TMI Tax Updates - e-Newsletter
April 28, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
Income Tax
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Eligibility for exemption u/s 11 - "Ownership" of the Corporation and "activities" of the Corporation are two different aspects and the ownership cannot be considered or taken into account to determine the character or nature of the activities carried on by the Corporation - AT
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Additions on the basis of statement made u/s 133A - A statement made voluntary under Section 133A of the Act cannot be retracted unless the assessee files evidence to show that the admission made in the statement at the time of survey was wrong and against the material on record. - HC
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Personal liability of administrator of trust for non deduction of tax at source - Principal Officers - The proceedings initiated is not a criminal proceeding. Under these circumstances the impugned proceedings could not have been initiated against the Administrator, who was only acting as an employee of the Trust, as no payments were made to in his individual capacity and the payments were made by the Trust. - HC
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Power to transfer cases - We do not see what difficulty he would have, if the assessee’s account, of which he is the Managing Director, is also processed at the same time where his individual and his wife is processed. - HC
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Registration under Section 12A cancelled - earning of a huge net profit - the two conditions stipulated under the provisions of Sub-section (3) of Section 12AA of the Act, which empowers the authority to cancel the registration, do not exist in the present case - HC
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Bifurcation of income - Rental income - Merely because the document is styled as lease deed and building is involved. Therefore, the authorities were not justified in bifurcating the rental income and the business income. - HC
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Reopening of assessment - Change in Opinion based on same set of facts - framing of the assessment order is not in the control of the assessee, therefore, for any omissions or commissions in the assessment order cannot be attributable to the assesee. - AT
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Revision of assessment order - CIT noticed huge amount of withdrawals/ payments by the party - Provisions contained u/s 263 cannot be used as a tool to start roving and fishing enquiry - AT
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Addition u/s 41(1) - Simply because the address of the sundry credits had changed, which fact was brought to the knowledge of the AO, without making any enquiry at the changed address, the AO on mere presumptions, conjectures and surmises has resorted to make the additions with the aid of Section 41(1) of the Act was misconceived - AT
Customs
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Conviction under Section 15 of the Narcotic Drugs and Psychotropic Substances Act, 1985 - Since in the cases of NDPS Act the punishment is severe, therefore strict proof is required for proving the search, seizure and the recovery - conviction of the appellant and the sentence imposed on him is set aside - SC
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Confiscation of goods u/s 111 - Freezing of bank account - Smuggling of goods - appellant has failed to explain the source of the imported goods sale proceeds whereof were credited into the bank account which has been frozen. The onus was/is on the appellant to explain the transactions in the said bank account and to establish that the said transactions were/are not tainted. - HC
Central Excise
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Demand of differential duty - Valuation of goods - inclusion of freight and transit insurance in the assessable value - Sale on FOR destination basis - Even though the appellant have taken transit insurance policy of the goods in their name, they cannot be treated as owner of the goods during transit. - AT
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Demand of differential duty - If the appellant had availed cenvat credit in respect of the coating material and did not include the value of the coating in the assessable value of the pipes and this fact was not specifically intimated to the Department, it would amount to suppression of the relevant facts - AT
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When the Department s case against an assessee is mainly based on statements given by some persons and those statements are not corroborated by some other independent evidence, and contradict each other, for using those statements, against the assessee for proving the charge of duty evasion against their, their cross examination would be necessary. - AT
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Manufacture of ugar syrup - captive consumption - Neither there is any evidence to prove that the goods, in question, are classifiable under 17029090 nor there is any evidence to prove that the goods, in question, in form in which they come into existence in the appellant s factories, are marketable - AT
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Cenvat credit of SAD - appellant found that they are unable to utilise the amount in the EPCG licence as they were going to redeem the licence in a shorter period and therefore they have taken credit in the Cenvat account - credit allowed - AT
Articles
News
Case Laws:
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Income Tax
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2015 (4) TMI 885
Eligibility for exemption u/s 11 - whether the assessee is carrying on commercial activities and hence not eligible for exemption under section 11? - funds claimed to have been received on behalf of the Government of Maharashtra is taxable as income in the hands of the assessee - whether the assessee is not eligible to claim set off of brought forward deficit and also the deduction of book depreciation? - contention of the assessee was that it is an agent or instrumentality of Government of Maharashtra Government, since it is performing Sovereign functions of development and allotment of industrial plots for public purposes - Held that:- the control or directions issued by the State Government would not change the character of "business activity". We are of the view that the activity carried on by the assessee should be examined independently and the fact that the assessee is being regulated by the State Government would not make any difference. In our view "Ownership" of the Corporation and "activities" of the Corporation are two different aspects and the ownership cannot be considered or taken into account to determine the character or nature of the activities carried on by the Corporation. In view of the foregoing discussions, we agree with the Ld CIT(A) in holding that the activities of the assessee are commercial in nature and hence would be hit by the proviso to sec. 2(15) of the Act. Funds claimed to have been received by the assessee on behalf of the Government of Maharashtra - Held that:- The assessee is raising the contention for the first time before us that it is carrying on the activities on its own account and also as agent of the Government of Maharashtra. There appears to be no reference in the orders of the tax authorities to the resolutions passed by the Government of Maharashtra. It is further contended that the assessee is following consistently taking the funds received on behalf of the State Government to the Balance Sheet as per the resolutions passed by the State Government. Since the assessee has submitted that it is also carrying out certain activities on behalf of the Government of Maharashtra and since the said claim of the assessee has not been examined by the tax authorities, we are of the view that this issue requires fresh examination at the end of the assessing officer. Accordingly, we set aside the order of Ld CIT(A) on this issue and restore the same to the file of the assessing officer with the direction to examine the same afresh by duly considering all the documents and explanations that may be furnished by the assessee before him in order to substantiate its contentions. The assessee is also directed to furnish all the details that may be called for by the assessing officer. Since we have set aside this matter to the file of the AO, the alternative contention of the assessee is also set aside to his file. Claim for deduction of brought forward deficit computed u/s 11 - Held that:- The Ld CIT(A) held that the same is not allowable as deduction, since the assessee's income is computed in 'commercial manner', since the provisions of the Act do not allow such kind of deduction. Though the Ld A.R placed reliance on certain case law in this regard, yet we notice that they were rendered in the context of the computation of income u/s 11 of the Act. Since the income of the assessee is required to be computed under normal provisions of the Act for the year under consideration, since it is covered by the proviso to sec. 2(15) of the Act, we are in agreement with the view expressed by Ld CIT(A) on this issue. We notice that the Ld CIT(A) has rejected the claim for deduction of book depreciation. In our view, the depreciation computed u/s 32 of the Income tax Act should be deducted for the purpose of arriving at the income of the assessee, when the income is computed in terms of the provisions of the Income tax Act. Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the AO to allow the depreciation admissible u/s 32 of the Act. - Decided partly in favour of assessee for statistical purposes.
