TMI Tax Updates - e-Newsletter
March 4, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
Highlights / Catch Notes
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Income Tax:
Addition u/s. 68 - CIT(A) should not have rubbished the affidavit without going into the merits. Therefore in the interest of justice and fair play, we restore this issue to the files of the A.O. - AT
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Income Tax:
Deduction u/s. 10B - Even though an estimation of excess stock in the middle of the year, while accepting the Books of Accounts of the year, is not generally permitted by various decisions of the ITAT, since Assessee is eligible for deduction u/s. 10B on the additions/disallowance made on these units, we are of the opinion that the same amount can be allowed for deduction u/s. 10B as the stock pertains to Hosur and Ongole units, which are eligible for deduction u/s. 10B. - AT
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Income Tax:
Penalty u/s 271(1(c) - accommodation entry - when the assessee has admitted this amount as income then no further investigation was required on the part of the AO to prove that this amount was received on account of accommodation entries received by the assessee. - levy of penalty confirmed - AT
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Income Tax:
Applicability of the provisions of sec.50 - transaction of sale of land and building - When an asset has not entered the block, then the question of application of Explanation 5 to sec. 32(1) shall not have application - AT
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Income Tax:
Entitlement to exemption u/s 11 - there is a violation of sec. 13(1)(c) of the Act as the assessee invested funds in a limited company where the trustee is the Managing Director and his wife is a Director - where the nonexempt portion of relevant income arises as a consequence of the contravention of the provisions of sec. 13(1)(c) or (d), the said income would be subject to tax at the maximum marginal rate. - AT
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Customs:
Demand of Anti-Dumping duty under Sections 9A of the Customs Tariff Act, 1975 read with Section 9B ibid and the rules made thereunder - the tiles are deemed to be imported from Sri Lanka and not from China as it fulfills the condition of value addition of more than 35%. Hence, not liable to anti-dumping duty - AT
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Service Tax:
Invokation of Section 80 of the Finance Act, 1994 and immunity from penalty under Section 78 of the Act - Levy of service tax being an indirect tax mechanism hardship is faced by the tax payer if incidence of tax is not realised from the service recipient. Considering such aspect and taking into consideration that a part of the penalty amount has been discharged, the balance of the penalty is waived. - AT
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Central Excise:
Following activities undertaken by the applicant would not amount to manufacture or deemed manufacture under Section 2(f) of the Central Excise Act, 1944, namely; Inspection, testing and installing batteries, Cleaning, lint brushing and deodorizing, Touching up and re-stitching, Filing, debundling and jewellery correction, Activities related to spectacles and frames, Folding, hanging and ironing, Polishing, shinning and coating, Tagging, Freebies, Protective stickering, Placing the products in original box, Inserting warranty card, Inserting moisture absorbing tablets, Inserting books mark and Replacing shoe laces.
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Central Excise:
Claim of interest on delayed Refund - delay in grant of refund - relevant date to be computed from the date of application of refund or from the date of rectification of defect in the refund application - The adjudicatory process by no stretch of imagination can be carried on beyond three months. It is required to be concluded within three months - Interest allowed from the date of application - SC
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Central Excise:
Transfer of Un-utilised cenvat credit balance - amalgamation - Since the effective date of the transfer is 01.06.2005, which has been specifically mentioned in the order dated 09.10.2006 of the Hon’ble Delhi High Court, there is no scope of transfer of any cenvat credit balance lying in the cenvat credit account of M/s. M/s. Karamchand Appliances Pvt. Ltd. to the appellant prior to such date. - AT
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Central Excise:
Transfer of cenvat credit by the respondent from its DTA Unit to EOU Unit - transfer of cenvat credit availed on capital goods only, has been barred by the CBEC from being transferred to an EOU from a DTA Unit and not the credit availed in respect of the inputs. - AT
Articles
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2016 (3) TMI 92
Addition u/s 69A - Held that:- The assessee vide letter dated 09/11/2009 claimed that the amount in question had been kept out of his personal savings of the earlier years and the same has been reflected in the books of account. From the aforesaid facts it can safely be inferred that the money in question belonged to the assessee particularly in the light of the fact that the same had not been recorded in the books of accounts at the time of search. Under these circumstances, benefit of entries made subsequently in Capital Account Statement as on 31/03/2008 cannot be extended to hold that the assessee has discharged the burden of explaining the nature and source of acquisition of money in question to the satisfaction of the authorities concerned within the meaning of section 69A of the Act. - Decided against assessee Addition to the extent of amount donated to Seth Shree Motisha Sadharmik Bhakti Kendra, Mumbai -assessee has produced copies of certificates u/s 80G - Held that:- Explanation given by the assessee in respect of payment allegedly made to Jain International trade Organization and other donations in question are not supported by any documentary evidence, therefore, there is no reason to interfere with the findings of the Ld. CIT(A). In our considered opinion the appellant has failed to establish that the remaining amount of ₹ 14,801/- was either spent exclusively for the purpose of business or given as donations within the meaning of 80G and is not entitled for claim deduction thereof. The Ld.CIT has, therefore, rightly confirmed the disallowance to the extent of ₹ 14,801/-. - Decided against assessee
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2016 (3) TMI 91
Addition on account of unaccounted cash receipts - Held that:- Undisputedly the impugned addition is made only on the basis of loose paper which shows that certain payments were made for acquiring the share in the partnership firm. Assuming yet not accepting that the said payment was actually made but then it was made for acquiring the share in the partnership firm. This by its very nature is a capital receipt in the hands of the Assessee. Therefore assuming yet not accepting that even this transaction has taken place it is a capital receipt which cannot justify the impugned additions. We accordingly set aside the findings of ld. CIT(A) and direct the A.O to delete the impugned addition of ₹ 5 lacs made on account of unaccounted cash receipts. - Decided in favour of assessee Addition u/s. 68 - Held that:- The counsel for the assessee reiterated what has been stated before the lower authorities. The D.R. supported the finding of Revenue authorities. We have given a thoughtful consideration to the order of the authorities below. We have also gone through the affidavit filed before the ld. CIT(A). In our considered opinion the ld. CIT(A) should not have rubbished the affidavit without going into the merits. Therefore in the interest of justice and fair play, we restore this issue to the files of the A.O. The A.O is directed to decide the issue afresh in the light of the contents of the affidavits. Keeping in mind, the ratio laid down by the Hon’ble Supreme Court in the case of Mehta Parekh & Company [1956 (5) TMI 4 - SUPREME Court]. - Decided in favour of assessee for statistical purposes. Penalty u/s 271(1)(c) - disallowance of depreciation - Held that:- Undisputedly the assessee claimed depreciation which was not permissible during the period in which the delivery vans were purchased. However, in our considered opinion a mere making of a claim which is not sustainable in law will not amount to furnishing inaccurate particulars. We draw support from the decision of Hon’ble Supreme Court in the case of Reliance Petro Products Pvt. Ltd. [2010 (3) TMI 80 - SUPREME COURT ]. - Decided in favour of assessee
