comply the award dated 21.02.2008 passed by the Commissioner in Claim Application filed by the claimant - Held that:- Either under misconception or on erroneous reading of the provision or under mistaken belief the Insurance Company deducted ₹ 15,793/from the amount payable towards compensation and interest pursuant to the decree by Workmen's Compensation Commissioner. The interest amount awarded by learned Commissioner was required to be spread over in respect of the period from the date of accident till the date of judgment. If the said procedure had been followed then the amount payable towards interest would not invite the obligation to deduct tax at source. However, the Insurance Company failed to follow the said procedure as explained in above mentioned decision by Hon'ble Division Bench. Instead the petitioner considered entire income of ₹ 1,53,938/as interest of the claimant for accounting year of 2008 and consequently it deducted ₹ 15,793/, from the amount payable to the claimant and deposit it with the Income Tax Department. The above discussion has also brought out the fact that in entire transaction there is no fault of the claimant and therefore claimant cannot be penalised for action and mistake of the Insurance Company. The poor workman, who is not even assessee and whose income at the relevant time was not taxable, cannot be made to undergo entire process of filing return and reclaim the amount. Therefore, there is no justification to interfere with and disturb the order passed by the Commissioner. The learned Commissioner has passed the impugned order after taking into account the direction and guidelines issued by Division Bench of this Court in Hansagauri Prafulchandra Ladhani and ors v. Oriental Insurance Company Limited and ors, (2006 (10) TMI 383 - GUJARAT HIGH COURT) and, therefore also there is no justification to interfere with the said direction. Under the circumstances, the petition should fail and should be rejected. The petition is not accepted for the reasons mentioned above and it is, therefore, rejected. It is, however, clarified that it will be open to the Insurance Company to follow such procedure as may be permissible under Law to seek refund of the amount i.e. ₹ 15,793/, which it has deposited with Income Tax Authority, if it is so permissible under applicable provisions and this order or the order passed by learned Commissioner would not stand in way of Insurance Company to claim the refund of the said amount in accordance with law, if permissible.
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2017 (3) TMI 1238
Reopening of assessment - reasons to believe - Held that:- The respondents have placed on record the materials that gave them the reason to believe that there is escapement of Income. The ground for re-assessment is "under-invoicing" which in the opinion of this Court is "sufficient reason" to believe that there is escapement of income. The sufficiency of reasons cannot be gone into in a writ proceedings. The contents of the Invoices have to be ascertained which is a factual issue and to be adjudicate after hearing the assessee. Hence, prima-facie no illegality can be attached to the reasoning of the assessing authority for arriving at a conclusion, that there has been under invoicing and consequent escapement of income. The expression "reasons to believe" indicates a satisfaction that is subjective in nature but such satisfaction must be arrived at and must be based on relevant material. The report by the Commissions and the various invoices relied upon, can by no stretch of imagination be described as irrelevant material. But the issue whether the said 'relevant material' are sufficient to actually re-assess and penalize the assessee can be arrived at only after a through examination of the material and after opportunity to the party. Thus, the same is a fact finding exercise which this court ought not to enter in the exercise of its jurisdiction under Articles 226 of the Constitution of India. The reasoning of the authorities is sound and proper. There being no illegality, the writ petitions assailing the notice and the order on the objection is premature and the proceedings initiated under section 148 of the Act are justified and do not call for interference at the hands of this Court.
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2017 (3) TMI 1237
Disallowance of deduction under section 80IB(11A) - Discount - Held that:- Discount is an item by which the assessee has reduced its cost of purchase, i.e. cost of material has been saved which has resulted a little higher profit. Thus, this discount has a direct nexus with activities of the assessee and it is treated as business profit. It deserves to be considered for grant of deduction under section 80IB Interest received from PGVCL - Held that:- The ld.counsel for the assessee conceded that in view of the judgment of the Hon’ble Gujarat High Court in the case of CIT Vs. Nirma Ltd (2014 (10) TMI 388 - GUJARAT HIGH COURT ) only net interest income is to be excluded for grant of deduction under section 80IB. We remit this aspect to the AO. He shall exclude net interest income from PGVCL for admissibility of deduction under section 80IB. Interest subsidy received from Govt. of Gujarat. - Held that:- AO himself has not treated the interest income as income from other sources. He treated it as a business income, but did not grant deduction under section 80IB(11) of the Act. Since this interest income has direct nexus with the activities of the assessee, it only goes to reduce the expenditure incurred on the loans availed from the bank. The assessee could reduce the net interest expenditure. In other words, if bank has charged 12% and it got subsidy of 5%, then it had charged the rate of 7% on the profit & loss account, then it would have enhanced its profit to this extent, and therefore, this interest subsidy is to be considered as eligible for grant of deduction under section 80IB(11) of the Act. See ACG Associated Capsules P.Ltd. vs. CIT [ 2012 (2) TMI 101 - SUPREME COURT OF INDIA ] Notional interest payment on the capital contribution and remuneration paid to the partners - Held that:- Direct the AO not to reduce interest payable to the partners on their capital contribution and remuneration from the eligible profits for grant of deduction under section 80IB because, it is the discretion of the assessee to pay interest and remuneration to partners or not. See Sagar Foods case [2017 (3) TMI 1297 - ITAT AHMEDABAD ]
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2017 (3) TMI 1236
Unexplained cash credits addition u/s.68 - Held that:- There is no dispute that the CIT(A) has granted said part relief to assessee wherein it was found to have executed sale deeds with his customers later on after including the advance amount as part of the sale consideration money. There is further no quarrel that the assessee has also placed on record all of their particulars including PAN numbers which have nowhere been disputed. Nor the Assessing Officer conducted detailed inquiries by issuing them necessary notices under the provisions of the Act on test check basis. We repeat that we are dealing with an issue of unexplained cash credits u/s.68 of the Act wherein an assessee suppose to discharge its primary onus of proving source along with identity, genuineness and creditworthiness thereof. We thus conclude in Revenue’s appeal that the assessee has discharged its onus successfully in course of remand and lower appellate proceedings Delete the remaining addition as confirmed in the lower appellate proceedings - Held that:- We find that it has filed a petition on 07.01.2017 before this tribunal alongwith details of 483 customers pertaining to the advances received of ₹ 2.52crores. It submits therein that it has obtained PAN numbers of 182 customers involving advances amount of ₹ 1.02 crores. Total 75 customers are stated to be the cases therein amount is refunded due to cancellation plot registration. This is followed by 21 members whose sale deeds have been executed on 31.03.2016 leaving behind balance amount of advances received from 205 customers involving ₹ 96,60,823/-. Learned Departmental Representative objects to this petition. He strongly submits that the same is in the nature of additional evidence wherein an Assessing Officer has to be granted opportunity to rebut the facts sought to be brought on record. We appreciate learned Departmental Representative’s concerned. The fact also remains that all these developments in this petition are post facto institution of the instant appeal as filed in the year 2012. We therefore take these additional documents on record and remit the issue back to the Assessing Officer for conducting necessary verification as per law. We further deem it appropriate to confirm the remaining addition amount of ₹ 96,60,823/- wherein the assessee has not been able to rebut Assessing Officer’s findings as affirmed in lower appellate order under challenge unlike in other cases wherein it has procured additional details even after a time span of almost five years after the CIT(A)’s order. This assessee’s ground is thus partly accepted for statistical purposes. Addition pertaining to amounts received as booking cancellation and the latter sum of ₹ 1,01,000/- as pre-operative cheque return charges - Held that:-Learned Authorized Representative strongly argues that the assessee ought to have been allowed to treat the above incomes as work-in-progress instead of business income. He however fails to dispute that there exists a direct first degree nexus between assessee’s business of real estate development and these two incomes wherein it has firstly charged for plot booking cancellations and also derived latter income in lieu of cheque cancellation charges from its customers. We thus find no reason to interfere in the CIT(A)’s order confirming Assessing Officer’s action on both counts. - Decided against assessee
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2017 (3) TMI 1235
Deduction for depreciation from the rental income of loader - Held that:- In considered opinion under the Income tax Act, income of the assessee is chargeable to tax and not the gross receipts. The gross receipts from loader during the year was ₹ 4,18,711/- as evidenced by the copy of Profit and Loss account filed before me. Hence the assessee is entitled to deduction of depreciation of ₹ 9,94,050/- from the rent of loader of ₹ 4,18,711/-. After deducting rent of loader of ₹ 4,18,711/- from the depreciation of ₹ 9,94,050/-, there will remain unabsorbed depreciation of ₹ 5,75,339/- . The same is deductible u/s.70 of Income tax Act, from the income determined from gross bills at ₹ 3,39,265/- and the balance amount of depreciation is adjustable against income from other sources of ₹ 5,92,565/- as per provisions of section 70(1) of the Act. Hence, set aside the orders of lower authorities and direct the Assessing Officer to allow deduction for depreciation of ₹ 9,94,050/- from the rental income of loader to the assessee and thereafter determine the income of the assessee as per law. Thus, the grounds of appeal of the assessee are partly allowed.
