TMI Tax Updates - e-Newsletter
March 8, 2016
Case Laws in this Newsletter:
Income Tax
Corporate Laws
Service Tax
Central Excise
TMI SMS
Highlights / Catch Notes
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Income Tax:
Apportionment of expenses between the taxable and exempted income - disallowance u/s 14A - The act of engagement of Company Secretary was clearly for the purpose of carrying on activities of the company, in absence of which, the company would be breaching the legal requirement. That being the position, the expenditure had to be apportioned between the taxable income and the exempt income. - HC
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Income Tax:
Assessment u/s 147 - Time limit for completion of assessments and reassessments u/s 153 - the draft Assessment order dated 30th March, 2015 is not sustainable being without jurisdiction. This for the reason that it has been passed without disposing of the objections filed by the Petitioner to the reasons recorded in support of their impugned notice. - HC
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Income Tax:
Profit on sale of shares - short term capital gains subject to tax @ 10% as per provisions of sec. 111A OR addition(s) made by Assessing Officer on account of unexplained credits u/s 68 - non-genuine purchases/sales of transactions of shares - Assessee has satisfied all the conditions - No addition u/s 68 - AT
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Income Tax:
Undisclosed cash deposited to the bank - when the assessee has demonstrated that he had withdrawn cash from the bank and there is no finding by the authorities below that this cash available with the assessee was invested or utilised for any other purpose, in that event, it is not open to the authority to make the addition on the basis that the assessee failed to explain the source of deposits. - AT
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Service Tax:
Refund claim - Service tax paid under Erection, Commissioning and Installation service during the period March, 2007 - the Service tax liability will not arise when works contract is executed, under any other services prior to 01.06.2007. - Refund allowed - AT
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Service Tax:
Entitlement of Cenvat credit - Appellant provided telecom towers, pre-fabricated shelters and parts thereon to telecom service providers for providing passive infrastructure on lease basis and claim for Cenvat credit - Credit not allowed - AT
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Central Excise:
Cenvat credit on AED (T&TA) for payment of basic excise duty on clearance of the final product from the factory - the information regarding taking of cenvat credit on the disputed duty amount and utilization thereof for clearance of the finished products was within the knowledge of the Department, the show cause notice issued on 04.03.2008, proposing recovery of cenvat credit for the period April 2003 to July, 2004,is barred by limitation of time. - AT
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Central Excise:
Transaction value as defined under Section 4(3)(d) - ‘the advertisement expenditure incurred by a manufacturers’ customer can be added to the sale price for determining the assessable value, only if the manufacturer has an enforceable legal right against the customer to insist of the incurring of such advertisement expenses by the customer - AT
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Central Excise:
Clandestine removal of LPG Cylinder from the factory - the allegation of clandestine removal without proper verification of books cannot be a defensible ground for confirmation of duty demand and for imposition of penalty - AT
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Central Excise:
Cenvat Credit on the Cement Sheets (A C Sheets) and Corrugated Aluminum Sheets - the appellant is entitled to Cenvat credit as the sheets so utilized portable nature of accessories of the capital goods and as such are capital goods as defined in Rule 2(a)A(iii) of the Cenvat Credit Rules 2004 - AT
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Central Excise:
Whether appellants are eligible for concessions available for the goods manufactured/purchased by them when transferred to the power plant owned by another entity inside their factory premises - benefit of exemption allowed - AT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2016 (3) TMI 186
Addition on account of unaccounted sales - Assessee’s main source of turnover is commission and compensation as well as services, fabrication and erection work - Held that:- Looking to the total financial exposures of the company in lieu of gross turnover, profit for the year, share capital reserve and surplus etc. and above all when all the books of accounts are audited then raising doubt on a transaction which has been carried out in the normal course of business then it was not correct on the part of the Assessing Officer to doubt about the transaction of a meagre amount without bringing on record any evidence in respect of transactions of suppressed sales. Assessing Officer should have appreciated that business is carried on by its management which has to look after its day to day activities and certainly whimsical doubt should not be raised about a transaction that goods costing of ₹ 8,05,578/- would be sold at a suppressed value of ₹ 4,42, 831/-. When the goods are three years old and are of no regular use by the company and also the fact that there is no other sale of products of the company then certainly this transaction would have occurred in a normal course of business. We do not find any reason in disbelieving the assessee. We, therefore, delete the addition - Decided in favour of assessee Proportionate disallowance of interest relating to investments meant for earning exempt income - Held that:- Assessee is having a capital reserve and surplus basis of ₹ 9.25 crores and the brought forward investment as on 31.3.2002 is ₹ 3.66 crores and it can be easily inferred from the figures that assessee was having sufficient source of capital and reserve and surplus which might have been utilized for the investments. In lack of any other evidence brought on record by the Revenue as well as respectfully following the decision of Jurisdictional High Court and decision of co-ordinate bench for various years in assessee’s own case, we are of the that no disallowance should have been made for interest in the case of assessee and we delete the same - Decided in favour of assessee