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2016 (3) TMI 90
Validity of reopening of assessment - undisclosed deposit in the bank account of the assessee - Held that:- The basic requirement for reopening of assessment that the AO must apply his mind to the materials in order to have reasons to believe that the income of the assessee escaped assessment was found to be missing when the AO proceed to reopen the assessment which is in nature of a post mortem exercise after the event of reopening of the assessment. Therefore the reopening of the assessment was found to be invalid as it does not satisfy the requirement of law that prior to the reopening of the assessment the AO has to apply his mind to the material and conclude that he has reason to believe that income of the assessee has escaped assessment. Applying the above proposition of law it leaves no doubt in the mind that in the case on hand the AO has reopened the assessment mechanically without application of mind to conclude that the said amount of ₹ 6 lac deposit in the bank account of the assessee constitutes the income of the assessee and the same has escaped assessment. The decision relied upon by the ld DR is not applicable in the facts of the present case because in the said case not only the accommodation entry were found by the investigation wing but the modus operandi was also detected and therefore it was found that the AO was having the sufficient material and information to form the believe that the income assessable to tax has escaped assessment. In view of the facts and circumstances as well as the decisions relied upon by the AR, the reopening is in the case of the assessee is not valid - Decided in favour of assessee
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2016 (3) TMI 89
TDS u/s 195 - Disallowance being professional fees incurred by US branch of the assessee - non-deduction of tax at sources - disallowance u/s 40a(i) - INDO US DTAA - Held that:- In this case, the services have been utilized outside India by business carried on by the US branch of the assessee, which is assessed also under US Tax laws. Therefore no income deemed to accrue or arise in the hands of the recipient of such sum. Hence there is no requirement of tax deduction at source on the same as per Indian tax Laws. Further CIT (A) has also considered various provisions of INDO US DTAA. According to article 7 of DTAA if the recipient are earning business income and there is no permanent establishments of such recipients in India, such income shall not be chargeable to tax in India. Therefore, according to DTAA also the income shall not be subject to tax in India. Hence, there is no withholding tax liability on assessee as per Income tax Act 1961 as well as per DTAA. Ld. DR could not point out any infirmity in the order of CIT (A) where in CIT (A) has dealt elaborately various provision of the Income tax act and DTAA for holding that there is no withholding tax liability on assessee with respect to payment by US branch of the assessee - Decided in favour of assessee
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2016 (3) TMI 88
Revision u/s 263 - whether exemption u/s 54F of the Act can be denied for the assessment year 2009-10, for failure to construct the property within the period of 3 years from the date of sale of original asset? - Held that:- On careful consideration of the provisions of section 54F of the Act, it is abundantly clear that sub section 4 of section 54F of the Act, provides for, where the assessee has not utilized the full value of consideration for purchase/construction of residential house property within the due date specified u/s 139(1) of the Act, then the assessee shall invest the unutilized portion of sale consideration under the capital gain deposit scheme and furnished the proof along with return of income. The proviso to sub section 4 of section 54F of the Act provides that in case the assessee failed to utilize the amount invested under sub sec. 4 for construction of house property within a period of 3 years from the date of sale of original asset, then the assessee is required to pay the tax on the whole capital gain in the previous year in which the period of 3 years from the date of transfer of the original asset expires. In the present case on hand, on perusal of the facts, it is clear that the assessee has purchased another residential site within a period of 3 years and the balance amount was also invested under capital gain deposit account scheme. If there is inadequate enquiry, that would not by itself give occasion to the CIT to assume jurisdiction u/s 263 of the Act, merely because he has a different opinion on the issue. The CIT can do this, when there is a lack of enquiry by the assessing officer. In the present case on hand, there is no reason of whatsoever for the Commissioner to revise assessment order, as on both counts i.e. the order is not erroneous as the A.O. has verified the issues and allowed the claim made by the assessee u/s 54F of the Act. The order is also not prejudicial to the interest of the revenue, as the issue of exemption u/s 54F of the Act claimed by the assessee was in accordance with law. Therefore, we are of the opinion that the CIT without any justification assumed the jurisdiction to revise the assessment order which is not permissible under the law. - Decided in favour of assessee
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2016 (3) TMI 87
Income from sale and purchase of shares - LTCG/ STCG OR business income - Held that:- Merely because the rate of tax has been reduced in respect of short term capital gains and long term capital gains have been exempt during the year by way of an amendment to the provisions as discussed above, that itself, cannot be a ground for the AO to depart from its consistent stand of treating the assessee as an investor and thereby to charge the income earned by the assessee from share transactions as business income. As discussed above, at the time of purchase of shares even during the year but prior to 01.10.2004, the assessee was not guided or influenced by lower tax rate in case of short term capital gains as the rate for business income and short term capital gains was at par. The assessee, however, was treating himself as an investor and keeping the shares as investments in his account irrespective of the probable tax implication as there were no such tax implications as discussed above. The intention of the assessee, while purchasing the share, is the important and guiding factor as to whether the same was purchased with an intention of investment or for trading. The facts of the case as discussed above, clearly reveal that the assessee had treated the shares as investments in his account. As discussed above, if during the mid of the relevant Financial Year, certain tax benefits have been given in respect of capital gains, that cannot, in any way, lead to an assumption or presumption that the intention of the assessee at the time of purchase of shares was that of a trader and not of an investor. The treatment of the investment in the account books of the assessee was also a relevant guiding factor. The AO has also not pointed out as to in what manner the activity of the assessee for the year under consideration had been changed from investor to that of a trader especially when the department had consistently been treating him as an investor. It is also pertinent to mention here that as discussed above, in subsequent assessment years the department has again accepted the assessee as an investor. It is for the first time that in this year under consideration i.e. A.Y. 2005-06 the assessee had been treated as a trader because of certain tax benefits granted to an investor in securities by way of amendment in the relevant provisions of the Income Tax Act and subsequently for the A.Ys 2006-07 to 2008-09, the assessee was treated as trader.In view of our above discussion of the matter, we are of the view that the assessee is to be treated as an investor for the A.Y. 2005-06 to A.Y. 2008-09 also. We hold accordingly. The AO, therefore, is directed to treat the income from sale and purchase of shares as short term capital gains and long term capital gains according to the period of holding as per the provisions of law for these assessment years also. - Decided against revenue Disallowance under section 14A as per the provisions of rule 8D - Held that:- For the years for which Rule 8D is not applicable and in the event of that the AO is not satisfied with the explanation/working given by the assessee, disallowance under section 14A has to be made on a reasonable basis. We restrict the disallowance u/s 14A in the case of the assessee @ 5% of the tax exempt income earned by the assessee during the year.