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2017 (3) TMI 1234
Term loan interests - Nature of expenditure - revenue or capital - Held that:- The nature of the impugned amount was duly disclosed in the notes of account attached to the balance sheet. The said note mentioned that the amount involved was long term bank interest and medium term banking on interest. If that be so there was no reason to treat the same as preoperative expenses. However this aspect needs factual examination at the level of the Assessing Officer. Learned CIT(Appeals) also has principally agreed with the proposition of the assessee but has held that adequate materials are not on record. In these circumstances in our considered opinion, the issue as to whether the amount involved is actually revenue in nature needs to be remitted to the file of the Assessing Officer. Accordingly the issue is remitted to the file of the Assessing Officer. The Assessing Officer shall examine this issue after giving the assessee an opportunity of being heard. After due examination if he finds that the amount involved was revenue in nature liable to be debited to the profit and loss account, the assessee's claim would deserve to be allowed - Decided in favour of assessee for statistical purposes
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2017 (3) TMI 1233
Revision u/s 263 - expenditure incurred on community development and tribal welfare under corporate social responsibility and expenditure incurred in connection with diversion of high tension lines of Maharashtra State Electrical Transmission Co. Ltd. at open cast mines of W.C.L. not condidered by A0 - Held that:- Upon examining the records and the paper book submitted by the assessee we find that the AO has duly issued the questionnaire on both the subjects and the assessee has duly replied. In the notice u/s 142(1) dated 04-10-2012 details of both the items has been sought by the AO in point No. 13 and 20 respectively. Submissions by the assessee placed in the paper book clearly demonstrate that assessee has given due details of explanation. Hence there is no question of learned CIT assuming jurisdiction u/s 263 and holding that the concerned expenditure were allowed without examination by the AO. Lack of appreciation of mind by the concerned authority exercising revisionary power is evident here. Secondly we find that the issue of community development and tribal welfare expenditure has already been decided by the ITAT in favour of the assessee in several decisions of earlier years. Further more we also note that on the issue of diversion of high tension lines the AO has disallowed some expenditure u/s 154 by an order which is dated prior to the date of learned CIT’s order. Hence this makes it also clear that the AO has duly examined this issue. Further more the issue of diversion of high tension lines of open cast mines of WCL is wholly and exclusively connected with facilitating the business of the assessee which is mining. Hence it also cannot be said that the expenditure is not allowable or there can be two opinion in this regard. In these circumstances, in our considered opinion, the order of learned CIT is not at all sustainable and is liable to be quashed. - Decided in favour of assessee
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2017 (3) TMI 1232
Reopening of assessment - approval not taken u/s. 151(1) - non appropriate sanctions - Held that:- Approval should be taken u/s. 151(1) and according to Section 151(1) of the I.T. Act, after the expiry of the 4 years from the end of the relevant assessment year, no notice u/s. 148 of the I.T. Act shall be issued unless the Chief Commissioner or Commissioner is satisfied on the reasons recorded by the AO that is fit case for the issue of such notice. In view the case of the Assessee is fall under section 151(1) of the I.T. Act and not u/s. 151(2) of the I.T. Act, because according to section 151(2) in the cases other than the case fallen under sub-section (1) of Section 151, no notice shall be issued u/s. 148 by the AO, who is below the rank of JCIT, unless the JCIT is satisfied on the reasons recorded by such AO, that is a fit case for the issuance of such notices. Thus the case is fallen u/s. 151(1) of the I.T. Act. In the present case, the case of the assessee has been reopened the assessment after the expiry of 4 years and in the present case of assessee the approval/satisfaction should be from the Chief Commissioner or Commissioner only. However, the case of the assessee has been reopened and notice u/s. 148 has been issued with the approval of the Addl. CIT, therefore, the notice u/s. 148 is bad in law and is quashed. See COMMISSIONER OF INCOME TAX Versus SPL'S SIDDHARTHA LTD [2011 (9) TMI 640 - DELHI HIGH COURT ] - Decided in favour of assessee
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2017 (3) TMI 1231
G.P. estimation - Held that:- We are of the view that in the totality of the facts as discussed above where assessee is doing manufacturing and providing job work, regular books of accounts are duly audited with almost double revenue as well as gross profit as compared to preceding Financial Year and turbulence faced in the business due to natural calamity in the form of floods which altogether lead to minor decrease in gross profit rate, no addition was called for by estimating gross profit rate at 23% and, therefore, book result of the assessee needs to be accepted. - Decided in favour of assessee Disallowance of loss suffered due to flood - Held that:- As on one hand, assessee has claimed loss of ₹ 15,43,049/- and on the other hand, has not disputed the Surveyor’s Report showing safe stocks of residual materials at ₹ 16,93,596/- and also accepting that the goods in question are chemicals which losses its value, if mixed with water, but certainly has some value, we find it justified to sustain the disallowance of loss due to flood at ₹ 1,50,000/- as against ₹ 15,43,049/- claimed by the assessee.