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2016 (3) TMI 185
Adoption of Fair Market Value (FMV) as on 01/04/1981 - Held that:- The assessee has placed Valuation Report by an authorized valuer who has adopted the value at ₹ 28.50 sq.ft. Further, the value adopted by the AO is at ₹ 20/- per sq.ft. After considering the rival contentions and looking to the peculiarity of the facts of the present case, we are of the considered view that the value at ₹ 25/- per sq.ft. would subserve the interest of justice. Accordingly, we hereby direct the AO to adopt the cost of acquisition @ ₹ 25/- per sq.ft. and, accordingly, recompute the capital gain. - Decided partly in favour of assesse Disallowance of set off of carry forward business loss of the earlier years against the assessed income - Held that:- Respectfully following the ratio laid down by the Hon’ble Jurisdictional High Court in the case of General Motors India (P) Ltd. vs. DCIT (2012 (8) TMI 714 - GUJARAT HIGH COURT ), we hereby direct the AO to allow the set off of unabsorbed depreciation against income assessed for the year under consideration. - Decided in favour of assesse
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2016 (3) TMI 184
Trading addition - non rejection of books of accounts - ITAT deleted the addition - Held that:- Tribunal has rightly held that when the books of accounts of the assessee had not been rejected and assessment having not been framed under section 144 of the Income Tax Act the said authorities were in error in resorting to an estimation of income and such exercise undertaken by them was not sustainable. Section 145(3) of the Act lays down that the Assessing Officer can proceed to make assessment to the best of his judgment under section 144 of the Act only in the event of not being satisfied with the correctness of the accounts produced by the assessee. In the instant case the Assessing Officer has not rejected the books of accounts of the assessee. To put it differently the Assessing Officer has not made out a case that conditions laid down in Section 145(3) of the Act are satisfied for rejection of the books of accounts. Thus, when the books of accounts are maintained by the assessee in accordance with the system of accounting, in the regular course of his business, same would form the basis for computation of income. In the instant case it is noticed that neither the Assessing Officer nor CIT(Appeals) have rejected the books of accounts maintained by the assessee in the course of the business. As such tribunal has rightly rejected or set aside the partial addition made by Assessing Officer for arriving at gross profit and sustained by the CIT(Appeals) and rightly held that entire addition made by the Assessing Officer was liable to be deleted. - Decided in favour of assessee
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2016 (3) TMI 183
Denial of registration under Section 12A and recognition under Section 80G - Held that:- To ascertain the true nature/purpose of the Trust, the objectives have to be considered as a whole, not in isolation. The Tribunal cannot pick and choose certain objectives ignoring the main objectives. It appears that the respondent and the Tribunal are influenced by the preamble in the Trust Deed. Preamble cannot control the main objectives of the Trust. Section 2[15] of the Act contemplates 'charitable purpose'. 'Charitable purpose' includes relief of the poor, education, medical relief and the advancement of any other object of general public utility. The phrase 'any other object of general public utility' if, examined in the light of the Judgment in the case of AHMEDABAD RANA CASTE ASSOCIATION [ 1971 (9) TMI 8 - SUPREME Court ], it is not necessary that the object should be to benefit of the whole of mankind or of persons in a Country or State. If it is distinguished from a specified individual and if it is to the benefit of section of the public, it has to be construed as charitable purpose. As such, the Order passed by the Tribunal is unsustainable. The matter deserves to be reconsidered by the Tribunal regarding the purpose and objectives of the Trust in the light of the Trust Deed and any other documents to be furnished by the Assessee.
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2016 (3) TMI 182
Apportionment of expenses between the taxable and exempted income - disallowance u/s 14A - expenses incurred by the assessee on salary paid to the Company Secretary and other expenses for maintaining its very corporate existence - Held that:- In our opinion, the CIT(Appeals) and the Tribunal committed no error. The fact that virtually entire income of the assessee was exempt is not in dispute. The fact that the assessee paid salary of ₹ 2.91 lacs to the Company Secretary so engaged by the company is also not in dispute. Merely because under the relevant provision of the Companies Act, it was compulsory for the company to engage a Company Secretary, would not in any manner change the fundamental facts. The salary paid to the Company Secretary was for running the business of the company which principally comprised of investment in shares and agricultural operations. It is not necessary that the Company Secretary should himself have directly contributed to any of the tasks relatable to the earning of income. Expression used in subsection( 1) of section 14A of the Act is “in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income”. Therefore, merely because it was compulsory in law to engage the Company Secretary would not in any manner change this position. The fact of the matter is that the company did engage a Company Secretary and incurred expenditure of ₹ 2.91 lacs by way of salary. The act of engagement of Company Secretary was clearly for the purpose of carrying on activities of the company, in absence of which, the company would be breaching the legal requirement. That being the position, the expenditure had to be apportioned between the taxable income and the exempt income. - Decided against assessee
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2016 (3) TMI 181
Application u/s Section 220 (6) - Held that:- For the moment, since the petitioners have applied before the appellate forum with an application for stay of the recovery of the tax in dispute pending disposal of the appeal, the appellate authority is requested to dispose of such application upon affording the assessee a hearing within a period of two months from date, uninfluenced by the orders that may have been passed in matters arising out of Section 220(6) of the Act.