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2016 (3) TMI 86
Reference to DVO - Additions towards difference between the cost of construction estimated by the DVO and cost of construction declared by the assessee - Held that:- In the present case on hand, the assessee claimed that she has used materials from dismantled building and also constructed the building on her self supervision. It is an undisputed fact that the DVO has applied the plinth area rate and cost index method, whereas the registered valuer has adopted detailed estimation method with plinth area rate prevailing in the market at that point of time. The DVO did not appear to have taken into consideration the local rates that actually existed during the period of construction. It is a common knowledge that CPWD rates are far higher than the local rates. Keeping in view of the fact that CPWD rates are always higher than the local rates, the CIT(A) would appear to have allowed 10% deduction towards cost of materials and supervision charges. Therefore, considering the facts and circumstances of the case, we are of the opinion that the assessee is eligible for 15% deduction towards rate difference and a further 10% deduction towards self supervision charges. Taking into consideration of the facts that the CPWD rates of New Delhi are always higher than the local rates we are of the opinion that the assessee is entitled for 15% deduction towards difference between CPWD rates and local rates and further 10% deduction towards self supervision charges. Therefore, we direct the A.O. to determine the cost of construction of building by taking average of the two plinth areas arrived by the DVO and claimed by the assessee and allow 15% & 10% respectively towards rate difference and self supervision charges. - Decided partly in favour of assessee
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2016 (3) TMI 85
Penalty u/s 271(1)(c ) - Addition in the order passed u/s 153C/143(3) - selection of assessment year - Held that:- We hold that the assessee had offered the business income on sale of flats in Asst Year 2009-10 in respect of cheque portion of sale consideration which has been accepted by the department in section 143(3) proceedings. Therefore the unaccounted cash element received on sale of flats was also assessable only in Asst Year 2009-10 and not in Asst Year 2008-09 as per the accounting practice followed by the assessee and also as held in the various decisions relied upon hereinabove. We hold that income has to be assessed in the year to which it pertain to and not in any other assessment year based on the offering of the assessee. Hence we hold that the cash receipts on sale of flats as per the seized document was not taxable in Asst Year 2008- 09 though the same was offered by the assessee itself in that year. This would be an excruciating factor in the penalty proceedings and hence the assessee cannot be attributed with any concealment of income or furnishing of inaccurate particulars of income for the Asst Year 2008-09 in this regard. In view of the aforesaid findings and judicial precedents, we hold that once a particular income was not assessable in the Asst Year 2008-09 then even though the income might have been assessed in Asst Year 2008-09, penalty u/s 271(1)(c) of the Act cannot be imposed on the same. - Decided in favour of assessee
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2016 (3) TMI 84
Deduction u/s 80IB(10) - exclusion terrace area - Built up area exceeding 1500 sq.ft including terrace area - Held that:- The terrace area needs to be excluded from the built up area and if the same is excluded, then the resultant built up area is well within the 1500 sq.ft limit prescribed in the statute and hence rejection of deduction u/s 80IB(10) of the Act on this ground by the Learned AO is not in order. It could be safely concluded that the commercial project was handled by an independent partnership firm styled as ‘Ashiana Amar Infrastructure’ for construction of commercial complex along with the approved plan, and both residential and commercial properties being independent untis and belong to two independent entities. We find that the assessee firm had considered 58 bighas of land for construction of residential units and adjacent land of 11 bighas belongs to another firm which constructed commercial project separately. Hence the deduction u/s 80IB(10) of the Act should be claimed unit wise and hence rejection of deduction u/s 80IB(10) of the Act on this ground by the Learned AO is not in order. - Decided in favour of assessee.
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2016 (3) TMI 83
Deduction u/s. 10B - Held that:- Assessee is eligible for deduction u/s. 10B, the fact of which was already acknowledged by the CIT(A) in the order for AY 2011-12. However, in AYs. 2007-08 to 2010-11, Ld. CIT(A) in his own way categorized the export of rough granite blocks into dimensional blocks and un-dimensional blocks and restricted the deduction to so called type-3 un-dimensional blocks. Even though Ld. CIT(A) deviated from the issue in analyzing the nature of rough granite blocks exported, however, he made amends in the order for AY. 2011-12 and allowed the deduction in all the granite blocks being exported by Assessee, subject to examination of eligibility of Ongole unit. This unit is also established much earlier and Assessee was allowed deduction on this unit also upto AY. 2006-07. Consequently, the direction of the CIT(A) asking the AO to examine the eligibility of Ongole unit is superfluous. Therefore, allowing Assessee’s ground on this issue, we direct the AO to allow the deduction of Ongole unit as claimed by Assessee. To that extent, Assessee’s appeals are allowed with reference to allowing of 10B claim in all the impugned AYs. 2007-08 to 2011-12. Addition on Excess Cash - Held that:- If there is enough cash balance on the day which can be explained, there cannot be any excess cash, considering that Assessee has no local sales and no need for generating cash outside the Books of Accounts when the incomes are exempt from tax. In view of that with reference to the addition of cash, we set aside the orders of the AO and CIT(A) on the issue and restore the matter to the file of AO for fresh examination of Assessee’s contentions and adjudication. Decided in favour of assessee for statistical purposes. Excess Stock in the course of search/survey at Hosur - Held that:- At this point of time, it is not possible to examine whether there is an excess stock of granite blocks in the quantity or in the valuation, considering the fact that this value was done with the help of Assessee-company’s officials. It is also contended that so called excess valuation is less than 5% of the total stock available with Assessee and AO accepted the closing stock value as the Books of Accounts were not rejected. Even though there is merit in Assessee’s contentions, it is difficult to adjudicate whether there is excess stock considering the fact that the sales and stock were reconciled on the date of search and certain amounts were quantified. Even though an estimation of excess stock in the middle of the year, while accepting the Books of Accounts of the year, is not generally permitted by various decisions of the ITAT, since Assessee is eligible for deduction u/s. 10B on the additions/disallowance made on these units, we are of the opinion that the same amount can be allowed for deduction u/s. 10B as the stock pertains to Hosur and Ongole units, which are eligible for deduction u/s. 10B. Assessee’s alternate contention is accordingly allowed.