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2015 (4) TMI 884
Dis-allowance of interest paid on borrowings u/s 36 - Interest free advances given to various parties - Direct nexus between the interest bearing loan taken by the assessee and the interest free advance given - Dis-allowance of expenditure u/s 14A - No claim for exemption of any income from payment of tax - Levy of interest u/s 234 of Income Tax Act, 1961 - Issue of double taxation on account of prior period income - Addition u/s 41(1) of Income Tax Act, 1961 - Held that:- In the instant case the CIT(A) has recorded a finding to the effect that in the assessment of Assessment Year 2005-06 the Assessing Officer has established a direct nexus between the interest bearing loan taken by the assessee and the interest free advance given by the assessee which was not for its business purposes. The CIT(A) has followed its own order passed in the case of the assessee in the Assessment Year 2005-06 for confirming the disallowance made in the year under appeal. The Authorized Representative of the assessee has brought no material to controvert the above findings of the CIT(A). The Departmental Representative also could not bring any material before us to show that the finding of the CIT(A) in the case of the assessee in the Assessment Year 2005-06 was reversed in an appeal by any higher authority. In the above circumstances, we do not find any good reason to interfere with the order of the CIT(A) which is hereby confirmed and this ground of the appeal of the assessee is dismissed. Dis-allowance of expenditure u/s 14A - The Authorized Representative of the assessee has pointed out from page nos. 11 to 13 of the paper-book for Assessment Year 2007-08 that the assessee had not claimed any income as exempt from tax. He has also pointed out from page nos. 27 and 28 of the paper-book for Assessment Year 2008-09 that no income was claimed as exempt by the assessee in its Return of Income. The Authorized Representative of the assessee has relied on the decision of the Hon’ble Gujarat High Court in the case of Corrtech Energy (P) Ltd. [2014 (3) TMI 856 - GUJARAT HIGH COURT], wherein it has been held that where the assessee has not made any claim for exemption of any income from payment of tax, no disallowance could be made u/s 14A of the Act. The Departmental Representative has not disputed the submission of the assessee that during the assessment years under consideration the assessee has not claimed any income as exempt from tax in its Return of Income filed. Therefore, respectfully following the decision of Hon’ble Gujarat High Court in the case of Corrtech Energy (P) Ltd.[2014 (3) TMI 856 - GUJARAT HIGH COURT], we delete the disallowance of expenditure made u/s 14A read with Rule 8D. Levy of interest u/s 234 - At the time of hearing, no submissions were made by the Authorized Representative of the assessee on this ground of appeal taken in the appeal. Therefore, we hold that charging of interest is consequential and accordingly dispose of this ground of appeal of the assessee. Issue of double taxation on account of prior period income - We find that it is not in dispute that ₹ 30,46,655/- was income of prior period. In our considered view, on the same analogy on which expenses of prior period is not allowable, the income of prior period also cannot be brought to tax for the year under consideration. The lower authorities in the garb of disallowance of gross amount of prior period expenses, has in fact brought to tax prior period income for the year under consideration. No material has been brought before us to show that how and why the prior period income of ₹ 30,46,655/- is taxable in the year under consideration, when the system of accounting of the assessee is mercantile. Therefore, in our considered view, when the gross amount of prior period expenses added to the income of the assessee, then lower authorities could have also reduced prior period income of ₹ 30,46,655/- for computing the total income of the year under consideration. We, therefore, delete the disallowance of ₹ 30,46,655/- and allow the grounds of the appeal of the assessee. Adhoc disallowance out of interest expenses - We find that the CIT(A) has confirmed the disallowance by following order of his predecessor passed in the case of the assessee itself in the immediately preceding year. The AR brought no material to controvert the above findings of the CIT(A) or to show that this order of the CIT(A) passed in the immediately preceding year was reversed by any higher authority. Therefore, we do not find any good reason to interfere with the order of the CIT(A), which is confirmed and the ground of the appeal of the assessee is dismissed. - In net decided partly in favour of assessee. Addition u/s 41(1) of Income Tax Act, 1961 - The DR simply relied upon the order of the AO and could not point out any error in the order of the CIT(A). In the absence of any material to show that the liability in question ceased to exist during the year under consideration or any benefit was received by the assessee during the year under consideration, we find no error in the order of the CIT(A), which is confirmed, and the ground appeal of the Revenue is dismissed. - Decided against the revenue.
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2015 (4) TMI 883
Legality of allowing the claim for deduction by way of filing revised statement of income during the assessment proceedings - revenue contended that since the assessee has not claimed the deduction in its original return, the assessee cannot claim any benefit which the assessee has forgotten to claim while filing the return - Held that:- It is found that TDS on the alleged payment was deposited on 19.05.2007 i.e. in the F.Y. 2007-08 relevant to the AY under consideration. Even by the pre amendment provision of section 40(a)(ia), the said payment was allowable in the year of payment of TDS i.e. the year under consideration. Even if no revised statement of income was filed , the claim was allowable as the deduction has been claimed on the payment of TDS . We do not find any reason to interfere with the findings of the CIT(A) - Appeal of revenue dismissed. Allowability of delayed payment of PF - Amendment to section 43B - Held that:- Relying upon Commissioner of Income Tax v/s Alom Extrusions Ltd. [2009 (11) TMI 27 - SUPREME COURT] and Commissioner of Income Tax-4 vs. M/s. Hindustan Organics Chemicals Ltd [2014 (7) TMI 477 - BOMBAY HIGH COURT] the amendments to the section brought about by the Finance Act, 2003 with effect from 1st April 2004 were retrospective in nature and would operate from 1st April 1988 – thus, the Tribunal was fully justified in deleting the addition on account of delayed payment of Provident Fund of employees' contribution – thus, no substantial question of law arises for consideration – Decided against Revenue.