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2016 (3) TMI 180
Recovery proceedings - When tax payable and when assessee deemed in default - remedy under Section 220 - Held that:- The scheme of the Act provides a specific remedy under Section 220 (6) and the same having not been invoked by the petitioner in the present case, does not entitle him to the protection as has been prayed for on the ground of mere pendency of the appeal or till the disposal of interim stay application. From the perusal of impugned notice dated 3.11.2015, we do find that the assessing authority has not considered the aspect of the pendency of appeal nor the grievance raised by the petitioner to this effect has been considered in accordance with law but at the same time it is found that the petitioner has not brought any material whatsoever to the knowledge of the assessing authority. Although the petitioner has also made a reference to some circulars issued by CBDT but the same are not filed before the Court nor before the assessing authority, therefore, the Court has no choice except to interpret the intention of legislation from its plain reading. In civil disputes Order XLI Rule 5 and 6 Code of Civil Procedure, 1908 specifically confer jurisdiction on the appellate court or the court passing the decree for stay of orders/decree appealed against or for imposing conditions to secure the ends of justice. The benefit of Section 144 CP.C. is also available to a litigant in all judicial proceedings, therefore, the exclusion of power of interim stay at the first appellate stage under Income Tax Act, 1961 has to be read in the manner provided for in Section 220 (6) of the Act but not otherwise. The provisions of Section 144 C.P.C. may not be applicable to the proceedings under the Income Tax Act, 1961 but the principles do apply. It is true that an appeal is the continuity of proceedings but the legislative intention of securing the interest of revenue by imposing just conditions at the first appellate stage, can also not be held to be arbitrary and reading a principle contrary to the intention of Section 220 (6) amounts to adding something in the appellate jurisdiction which the law neither expressly nor by implication does provide. In the circumstances of the case, we leave it open to the petitioner to approach the assessing officer under Section 220 (6) of the Act within a period of two weeks from today and in case any application is filed by the petitioner before the assessing officer, he shall pass necessary order after affording an opportunity to the petitioner within three months from the date of filing of any such application. Until decision on the application, filed if any, or until decision of the appeal itself within a period of three month, the recovery proceedings in relation to the assessment year 2012-2013 for the disputed amount shall remain in abeyance and the same shall abide by to the outcome of the appeal.
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2016 (3) TMI 179
Assessment u/s 147 - Time limit for completion of assessments and reassessments u/s 153 - Held that:- In the present facts, we find that the draft Assessment order was passed on 30th March, 2015 without having disposed of the Petitioner's objections to the reasons recorded in support of the impugned notice. The reasons were supplied to the Petitioner only on 19th March, 2015 and the Petitioner had filed the objections to the same on 25th March, 2015. This passing of the draft Assessment order without having disposed of the objections is in defiance of the Supreme Court's decision in GKN Driveshafts (India) Ltd (2002 (11) TMI 7 - SUPREME Court ). Thus, the draft Assessment order dated 30th March, 2015 is not sustainable being without jurisdiction. This for the reason that it has been passed without disposing of the objections filed by the Petitioner to the reasons recorded in support of their impugned notice. Accordingly, we set aside the draft Assessment order dated 30th March, 2015. We are not dealing the validity of the reasons in support of the impugned notice in the present facts as the time limit to pass the Assessment order as provided under 4th Proviso to sub-section(2) of Section 153 of the Act has already expired when the petition was filed.
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2016 (3) TMI 178
Capital gain computation - whether Property 'held' by the assessee is relevant in computing capital gain and not 'owned' - indexation - computation of Cost of acquisition - market value - antecedent interest over the property - revision u/s 263 - Held that: - The expression “where the capital asset became the property of the Assessee before 1st April, 1981 in the context of Sec.55(2)(b)(i) of the Act, is rather ambiguous, in the sense that it does not speak of the date of vesting of legal title to the property. Even the provisions of sec.2(47)(v) & (vi) of the Act which defines what is “transfer” for the purpose of the Act, considers possessory rights as akin to legal title. It is therefore necessary to look into the policy and object of the provisions giving exemption from levy of tax on capital gain. In the present case the Assessee had paid the entire consideration for the property prior to 1.4.1981. Therefore the claim of the Assessee that the property became property of the Assessee before 1st April, 1981 as it held the property from the year 1970 has to be accepted, keeping in mind the policy and object of the provisions giving the benefit of inflation by adopting fair market value as on 1.4.1981 in respect of properties acquired prior to that date. In our view that the legislature would not have intended to give a meaning to the expression “where the capital asset became the property of the Assessee before 1st April, 1981” used in Sec.55(2)(b)(i) of the Act, as referring to only vesting of legal title. It is unlikely that the legislature would wish to deny benefit of adopting Fair Market value as on 1.4.1981 while computing cost of acquisition for the purpose of Sec.48 of the Act, in a case where, otherwise the Assessee satisfies all parameters for grant of fair market value as on 1.4.1981. The expression “where the capital asset became the property of the Assessee before 1st April, 1981” as used in Sec.55(2)(b)(i) of the Act should not be therefore be equated to legal ownership. In the present case the Assessee had an antecedent interest over the property as early as 3.3.1970 and a vested right over the property by paying the entire sale consideration and complying with the other terms of the deed of assignment much prior to 1.4.1981. We are therefore of the view that the CIT was not justified in directing the AO to adopt the date of acquisition of the property by the Assessee for the purpose of computing capital gain u/s.48 as 19.4.1994. The claim of the Assessee that it was entitled to adopt fair market value of the property as on 1.4.1981 as cost of acquisition and consequent indexation benefit is correct. We reverse and modify the order of the CIT to this extent. As far as what is the cost of acquisition and as to whether the expenditure incurred by the Assessee in connection with the transfer were allowable deduction or not, has not been examined by the AO while completing the assessment u/s.143(3) of the Act. To this extent we uphold the order of the CIT directing the AO to examine these two aspects and compute capital gain accordingly
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2016 (3) TMI 177
Profit on sale of shares - short term capital gains subject to tax @ 10% as per provisions of sec. 111A OR addition(s) made by Assessing Officer on account of unexplained credits u/s 68 - non-genuine purchases/sales of transactions of shares - Held that:- The sale consideration received from sale of equity shares at ₹ 49,66,501/- cannot be treated as unexplained cash credit u/s 68 of the Act because assessee has offered complete explanation about the nature and source of the credit which has happened in the year under appeal through bank transaction and complete details of M/s Grishma Securities P. Ltd. (from whom the sale consideration of ₹ 49,66,501/- is received) in the form of its membership No., contract note, SEBI registration No., PAN and bank details were made available to the Assessing Officer. The transaction being chargeable to STT 2nd condition laid down in Section 111A(1)(b) is also satisfied. So far as payment or recovery of STT is concerned, it can be taken care of by Chapter VII of the Finance No.2 Act of 2004 which provides for assessment, collection recovery of STT. Recognized stock exchange had been empowered to collect the STT, the A.O. is empowered to make assessment of such STT as per Section 102 of STT Act as per Chapter VII of the Finance Act No.2 of 2004. There is no contrary material to hold that is not in fact STT but some other charges except the apprehension of the A.O. which is not found substantiated. We, accordingly uphold the contention of the assessee and as accepted by Ld. CIT(A) that the sum is in fact STT duly deducted by the broker from the payments made to the assessee on sale of shares. - Decided in favour of assessee
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2016 (3) TMI 176
Action u/s 132 for search and seizure - order under section 158BC read with section 143(3) - Held that:- By the impugned assessment, which has been upheld till the High Cour [2006 (7) TMI 145 - BOMBAY High Court], the addition of only ₹ 3.85 lakhs to the income of the assessee- appellant was made and the tax effect thereof would still be much less. Appeal is dismissed on this ground alone.