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2016 (3) TMI 82
Addition of excess depreciation claimed in the past - CIT(A) deleted the addition - Held that:- In this case, the assessee had obtained the benefit of depreciation to the tune of ₹ 23,92,470/- in earlier years. Hence, when the asset was written off by reducing the written down value of the assets, the assessee was not entitled for the depreciation benefit which was granted earlier. It is an undisputed fact that the assessee had claimed depreciation on the entire block of assets written down value from the year of acquisition of the assets and it was already allowed by the Department. When, it was noticed that an amount of ₹ 43,88,000/- found to be excess in the value of the assets, the same was reversed by the assessee during the current year and depreciation allowed on that amount on earlier occasion has to be withdrawn and to be added back in this year, as otherwise, the assessee company will get double benefit, which is not justified. In view of this, we hold that the depreciation claimed by the assessee on the above value of ₹ 43,88,000/- in earlier year, which the assessee is not entitled, need to be brought back to tax u/s.28(iv) of the Act as the value of benefit is arising from the business of the assessee. After reducing the said amount of depreciation granted earlier from the amount of ₹ 43,88,000/-, the balance amount is to be reduced from the closing written down value of block of assets. Accordingly, we direct the AO to bring back to tax, the amount of depreciation granted to the assessee in the earlier years on the alleged amount of ₹ 43,88,000/- u/s.28(iv) of the Act and re-determine the closing written down value of block of assets in the year under consideration - Decided in favour of revenue Disallowance of expenses incurred towards premium of premature redemption of debentures - Held that:- Applying the ratio laid down in the case of Madras Industrial Investment Corporation Ltd. V. Commissioner of Income Tax reported in [1997 (4) TMI 5 - SUPREME Court] and National Engineering Industries Ltd., VCIT [1998 (9) TMI 65 - CALCUTTA High Court] where under it is held that there is no distinction between discount and premium, the discount on debentures as well as the premium payable on actual redemption on debentures in future years and the expenditure incurred for issue of such debentures are all held to be the revenue expenditure, entitled to be spread over the period of debentures and consequently, allowable as deduction in a particular assessment year - Decided in favour of revenue Addition made on account of difference in arm’s length under Transfer Pricing - Held that:- ALP should be determined on a transaction by transaction basis and not on an aggregate basis as argued by the ld. AR. Hence, we reverse the order of the CIT(Appeals) and restore that of the AO. This ground of appeal by the Revenue is allowed. Reopening of assessment - Held that:- It is possible that with due diligence the Assessing Officer would have ascertained this fat at the time of original assessment also, but in view of the explanation (1) it does not mean that there was no default on the part of the assessee. Hence, reopening u/s.147 is held to be valid. The assessee has tried to take shelter under the exception provided by the above stated proviso where an assessment under sub-section (3) of section 143 has been completed, no action after the expiry of four years from the end of the assessment year can be taken. But as stated above, when the assessee has not disclosed fully and truly the facts necessary for the assessment , this proviso will not come to its rescue. Same is applicable to other reasons records for reopening of assessment. Consequently, we hold that the entire reassessment proceeding in this case is valid and therefore, the action of the Assessing Officer is upheld. The assessee fails on this legal issue. Though the assessee company claimed that the entire amount of ₹ 63.02 crores is capital receipt, the fact gathered show that at least a part of it should be on revenue account.Further, the assessee company has made a wrong claim u/s 80HHC treating the interest receipts as export incentive. In these circumstances, we have reason to believe that the Income chargeable to tax has escaped assessment in view of failure on the part of the assessee company to disclose truly and fully all material facts as required by the proviso to section 147 in not offering the compensation received as revenue receipts and also has made a wrong claim of deduction u/s 80HHC by treating the interest receipts as export incentives - Decided against assessee ALP - assessee's claim of adoption of ALP at USD 965/MT rejected - Held that:- In this case, price variation is more than 5%, Assessing Officer is justified in making adjustment of ALP determined by the tax payer and the proviso to sec.92C provides that where more than one price may be determined by the most appropriate method, the ALP shall be taken to be the arithmetical mean of such prices. In the instant case only one price has been determined under most appropriate method, the question of application of the proviso does not arise. - Decided against assessee
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2016 (3) TMI 81
Penalty u/s 271(1(c) - accommodation entry - Held that:- There is no doubt that the AO has initiated the penalty proceeding by making the addition on the basis of information of receiving the accommodation entries by the of the assessee which was detected during the search and survey proceedings. Though there was confusion about the names of the parties from whom the assessee has received the amount however ultimately the assessee admitted to have received these amounts from three parties and decided to surrender this amount for taxation. Hence, the assessee has surrendered this amount to tax which is not voluntary act on the part of the assessee, but because of the proceeding initiated by the AO, after this fact of accommodation entries was detected in the search and survey proceedings. Therefore, the surrender of the amount by the assessee pre-empts the further investigation during the assessment proceedings. Even otherwise when the assessee has admitted this amount as income then no further investigation was required on the part of the AO to prove that this amount was received on account of accommodation entries received by the assessee. As relying on Hon'ble Supreme Court in the case of Mak Data Vs. CIT [2013 (11) TMI 14 - SUPREME COURT ] the penalty levy u/s 271(1)(c) is confirmed. - Decided against assessee
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2016 (3) TMI 80