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2015 (4) TMI 882
Charge of rental income - business income or income from house property - Tribunal directing the Assessing Officer to tax the rental income as 'income from house property' and to allow deduction u/s 24 - ITAT allowed the claim of expenses of ₹ 45 lakhs on account of provision for incomplete work - interest paid as capital brought in by partners - Held that:- We do not think that when the Tribunal relied upon the judgment of the Hon'ble Supreme Court in the case of East India Housing [1960 (11) TMI 7 - SUPREME Court], it had committed any error of law or acted perversely. Therefore, assuming that we can allow any mixed questions to be raised for the first time, raising them does not enable the Revenue to urge and contrary to what is held by the Tribunal. The position also appears to be identical in the case dealt with by the Hon'ble Supreme Court in Commissioner of Income-tax v. Vikram Cotton Mills Limited [1987 (12) TMI 1 - SUPREME Court]. There as well, the property came to be mortgaged and what was before the Supreme Court was the fact that the High Court, with the approval of the assessee and the creditors evolved a scheme where under the business assets of the assessee were let out to M/s. General Fibres Dealers (P) Ltd. It is in that peculiar fact situation that the Supreme Court took the view and with regard to the nature of income. We are of the view that on the essential contentions raised before the Tribunal and as elaborated or additionally proposed before us a different view than the one taken by the Tribunal is not possible.- Decided against revenue. Expenses claimed on account of incomplete work - Held that:- It is an undisputed fact that in the case of project completion method the project is deemed to have been completed on its completion and sale of its 80%. The remaining portion of 20% is under either renovation or under sale. The common areas are generally renovated after the completion of the project. In this situation, making a provision for incomplete work, cannot be called to be incorrect system of accounting. More over, the claim made by the assessee were not doubted by the Assessing Officer. He has simply disallowed the claim of the assessee on the ground that the provision of incomplete work should not have been made in the impugned assessment year, without looking to the facts that same cost of incomplete work was taken in the closing stock. We are of the opinion that CIT (A) has properly adjudicated the issue in the light of given facts and circumstances of the case. We, therefore, find ourselves in agreement with the Order of the CIT (A). We do not think that the Assessing Officer's view having been interfered with in such a scenario that any substantial question of law arises for our determination and consideration. Thus, the appeals fail on these two grounds. - Decided against revenue. Deduction under section 24(b) of the IT Act as interest on borrowed capital - ITAT allowed the claim - Held that:- If two conflicting views of the Commissioner were placed before the Tribunal and the Tribunal found that it had concurred with one of those views and that the view with which it concurred prevails, then, we do not think how the Revenue can raise this issue. The issue has been considered bearing in mind the typical factual background. If the entire interest paid on the partners' capital was related to the premises which were let out by the assessee but the construction thereof came from the contributions of the partners, then, the interest was due and payable to them. That interest was payable not only in terms of the general principle of partnership and highlighted in the Indian Partnership Act, 1932, but also on the broad consideration under section 24(b) of the Income Tax Act, 1961. If the income is income from house property and that is a deduction which could be granted from the same we do not think that the Revenue should be permitted to raise this ground. Even otherwise, the finding being consistent with the factual position which is not disputed, then all the more even this ground cannot be considered as a substantial question of law. - Decided against revenue.
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2015 (4) TMI 881
Disallowance u/s 14A - Held that:- A judgment of a Division Bench of this Court in the case of Godrej & Boyce Manufacturing Company Limited vs. Deputy Commissioner of Income Tax [2010 (8) TMI 77 - BOMBAY HIGH COURT] wherein held that Rule 8D is prospective and not retrospective. Even otherwise the AO must give finding with respect to the nexus of this expenditure with that of the exempted income before disallowance and must point out to any expenditure, whatsoever, which is relatable to the exempted income - no disallowance at all should be made covers the controversy against the Revenue - Decided in favour of assessee. Disallowance u/s 35 - expenses on scientific research development - AO found that this claim cannot be granted as the expenditure has not been capitalised in the books of account but shown as waiting as such - whether there was no requirement of any project being completed or the entire amount capitalised in the books of account as reported by the auditors? - Held that:- . The Tribunal found that once there is no dispute that such expenditure is incurred and the legal provision not warranting any further capitalisation of the amont and in the books of account, the Assessing Officer and the Commissioner erroneously rejected this claim. The Tribunal has also taken care to observe that when the Assessing Officer found that the expenditure on research and development is eligible for deduction under the same provision in the subsequent year then the view taken by the Assessing Officer all the more cannot be sustained. - Decided against revenue. Deduction U/S 43B - Held that:- There was no question of section 43B being invoked and at the stage when the interest was not payable. The loan itself was availed of on 26th December, 2002, and for one year. It was payable with interest. However, the interest had not become payable and hence the question of relying on section 43B to disallow the claim does not arise. By the plain language of this provision and given the factual and admitted position, we do not think that the Tribunal erred in the view that it has taken and hence even with regard to this question. No substantial question of law. - Decided against revenue.
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2015 (4) TMI 880
Deduction u/s 14A - Held that:- We do not think, upon reading of the Tribunal's order, that it is vitiated by any error of law apparent on the fact of the record. It cannot be termed as perverse because in the return of income declaring total income of ₹ 1,32,82,806/-, the Assessing Officer noticed that a sum of ₹ 32,74,921/- has been received as dividend and ₹ 87,52,106/- as long term capital gains, which has been claimed as exempt under section 10 of the Income Tax Act, 1961. We are only concerned here with the dividend. The Assessing Officer held that certain amount of administrative expenditure was attributable towards earning the dividend income and difficult to accept the contention of the Assessee that no expenditure has been incurred to earn such income. He therefore disallowed the sum of ₹ 76,15,743/- under section 14A read with Rule 8D. This order of the Assessing Officer was partly set aside in Appeal by the Commissioner and held that even if the Assessing Officer's view is to be maintained, still, the entire claim could not have been disallowed. The Tribunal had taken earlier view that 10% of the dividend earned should be treated as expenditure incurred. Thus, in earning the income of dividend 10% was set aside towards expenses. This view of the Tribunal was applied and in identical facts by the Commissioner to the present case. Such an approach of the Commissioner and relying upon the law laid down by this Court in the case of Godrej and Boyce Manufacturing Co. Ltd. (2010 (8) TMI 77 - BOMBAY HIGH COURT) has not been interfered with in Appeal by the Tribunal. - Decided in favour of assessee.
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2015 (4) TMI 879
Unexplained investments - addition u/s 69C deleted by ITAT - Held that:- Since the substantial amounts to the extent of ₹ 45 lakhs were explained by the assessee, the view of the ITAT reversing the remission to the extent of ₹ 10,63,000/- cannot, in the circumstances of the case, be deemed to be unexplained. In any event, even if this Court were to entertain the said matter, so far as the small denomination demand drafts of ₹ 19,500/- are concerned, the total amount on that account itself would be only ₹ 10,63,000/- - a sum clearly below the tax-effect threshold which entitles the Revenue to approach this Court under Section 260A. No question of law is made out. - Decided against revenue.