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2016 (3) TMI 175
Entitlement to claim of deduction u/s 80-HHC - assessment order u/s 143(3) r.w.s. 147 disallowed the claim of the assessee on the ground that the assessee failed to bring export sales realization in convertible foreign exchange within stipulated period - Held that:- In the original assessment when this claim was denied by the AO, after noticing that there was a delay in bring sale proceeds and despite that the assessee made a claim u/s 80-HHC. In the remand proceedings, the claim of the assessee was to be considered and decided in the light of the judgment of Azad Tobacco Factory (P) Ltd (1995 (4) TMI 6 - ALLAHABAD High Court ) wherein it has been held that once the assessee has made a claim u/s 80-HHC and there is a delay in bringing sale proceeds within stipulated period, then the assessing authority has neither vested power for allowing the further period nor can he deal with the same. It was held by the Hon’ble High Court that the Chief Commissioner or Commissioner, as the case may be, is the competent authority to extend the period on satisfaction that the assessee was unable to do so for the reasons beyond his control. Therefore, once the assessee made a claim, the AO was required to place the same before the CCIT or CIT, as case may be, and the assessee was required to explain the reason for delay. In the case in hand, AO has not followed the procedure as required to place the matter before the CCIT or CIT, as the case may be, but himself has decided to refuse the extension of time claimed by the assessee which is beyond the jurisdiction of the AO. Accordingly, in the facts and circumstances of the case, we do not find any error or illegality in the order of the CIT(A). - DEcided against revenue
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2016 (3) TMI 174
Validity of reopening of assessment - validity of notice - Held that:- Since it has been established that notice under section 148 of the Act was issued by the Assessing Officer having no jurisdiction over the assessee, the reopening is bad in law and, therefore, the assessment framed consequent thereto is not sustainable in the eyes of law. - Decided in favour of assessee
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2016 (3) TMI 173
Deemed dividend addition under section 2(22)(e) - rectification of mistake - Held that:- The judgment in the case of CIT v. Smt. Savithiri Sam [1997 (9) TMI 32 - MADRAS High Court ] was in connection with the transfer of debit balance in the account of the deceased shareholder to the account of his wife in the books of account, who is not a shareholder. In that circumstances, it was held by the jurisdictional High Court that the provisions of section 2(22)(e) of the Act are not applied. It is pertinent to mention here that there is a direct judgment from the jurisdictional High Court in the case of CIT v. L. Alagusundaram Chettiar [1976 (10) TMI 22 - MADRAS High Court] wherein it was observed that loan advanced by the company to Hindu undivided family of one K, the low paid employee of the company was karta and K in turn, advancing loan to the assessee, managing director of the company, was deemed dividend in the hands of the assessee in view of admission by the assessee that when required loan, he obtained it through K in this manner. In view of contradictory judgments, the issue arising from the miscellaneous petition is a debatable one and it cannot be said that it should be rectified under section 254(2) of the Act. Under section 254(2) only a mistake, which is apparent from the face of the record, could be rectified and not a debatable issue. If it is so, it is only an error in judgment and not a mistake apparent from the record amenable to rectify under section 254(2) of the Act. In our opinion, the order of the Tribunal to be read as a whole and not in a piecemeal manner. Accordingly, the order of the Tribunal on these issues is not liable to be interfered with unless the Tribunal has not taken into consideration any irrelevant material or has failed to take into consideration any relevant material or the conclusion arrived at by the Tribunal is perverse in the sense that no reasonable person, on the basis of the facts before the Tribunal, could have come to the conclusion to which it has come. In view of the above discussion, we find no merit in the miscellaneous petition filed by the assessee and it deserves to be dismissed. - Decided against assessee
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2016 (3) TMI 172
Voluntary contributions towards special repair fund - whether charging of transfer fees has no element of trading or commerciality and the same was covered under the concept of mutuality ? - Held that:- Commissioner of Income-tax (Appeals) was justified in deleting the addition on account of voluntary contributions towards special repair fund holding that charging of transfer fees has no element of trading or commerciality and the same was covered under the concept of mutuality. - Decided against revenue Carry forward and set off of unabsorbed depreciation and business loss - Commissioner allowed the claim - Held that:- In the instant case the Assessing Officer has accepted that the assessee-society has been receiving transfer funds, which is governed by the principle of mutuality and the disallowance was limited to repair funds on the ground that it is in excess of the amount prescribed in the bye-laws whereas the learned Commissioner of Income-tax (Appeals) held that even that amount is governed by the principle of mutuality since it cannot be termed as transfer fees but amounts to sharing of the actual expenditure incurred for renovation work and hence it cannot be said to be in violation of the conditions prescribed in the bye-laws. In effect the Assessing Officer as well as the Commissioner of Income-tax (Appeals) admitted that the assessee-society is governed by the principle of mutuality and it is not carrying on any business. Such being the case it cannot be said, for the limited purpose of the claim of carry forward depreciation, that it was engaged in any business. Under these circumstances, of the view that the learned Commissioner of Income-tax (Appeals) was not justified in setting aside the matter for fresh consideration - Decided in favour of revenue
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2016 (3) TMI 171