Penalty u/s.271(1)(c) - disallowances on difference of calculation of 80IB deduction - addition u/s.69C on account of expenditure and interest from bank - Held that:- On the issue of deprecation of Jammu unit due to mistake of the assessee company at the time of filing of return deduction was not claimed and subsequently revised computation of income was filed in addition to revised computation of 80IB deduction. The assessee company explained the circumstances of deduction u/s.80IB to the Assessing Officer and Commissioner of Income Tax (Appeals) and filed rectification petition u/s.154 against the order of Sec.143(3) of the Act and also against the order of 271(1)(c) of the Act. Finally, the ld. Assessing Officer has considered rectification petition dated 21.04.2015 of the assessee and passed order dated 7.7.2015 allowing deprecation in respect of Jammu unit eligible for deduction u/s.80IB. The mistake committed by the assessee company was rectified in the year 2015 and there was a genuine reason for the assessee to file petitions as per the law and claimed relief. Further, the assessee has not furnished any inaccurate particulars on the issue of depreciation and we rely on the decision of Apex Court in the case of CIT vs. Reliance Petro Products Ltd [2010 (3) TMI 80 - SUPREME COURT ]. In respect of addition of unexplained expenditure of ₹ 3,29,664/- the assessee has not reconciled the payments of Bank account with books of accounts maintained though the Department collected information based on AIR data. Even before us, the assessee has not supported his case with Bank statements of Credit Card expenses. Further, unaccounted receipts of ₹ 11,950/- pertaining to interest on bank deposits, which the assessee has omitted to include in the books of accounts for taxation purpose. In respect of these two additions the ld. Authorised Representative submitted that to buy peace with the Department has not filed appeal before the Commissioner of Income Tax (Appeals). However, no bonafide explanation from the assessee side for making inaccurate particulars to the Department. Considering the facts and circumstances of penalty, we direct the Assessing Officer to recompute penalty in respect of sustained addition of unexplained expenditure ₹ 3,29,664/-and unclaimed receipts of ₹ 11,950/- only - Decided partly in favour of assessee
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2016 (3) TMI 79
Unexplained expenditure U/s 69C on daughter’s marriage - loose paper found during the course of search, in which the details of marriage expenses of assessee’s daughter Rubi, which was solemnized on 06/7/2007 had been recorded by the assessee - Held that:- he assessee has not correlated with evidence that there is source of ₹ 10 lacs and this amount was received for common expenditure. The assessee also claimed ₹ 3,78,000/- from Smt. Rukmani Gattani, mother in law of assessee and certain jewellery as per her Will dated 05/4/2000. These evidences were not found during the source of search at the residence of the assessee. There is a time lapse between the date of Will and date of marriage and assessee did not have any evidence regarding jewellery received from his mother in law. The assessee’s daughter Rubi also contributed ₹ 1 lac as claimed by the assessee but during the course of search, no evidence was found. Even at the time of recording statement U/s 132(4) of the Act, the assessee had not made any reference of income of the Rubi. Therefore, we do not find any reason to intervene in the order of the ld CIT(A). - Decided against assessee Addition out of car insurance, conveyance and telephone expenses - Held that:- Assessing Officer has not specifically pointed out any personal use but estimated disallowance has been made, which is also appears to be higher side. Accordingly, we restrict this disallowance @ 10%. The Assessing Officer suitably modified the addition. - Decided partly in favour of assessee
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2016 (3) TMI 78
Applicability of the provisions of sec.50 - transaction of sale of land and building located in an area named Kalina (hereinafter “Kalina Property”) in Mumbai - Held that:- The tax authorities have presumed that the Kalina property has formed part of block of assets. The said presumption is not supported by any evidence. The assessee has all along been claiming that it has claimed depreciation on Navi Mumbai office premises and when it was sold the entire surplus arising in the block was offered as short term capital gain. When an asset has not entered the block, then the question of application of Explanation 5 to sec. 32(1) shall not have application.In view of the above, we are of the view that the Ld CIT(A) was not justified in holding that the provisions of sec. 50 of the Act shall apply to the structures, if any, available on the Kalina property. Accordingly, we set aside the order of Ld CIT(A) on this issue. Accordingly, we direct the AO to compute the capital gain by treating the expenses incurred on land levelling, compound wall, etc as land improvement cost, since they have been predominantly incurred to protect the land only. Deduction of expenses while computing the capital gains - Held that:- We notice that the assessee has obtained valuation report from /s M.B. Sabnis & Co. in order to ascertain the market value of property as on 1.4.1981 and has paid a sum of ₹ 55,150/-. The valuation report so obtained would only serve for the purpose of computation of capital gains and hence the same cannot be considered to be expenses incurred in connection with the transfer of land. Accordingly, we are of the view that the tax authorities are justified in disallowing this claim. The expenses incurred on soil testing, in our view, is connected with the sale transaction and hence the same should be allowed, since the assessee has carried out the same only to establish the quality of soil available on the land. The legal & due diligence fee of ₹ 75.00 lakhs paid to Kirit Damania & Co. was related to the examination of title deeds and carrying out due diligence and hence we are of the view that the Ld CIT(A) was justified in allowing the same. The payment made to K.N. Gandhi & Co. (Rs.82,72,500/-) and J.R. Shah & Co. (Rs.50,000/-) have been claimed to be towards legal, taxation planning fees. However, the assessee has already paid legal & due diligence fee to /s Kirit Damania & Co. and hence the nature of services rendered by the above said two professional firms were not known or properly explained. In any case, the taxation planning activity cannot be considered to be an expenditure incurred in connection with the transfer of land. However, since they have rendered some legal service connected with the transfer of land, we are of the view that a portion of the payment should be considered as expenditure incurred in connection with the transfer of land. Accordingly we modify the order of Ld CIT(A) and direct the AO to allow 50% of the expenses paid to /s K.N. Gandhi & Co and M/s J.R. Shah & Co. The remaining expenditure relate to architect fee paid to two firms. The nature of services rendered by the two architect firms has not been brought on record. In the absence of the relevant details, we are not able to decide as to the payment made to the two architect firms relate to the expenditure incurred in connection with the transfer of land. Accordingly, we are of the view that the allowability of payment made to the architect firms requires fresh examination at the end of the AO. Accordingly we set aside the order of Ld CIT(A) on this issue and restore the same to the file of the AO with the direction to examine the claim of the assessee by examining the nature of services rendered by the two architect firms, viz., M/s Rajiv Harmalkar and M/s Shekhar Arolkar & Associates.
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2016 (3) TMI 77
Deduction u/s 10A disallowed before set off of brought forward business losses - Held that:- By following the latest judgment of the Hon'ble jurisdictional High Court based on the substituted/amended provisions of sec.10A/10B which are applicable in the case of the assessee as well as the decision of the Tribunal in case of Biocon (2014 (12) TMI 838 - ITAT BANGALORE), we decide this issue in favour of the assessee and direct the AO to allow deduction u/s 10A without setting off the domestic losses. Inclusion of sale proceeds of swarf as part of export turnover for the purpose of computation of deduction u/s 10B - Held that:- Hon’ble Supreme Court in the case of Mahavir Cycle Industries vs. CIT (2016 (2) TMI 805 - SUPREME COURT) following its earlier decision in the case of CIT vs. Punjab Stainless Steel Industries (2014 (5) TMI 238 - SUPREME COURT) wherein the Hon’ble Supreme Court held that scrap generated during the course of manufacturing of main product should be included in the total turnover for the purpose of deduction u/s 10B of the Act.