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2017 (3) TMI 1230
Addition under section 69C - Held that:- We find that out of total purchases, the AO could not verify the purchases to the extent of ₹ 49,74,252/- when the notice under section 133(6) of the Act were issued which were returned un-served. We also find that the assessee could not produce any stock tally of the total purchases and sales made during the year and stocks left unsold at the year end. But the AO has not doubted the sales made during the course of assessment proceedings. The ld.CIT(A) has recorded the findings of facts that the assessee has not discharged the burden cast upon it including proving the genuineness of the transactions. CIT(A) also observed that the AO has also failed to discharge the responsibility cast upon under the Act. The AO has not disputed the books of accounts including the sales nor did verify or investigate the amount paid by way of cheques whether received by the appellant back from the purchasers. In our opinion, the ld.CIT(A) has rightly sustained the addition to the extent of 12% of the total purchases covering the leakages of revenue and also the possibility of savings which the assessee may have made by making purchases from gray market by not paying the regular and legal taxes of local bodies.- Decided against revenue
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2017 (3) TMI 1229
Deduction under section 10A - Held that:- AO was not justified in set off of the unabsorbed business loss against profits of the eligible units and the assessee is entitled for exemption under section 10B of the Income Tax Act. This ground of appeal is allowed. See C.I.T. & Another Versus M/s Yokogawa India Ltd. [2016 (12) TMI 881 - SUPREME COURT ]
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2017 (3) TMI 1228
Disallowance towards repair expense on the rented premises - Held that:- As in the case before us the assessee failed to furnish the necessary details in support of its claim before the lower authorities, therefore the plea for depreciation cannot be entertained. However, now the ld AR has submitted the list of expenses of the ‘current repair’ expenses along with the bank statement for consideration. In the aforesaid facts and circumstances of the case, we are of the view that first the genuineness of the expenses should be established. For that purpose and in the interest of natural justice, we are inclined to restore the issue to the file of AO for fresh adjudication as per law. Once the genuineness of the expenses gets established, then the same can be treated as capital in nature and the depreciation thereon can be allowed. Thus the ground filed by the assessee is allowed for statistical purposes. Disallowance of telephone expense, business promotion expense and miscellaneous expenses - Held that:- We find that there was no excess claim of expenditure made by the assessee in comparison to earlier years vis-à-vis to the turnover of assessee. It is also important to note that there was a massive fire broke out in assessee’s office premises as claimed by assessee and that may be one of the reasons for non-production of the supporting evidence before the authorities below. However none of the Authorities Below have not commented to this aspect. Since there is no finding of the Authorities Below on this aspect whether the assessee failed to give satisfactory reply due to fire break out in the office of assessee and if that is not the case then it was the duty of assessee to justify all the expenses claimed in its profit and loss account. However, we are not interested in sending back the matter to the AO to avoid further litigation. Therefore, in the interest of justice, we restrict the disallowances to the extent of 50% for the year under consideration, as all the vouchers were not produced for verification during the appellate proceedings. AO is directed accordingly. Thus, this ground of assessee’s appeal is allowed. Addition on account of investment in tenanted property out of undisclosed income - Held that:- Assessee has admitted before the AO that the necessary details with regard to the investment in the tenanted properties are not readily available. However, the assessee before the ld. CIT(A) submitted that impugned investments have been disclosed in the books of accounts and no defect was pointed out by the AO. Therefore, the ld. CIT(A) allowed relief to the assessee. It is also important to note that the books of accounts were duly produced before the AO at the time of assessment. After considering the facts in totality, we are of the view that the AO failed to bring any defect in the books of accounts and all the investments have been duly disclosed in such books. Thus, we find no infirmity in the order of ld CIT(A) and uphold the same. Hence, this ground of Revenue’s appeal is dismissed.
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2017 (3) TMI 1227
Entitlement for exemption under section 11(2) denied - scope of charitable activities - accumulation of income under section 11(2) is not specific and the deposits made in the bank are not as per provisions of section 11(2)(b) - Held that:- The assessee is a charitable society and carrying various charitable activities, such as, construction of building for the purpose to accommodate HIV / AIDS patients and also accommodation for sisters and training centres. The Assessing Officer has not doubted about the charitable activities carried-out by the assessee-society. We have considered all the details and found that the assessee is carrying charitable activities as per its objects. The assessee made a detailed submission before the Assessing Officer and also before the Commissioner of Income Tax (Appeals). So far as, the accumulation of income, it was submitted before the Assessing Officer that it is for the purpose of construction of Vimala Women Charitable Society and also maintenance of the institution. The explanation of the assessee was simply rejected. Before the Assessing Officer the assessee filed all the details about the construction and also explained that his accumulation is for the purpose of construction and maintenance of the province of the society and also maintenance of sisters etc. The assessee also filed the details of investment of funds. The Commissioner of Income Tax (Appeals) after considering the explanation of the assessee and also considering the details submitted, in respect of the purpose for which funds are accumulated, he gave a specific finding that the assessee society has utilized the funds for charitable purpose and the order of the Assessing Officer was reversed on this count. Insofar as deposits made in the bank account, the Commissioner of Income Tax (Appeals) gave a specific finding that the assessee received funds during the year to utilize the same for specific purposes and it has set apart these funds and invested the same in the fixed deposits during the year itself for the purpose of future utilization. - Decided against revenue
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2017 (3) TMI 1226
Reopening of assessment - Held that:- The undisputed fact is that there is no fresh tangible material in the possession of the AO to form belief of escapement of income. Under the circumstances, it would not be possible for the AO to take shelter of the protection provided in Explanation 1 to section 147. Thirdly, the real intent of this Explanation seems to be to protect those cases where the proper information was not provided by the assessee during the course of original assessment proceedings or it was provided in such a manner which was not possible to be examined by the AO in the peculiar facts and circumstances of a particular case. It may also provide protection in those cases where the issue was not examined at all by the AO as there was no occasion with the AO to examine the issue under consideration. However, in the case before us, the impugned issue was examined by the AO in view of the query asked by him and the same was properly replied with proper details and thereafter only original assessment u/s 143(3) was passed accepting the impugned claim. Thus, in our considered opinion, the AO does not have the shield of Explanation 1 of section 147 to justify the reopening which has been done without there being any fresh tangible material in the possession of the AO.