Undisclosed cash deposited to the bank - income from undisclosed sources - Held that:- We find merit in the contention of assessee that there is no dispute that the amount which was withdrawn by the assessee on various dates during the year 2006 was available with him for making deposits. In the absence of finding that the amount which was previously withdrawn by the assessee had been utilised for any other purpose merely on the basis of conjecture that the amount might have been utilised for any other purpose and was not available with the assessee for making the deposits, we are unable to accept the reasoning of the authorities below. In our considered view, when the assessee has demonstrated that he had withdrawn cash from the bank and there is no finding by the authorities below that this cash available with the assessee was invested or utilised for any other purpose, in that event, it is not open to the authority to make the addition on the basis that the assessee failed to explain the source of deposits. Moreover, the authorities below have not disputed the fact that the assessee had withdrawn an amount of ₹ 9,10,000 before the deposits made on various dates during the financial year 2007-08. Therefore, the orders of the authorities below are set aside and the Assessing Officer is directed to delete the addition - Decided in favour of assessee
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2016 (3) TMI 170
Disallowance of foreign travel expenses - Held that:- There is no dispute on the genuineness of the expenditure in both years. The dispute is only with regard to the employees travelling to the shareholders meet where the employees are not the shareholders. The business purposes of the assessee are not sufficiently and adequately demonstrated before us. Therefore, we are of the opinion, both appeals should be remanded for one more round to the file of the Assessing Officer for adjudicating the issue afresh. The assessee shall demonstrate where exactly the meet took place, why Shri Agarwal travelled to Singapore, how Shri Agarwal is connected to the shareholders meet when the assessee is a shareholder in the joint venture company. Further, the assessee shall also demonstrate as to what is the fact on the disallowance made by the Assessing Officer in the earlier year on account of foreign travel. - Decided in favour of assessee for statistical purposes.
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2016 (3) TMI 169
Disallowance of claim of depreciation on "goodwill" under section 32(1)(ii) - Held that:- We direct the Assessing Officer to allow the assessee's claim of depreciation on "good-will" in all the years under consideration as goodwill also falls under the expression 'any other business or commercial right of a similar nature' and thus would be an asset under Explanation 3(b) to section 32(1) of the Act - Decided in favour of assessee.
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2016 (3) TMI 168
Reopening of assessment - deduction under section 80P(2)(a)(i) of the Act was wrongly given inasmuch as the appellant is not a banking company registered under the Banking Regulation Act, 1949, and was not having any banking licence from the Reserve Bank of India - Held that:- As the appellant-bank at the outset apprised the court about certain subsequent developments by submitting that after the aforesaid order was passed by the High Court, the Assessing Officer proceeded with the assessment holding that the appellant-assessee was not entitled to any deduction under the aforesaid provisions of the Act. Against that assessment order the appellant preferred an appeal before the Commissioner of Income-tax (Appeals) which was allowed by the Commissioner of Income-tax (Appeals). The order of the Commissioner of Income-tax (Appeals) was challenged by the Department before the Tribunal and that appeal has also been dismissed. In view of the aforesaid events, it is clear that the present appeals have become infructuous. We, thus, dispose of these appeals as infructuous leaving the question of law open.
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2016 (3) TMI 167
Deduction u/s 54F - Held that:- We modify the impugned judgment by directing that the Assessing Officer shall consider the matter de novo without being influenced by any observation made by the High Court in [2014 (4) TMI 211 - KERALA HIGH COURT], in accordance with law.
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Corporate Laws
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2016 (3) TMI 152
Termination of services of peon - According to the Official Liquidator the misconduct against Shri Shetty, Peon has been proved considering the report of the enquiry officer and the explanation offered by Shri Shetty and it is grave and of serious nature warranting the punishment of removal from service - Held that:- The power vested on the disciplinary authority is a discretionary power and courts will not interfere in the quantum of punishment but if it appears that the punishment being suggested is based on a report, which has not considered all facts and circumstances or it has relied on statement recorded by persons who the employee states have forced him to give that statement and those people who are not made available for cross examination when the punishment recommended is unreasonable, the courts generally interfere. The discretionary power has to be judicially exercised by giving cogent reasons. Suspension is a very drastic action and has very drastic consequences. Termination from service is worse. The Competent Authority while passing an order or recommending the punishment should keep in mind the adverse effect which its order may have on the rights, liberties or interest of persons keeping in mind the purpose for which the rules framed were intended to serve. The person not only gets less or no pay but goes through the ignominy of having to face all his colleagues, family and friends while under suspension and after termination. He is shamed Taking into account the totality of the facts and circumstances, it is of the view that the recommendation of the Official Liquidator in his further report dated 31st October, 2011 read with report dated 18th February, 2013 cannot be accepted. As find it difficult to even accept that Shetty could be faulted. At the same time this court by its order dated 16th January, 2006 declined the prayer of resumption of regular employment to Shri Shetty. Hence Shri Shetty should be given all benefits including increments and promotion that he would have obtained during the period after 16th January, 2006 had he not been under suspension. His salary/emoluments to be fixed/determined accordingly. In the circumstances, have no hesitation in setting aside the inquiry report dated 20th May, 2011 of Shri N. Chinnachamy. Since setting aside the enquiry report itself, the leave sought by the Official Liquidator in his further report dated 18th February, 2013 is declined. The suspension order of Shri S.M. Shetty is set aside. The Official Liquidator is directed to reinstate Shri S.M. Shetty in the same rank and position and pay as he would be with effect from 16th January, 2006, had he not been under suspension.