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2016 (3) TMI 76
Undisclosed income u/s 69A - cash receipts found and impounded during the course of survey action - Held that:- we are of the considered opinion that the ld. CIT (A) erred in upholding the conclusion of the AO based only on the admission during survey made by Shri Suri at the wee hours (i.e. between 3.00 AM – 4.00 AM) to fasten the liability when Shri Suri was able to explain and reconcile the receipts. The AO did not bother to enquire into the veracity of the explanation given by the assessee. The AO could have easily called for details from the branches of the assessee at Janakpuri and tested the explanation given by the assessee in respect to interbranch transfer of cash to the Head Office, without doing so, the addition made solely on the basis of admission during survey cannot be upheld as held by the Hon’ble Supreme Court in CIT vs. S. Khader Khan Son (2013 (6) TMI 305 - SUPREME COURT) and CIT vs. Dhingra Metal Works (2010 (10) TMI 29 - DELHI HIGH COURT ). Therefore, the orders of the lower authorities are bad in law and are set aside on this issue. - Decided in favour of assessee Disallowance of advertisement expenses - similar expenses were disallowed and offered for taxation in earlier years - Held that:- We find that the assessee had produced the ledger and bills of the advertisement expenses before the lower authorities below and explained that entire expenditure has been incurred wholly and exclusively for the purpose of business. The AO has not pointed out any discrepancy or any reason explained even inadmissible in the nature as per section 37 of the Act. Just because the assessee has not offered for tax in the previous years, it cannot be the ground for disallowing the expenses. It should be remembered that there is no estoppel against the law. It is a trite law that if the expenses are wholly and exclusively for the purpose of business or profession and if it is not a capital expenditure or personal expenditure then the expenditure need to be allowed. From the ledger of the advertisement expenditure (Pages 163 to 168 of PB), we find that the assessee company had incurred advertisement expenditure on advertising the same in newspapers and magazines. In the light of the fact that there were no other justifiable reasons given by both the authorities below to disallow the advertisement expenditure, cannot be countenanced. Therefore, we delete the addition made by the authorities below - Decided in favour of assessee
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2016 (3) TMI 75
Disallowance of legal costs on account of fees paid to M/s. AZB & Partners - capital gain computation - Held that:- The undisputed facts brought before us are that legal fees has been paid to M/s AZB & Partners (advocates and solicitors) for protecting the investment of the assessee with Zandu. Further, an admitted fact is that as a result of the aforesaid legal exercise, the assessee earned larger amount of capital gains as initial open offer of ₹ 7,315/- per share was eventually enhanced to ₹ 16,500/- per share. The totality of facts and circumstances of the case and documentary evidences brought before us clearly suggest that undoubtedly, there was improvement in the value of the asset being shares of Zandu held by the assessee company. During the course of hearing, both the parties fairly agreed that even if impugned expenses may not be allowable as revenue expenses but these were, for sure, aimed for providing enhancement to the value of the shares. Under these circumstances, we do not find any hesitation in holding that these expenses should be added to the cost of shares as cost of improvement. The AO is directed to recompute the amount of capital gain earned by the assessee. - Decided partly in favour of assessee
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2016 (3) TMI 74
Unexplained cash deposit under section 68 - Held that:- The assessee is in the business of running a departmental store in the name of the private limited company promoted by him. It is apparent from the facts of the case that assessee has been continuously depositing cash in his bank account and withdrawing the same. In such circumstances when these deposits are not reflected in the books of accounts of the assessee it would be appropriate to make addition on the basis of peak credit method. Therefore, we hereby direct the learned Assessing Officer to make addition in the hands of the assessee invoking section 68 of the Act by adopting peak credit method.
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2016 (3) TMI 73
Entitlement to exemption u/s 11 - as per revenue amount advanced to M/s Anna Investment Pvt. Ltd is not an approved investment u/s 11(5) - violation of sec. 13(1)(c) - Held that:- The exemption from tax will be denied only if their income is applied for the benefit of the author, founder etc. otherwise than in compliance with a mandatory term of the trust or a mandatory rule governing the institution. The requirements of sec. 13(1)(c)(ii) is that the trust should apply the funds in a concern in which they themselves are interested, if there was a mandatory provision in the trust deed for such a purpose. Such a mandate in the trust deed should have existed and could not have been brought in by amending the trust deed at a later stage after that crucial date, even if the trust deed authorized the trustees to amend the trust deed to bring in the mandatory condition or requirement for them to invest funds of the trust in a concern in which they might be interested. In is admitted fact in this case that there is a violation of sec. 13(1)(c) of the Act as the assessee invested funds in a limited company where the trustee is the Managing Director and his wife is a Director. Being so, placing reliance on the judgment of Supreme Court in the case of CIT vs Rattan Trust, [1997 (7) TMI 11 - SUPREME Court ] and CIT vs Nagarathu Vaisiyargal Sangam, [1998 (8) TMI 6 - MADRAS High Court ], we hold that the Assessing Officer was correct in invoking the provisions of sec. 13(1)(c) of the Act and denying exemption to the assessee u/s 11 of the Act. - Decided against assessee Benefit of sec. 112 - only that portion of income i.e capital gain to be considered for tax in terms of sec. 112 of the Act at maximum marginal rate as proposed by the Assessing Officer - Held that:- The provision of section 164(2) is concerned with taxability of income (i) which is derived from property held under trust wholly for charitable or religious purposes or (ii) in the form of voluntary contribution received by the trust covered by sec. 2(24)(iia), or (iii) the nature referred to in sec. 11(4A). The income of such trust which is not exempt u/s 11 or sec. 12 of the Act shall be charged to tax as if such exempt income is the income of an AOP. The proviso to sec. 164(2) inserted with effect from 1.4.1985 enjoins that where the nonexempt portion of relevant income arises as a consequence of the contravention of the provisions of sec. 13(1)(c) or (d), the said income would be subject to tax at the maximum marginal rate. Capital gain is to be assessed by applying the provisions of sec. 112 even if the income is assessed as per sec. 164 of the Act The benefit of sec. 112 of the Act so as to assess the gain from the transfer of the capital asset cannot be given to the deemed AOP. - Decided in favour of revenue
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Customs
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2016 (3) TMI 63
Payment of Redemption fine and penalty- Import of Old and Used Tyres- Revenue contended that the import of old and used tyres is restricted under Exim Code 40122020 of ITC(HS) Classification 2009-2014 and therefore requires a valid import license issued by Directorate General of Foreign Trade, New Delhi; and that as old and used tyres are covered by B-3140 of Part-B of Schedule III of the Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008 (for short, referred to as the "Rules, 2008", the importer requires permission from Ministry of Environment and Forest (MoEF). Held that: MOEF permission required for clearance of the consignments of old and used tyres are not legally sustainable, and thus, allowable for redemption of imported consignment on payment of redemption fine of 15% on the declared value and the quantum of penalty reduced to ₹ 30,000/- in the interest of justice. Decision in the case of Jibran Overseas 2015 (11) TMI 1020 - CESTAT NEW DELHI followed. - Decided in favour of appellant
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2016 (3) TMI 62