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2017 (3) TMI 1225
Short term capital loss carried forward for set off to the succeeding year - claim denied - Held that:- We notice that the heading of section 80 reads as “Submission of return for losses” and section 80 is the section that prescribes the condition for carry forward of losses. It does not use the word “return of loss”. Further the provisions of section 139(3) talks about the loss sustained under the specific heads only. Accordingly we agree with the view of Ld CIT(A) that the short term capital loss sustained by the assessee cannot be carried forward, as the return of income has not been filed as per the provisions of sec. 139(3). Accordingly we uphold the order passed by Ld CIT(A) on this issue. - decided against assessee
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2017 (3) TMI 1224
Addition made u/s. 43B - Customs duty liability - Held that:- We notice that the Ld CIT(A) had taken the view in AY 2004-05 that the provisions of sec. 43B would not be applicable to the Customs duty liability, but the Tribunal had set aside the same. However, in the instant year, the Ld CIT(A) has confirmed the addition by holding that the provisions of sec. 43B shall be applicable to the assessee. We notice that the co-ordinate bench has taken the view that the customs duty liability adjusted against export obligations is liable to be allowed as deduction under first proviso to sec. 43B of the Act. We further notice that the view so taken by the co-ordinate bench has been followed by another co-ordinate bench in the assessee’s own case relating to AY 2005-06. In view of the above, consistent with the view taken by the co-ordinate benches in other years, we hold that the assessee is entitled to deduction u/s 43B of the Act in respect of customs duty liability adjusted against export obligation. In the instant case, there is no dispute that the entire amount of customs duty liability has been adjusted against export obligation before the due date for filing return of income. Accordingly we reverse the order passed by Ld CIT(A) on this issue and direct the AO to delete the addition. - Decided in favour of assessee
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2017 (3) TMI 1223
Penalty u/s.271(1)(c) - Held that:- As emerges from this tribunal’s quantum order that it is not an instance wherein the assessee had not offered any explanation or adduced altogether false explanation in order to state source of the impugned cash deposits. The fact remains that the assessee has already proved to have been engaged in commission business in automobile sector wherein it is not always possible to file all the relevant confirmations. Learned co-ordinate bench also appears to have benefit of opening balance, accumulated profit as well as peak credit after preparing a fund flow statement. We take into account the same to conclude that this is not a fit case to invoke the impugned penalty provision as the assessee has not been able to substantiate his claim in quantum proceedings. We wish to observe here that the hon’ble apex court in Reliance Petroproducts’ case (2010 (3) TMI 80 - SUPREME COURT) has already settled the law that quantum and penalty proceedings are separate and each and every disallowance / addition made in the course of former does not ipso facto attract the latter penal provision in the Act. We keep in mind the same and direct the Assessing Officer to delete the impugned penalty. - Decided in favour of assessee
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2017 (3) TMI 1222
Disallowing 100% of repairs & maintenance expenditure of buildings and plant & machinery - Held that:- Treatment of assessee’s repair claims pertaining to its hotel building and plant & machinery. Both the lower authorities except to the extent of minor fraction in lower appellate order hold the same as capital expenditure. It emerges that this tribunal’s co-ordinate benches in assessment years 2005-06 to 2007-08 have already decided the very issue in assessee’s favour. The factual position however is different in succeeding assessment years wherein the assessee has itself treated 65% of the above heads of expenses as capital expenditure and 35% to be Revenue expenditure as per its authorized person’s survey statement operative from the impugned assessment year. The assessee’s sole endeavor accordingly before us is to claim only 35% of the expenditure as revenue and balance 65% to be capital expenditure as per its above survey statement. Learned Departmental Representative appearing at Revenue’s behest fails to dispute all the above-stated survey developments as well as treatment of the very head of expenditure as revenue in nature in preceding assessment years and partly capital and partly revenue expenditure in latter assessment years. We therefore accept assessee’s limited contention and direct the Assessing Officer to treat 65% of the impugned claims as capital expenditure entitled for depreciation and balance 35% as revenue expenditure. He shall accordingly frame consequential assessment as per law.
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Customs
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2017 (3) TMI 1196
Valuation of imported goods - 888 Brand Glass Chatons - Unbranded Coloured Glass Chatons - Pocket Scale & Cutters - rejection of declared value - appellant's case is that without showing the evidence for contemporaneous imports transaction value cannot be rejected - Held that: - Revenue’s case is not based on the reliable evidences, which could be legally sustained - In the practical world, unless manufacturer’s price list has got corroboratory evidences which can be in the form of contemporary imports or further corroboration from the manufacturer’s end on the prices for India for this much quantity, the Revenue’s order in appeal for enhancement of value in case of ‘888 brand glass chatons’ cannot be sustained legally. Unbranded Coloured Glass Chatons - Held that: - There is no enquiry made with the experts in the field of subject goods namely Unbranded Coloured Chatons. The Revenue has re-determined the value under rule 9 of CVR 2007 on the basis of market enquiry. However, from the facts it appears that market enquiry was not scientifically conducted and market enquiry in the absence of any corroboratory evidence cannot become sole basis for sustaining the enhancement of value as done by the impugned order - enhancing the value of these items cannot be legally sustained. Pocket Scale & Cutters - Held that: - there is no systematic data of market enquiry available and further market enquiry alone cannot become the basis of enhancement of the value unless the results of the market enquiry are corroborated by independent evidences which could be contemporary imports or manufacturer’s price list, which again needs support by the specific written declaration from manufacturer - enhancement of value not sustainable. Appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1195
Project import - contravention of Project Import Regulations, 1986 - demand of differential duty - absolute confiscation - Held that: - there is absolutely no contravention of Project Import Regulations, 1986 committed by the appellant - the total imports were made of 18 moulds. The 10 moulds were cleared without availing the benefit of Project Import Regulations, the appellant have paid applicable custom duty therefore once the import were not made under Project Import Regulations in respect of 10 moulds, no contravention or violation of Regulation can be alleged in respect of said 10 moulds - As regards remaining 8 moulds, I find that they were cleared under Project Import Regulations against registered contract only after the registration of the said contract, the 8 moulds imported and cleared under Project Import Regulations is absolutely in order - neither any differential duty can be demanded nor the said goods are liable for confiscation - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1194
Imposition of personal penalties u/s 112 of the CA, 1962 - the appellants are alleged to have purchased imported fabrics which were diverted by an EOU which was imported for actual consumption of the said EOU - Held that: - the various statements recorded of the co-noticees indicate that both the appellants had visited the premises of the EOU and took inspection of the goods and the statements also records that both the appellants were indulged in purchase of fabrics in cash without any documents - the appellants’ claim of ignorance, is without any merits. The penalty of ₹ 2 lakhs each on these two appellants is definitely excessive considering that fact that there could be element of doubt as to whether they were aware of the goods being diverted, particularly so when they were taken to a warehouse for inspection of the goods - also the penalty imposed on the Chartered Accountant, is on higher side - the ends of justice will be met if the penalties imposed on both these appellants are reduced to Rupees Fifty thousand each from ₹ 2 lakh Appeal allowed - decided partly in favor of appellants.
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2017 (3) TMI 1193
Classification of imported goods - FOF (Fibre Optic Ferrule) - The respondent-assessee is arguing that appropriate classification for the goods in question is 85389000, which is the order of the Commissioner (Appeals) whereas Revenue is pleading that subject impugned goods deserve classification under Customs Tariff Heading 69149000 - Held that: - There is no dispute that the goods imported are Zirconia Ferrules named as Fiber Optic Ferrule (FOF) and they are important part of Fiber Optic Connectors of Customs Tariff Heading 8536. The Revenue wants to classify the item under Chapter 6914 because of its constitution as it is made up of ceramics (zirconia oxide); but because of the reason that the identity of the article is associated with its primary function, when it is essential part of fiber optic connector of 8536; the item is to be classified under Chapter Heading 85389000. When we refer to General Explanatory Notes to Chapter 85, we do not find any exclusion in case of the item in question which is Zirconia Ferrule (declared in the Bill of Entry) as Fiber Optic Ferrule (FOF). Therefore, when there is no specific exclusion for the item in question even when they are made up of ceramic, and when the item is specific part of Fiber Optic Connectors of Tariff Heading 85367000, there it deserves classification as part suitable for use principally with the apparatus, of heading under Chapter 8536 and would have classification under Heading 8538. Thus, the item viz. Fiber Optic Ferrule imported by the respondent deserves to be classified under Chapter Heading 8538 being part of Optical Fiber Connector of sub heading 85367000 of Customs Tariff. Appeal dismissed - decided against Revenue.