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Service Tax
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2016 (3) TMI 166
Refund claim - Service tax paid under Erection, Commissioning and Installation service during the period March, 2007 - Appellant has to design, supply, testing, erection and commissioning of Auto LPG Dispensing System on lumpsum turnkey basis. It mistaken interpretation of law and discharged the Service Tax liability on 33% of the contract value under the category of Erection, Commissioning and Installation service while he was not required to do so and subsequently on being pointed out by their customer, appellant registered themselves under works contract and again discharged the Service Tax liability as applicable - Held that : by applying the case of Commissioner of Central Excise & Customs, Kerala Vs. Larsen & Toubro Ltd. 2015 (8) TMI 749 - SUPREME COURT, the Service tax liability will not arise when works contract is executed, under any other services prior to 01.06.2007. - Decided in favour of appellant with consequential relief
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2016 (3) TMI 165
Entitlement of Cenvat credit of service tax - Appellant provided telecom towers, pre-fabricated shelters and parts thereon to telecom service providers for providing passive infrastructure on lease basis and claim for Cenvat credit - Held that: for entitlement of credit on towers, shelters or parts thereof, it is therefore essential that these should be goods and should fall, either within the ambit of capital goods specified in Rule 2(a)(A)(i) of the rules, namely goods falling under Chapters 82, 84, 85 or 90 or to components, spares or accessories of goods specified in sub-clause (i). Even for availing credit as "inputs", towers, shelters or components thereof should be goods and used for providing an output service. These are conditions precedent for availment of Cenvat credit, on duty paid on these goods, for remittance of service tax on the output services rendered, whether the output service is "BAS" or "BSS" (in the case of passive infrastructure providers) or "Telecom Services" (in the case of active infrastructure providers, namely where the telecom companies themselves own the infrastructure used for rendition of telecom services). As these conditions are not fulfilled, appellant is not entitled to Cenvat credit. Entitlement of Cenvat credit of duty of excise - Appellant provided telecom towers, pre-fabricated shelters and parts thereon to telecom service providers for providing passive infrastructure and supplier has paid Excise duty on on them as capital goods by classifying them under Chapter 85 of the Central Excise Tariff Act, 1985 - Held that: to decide whether Cenvat credit can be availed or not, first it is to be decided that whether towers and shelters are capital goods or immovable property. By relying on the judgments of Hon'ble Bombay High Court in the case of Bharti Airtel Limited vs. CCE, Pune - III 2014 (9) TMI 38 - BOMBAY HIGH COURT and Vodafone India Limited 2015 (9) TMI 583 - BOMBAY HIGH COURT, and as the the provision of towers and shelters as infrastructure used in the rendition of an output service is common to both passive and active infrastructure providers, whether of "BAS" or "BSS" in one case and "telecom service" in the other, the towers and shelters and parts are decided to be immovable property. Therefore, the appellant is not entitled to Cenvat credit. - Decided against the appellant
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2016 (3) TMI 164
Taxability - Tour Operator Services - Whether providing package tour service comes under the ambit of Tour Operator Services - Appellant providing Jet Escapes packages to the customers to increase their revenue by giving the facilities of transportation, stay and sight seeing as package tour - Held that: by relying on the decision taken by the Tribunal in the case of T.N. State Trans. Corpn., Kumbakonam Ltd. 2009 (2) TMI 90 - CESTAT CHENNAI, where the tour operator service means the person should be engaged in the business of planning, scheduling or arranging the tours. In the absence of any such activity undertaken, the services cannot be considered as tour operator service. - the appellant herein has not planned, scheduled or organized tours for their passengers. - the appellant is not covered under the category of “tours operator service”. - Decided in favor of assessee.
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2016 (3) TMI 163
Reversion of Adjudication order - Overall aspects of the execution of work not look into - Held that: the order of quasi-judicial Adjudicating Authority should be based on material facts and tested by evidence to make application of law thereto. As, such a process not being followed, order of both the authorities do not get approval of law. Therefore, the matter is liable to be send back to the Adjudication authority for settling the material facts examining the work order/contract document and testing any of such facts with evidence to apply law.