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2015 (4) TMI 878
Interim stay application - Held that:- It has been held by the Tribunal that the assessee was still in the process of constructing the building for charitable purpose. That he claimed that the order of the Assessing Officer treating the corpus donation as the income of the assessee was not justified. In these circumstances, the Tribunal was proceeded to grant a conditional stay order. The assessee has been directed to deposit a further sum of ₹ 30lacs on or before 15.3.2015 and in case the compliance is made, further recovery of ₹ 2,97,68,450/- is to shall remain stayed for a period of six months or till the appeal is finally decided, whichever, is earlier. No substantial question.
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2015 (4) TMI 877
Unaccounted cash - suppression of professional receipts - assessee took a plea that on the date of payment of the said amount to Shri Renavikar viz. 30th June, 2001, there was a cash balance in the books and to the extent of ₹ 10,22,850/-. Hence this amount was utilized for making payment to Shri Renavikar. The assessee declared the balance amount of ₹ 29,75,150/- towards unaccounted investment - Set off claim - Held that:- The Assessing Officer rejected this stand on clear and sound reasoning. There was evidence that the assessee indulged in suppression of professional receipts. There was documentary evidence in the form of diaries from 16th August, 2001 to 29th March, 2002. That was for 166 working days which is referred to at page 33 of the assessment order. The assessee voluntarily offered ₹ 24,45,520/- towards suppression of professional receipts. These are operational receipts. On the basis of the incriminating evidence the Tribunal found that it is difficult to accept the statement that the assessee had with him the sum and which was required to be paid to Shri Renavikar. The Tribunal noted that the assessee also took the stand that there was one transaction with Shri Doke. That was a sum given to Shri Doke, but that transaction did not materialise. Shri Doke returned the entire sum. The assessee, therefore, pleaded that ₹ 25,00,000/- returned by Shri Doke and cash available with assessee was utilised for making payment to Shri Renavikar and to that extent the set off of the amount may be given. Thus, the Tribunal found that such a stand and which is raised during the course of assessment proceedings cannot discharge the burden and which is on the assessee. The desired presumption that the assessee has made the investment to the extent from the available cash balance cannot be raised. It is not the case that there is no transaction after 30th June, 2001. The source of this transaction was not proved is the first conclusion. The alternate contention and from the transaction of Shri Doke would denote that there is no evidence except the statement of Shri Doke that the amounts were returned. Presuming that the transaction did not materialise and the amount was returned by Shri Doke, there has to be a supporting evidence to show that Doke returned the amount on or before the date of the transaction with Shri Renavikar. Therefore, both contentions have been rightly rejected. With regard to the suppressed professional receipt of ₹ 14,30,225/- once again the Tribunal found that for a substantial period the assessee was maintaining parallel record suppressing professional receipts. It is true that there is no specific evidence for the period 1st April, 2001 to 30th June, 2001. However, the assessee himself admitted the modus operandi that he was not fully recording the receipts in the books of account. That is how the Assessing Officer's order has been confirmed. The Tribunal found that though there is no direct evidence, but the circumstances indicating to the contrary and against the assessee, the addition to the extent of 10% has alone been sustained. No substantial question of law - Appeal dismissed - Decided against assessee.
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2015 (4) TMI 876
Stay petition challenged - Held that:- It is not in dispute that at the time of rejecting the stay petition by the first respondent, the petitioner has made a statement before the authority that he is willing to pay the entire arrears amount in instalments. That being so, he cannot now contend that the order passed in the stay petition is wrong. Moreover, though the petitioner has disputed the liability, the demand of ₹ 4,25,40,690/- is payable by the petitioner to the respondent. Admittedly, six months have been lapsed. Further, the accounting year would also come to an end on 31.3.2015. In such circumstances, not inclined to interfere with the order passed by the first respondent. Therefore, I direct the petitioner to pay the aforesaid sum of ₹ 4,25,40,690/- in three equal instalments on or before 31.3.2015. The first of such instalment shall be paid on or before 20.3.2015. The second instalment shall be paid on or before 27.3.2015 and the third and final instalment shall be paid on or before 31.3.2015. With regard to the disputed amount of tax including TDS is concerned, the same is payable by the petitioner subject to the outcome of appeal/rectification. - Decided against assessee.
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2015 (4) TMI 875
Return of Income not being accepted by system in view of non deposit of tax deducted at source by Respondent No.5. - Held that:- Today, Mr. Pinto, learned Counsel appearing for respondent on instructions states that the Respondent No.5 viz. M/s Vardhaman Developers Ltd. have already paid the tax deducted at source into the Government Treasury together with interest and the petitioners would now be able to upload their returns of income for the Assessment Year 201415. Mr. Pinto on instructions further states that once return of income has been uploaded, the RespondentRevenue could be in a position to make a statement that no penal or financial consequence would be visited upon the petitioners on account of delay in uploading the return of income for the failure of Respondent No.5 to pay the tax deducted into the treasury. Respondent No.5 states that the amount of tax deducted at source alongwith interest has already been deposited in Government Treasury and no sooner they receive Form 16A which is generated online, the same would be handed over to the petitioners. Hearing of petition to enable the petitioners to uploaded its Return of Income and enable Mr. Pinto to take instructions that no penal and/or financial consequence would visit the petitioners only on account of delay in uploading their Returns of Income of Assessment Year 2014-15 for no fault of theirs.