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2017 (3) TMI 1192
Classification of imported goods - sulphur analyser - classified under CTH 9022.19 of the First Schedule to the CTA, 1975 or under CTH 9027.80 - demand of differential duty alongwith interest - Held that: - It is pertinent to note that reclassification of the item has taken place in June 2001 and, that too, following discussion in a Tariff Conference in June 2001 which was communicated in September 2001. That any doubt regarding classification had to be placed before the Tariff conference itself evinces the prevailing uncertainty on the duty liability of the said goods. Consequently, invoking of the extended period for the recovery of duty is not tenable - appeal dismissed - decided against Revenue.
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Corporate Laws
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2017 (3) TMI 1190
Winding up petition - Whether an employee can maintain a Petition for winding up of a Company under section 439 r/w sections 433(e) and 434(1)(a) of the Companies Act, 1956 as a creditor based on the claim of the recovery of his unpaid salary and wages? - Held that:- On a conjoint reading of the provisions of the Companies Act, 1956 and more particularly sections 434 and 439 as well as the provisions of the Trade Unions Act 1926, we are clearly of the view that looking to the mandate of sections 13 and 15 of the Trade Unions Act 1926, there is no doubt in our mind that a Petition for winding up would be maintainable at the instance of the Trade Union. This is for the simple reason that section 15(c) and (d) clearly mandates that the prosecution or defence of any proceeding to which the Trade Union or any member thereof is a party as well as the conduct of trade disputes on behalf of the Trade Union or any member thereof can be done by the Trade Union. This would clearly go to show that the Trade Union, for and on behalf of the its members can certainly prefer a winding up Petition as contemplated under section 439 of the said Act. This is for the simple reason that if the workmen have not been paid their wages and/or salary by the Company, they would certainly be a creditor or creditors as contemplated under section 439(1)(b) of the Companies Act, 1956. Section 15 clearly mandates that the Trade Union can take up this cause for and on behalf of its members. Hence, after complying with the provisions of section 434 of the Companies Act, 1956 the Trade Union would certainly be competent to present a winding up Petition. We may add here that this does not mean that in every instance when a Trade Union or a workman files a winding up Petition, the Company is ipso facto to be wound up. Whether or not there is any merit in the claim made by the workman and/or employee depends on the circumstances in each case. All that we are holding is that a Trade Union, though having a legitimate claim, cannot be shut out from approaching the appropriate forum for winding up the Company on the ground that its members have not been paid their wages and/or salaries. We therefore hold that an employee can maintain a Petition for winding up of a Company under section 439 r/w sections 433(e) and 434 of the Companies Act, 1956 as a creditor based on the claim of the recovery of his unpaid salary and wages. Further we hold that a winding up Petition at the instance of a Trade Union and for the dues that are payable to its members is maintainable as it clearly falls within section 439 of the Companies Act, 1956. The issue is answered accordingly. Let this Company Petition be now placed before the Company Judge to be decided on its own merits and in accordance with law.
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Service Tax
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2017 (3) TMI 1221
Taxability - Renting of immovable property service - vacant land - effective date of levy of tax - whether the service rendered was liable to be taxed in the hands of the appellant from 1st June 2007 merely because of the retrospective effect of the addition of vacant land to the explanation defining ‘immovable property'? - Held that: - There is no doubt that as on the date of imposition of levy, the appellant had not indulged in any taxable activity. Even when the amendment came into effect and even if retrospectively effective the transaction between the appellant and the lessee could not be described as that of a lease of vacant land. Consequently, the levy of tax on the rental income derived by the appellant from the lessee is beyond the scope of taxability - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1220
Nature of Activity - provision of services or mere profit sharing arrangement - Activity of refilling the nitrogen has been sub contracted by the appellant to five contractors who are their sales agents - whether the activities of the appellant would fall within the ambit of business auxiliary service (BAS)? - Held that: - the agents of the appellant are approached by the customers who had purchased the only on reference and goodwill of the appellant. Sharing of consideration is also on transaction basis. The amount received by the appellants, though called as “profit sharing” is only a consideration from the agents for promoting the business at agreed terms and is therefore very much a business auxiliary service and the appellants will then become liable to discharge, and tax as applicable thereon - appeal dismissed - decided against appellant.
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2017 (3) TMI 1219
Rejection of refund claim - refund claim has been rejected on the ground that tax is indeed leviable - the case of appellant is that the dispute pertains to the rejection of refund claim and not to a decision on taxability. The latter would flow from a demand u/s 73 of FA, 1994 and no such challenge appears on record. Nor is there any material on record to suggest that notice for such demand was issued - Held that: - Just as a claim for refund on ground of non-taxability should be accompanied by a decision in appeal upholding that contention, a rejection of claim that tax not due was paid incorrectly would have to be backed by an order of assessment - If the tax or interest was due, tax thereon should have been recovered, in the absence of applicability of section 73(3), by issue of notice u/s 73(1). An order of rejection of refund claim u/s 11B is not the proceedings to determine taxability - appellant is justified in claiming that the demand under section 73(1) is mandated to complete the proceedings and would necessarily have to be followed by an adjudication order that is legally challengeable. By not issuing a notice and a consequential order, the assessee was also denied the opportunity to challenge the contention of Revenue on taxability - the impugned order rejecting the refund claim on ground of taxability is not sustainable as taxability has not been asserted by appropriate process and is set aside - matter is restored to the original authority to reconsider the refund claim - matter on remand.
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2017 (3) TMI 1218
Short payment of tax - ambulances provided to the Port Trust - The impugned order is contested on the ground that ambulance service had not been included in any of three notices and that abatement of 90% could not have been extended - Held that: - the findings on the issue of taxability are too meagre for a decision to be taken in these proceedings - it would be appropriate to remand the matter to the first appellate authority to hear the matter afresh - appeal allowed by way of remand.
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2017 (3) TMI 1217
Refund claim - programme producers service - refund claim allowed on the ground that the service was taxable as “commercial use or exploitation of an event service” which was incorporated in FA, 1994 only w.e.f. 1st July 2010 and hence not liable to tax for the prior period - Held that: - reliance placed in the case of Royal Western India Turf Club Ltd v. Commissioner of Service Tax, Mumbai [2012 (11) TMI 526 - CESTAT, MUMBAI], where it was held that the CBEC circular 334/1/2010-TRU dated 26-2-2010 clarified the position as The proposed service now seeks to tax the amount received by the person or organization, who permits the recording and broadcasting of the event from the broadcaster, or any other person, who seeks to commercially exploit the event - refund justified - appeal dismissed - decided against Revenue.