Waiver of pre-deposit of differential duty under Section 129E- Declared value rejected by DRI and revalued confirming the differential duty of ₹ 265,46,81,964/- u/s. 28(2) of Customs Act for the period 2006 to 2010- Appellant complied pre-deposit of ₹ 10 Crores and paid 1% EDD for the period May to June 2013- SVB provisional assessment order for the period May 2011 to till date pending- Held that: the appellant filed the appeal against the Commissioner’s order on 9-10-2015 and complied with pre-deposit of the tax of ₹ 10 Crores u/s.129A. The Commissioner’s order confirming the demand under section 28 is related to the period 2006 to 2010 whereas the pending SVB provisional assessment ordered for the period May 2011 till date. Ordering 1% EDD for future imports is with reference to pendency of appeal before Tribunal. Therefore there is no justification or any valid grounds to stay the operation of the order and the miscellaneous application for stay is liable to be justified. The Principal Commissioner of Customs (Chennai-III) has granted extension of waiver of payment of 1% EDD from 12.10.2015 till 31/12.2015. The order for provisional assessment for the subsequent period and the deposit of 1% EDD for the subsequent imports pending finalization by SVB are independent and not linked with the impugned Order in Original. Therefore we find that DC SVB cannot seek 1% EDD on the grounds of appeal pending against OIO. - Decided partly in favour of assessee
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2016 (3) TMI 61
Demand of Anti-Dumping duty under Sections 9A of the Customs Tariff Act, 1975 read with Section 9B ibid and the rules made thereunder- Import of Polished porcelain vitrified floor tiles from Sri Lanka but claimed to be originated in China by revenue- Held that: In terms of Rule 8 of Customs Tariff (DOGFTA between Sri Lanka and India) Rules, 2000, when there is an aggregate value addition in the territories of contracting parties of not less than 35% of FOB value of the product under export, then the export is deemed to be from the contracting party. Therefore, the tiles are deemed to be imported from Sri Lanka and not from China as it fulfills the condition of value addition of more than 35%. Hence, not liable to anti-dumping duty. - Decided against revenue
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Corporate Laws
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2016 (3) TMI 60
Single Judge Jurisdiction under Section 392 of the Companies' Act, 1956 - Held that:- Except Section 446 (and dependent on the conditions which are to be fulfilled as spelt out by it) there is no other power under the Companies Act, authorizing the Company Court to exercise universal jurisdiction, as it were, and adjudicate disputes concerning third parties’ transactions with the company. Therefore, the power is, in a sense, sui generis and applicable only in the event of a winding up order being made. As correctly held by the impugned judgment, Section 446 and the phraseology it adopts precludes the exercise of a wide, unenumerated jurisdiction of the kind invoked by the appellants. Thus, Section 446 and the exclusive jurisdiction provided by it, subject to express preconditions, which regulate its exercise, rule out the existence of a wide, un-spelt residual jurisdiction under Section 392 which is both ubiquitous and unregulated. In other words, the maxim exclusio unis est exclusio alterius (which means "mention of one thing implies the exclusion of another") squarely applies to this case. The other feature peculiar to this case is that the power of the Company Court to decide upon matters and disputes which do not directly relate to its jurisdiction, apart from being limited in its operation to what is expressly stated in Section 446, is also excluded in relation to matters and causes which are to be tried by Tribunals and Courts of exclusive jurisdiction. Thus, it was ruled in Indian Bank v Official Liquidator [1998 (5) TMI 342 - SUPREME COURT OF INDIA ] that even under Section 446, the Court does not possess the power to set aside the order of a tribunal constituted under a rent control legislation. Thus the Company Court acted correctly in refusing to exercise jurisdiction under Section 392 having regard to the nature of reliefs claimed by the appellants
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Service Tax
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2016 (3) TMI 72
Demand of Service Tax on Management, Maintenance or Repair service for the period 01.07.2004 to 31.03.2005 - Appellant contended that he was a Proprietorship entity, was not therefore a commercial concern, which was the description in the provision for identification of a provider of the specified taxable service, of management, maintenance or repair service; and that there was no contract between the assessee and the recipient of the service i.e. OPM, Amlai and thus no liability to tax - Held that: in view of the decision in CCE vs. R.S. Financial Services - 2007 (10) TMI 392 - CESTAT, NEW DELHI, a business run by a sole proprietor would nevertheless amount to business by proprietary concern; and the fact that the assessee was a proprietorship did not derogate from its liability to service tax. Analysing assessee's contention that he had provided no services under a contract, the impugned order concluded that there was a work order issued in favour of the assessee which amounts to a maintenance or repair service contract and therefore this contention, was misconceived. Therefore, the assessee/ appellant was a commercial concern and provided maintenance or repair service during the period in issue under a contract entered into with the recipient M/s OPM Amlai, suffers no infirmity. - Decided against the appellant
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2016 (3) TMI 71
Invokation of Section 80 of the Finance Act, 1994 and immunity from penalty under Section 78 of the Act - Appellant says the default was occurred due to no realization of taxes from service recipient duly for which entire service tax liability along with interest for belated payment of tax has been paid in two instalments before adjudication. Also the part of penalty has been discharged - Held that: There is no element of mens rea coming from the Adjudication order. Therefore, penalising the appellant under section 78 would be harsh in view of the reasonable cause of discharge of liability belatedly due to delay of realisation of service tax from the service recipient deserves consideration. Levy of service tax being an indirect tax mechanism hardship is faced by the tax payer if incidence of tax is not realised from the service recipient. Considering such aspect and taking into consideration that a part of the penalty amount has been discharged, the balance of the penalty is waived. - Decided in favour of appellant
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Central Excise
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2016 (3) TMI 70
Manufacture or deemed manufacture - activities treated as Manufacture or deemed manufacture - whether activity of Quality Check Stickering will not amount to manufacture under Section 2(f) ibid? - Held that:- It is observed that as per the clarification dated 02.03.2012 issued by CBEC, if brand name is not affixed or embossed on the jewellery but appears on the packing, such as jewellery box or pouch or warranty card or certificate of quality, such goods will not be treated as branded jewellery and thus will not be liable to excise duty. In the instant case, applicant has submitted that the tag is applied by them while placing the jewellery in the box to prevent return of counterfeit items. Application does not mention that applicant would affix or emboss brand name on the jewellery. Tagging in this case is not embossing or affixing. Therefore, the activity of tagging of jewellery would not amount to manufacture under Section 2(f) ibid. Following activities undertaken by the applicant would not amount to manufacture or deemed manufacture under Section 2(f) of the Central Excise Act, 1944, namely; Inspection and testing, Cleaning and lint brushing, Jewellery correction, Activities relating to spectacles and frames (placing in case, tightening screws on eyewear), Folding and hanging, Tagging, Inserting freebies, Placing the product in original box / pack, Inserting warranty cards, Inserting moisture absorbing tablets, Inserting bookmark, Debundling, Sorting, Wrapping, Sensitive material covering, Bagging, Bundling, set creation and rubber banding, Stickering, Boxing, Stuffing and adding dunnage to glassware, Taping, Consignee detailing and Cardboard foot printing.