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2015 (4) TMI 874
Additions on the basis of statement made u/s 133A - Bogus income - duplication of income - Statement made voluntarily by the petitioner under Section 133A retracted - Held that:- Admittedly, the petitioner's main income is generated from transport business. The income from loose papers, so seized, indicated that certain payments were made to Tarachand Munim from transport business. This statement is now being rescinded by the petitioner and a new stand is being taken indicating that this money was used by the petitioner through Tarachand Munim for buying betel nuts and, therefore, there is duplication of this income since this value was already shown in the stock of betel nuts. We find that no documents has been placed before the Commission nor before this Court to show that there has been duplication of the income on purchase or sale of betel nuts. We are of the opinion that a statement made voluntarily by the petitioner under Section 133A of the Act can form the basis of assessment. The mere fact that the petitioner retracts his statement could not make his statement unacceptable. The burden lay upon the petitioner to establish that the statement made by him at the time of survey was wrong and in fact there was no additional income. In our opinion, this burden has not been discharged since no cogent evidence has been brought on record. In Pullangode Rubber Produce Co. Ltd. Vs. State of Kerala, (1971 (9) TMI 64 - SUPREME Court) the Supreme Court held that an admission is a piece of evidence though it is not conclusive. Consequently, a statement made voluntary under Section 133A of the Act cannot be retracted unless the assessee files evidence to show that the admission made in the statement at the time of survey was wrong and against the material on record. The mere fact that the Commissioner of Income Tax in his report has held that the statement given by the petitioner was on oath and therefore, it cannot be retracted is immaterial in the context of what we have said aforesaid. Levy of interest u/s 234B - In view of the decision of the Supreme Court in Brij Lal (2010 (10) TMI 8 - SUPREME COURT ) interest is chargeable till the date of entertaining the application for settlement under Section 245D(1) of the Act and not till the date of the order passed by the Settlement Commission - Decided against assessee.
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2015 (4) TMI 873
Personal liability of administrator of trust for non deduction of tax at source - Principal Officers - 40% professional fee paid to consultants/doctors working in their hospital - whether action should have been initiated against M/s. Sri Adichunchanagiri Shikshana Trust? - whether proceedings u/S.201(1) and 201(1)(a) of the Act cannot be initiated against the assessee who had submitted the TDS returns and in whose name TDS account number was allotted and who was issuing TDS certificates on behalf of the hospital and the Trust? - Held that:- The consequences of failure to deduct or pay results in the assessee being declared as assessee in default. Therefore, the persons against whom proceedings may be initiated for failure to deduct or pay is the assessee, who may made payment without deducting TDS. In the instant case the assessee was acting as an employee of the Trust. The payment made by him was not in his individual capacity. It was on behalf of the Trust. The money paid is out of the Trust. The consequences of failure to deduct or pay the TDS tax should be visited on that Trust for denying the benefit under the Act. The proceedings initiated is not a criminal proceeding. Under these circumstances the impugned proceedings could not have been initiated against the Administrator, who was only acting as an employee of the Trust, as no payments were made to in his individual capacity and the payments were made by the Trust. Therefore, both the Appellate Authorities were justified in setting aside the order passed by the Assessing Authority, reserving liberty to the department to proceed against the Trust. - Decided in favour of assessee.
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2015 (4) TMI 872
Power to transfer cases - order passed by the authorities transferring the file of the assessee to the Hyderabad - Held that:- Managing Director of the assessee has paid money for purchase of 10 plots, out of which, two are registered in his name and 8 are registered in his wife’s name and the seller - Sri Syed M. Mehdi was paid the money by cheques from the account of the assessee and the partnership firm where he and wife are partners. It is asserted that the cheques given to Sri Mehdi on various dates and the cheques were drawn from the bank account of the assessee and the partnership firm and also of his and his wife’s personal account at Kotak Mahendra Bank, ITPL Branch, Whitefield, Bangalore. From this answers, it is clear that the 10 plots were purchased in Hyderabad, two in the name of the Managing Director and 8 in the name of his wife. The consideration for these 10 plots was paid to the purchaser from the account of the assessee and from the account of the partnership firm and the individual account of the Managing Director and his wife. That is why it is necessary to centralize all the returns in order to find out the true nature of the transaction - from which account, how much account is paid? and how the documents came to be registered in the name of husband and his wife? The Managing Director is fully acquainted with all these facts. It is he, who has given all these information and he has no difficulty in going to Hyderabad for being present during the assessment proceedings of his, individual account and his wife’s account. We do not see what difficulty he would have, if the assessee’s account, of which he is the Managing Director, is also processed at the same time where his individual and his wife is processed. The order passed by the authorities transferring the file of the assessee to the Hyderabad is just and proper and without any justification the learned Single Judge has interfered with the well considered order passed. Therefore the impugned order cannot be sustained. Hence, Appeal is allowed, the impugned order passed by the learned Single Judge is hereby set aside and the order of transfer is restored.
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2015 (4) TMI 871
Registration under Section 12A cancelled - examination of records shows that the Mandali has earned a huge net profit of ₹ 30,72,028/- for the assessment year 2008-09 and ₹ 42,23,142/- for the assessment year 2009-10 and activity carried on by the assesse is in the nature of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or business - Held that:- Registration granted under Section 12A can be cancelled under two circumstances i.e., (i) If the activities of such trust or institution are not genuine and (ii) The activities of trust or institution not being carried out in accordance with the object of the trust or institution. It is not in dispute that the Director of Income Tax (Exemption) has not recorded any such finding about the violation of the two conditions stated above. The Tribunal while deciding the matter has rightly recorded a finding that a perusal of impugned order shows that Director of Income Tax (Exemption) has not arrived at any such finding. The fact that the receipts from commercial activities are more compared to the overall receipts of the charitable organization can neither lead to the conclusion that the activities of the trust or institution are not genuine nor it can be said that the activities of the trust or institution are not being carried out in accordance with the objects of the trust or institution and therefore, the two conditions stipulated under the provisions of Sub-section (3) of Section 12AA of the Act, which empowers the authority to cancel the registration, do not exist in the present case. Decided in favour of assessee.
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2015 (4) TMI 870
Entitlement to registration under Section 12AA - Held that:- Revenue would not be justified in refusing the grant of registration at the threshold. See Director of Income Tax Exemptions Versus M/s. Seervi Samaj Tambaram Trust [2014 (2) TMI 32 - MADRAS HIGH COURT] and Commissioner of Income Tax-I, Madurai. Versus Arulmigu Sri Kamatchi Amman Trust [2012 (2) TMI 159 - MADRAS HIGH COURT ] It is not denied by the assessee that on the date of the application under Section 12AA, it was yet to commence its operation. But nevertheless the genuineness of the objects of the trust were not questioned by the Commissioner. Considering the fact that the continuance of registration is further a subject matter of scrutiny by the Commissioner as contemplated under Section 12AA(3) of the Income Tax Act, we do not think that the Revenue would be justified in refusing the registration at the threshold. - Decided in favour of assessee.