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Central Excise
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2017 (3) TMI 1216
CENVAT credit - inputs cleared as such - clearance of the input to sister unit as such after reversing the credit equal to the duty of excise which is applicable on said goods on the date of such removal and on the value determined for such goods - CBEC Circular No. 643/34/2002-CX dated 1-7-2002 - Held that: - in terms of the said clarification, it is clear that for arriving at value of the said goods, value shown in the invoice on the basis of which Cenvat credit was taken by the assessee in the first place should be adopted for the purpose of Rule 57 AB (1C) or Rule 3(4) of the CCR, 2001 or 2002 - reliance was placed in the case of Eicher Tractors Vs. CCE [2005 (9) TMI 340 - CESTAT, NEW DELHI], where it was held that The revenue cannot argue against its own Circular, when the Board has stated that the provisions of the Rule 3(5) of the CCR, 2004 would apply in respect of the capital goods and inputs on which credit has been availed are removed as such - demand set aside - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1215
PSU - CENVAT credit - Methanol - user condition - denial of cenvat credit, wrongly availed by the Appellant on Menthol Catalyst which is an input of Methanol, on the ground that exempted Methanol has not been used in manufacture of fertilizers but in ETP plant - Held that: - the credit availed by the Appellant on the inputs stands reversed. Once the credit of inputs used in exempted goods stands reversed, the demand for reversal of 8%/10% amount of value of exempted goods in terms of Rule 57 AH or Rule 6 of CCR does not sustain. Extended period of limitation - Held that: - the use of Methanol by the Appellant in their ETP plant was in the knowledge of the department - the demands made by invoking extended period are time barred and are not sustainable. Appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1214
Imposition of penalty u/r 25 - CENVAT credit - the case of the appellant is that the goods have not been confiscated and therefore the penalty cannot be imposed u/r 25 of CER, 2002 - Held that: - M/s. Aster Pvt. Ltd., has accepted the liability whereby it stands established that they have availed wrong credit on the goods supplied by appellant. Even though the goods are not confiscated there is clear contravention of the provisions of the Rules/Notifications as provided under Sub-Clause (d) of Rule 25 of CER, 2002. Therefore, the penalty imposed is just and proper - Appeal dismissed - decided against appellant.
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2017 (3) TMI 1213
Imposition of penalty - reversal of credit for obtaining the Terminal Excise Duty (TED) benefit from the DGFT - Held that: - the appellant was entitled for the benefit of Terminal Excise Duty. However, the appellant had purchased the goods on payment of Central Excise Duty and availed cenvat credit of such duty paid on the capital goods. Since the appellant has reversed the cenvat credit before issuance of SCN and also paid interest attributable to such late reversal of cenvat credit, the penalty cannot be imposed on the appellant, in view of the fact that there was no element of suppression, fraud, collusion etc, with intent to avail wrong cenvat credit - penalty set aside - appeal allowed - decided in favor of appellant-assessee.
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2017 (3) TMI 1212
Imposition of penalties - Rule 26 - penalties on company, M/s Man Industries Ltd. (MIL) as well as various commercial persons - Held that: - the respondents namely, Shri J C Mansukhani, MD and Shri K G Mantri, Vice President (Commercial) were in the knowledge of the facts as well as they were the party to the facts leading to evasion of duty of Central Excise to the tune of ₹ 1,28,56,776/- - penalty upheld. M/s. MIL has intentionally split the tender in two parts one for bare pipes and the other for PE/CTE coating job. And both the respondents were having the knowledge and were party to this modus operandi of evasion of huge Central Excise duty amounting to ₹ 1,28,56,776/- . Both the respondents deserve to be imposed penalties in terms of Rule 26 of the CER, 2002, even when the main noticee M/s. MIL has been imposed the penalty equivalent to the duty evaded. It is also made clear that imposition of penalty is necessary in terms of Rule 26, with a further view that the said imposition of penalty will deter the respondents in future from playing such a role which led to evasion of payment of taxes/ dues due to the Exchequer. Penalty upheld - appeal allowed - decided in favor of Revenue.
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2017 (3) TMI 1211
Principles of natural justice - abrasive stones - demand of duty on the basis of loose kuchhi slips - Held that: - the appellant has submitted a Chartered Accountant’s certificate indicating the percentage of clearance of various types of abrasive stones. They have also submitted the average price prevalent in various time periods for the various types of abrasive stones. But we find that the adjudicating authority has not considered these submissions and in any case not discussed the same in the impugned order. He has also gone ahead and adopted the valuation of the entire abrasive stones as pertaining to one type and adopted the higher value of such abrasive stones. The appellants have also sought the cross-examination of Shri Mukesh Sahu as well as Shri Jitendra Hinger which was denied. To satisfy the principles of natural justice, we are of the view that the adjudicating authority should permit the cross-examination of these witnesses. The case needs to be remanded back to the original adjudicating authority for making good the deficiency of breach of natural justice - appeal allowed by way of remand.
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2017 (3) TMI 1210
CENVAT credit - Concast blooms - structural cobbles - rail cuttings - The main grounds of denial of credit are that the said inputs are Mild Steel products which can be used directly for re-rolling - whether the denial on credit was justified when the assessee claims that the denial was solely based on presumptions and surmises - The allegations are mainly about the improbability of selling final product at a loss; electricity and gas consumption being not in line with usage of such raw materials in the furnace; low yield of final product and non-availability of details of transport of raw material Held that: - the findings in the impugned order regarding non-receipt of materials in the factory of the appellant is not justifiable. The appellants submitted yearwise details of purchase of these inputs consumed by them and quantity sold as such during the material period. Even when the items were sold as such, the buyer has used such material for melting purposes. These assertions by the appellant, some of which are supported by the documentary evidence, have not been subjected to cross verification by the officers before proceeding to deny the credit. Further, the presumption that defective concast bloom is a MS item and can be used for rerolling purpose has been contested as incorrect by the appellant. It is the submission of the appellant that even during the visit by the audit officers, the appellants sought to demonstrate the usage of the duty paid inputs in their furnace. Regarding the yield being on the lower side, we note that a verification has been conducted by the Income Tax Department to find out the burning loss in another similarly situated unit. It was recorded that the yield varies from 82.87% to 85.21% - various inferences made in the impugned order, at best can lead to a suspicion regarding possible improprietary on the part of the appellant. However, the same is not sufficient to deny the credit of inputs received, without any corroborative evidence of non-receipt or diversion of received inputs. We find in the present case no such evidence has been brought forward by the Revenue. The inferences based on possible loss on sale, lesser usage of electricity or gas etc. are not sufficient enough to deny credit on inputs which are otherwise legitimately available to the appellant. Regarding non-maintenance of separate inventory of inputs, we find that the inputs were received and records of their receipt was maintained by the appellant. However, the inventory was not maintained individually on different inputs. In our opinion, this by itself cannot lead to the denial of credit on duty paid inputs. Credit allowed - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1209
Validity of proceedings - The appellants contested the legality of the proceedings itself on the ground that notice has not been served to 4 units whose existence has been questioned and whose turnover has been clubbed with the turnover of the main appellant - SSI exemption - dummy units - Held that: - Hon’ble Calcutta High Court in the case of CCE, Kolkata – II vs. Diamond Scaffolding Co. reported in 2011 (7) TMI 854 - CALCUTTA HIGH COURT upheld the Tribunal’s finding regarding the un-tenability of duty demand by clubbing clearance of other units without issue of show cause notice to such units. No notice has been served to the 4 units who were held to be dummies and whose turnover is added to arrive at the excise duty liability of the main appellant - The present adjudication is without the participation of the alleged dummy units, for a fair and proper decision. In our view, such non-issue of notice/non-participation of the other units whose turnover was added to turnover of main appellant, resulting in the present demand, puts the whole proceedings in legal jeopardy. Appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1208
SSI exemption - denial on the ground that credit has been taken in respect of other's brand name dutiable goods - Held that: - on similar set of facts in the case of CCE, Chennai vs. Nebulae Health Care Ltd. [2015 (11) TMI 95 - SUPREME COURT], the Hon’ble Supreme Court held that the exemption for own products, manufactured by SSI units, cannot be denied on the ground that the said unit undertaken manufacture and clearance of branded goods for which duty has been discharged by availing the Cenvat credit. The availment of credit in respect of dutiable final products cannot be held as a bar for eligibility of SSI exemption in respect of own goods - appellant have not availed any credits on any inputs used in the manufacture of their own products while availing threshold exemption. The appellant’s plea that wherever they have taken (in 2005-2006) the same has been rectified by way of reversal of amount attributable to the manufacture of their own products can be verified by the Jurisdictional officer - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1207
Valuation of differential duty - quantification of differential duty based on comparable value of similar products manufactured and cleared by others - Held that: - the differential duty has been calculated based on weighted average and it is pertinent to note that the Original Authority had complied with the directions of the Tribunal and the submission made by the appellants that the present impugned order is beyond the scope of denovo direction by the Tribunal is not factually correct. No other issue was pressed during submission made by the learned Counsel for appellant - appeal dismissed - decided against appellant.