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2016 (3) TMI 162
Pandal and Shamiana Contract Service under Section 65(105)(zzw) of the Finance Act, 1994. - Taxability of services like furniture, fixtures, light, light fittings, floor covering and other articles for decoration - Held that: Section 65(105)(zzw) ibid defined that “the taxable service is any service provided to a client, by a pandal or shamiana contractor in relation to a pandal or shamiana in any manner and also includes the services, if any, rendered as a caterer.” As the appellant was providing electrical lighting and decoration, etc., so it is clearly covered within the scope of Section 77(b) ibid as “Pandal and Shamiana Contractor”. The said fittings and decoration were provided to prepare a place for social/official functions organised by Tourism Department of Government of Rajasthan as mentioned in the impugned order and therefore the service rendered by the appellant clearly fell within the definition under Section 65(105)(zzw) ibid. It is also seen that the appellant actually charged service tax amounting to ₹ 9,62,787/-, therefore, its claim that it had a bona fide belief regarding non-taxability of service and there was no suppression of facts on its part, are totally untenable. - Decided against the appellant
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Central Excise
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2016 (3) TMI 161
Cenvat credit on AED (T&TA) for payment of basic excise duty on clearance of the final product from the factory - whether appellant had intentionally utilized the AED (T & TA) for payment of basic excise duty, knowing fully well that such utilization is prohibited under Rule 3 (6) (b) of the Cenvat Credit Rules, 2002? - initiation of proceedings for recovery of wrongly availed cenvat demand alongwith interest and imposition of equal amount of penalty by invoking the extended period of limitation - Held that:- Taking of cenvat credit of AED (T&TA) and utilization towards payment of BED is not attributable to fraud, collusion or any willful misstatement with intent to evade payment of Central Excise Duty, for the reason that the appellant had maintained proper records showing availment and utilization of cenvat credit on such disputed duty. Therefore, in absence of those ingredients, issuance of show cause notice should be confined to a period of one year from the date of utilization of such wrongly availed credit. It is not in dispute that the appellant has not complied with the statutory provisions in not filing the returns in time and that the credit particulars were not reflected therein. Since, the information regarding taking of cenvat credit on the disputed duty amount and utilization thereof for clearance of the finished products was within the knowledge of the Department, the show cause notice issued on 04.03.2008, proposing recovery of cenvat credit for the period April 2003 to July, 2004,is barred by limitation of time. See KG DENIM LTD. Versus COMMISSIONER OF CENTRAL EXCISE [2007 (10) TMI 95 - CESTAT, CHENNAI ] Therefore, proceeding initiated by Department for recovery of wrongly availed cenvat credit alongwith interest and imposition of penalty by invoking the extended period of limitation is not justified. - Decided in favour of assessee
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2016 (3) TMI 160
Liability to pay duty defaulted from the current account/in cash - the duty has already been paid through CENVAT credit account - Whether the interest is liable to be demanded from the appellant as the amount of duty on consignment basis has been paid without any delay by utilising the CENVAT credit and penalty can be imposed ? - Held that:- In the present case, since both the authorities below have admitted that the duty has been paid by the appellant on clearance of each consignment by utilising the CENVAT credit, in my opinion, such payment is in conformity with sub-rule (3A) of Rule 8 and thus, order for recovery of the duty already paid by utilising the CENVAT credit is not proper and justified, in view of the judgement of Hon'ble Gujarat High Court in the case of Indsur Global Ltd. Vs. Union of India (2014 (12) TMI 585 - GUJARAT HIGH COURT ). Since the central excise duty for the above period was paid by the appellant along with interest, it is of the view that confirmation of interest liability again on the appellant is also not in conformity with the Cenvat statute. It is an admitted fact on record that there was no intention on the part of the appellant to evade the payment of duty. Non-payment of central excise duty within the due date was due to the constraint in arrangement of funds, which cannot be attributable to fraud, collusion, wilful mis-statement, etc. Therefore, in view of the judgement of Hon'ble Gujarat High Court in the case of CC Vs. Saurashtra Cement Ltd. [2010 (9) TMI 422 - GUJARAT HIGH COURT ], imposition of penalty under Rule 25 of Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1994 is not justified. - Decided in favour of assessee
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2016 (3) TMI 159
Valuation - Related party transaction - Applicability of provisions of Rule 4 - clearance of waste and scrap, which originates during the manufacture of final product, without payment of duty - extended period invoked - Held that:- Commissioner (A) has only observed that since there was suppression, the extended period is invocable. However, there is no reference to any positive act on the part of the assessee so as to suppress or misstate the value with an intention to evade payment of duty. As per the learned advocate, they were filing all the requisite statutory returns wherein the entire facts were being disclosed by them. If that be so, then the extended period would not be available to the Revenue. However, the said contention of the learned advocate requires verification. Inasmuch as the matter stands remanded, he would examine the fact of limitation afresh after going through the appellant’s submission and the various documents, etc. said to have been filed by them with the Revenue.