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2015 (4) TMI 869
Bifurcation of income - Rental income - Tribunal treating 60% of his income as 'income from business' and 40% of the rental income as 'income from house property' - claim of the assessee is that the entire income is to be treated as income from business - Held that:- What is to be seen is; firstly, what is the intention behind the lease and secondly, what are the facilities given along with the buildings and documents executed in respect of each of them is to be seen and thirdly, it is to be found out, whether it is inseparable or not. If they are inseparable and the intention is to carry on the business of letting out the commercial property and carrying on complex commercial activity and getting rental income therefrom, then such a rental income falls under the heading of profits and gains of business or profession. In the facts of this case, it is clear that the entire construction and the interiors are all done with the sole intention of carrying on the business and therefore, the claimant is entitled to treat the entire income as income from business. Merely because the document is styled as lease deed and building is involved. Therefore, the authorities were not justified in bifurcating the rental income and the business income. The rental income shall be treated as income from the business, ie., profits and gains from the business under Section 28 of the Income Tax Act. - Decided in favour of assessee.
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2015 (4) TMI 868
Applications for refund - period of limitation - Held that:- On consideration of Section 119(2)(b) of the said Act it is of the opinion that directions of the Board may be given in case of delayed application for refund. On the submission of Mr. Poddar, learned senior advocate for the petitioner, it does not appear that applications for refund are time barred. The original application for refund is dated 31st August 2007 followed by reminders. The assessment year was 2006-2007. A claim for refund had to be made before 31st March 2008. The application for refund dated 31st August 2007, it seems to me, was well within time. One would get a situation when at the point of time fringe benefit tax was paid by the writ petitioner, they were not liable to pay such tax or to file such return. Therefore, this amount of ₹ 22 crores and odd can be said to be money paid under a mistake by the writ petitioner, not under any provision of the Act. If money has been received by the government on a mistake committed by the assessee it is liable to refund the sum. While making such refund it should not take recourse to unnecessary procedural formalities. Such seems to be also the view of the Supreme Court in Director of Income-tax (International Taxation) vs. Reliance Infocomm Ltd. reported in (2014 (3) TMI 610 - SUPREME COURT) and in Sandvik Asia Ltd. vs. Commissioner of Incometax reported in (2006 (1) TMI 55 - SUPREME Court . Thus direct the respondent authorities to treat the application as the application for refund and to process the same in accordance with law so that the refund amount along with accrued interest thereon is paid to the writ petitioner by 31st December 2014.
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2015 (4) TMI 867
Dis-allowance of commission payment - Dis-allowance of rent on DG set - Held that:- The Revenue had filed an appeal against the order of ld.CIT(A) in AY 2006-07 in ITA No.261/Ahd/2010 [2012 (11) TMI 160 - ITAT, AHMEDABAD], wherein identical ground raised by the Revenue was allowed for statistical purposes by restoring the issue back to the file of AO for decision afresh. The facts are identical in this year as well and the ld.CIT(A) has followed the order of his predecessor which has been set aside by the Coordinate Bench.Therefore, this ground of Revenue’s appeal is also restored to the file of AO to decide it afresh in the light of the direction given by the Coordinate Bench in ITA No.261/Ahd/2010 [2012 (11) TMI 160 - ITAT, AHMEDABAD]. Thus, ground Nos.1 & 1.2 of Revenue’s appeal are allowed for statistical purposes. The Assessing Officer has thought it proper to decide the percentage of disallowance on the basis of the expected annual return on such investment. We, however, clarify that in no circumstance the disallowance as made by the Assessing Officer should be enhanced while we are restoring this ground back to the stage of the Assessing Officer with the direction that the assessee shall place on record the basic requirement of business necessity for taking on hire the impugned DG set. With these remarks this ground is restored back to the file of Assessing Officer for De novo decision. Therefore, for this year also, this issue is also restored to the file of AO for decision afresh. The AO is hereby directed to decide this issue in the light of the direction by the Coordinate Bench in ITA No.261/Ahd/2010 [2012 (11) TMI 160 - ITAT, AHMEDABAD]. Thus, ground Nos.2 & 2.2 of Revenue’s appeal are allowed for statistical purposes. - Decided partly in favour of revenue.
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2015 (4) TMI 866
Reopening of assessment - Change in Opinion based on same set of facts - Held that:- The learned CIT(A) upheld the reassessment proceedings merely on the reasoning that the Assessing Officer had not assigned any reason for accepting the capital gains made out of sale of shares as short term capital gains. This, in our view, cannot be a valid reason. If a claim made by the assesee in the return is not rejected, it stands allowed. If such a claim is scrutinized by the Assessing Officer during assessment, it means he was convinced about the validity of the claim. His formation of opinion is thus completed. Further, framing of the assessment order is not in the control of the assessee, therefore, for any omissions or commissions in the assessment order cannot be attributable to the assesee. In this connection, we rely on the decision of Hon’ble Gujarat High Court in the case of Gujarat Power Corporation Ltd. [2012 (9) TMI 69 - Gujarat High Court]. Further, there was no reference to any fresh material suggesting the escapement of income. In other words, the Assessing Officer was merely guided by change of opinion based on the same set of facts available on record at the time of framing the original assessment. It is settled proposition of law that even after the amendment in the provisions of Section 147/148 of the Act w.e.f. 01.04.1989 mere change of opinion cannot give rise to the valid reassessment proceedings. We are fortified by the view of Hon’be Supreme Court in the case of CIT Vs. Kelvinator of India Ltd. [2010 (1) TMI 11 - SUPREME COURT OF INDIA]. Respectfully following the ratio laid down in the above cited case, we are of the opinion that even in the present case, in the absence of any fresh material as well as the proper reasons recorded, we have no hesitation to quash the reassessment proceedings. - Decided against the revenue.
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2015 (4) TMI 865
Revision of assessment order - CIT noticed huge amount of withdrawals/ payments by the party - Provisions contained u/s 263 cannot be used as a tool to start roving and fishing enquiry - Held that:- As submitted by the learned counsel for the assessee, similar issue had arisen before the Division Bench of this Tribunal in the case of Shanti Transport [2015 (4) TMI 825 - ITAT HYDERABAD] for assessment year 2009-10), wherein the order of the Assessing Officer passed under S.143(3) rejecting the books of account of the assessee and estimating the income by applying higher rate net profit rate was set aside by the Commissioner of Income-tax by exercising the powers conferred under S.263 for the alleged failure on the part of the Assessing Officer to make proper and sufficient enquiries on certain issues. The Tribunal, vide its order dated 10.10.2014, however, quashed the order passed by the learned Commissioner under S.263 and restored the assessment order passed by the Assessing Officer under S.143(3). A perusal of the relevant portion of the Tribunal order dated 10.10.2014 reproduced above, clearly shows that the issue involved in the present case as well as all the material facts relevant thereto are similar to the case of M/s. Shanti Transport decided by the Division Bench of this Tribunal, and this position is not disputed even by the Learned Departmental Representative. I therefore, respectfully follow the order of the Tribunal in the case of Shanti Transport [2015 (4) TMI 825 - ITAT HYDERABAD] and accordingly setting aside the impugned order passé by the learned Commissioner under S.263, restore the assessment order passed by the Assessing Officer under S.143(3). - Decided in favour of assessee.