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2016 (3) TMI 69
Manufacture or deemed manufacture - activities undertaken by at the warehouse(s) prior to delivery of the goods to the merchant's customer - Tagging - Held that:- It is observed that as per the clarification dated 02.03.2012 issued by CBEC, if brand name is not affixed or embossed on the jewellery but appears on the packing, such as jewellery box or pouch or warranty card or certificate of quality, such goods will not be treated as branded jewellery and thus will not be liable to excise duty. In the instant case, the applicant has submitted that the tag is applied by them while placing the jewellery in the box to prevent return of counterfeit items. Application does not mention that applicant would affix or emboss brand name on the jewellery. Tagging in this case is not embossing or affixing. Therefore, the activity of tagging of jewellery would not amount to manufacture under Section 2(f) ibid. In view of the above, we hold that following activities undertaken by the applicant would not amount to manufacture or deemed manufacture under Section 2(f) of the Central Excise Act, 1944, namely; Inspection, testing and installing batteries, Cleaning, lint brushing and deodorizing, Touching up and re-stitching, Filing, debundling and jewellery correction, Activities related to spectacles and frames, Folding, hanging and ironing, Polishing, shinning and coating, Tagging, Freebies, Protective stickering, Placing the products in original box, Inserting warranty card, Inserting moisture absorbing tablets, Inserting books mark and Replacing shoe laces.
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2016 (3) TMI 68
Claim of interest on delayed Refund - delay in grant of refund - relevant date to be computed from the date of application of refund or from the date of rectification of defect in the refund application - Held that:- It is not a case where the assessee is claiming automatic refund. It is a case that pertains to grant of interest where the refund has been granted. The grievance pertains to delineation by the competent authority in a procrastinated manner. In our considered opinion, the principle laid down in Ranbaxy Laboratories Limited (2011 (10) TMI 16 - Supreme Court of India ) wherein held liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made would apply on all fours to the case at hand. It is obligatory on the part of the Revenue to intimate the assessee to remove the deficiencies in the application within two days and, in any event, if there are still deficiencies, it can proceed with adjudication and reject the application for refund. The adjudicatory process by no stretch of imagination can be carried on beyond three months. It is required to be concluded within three months. The decision in Ranbaxy Laboratories Limited (supra) commends us and we respectfully concur with the same. - Decided against the revenue.
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2016 (3) TMI 67
Modvat credit disallowed - Held that:- Chlorine containers are duty paid and used in the manufacture of final product. The Tribunal consistently viewed that, the Chlorine containers are eligible for CENVAT credit. The dispute relates to the value of the Chlorine containers was not included in the assessable value. But, there is no material available on record that any proceeding was initiated against the appellant for non-inclusion of the value of the chlorine containers in the assessable value, and therefore, the credit cannot be denied on such reasons. - Decided in favour of assessee
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2016 (3) TMI 66
Reversal of credit equal to the cenvat credit availed on the input - damaged/rejected goods cleared - Respondents are alleged to have failed to pay duty equal to the duty taken as credit on the inputs cleared as damaged/rejected prior to use in manufacture of final product as prescribed - Held that:- Inputs sold as scrap in terms of Section 4 of the Act on transaction value has originated from the manufacturing process followed in the petroleum industry. Once the input is rejected during manufacturing process and sold at the transaction value under Section 4 of the Act, the dept. has no case for asking the reversal of credit equal to the cenvat credit availed on the input. It is immaterial if the shape & size as well as classification of the input remains the same after rejection. It is different matter if the said rejected barrels are used as such for different purpose. These are considered to be waste for the appellants as these are not qualified as per the quality standard adhered by them. The dept. has not proved that the appellants have received more value from the buyer of rejected barrels than the value shown in the invoices for charging Central Excise duty. It is also not the case that the rejected barrels are recycled & purchased again by the appellants. In view of above, it seems to be more assumption & presumption as pleaded by the appellants, based upon which show cause notice issued & confirmed by the lower adjudicating authority since the dept. has not found any hole in procedure adopted by the appellants on receipts, manufacturing, clearance and accounting of transactions which is based on Standard Operating Procedures under which every single material is assigned an unique number/codes as explained by them in their defence reply. In the circumstances as discussed above do not find any merit in the case, therefore the impugned order is not sustainable under the law - Decided against revenue
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2016 (3) TMI 65
Transfer of Un-utilised cenvat credit balance - amalgamation - cenvat account in relation to input/input service, which were utilised for payment of duty on goods manufactured/cleared on or after 12.05.2005 - Held that:- As find from the available records that the share holdings of M/s.Karamchand Appliances Pvt. Ltd. has been transferred to the appellant on 12.05.2005, but the Scheme of amalgamation was approved by the Hon’ble Delhi High Court vide their order dated 09.10.2006, giving effect to the amalgamation date as 01.06.2005. Since the Hon’ble High Court has specifically approved the “effective date” of transfer of ownership as 01.06.2005, the date when mere share holdings were transferred, should not be considered as the effective date for the purpose of transfer of cenvat credit. Since the effective date of the transfer is 01.06.2005, which has been specifically mentioned in the order dated 09.10.2006 of the Hon’ble Delhi High Court, there is no scope of transfer of any cenvat credit balance lying in the cenvat credit account of M/s. M/s. Karamchand Appliances Pvt. Ltd. to the appellant prior to such date. Non-availability of cenvat balance in the account prior to 01.06.2005 shows that the same might have been utilised by M/s. Karamchand Appliances Pvt. Ltd., for which the cenvat demand cannot be fastened against the appellant. - Decided in favour of assessee
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2016 (3) TMI 64
Cenvat credit on the disputed services disallowed - assessee had availed Cenvat credit of service tax paid by various job workers on business auxiliary services, which according to the Revenue is not leviable to service tax. - Held that:- Since service providers are registered with the Service Tax Department and service tax paid by them were accepted and retained as statutory dues by the jurisdictional Service Tax authorities, the same cannot be denied at the recipient's end on the ground that the said service is not liable to payment of service tax. Since the respondent herein has taken cenvat credit of service tax on such service, on the strength of valid and proper invoice, evidencing payment of service tax, taking of such credit is in conformity with the Cenvat statute. With regard to transfer of cenvat credit by the respondent from its DTA Unit to EOU Unit, the Commissioner (Appeals) has allowed the cenvat credit by placing reliance on the decision of the Tribunal in the case of WOCO Motherson Elastomers Ltd. vs. CCE, Noida (2008 (5) TMI 61 - CESTAT NEW DELHI ), wherein it has been held that transfer of cenvat credit availed on capital goods only, has been barred by the CBEC from being transferred to an EOU from a DTA Unit and not the credit availed in respect of the inputs. - Decided in favour of assessee
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