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2016 (3) TMI 158
Transaction value as defined under Section 4(3)(d) - whether includes cost of advertisements or publicity - Held that:- We find that the terms of agreement are very clear that it is an option to the dealer to obtain advertising materials from the appellant at 50% of the cost. It is not disputed that only some of the dealers are availing these option. That being so, it can safely be concluded that it is not mandatory for the dealers to take the advertising materials from the appellants and to share the cost of such materials. Hon’ble Supreme Court in the cases of Philips India Ltd. v. CCE, Pune reported (1997 (2) TMI 120 - SUPREME COURT OF INDIA ) and the decision of Surat Textile Mills [2004 (4) TMI 81 - SUPREME COURT OF INDIA] wherein it has been held that ‘the advertisement expenditure incurred by a manufacturers’ customer can be added to the sale price for determining the assessable value, only if the manufacturer has an enforceable legal right against the customer to insist of the incurring of such advertisement expenses by the customer - Decided in favour of assessee
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2016 (3) TMI 157
Clandestine removal of LPG Cylinder from the factory - Duty demand and imposition of penalty - allegation of clandestine removal of goods has been leveled on the ground that the income tax dues have been promptly paid by the appellant without contesting the liability - Held that:- Central Excise duty demand has been confirmed by the authorities below solely based on the demand confirmed by the Income Tax department. On arriving at such conclusion, the Department has not carried out any independence enquiry to ascertain as to whether the goods were removed clandestinely without payment of Central Excise duty. Documents/ records maintained by the appellant regarding manufacture and clearance of goods have also not been verified. Further, there is no evidence regarding receipt of excess raw material/ input goods required for manufacture of the alleged clandestine removal of goods. No investigation has been taken place at the buyer's end, to verify the particulars regarding receipt of unaccounted for goods, who are the reputed public sector oil companies. Since LPG cylinders are not general merchandise, capable of bought and sold in the common market place and is controlled under the stringent norms prescribed by BIS, I am of the considered opinion that the allegation of clandestine removal without proper verification of books cannot be a defensible ground for confirmation of duty demand and for imposition of penalty. - Decided in favour of assessee
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2016 (3) TMI 156
Eligibility of duty exemption for captively consumed goods available under notification No. 89/95-CE to the CR sheets - process of slitting /shearing resulted in manufacture of intermediate product CR sheets classifiable under 7209 30 and 7211 51 - Held that:- The denial of exemption is not supported by legal provision when the assessee have all along manufactured and cleared railway coaches on exemption for home consumption except for one consignment of export. There is no other finding to the effect that the assessee has been clearing non-exempted goods so as to deny the exemption available to waste and scrap. We also find that in a separate proceedings the duty on waste and scrap attributable to coaches exported out of India have been confirmed and the amount has already been paid by the assessee. We find that the original authority in that order categorically found that the assessee are liable to pay Central Excise duty of ₹ 5,81,185/- on waste and scrap arising from the manufacture of 72 bogies cleared by them under bond without payment of duty to Vietnam. He also noted that the said duty stand paid by the assessee on 25.5.2002. In this background, we find the confirmation of demand by the present impugned order on the waste and scrape on this ground again is untenable and requires to be set aside. Considering the above discussions and findings, we allow the appeal of the assessee.
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2016 (3) TMI 155
Cenvat Credit availed on the Cement Sheets (A C Sheets) and Corrugated Aluminum Sheets disallowed - non qualification as capital goods as defined in Rule 2(a) (A) of Cenvat Credit Rules, 2004 - Held that:- It is an admitted fact that the sheets in question on which Cenvat Credit have been availed have been realized for providing cover to the machinery and its moving parts in order to protect them from dust particles etc. and to maintain temperature for good quality of output, more particularly in view of the fact that the factory is fitted with overhead cranes which runs on gantry throughout the factory shed from one corner to other. As such there is a probability of material falling on the machines and its moving parts. Further, it is not disputed by Revenue that the sheets in question have been utilized to provide cover to the accessories in the automatic wire mill plant. In this view of the matter, hold that the appellant is entitled to Cenvat credit as the sheets so utilized portable nature of accessories of the capital goods and as such are capital goods as defined in Rule 2(a)A(iii) of the Cenvat Credit Rules 2004. Thus, the appeal is allowed and the impugned order is set aside. The adjudicating authority is directed to give cash refund of the interest paid by the appellant which was paid by challan and the appellant is entitled to take back cenvat credit of the amount so reversed. The adjudicating authority shall disburse the cash refund within a period of 45 day from the date of receipt of copy of this order. - Decided in favour of assessee
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2016 (3) TMI 154
Recovery of 8% of value of exempted goods in terms of Rule 6 (2) (b) of Cenvat Credit Rules, 2002 - failure to to maintain separate accounts regarding inputs used in the manufacture of dutiable as well as exempted items manufactured - Held that:- As the show cause notice itself acknowledges that the entire Cenvat credit taken on inputs during the period August 2003 to July 2004 was paid back by the appellant on 7th August 2004 alongwith interest. This being the factual position as per record. He concluded that there was no need for issue of any show cause notice to recover the amount equal to 8% of value of exempted goods. He also observed that the exempted goods were actually by-products generated during the course of manufacture of refined oil and there was no need for reversal of any credit in view of supplementary instructions contained in CBEC Excise Manual readwith Board Circular dated 03/04/2000. In any case since the assessee has reversed the full amount, there is no question of any proceedings and confirmation of demand against the assessee. We find that there is nothing in Revenue's appeal which can lead to a different inference. The appeal only states the provisions of Rule 6 to say that 8% of value of exempted goods is recoverable. We find nothing on record to interfere with the order of learned Commissioner (Appeals) who examined the issue in detail and arrived at the decision, as discussed above.- Decided against revenue
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2016 (3) TMI 153
Whether appellants are eligible for concessions available for the goods manufactured/purchased by them when transferred to the power plant owned by another entity inside their factory premises - inputs purchased (Water Treatment Chemicals & LSHS) and certain items manufactured (Sulphuric Acid) and transferred to the captive power plant owned by the Joint Venture for use in the generation of electricity - Held that:- We find that the factory premises as licenced under Central Excise provisions in respect of the appellants continued to be unaffected and no separate Central Excise licence with de-marketed premises was given to the power plant separately. In such situation, the Revenue cannot take a stand that the power plant is another factory and not to be considered as within the factory of the appellant. The appellant’s case is further strengthened in view of the fact that all the inputs transferred to the power plants by the appellant are fully utilized in or in relation to the manufacture of electricity which in turn is fully used captively by the appellants. As such, we find the impugned order of the lower Authorities is not sustainable - Decided in favour of assessee
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