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2015 (4) TMI 864
Addition u/s 41(1) - unverifiable creditors - AO has made the addition invoking section 41(1) of the Act, when he found out through his inspector that the addresses of the sundry creditors were wrong; and neither the assessee could furnish the correct address nor produced the creditors before him - CIT(A) deleted the addition - Held that:- The copy of the bank statement from January 2010 to April 2010 reveals that entries given against date and amount tallies with the chart given which establish that amount have been remitted to the respective firms in their bank account by account payee/ RTGS as contended by the assessee as early as 15.12.2011 before the AO, which culminated in assessment order dated 26.12.2011. From a perusal of the chart and bank statement will reveal that the outstanding payments to the aforesaid sundry creditors for the instant Assessment Year, stands credited to their respective bank accounts by bank transfer before 28.04.2010 i.e. six months before the impugned addition made by the AO, though it was brought to his knowledge as stated above, that payments have been made. In the remand report of the AO, he states after perusal of the aforesaid bank statement evidencing account payee transfer of amount to their respective bank account, that appellant has filed copies of bank statements and same was examined. So the ld CIT(A) has rightly concluded in the light of the aforesaid evidence that sundry credit balance in the name of Nitesh Enterprises and Shri Ram Traders were genuine credit balance for purchase of material by the assessee and the liability in the name of such parties have been duly discharged by the assessee by making payment through RTGS i.e. a/c payee cheques. Moreover, it is an undisputed fact that the assessee has not written off the amount to the credit of the profit and loss accounts and the outstanding liabilities were still in existence which would prove that the assessee acknowledged his liabilities as per the book of account. Thus it has not treated the money as its own money. Accordingly, it has not become richer by the impugned amount as it continues to hold out that it is indebted to the aforesaid creditors, so it cannot be inferred that the said liability had ceased to exist. Section 41(1) is attracted only when there is cessation or remission of a trading liability. The AO in this case has failed to prove that the assessee has obtained the benefits in respect of such trading liability by way of remission or cessation thereof. Simply because the address of the sundry credits had changed, which fact was brought to the knowledge of the AO, without making any enquiry at the changed address, the AO on mere presumptions, conjectures and surmises has resorted to make the additions with the aid of Section 41(1) of the Act was misconceived and so the ld CIT(A) after considering the evidence on record and the remand report of AO has rightly held that there was no cessation of trading liability. So the question of fastening the addition with the aid of Section 41(1) does not arise. - Decided against revenue. Addition on account of rejection of books u/s 145 - estimated profit @8.7% of gross receipt - CIT(A) deleted the addition - Held that:- Books of account was produced by the assessee before the AO, so it does not lie in the mouth of the AO to simply say, the assessee failed to produce books of account when he himself say in Page 2 of the assessment order that assessee has produced books and he cannot reject the books of account without pointing out any defects in the books of account which are audited as per the law, and in the light of all supporting evidences produced by the assessee, we concur with the finding of the ld CIT(A) that the order invoking section 145 is bad in the eyes of law and is therefore legally not tenable. And in respect to the estimate @8% of gross receipt, we concur with the CIT(A) that neither the AO pointed out any wrong claim or bogus expense in the books nor has given any comparative cases wherein the net profit is shown @8% of the gross receipts. So we find no justification for the AO to estimate @ 8 % of gross receipts. Hence the ld CIT(A) has rightly deleted the addition made by the AO of ₹ 64,10,847/- - Decided against revenue.
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Customs
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2015 (4) TMI 889
Conviction under Section 15 of the Narcotic Drugs and Psychotropic Substances Act, 1985 - Seizure of three bags containing commercial quantity of poppy husk - Held that:- Since the vehicle was searched and the contraband was seized from the vehicle, compliance with Section 50 of the NDPS Act was not required. In the absence of independent evidence connecting the appellant with the fitter-rehra, mere compliance with Section 50 of the NDPS Act by itself would not be sufficient to establish the guilt of the appellant. It is a well-settled principle of the criminal jurisprudence that more stringent the punishment, the more heavy is the burden upon the prosecution to prove the offence. When the independent witnesses PW1 and DW2 have not supported the prosecution case and the recovery of the contraband has not been satisfactorily proved, the conviction of the appellant under Section 15 of the NDPS Act cannot be sustained. Section 15 provides for punishment for contravention in relation to poppy straw. The maximum punishment provided in the section is imprisonment of twenty years and fine of two lakh rupees and minimum sentence of imprisonment of ten years and a fine of one lakh rupee. Since in the cases of NDPS Act the punishment is severe, therefore strict proof is required for proving the search, seizure and the recovery - onviction of the appellant and the sentence imposed on him is set aside - Decided in favour of assessee.
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2015 (4) TMI 888
Confiscation of goods u/s 111 - Freezing of bank account - Smuggling of goods - Whether such freezing of bank account is confiscation/seizure of goods - Held that:- Without even the order / notice / direction of freezing of the account and without proper pleadings, and merely on the basis of copies of some documents handed over across the bar, do not deem it appropriate to render any interpretation of Sections 110 and 121 of the Act. Suffice it is to state that from the show cause notice dated 29th November, 2013 issued by the respondent no.2 DRI to the appellant, a case of the monies in the frozen account being sale proceeds of smuggled goods is made out and the said monies are liable to confiscation under Section 121 supra and thus cannot be allowed to be withdrawn unconditionally by the appellant. - appellant has failed to explain the source of the imported goods sale proceeds whereof were credited into the bank account which has been frozen. The onus was/is on the appellant to explain the transactions in the said bank account and to establish that the said transactions were/are not tainted. No endeavour even in that direction has been made. We, at this stage, have thus but to presume that the monies in the bank account which has been frozen, are sale proceeds of smuggled goods. - Decided against assessee.