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2017 (3) TMI 1206
Benefit of N/N. 17/2007-CE dated 01/03/2007 - manufacturers of excisable goods stainless steel patta/pattis - the operations of assessee's factory was banned in February, 2013, The ban on the factories was lifted by the Pollution Control Board in April, 2013. The assessee/appellants reinstalled the dismantled cold rolling machines and commenced operations with effect from 01/05/2013 - Proceedings were initiated against the assessee/appellants to recover central excise duty based on value of clearances during March to August, 2013 on the ground that they have failed to comply with the provisions and conditions of the notification No. 17/2007-CE during the said period. Held that: - the assessee/appellant applied for permission to follow the special procedure in terms of the above notification. The same was granted by the jurisdictional officer of Central Excise. Nowhere in the proceedings before the Original Authority it is recorded that the assessee/appellant have opted out of the special scheme. Neither it is recorded that any of the deliberate action on the part of the assessee/appellant will indicate that they are not continuing in the said scheme. The central point of dispute is that due to forced closure of the unit by the State authorities, the assessee/ appellant could not manufacture or operate their machinery during March and April 2013. Such forced closure cannot be termed as a failure on the part of the assessee/appellant to avail the special procedure. The permission granted to the assessee/ appellant to avail the special procedure and all other circumstances which make them eligible for such concession is existing all along. The closure of units admittedly, beyond the control of the assessee/appellant, is not to be treated as a failure to comply with the provisions and conditions of the notification during the period of forced closure of the units. The nonproduction of excisable goods during these two months can more appropriately termed as ceasing to work rather than failure to comply with the provisions. The Original Authority himself recorded that the assessee/ appellant themselves did not cease to work under the special procedure but ceased the work due to disconnection of power supply and sealing of DG set by the electricity department which was beyond control of the assessee. As such considering the facts and circumstances of the case he found that penalty u/r 25 of CER, 2002 is not imposable. Appeal allowed - decided in favor of assessee.
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2017 (3) TMI 1205
SSI exemption - dummy units - appellant have fraudulently floated fictitious firms to suppress the actual manufacturing activity - Held that: - the impugned order is self-contradictory - It is clearly recorded, in more than one place that Shri Veekay Auto Accessories was controlling the day to day activities of the fictitious firms floated by the owner, to suppress the manufacture and thereby to evade payment of central excise duty. However, in the conclusion, no duty has been confirmed against the said appellant - there is ambiguity and confusion in the findings recorded by the Original Authority - The cross examination sought for by the appellants have not been commented upon and discussed in the impugned order. Regarding the appeal filed by M/s. Newon Seat Covers, we note that except for the statements recorded from the proprietor to the effect that the firm was established on the direction of Shri V.K. Arora, who gave design and style and also supplied packing materials for packing “AVON” brand seat covers manufactured in her premises. Except for this statement, there is nothing on record to establish that the appellants were all throughout engaged in the manufacture of seat covers with brand name of another person - appeal allowed. Regarding the appeal by M/s.Vibhor Enterprises, the appellants did not produce any supporting evidence regarding the specific date of receipt of die for the manufacture of branded goods. In absence of such evidence, no reliance can be placed on the assertion by the appellant to exclude a part of their clearance for duty liability. Not knowing the excise provisions for duty liability is not a factor for setting aside the duty demand. Accordingly, we find no merit in the appeal by M/s.Vibhor Enterprises - appeal dismissed. Appeal disposed off - decided partly in favor of appellants.
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2017 (3) TMI 1204
Confiscation of seized WIP (Work in progress) materials found in excess, along with imposition of penalty - Held that: - no physical verification of stock was done during the past 4 years in the appellant s premises. We also note that the officers recorded shortage of 315 Mts. of scrap. As already noted, in the operation of a kind undertaken by the appellant, the emergence of M.S. scrap is continuous and the identity of an item as a scrap or as M.S. items further usable, has to be considered before arriving at the conclusion of excess in WIP or shortage in scrap - The whole exercise of the Revenue is based on the arithmetical calculation and stock taking undertaken in the premises of the appellant. No consideration was given to the nature of industry and actual process of manufacture, accounting and clearance of various items by the appellant. To sustain demand of duty on the basis of alleged clandestine removal or to deny credit on shortage of items, the evidences available in this case are not sufficient or reasonable - demand withheld. CENVAT credit - construction service in connection with building of rest facility for labour within the factory - denial on the ground of nexus - Held that: - The expenses are part of the appellant s business activities and in similar situation, the credits on such input service have been allowed by the Tribunal - credit allowed. Clearance to other units - MS Plates - Held that: - the same was confirmed on a general statement of the officials of the appellant without any further verification or corroboration. We find in the absence of any corroboration for such clearance and considering the work sheet contains reference to 13 Kg. and 15 Kg., we find no legal basis to sustain that demand. Appeal disposed off - decided in favor of assessee.
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2017 (3) TMI 1203
Natural justice - MODVAT credit - Liability to differential duty with reference to railway packaging, statutory levies and other charges - Held that: - the defense submission by the appellant were not on record before the Original Adjudicating Authority. Therefore, no detailed examination of their defense has been recorded in the original order - The appellants filed reply in response to the letter received from Superintendent in the Commissioner’s office. In normal course such reply should have been forwarded to the concerned Adjudicating authority - order personally passed by the lower authorities is not tenable due to non verification of relevant and material facts to arrive at a correct decision - appeal allowed by way of remand.
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2017 (3) TMI 1202
Clandestine removal - shortage of stock - Gutkha - demand - Held that: - by violating the Board Circular dated 19.12.2007, the search was conducted and shortage of raw material was made ground for demanding the duty. The Department has converted the number of hours into days and months, and has calculated duty accordingly. It may be mentioned that the said exercise has been carried out for each raw material separately, assuming that gutkha can be manufactured by using only one raw material, but the fact remains that the gutkha is manufactured with the combination of all the raw materials - the search was conducted against the Board Circular dated 19.12.2007 and the duty demand is based on the wrong facts - appeal dismissed - decided against Revenue.
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2017 (3) TMI 1201
CENVAT credit - MS items - denial on the ground that the items were utilised for fabrication of furnace/ pollution control plants, Conveyor belt system and supporting structures of capital goods - Held that: - The issue whether M.S. items used for support structures of capital goods is eligible for credit has been settled in the judgement of India Cements Ltd. Vs. CESTAT, Chennai [2015 (3) TMI 661 - MADRAS HIGH COURT], where the credit was allowed. Regarding the use of M.S. items for fabrication of capital goods, the goods fabricated are furnaces, pollution control equipment, conveyor systems etc. These items definitely fall within the definition of capital goods - the credit has been wrongly denied. Time limitation - Held that: - the Appellants have furnished the amount of credit availed in ER-1 returns, they have also furnished the details of invoices for procurement of M.S. items - the Appellants have disclosed the details of the credit availed - the SCN issued invoking the extended period of allegation is unsustainable. Appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1200
Imposition of penalty u/r 26 of CER 2002 on transporters - clandestine removal - The allegations against the respondents are that they did not carry the way bill/invoice in regard to the goods carried in the vehicle - Held that: - there is no proper evidence to establish the fact that the goods were clandestinely removed. It may be a fact that the drivers of the lorries did not carry the invoices at the time of interception. The Commissioner has observedthat there is no evidence to prove that the lorry drivers or the owners had involved themselves in clandestine clearance. The goods were accepted and carried by the drivers on the assurance that they would be issued invoices - For imposing penalty u/r 26 of CER, 2002 mens rea is essential, which is not there in the present case - penalty rightly set aside - appeal dismissed - decided against Revenue.
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2017 (3) TMI 1199
CENVAT credit - availing of double benefit - the appellant in their respective balance sheets for the financial years 2004-2005 and 2005-2006, charged unutilized CENVAT credit to profit and loss account as “exceptional item” of expenditure - whether the appellant are required to reverse CENVAT credit amounting to ₹ 44,28,762/- and ₹ 5,04,995/- u/r 4(4) of CCR, 2004? - Held that: - an assessee is debarred to claim the depreciation of the value representing the credit availed on the capital goods as well as depreciation on the said value under the Income Tax Act - It is not indispute that the appellant’s products soon after became exempted, they have reversed credit of ₹ 51,93,990/- on the inputs lying in stock, contained in the semi-finished goods, as well as the finished goods. Besides, whatever credit availed on inputs during this exempted period had been reversed by them - there is no merit in the impugned orders - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1198
Compounded scheme - non-payment of duty by the respondent for the period July and August, 2008 in terms of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008, effective from 1.7.2008 - The case of the Revenue is that the exports said to have been made by the respondent without payment of duty are not permissible during the relevant time - demand - Held that: - Regarding the applicability of the bar for export of the Pan Masala without payment of duty, introduced by way of Rule 14 A of the said Rules w.e.f. 5.3.2009, we note that the same cannot be given retrospective effect. There is nothing to indicate that the said insertion in the rules is to clarify an already existing legal principles - demand set aside - appeal dismissed - decided against Revenue.
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2017 (3) TMI 1197
CENVAT credit - certain inputs are exclusively used in the manufacture of exempted goods - The case of the department is that Cenvat Credit is not admissible on the inputs which are used exclusively for exempted goods - penalty - Held that: - at the time of taking credit, the entire facts was disclosed to the department. Moreover, the SCN was issued for the period of one year - In the Tribunal’s order in the appellants own case [2014 (3) TMI 707 - CESTAT MUMBAI], the identical case was decided wherein the penalty imposed by the lower authority was completely waived - I do not find any suppression of facts on the part of the appellants. Therefore, the penalty imposed u/r 15 i.e. equivalent amount of penalty is not sustainable - demand of credit upheld - appeal allowed - decided partly in favor of appellant.
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CST, VAT & Sales Tax
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2017 (3) TMI 1191
Minor - recovery of sales tax dues - Section 65 of the Revenue Recovery Act - it is the case of petitioner that in the Government Order dated 02/08/2003, there was a clear finding that the partnership was reconstituted by excluding the petitioner while he was a minor and the petitioner has ceased to be a beneficiary of the partnership firm. The period of assessment of sales tax arrears in question is later to the cessation of the petitioner as a beneficiary of the partnership firm - Held that: - the petitioner was already removed from the benefits of the partnership w.e.f. 01/01/1976 - Unless it is found on evidence, that the petitioner had become a partner of the firm subsequent to 01/01/1976, there cannot be any liability mulcted on the petitioner, as a partner. Yet another eventuality is whether the petitioner had succeeded to the estate of any deceased partner, who is jointly and severally liable to pay the amount. In such an event, there would not be any personal liability, whereas the liability will only be to the extent of properties succeeded from the deceased partner - petition allowed - decided in favor of petitioner.
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Indian Laws
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2017 (3) TMI 1189
Throwing of individual property into a common HUF hotchpotch - Held that:- The recitals of the Memorandum of Family Settlement clearly show that a share in the property was acquired by the defendants no.1,2&3 by way of inheritance from their father Shri Maheshwar Dayal. Had the property been of the HUF, the defendant no.2 being the eldest son of Shri Maheshwar Dayal would have become the Karta of the HUF and would have been described so in the Memorandum of Family Settlement and the defendant no.3 being the daughter of Shri Maheshwar Dayal would have got a share in the property only out of the share of Shri Maheshwar Dayal in the property. On the contrary, the defendants no.1,2&3 all equally inherited 1/3rd share of Shri Maheshwar Dayal in the property. The purport of the Memorandum of Family Settlement was to out of the 1/3rd share of Shri Maheshwar Dayal demarcate the share of the defendant no.3 Ms. Abha Dayal being the married daughter of Shri Maheshwar Dayal, with the defendants No.1&2 Shri Someshwar Dayal and Shri Dinesh Dayal being the sons of Shri Maheshwar Dayal continuing to hold the remaining property jointly. However merely because brothers hold the property inherited from their father jointly does not constitute HUF and does not make the property HUF property. The language used in the Memorandum of Family Settlement only shows that the defendants no.1&2 were treating the property as inherited property. An act of creation of HUF and of putting of individual property into HUF hotchpotch has to be unequivocal and unambiguous. From mere use of the words “joint Hindu family property”, an HUF does not come into existence and the exclusive rights in the property not divested/abandoned. The plaint does not disclose the property to be the property of any HUF or joint Hindu family property for the plaintiffs no.1&2 to have any right therein by birth or the plaintiff no.3 acquiring rights therein as wife of the Karta/co-parcener of the HUF. The plaint is thus not found to disclose a right in the plaintiffs to seek partition and the suit is resultantly dismissed. However we make it clear that the dismissal of this suit for partition on the basis of the property being HUF/joint Hindu family property would not come in the way of the plaintiffs if have any other rights to the property, agitating the same.
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2017 (3) TMI 1188
Consideration of representation - Held that: - the directions given by the Central Administrative Tribunal in the impugned order of considering the representation stand complied with and now grievances, if any, against such decision, for which, respondents if deemed proper can raise before appropriate forum but so far as petitioners are concerned no cause survives - petitions disposed off.
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