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2015 (4) TMI 887
Provisional release of the goods - Import made by using other person's Import Export Code - Held that:- no reason as to why the provisional clearance should not be granted by the customs authorities in respect of the goods which are the subject matter of the present petitions. We direct the Commissioner of Customs, ICD, Tughlakabad, New Delhi to provisionally clear the said goods, subject to the conditions that he may impose in accordance with law. The respondents shall also consider the petitioners‟ applications for detention certificates. - Decisions in the case of Commissioner of Customs & Central Excise v. Achiever International [2012 (5) TMI 67 - DELHI HIGH COURT] and First Track Traders v. Commissioner of Customs, Tuticorin [2012 (3) TMI 310 - MADRAS HIGH COURT] distinguished - Decided in favour of assessee.
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Corporate Laws
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2015 (4) TMI 886
Winding up - Claim of secured creditor rejected by Official Liquidator - Discriminatory treatment to one creditor - Held that:- In the present case, the earlier transferees were aware of the change. They agreed to the change, however, formality might not have been completed that might debar the Bank to claim the money on the basis of such subsequent charge. However, the earlier transferees were not entitled to raise such issue and their consent recorded in the said letter would preclude them to do so. The Official Liquidator would thus be obliged to take into consideration the entire situation and treat the modified charge as a valid one at least, to the extent as recorded with the Registrar of Companies. We would be failing in our duty if we do not draw attention of the learned Company Judge as to the functioning of the Official Liquidator as observed herein before. They were not acting in impartial manner. In course of hearing, we adjourned the matter and directed the Official Liquidator to pay, whatever according to them would be payable to the Bank. We directed so when we noticed, others were paid in ad hoc to the total exclusion of the Syndicate Bank. Official Liquidator paid only poultry a sum of ₹ 8 lakhs. When we asked Mr. Tilak Bose to explain, he would contend, in absence of appropriate papers, the Official Liquidator could not calculate the interest over the claim amount and thus they made prorata payment taking the claim of the Bank to the extent of ₹ 20 lakhs only. We are not sure as to whether they would use the same yardstick once again while making payment to the other creditors. We would humbly request the learned Company Judge to look into the affairs of the office of the Official Liquidator particularly ensuring impartiality. We observe so as we find, although the Official Liquidator was an officer appointed by the Central Government, he would enjoy his office and act strictly as per the direction of the learned Company Judge in his administrative capacity. - Decided partly in favour of appellant.
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Central Excise
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2015 (4) TMI 897
Demand of differential duty - Valuation of goods - inclusion of freight and transit insurance in the assessable value - Sale on FOR destination basis - Held that:- The appellant have certain quantum of sale on FOR destination basis in respect of which they have paid duty on FOR destination price which included the element of freight and transit insurance. - In the non- FOR sales, the appellant, on the request of the customers arranged the transportation of the goods and while in some cases, they have paid freight which was recovered from the customer, in other cases, part of freight was paid by the appellant and balance was paid by the customer and part of the freight paid was recovered from the customer and in some cases the entire freight was paid by the customers. The appellant, in all such cases, have taken general insurance policy against the loss of the goods despatched by them to the customers during the transit and proportionate amount of premium is charged by the appellant from their customers as transit insurance. However, on perusal of some of the invoices issued by the appellant which have been placed on record, it is seen that each invoice mentions that though the appellant take every care for packing and forwarding, but they do not accept liability for any loss, breakage or shortage of the goods once, the goods have left the units and that the goods are always despatched at the buyers risk. This fact is not disputed by the department. The department also does not dispute that in case of loss of the goods or damage to the goods during transit, it is the customers who get survey conducted and on the basis of survey report sent by the customers to the appellant, the appellant claim compensation amount from the insurance company for the goods lost/damaged during transit and thereafter pass on the same to the customers. - every invoice mention that the goods have been despatched at the buyer s risk and that the appellant do not accept any responsibility for loss or damage or shortage of the goods after the goods left from the works. The department also does not dispute that in case of loss of goods during transit it is customer who gets the survey done and on the basis of survey report, the appellant receive compensation for the loss of the goods from the insurance company but the entire compensation is passed on to the buyers without retaining any part of the same. Even though the appellant have taken transit insurance policy of the goods in their name, they cannot be treated as owner of the goods during transit. We find that the Tribunal in the case of Associated Strips Ltd. (2002 (3) TMI 96 - CEGAT, COURT NO. I, NEW DELHI) has held that merely because at the instance of the buyer, the assessee has taken transit insurance it does not indicate that the ownership of the goods remained with the assessee during transit. - in view of section 23 and 39 of the Sale of Goods Act, 1930, the goods would be treated as delivered to the buyer and property of possession of the goods and passed on to the buyer when the goods have been handed over to the transporter and that the assessee arranging for transit insurance would nowhere lead to inference that the assesse had retained the ownership of the goods during transit until delivery of the goods at the buyer s premises. - impugned order is not sustainable - Decided in favour of assessee.
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2015 (4) TMI 896
Benefit of exemption Notification No. 15/2005-CE dated 02.05.2005 - Sale of Cocoa shells - Exciseability of by product - Held that:- cocoa shells arise during the manufacturing process of cocoa butter and cocoa powder. The appellant is not manufacturing cocoa shells it is arisen unavoidably during the process of manufacturing cocoa butter and cocoa powder. Therefore the cocoa shells is nothing but by-product or waste. This shows that Rule 6(2) of CENVAT Credit Rule and payment of 10% provided therein is not applicable. This issue is squarely covered by the Hon'ble Supreme Court judgement in the case of Rallis India (2008 (12) TMI 46 - HIGH COURT BOMBAY) and also Hindustan Zinc Ltd. - [2014 (5) TMI 253 - SUPREME COURT]. - lower authority has wrongly confirmed the demand of 10% in terms of rule 6(2) of the CENVAT Credit Rules, 2004. Therefore, the impugned order is set aside - Decided in favour of assessee.
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2015 (4) TMI 895
Demand of differential duty - Suppression of value of goods - Inclusion of cost of cement coating and epoxy coating - Held that:- Cement coating had been got done by the appellant on job work basis through some job workers and the duty demand in respect of the value of cement coating has been dropped by the Commissioner himself and as such there is no dispute in respect of the same. - However, according to the appellant the epoxy coating had also been done through M/s Vipul Colour Coating outside the factory and hence, the value of this coating is not includible in the assessable value. However, on this point we find that Sh. K. G. Mantri, General Manager (Commercial) of the appellant company is his statement dated 16.02.2002 on being specifically asked, has stated that Cenvat Credit of the material used for coating was being availed by them. - value of the epoxy coating would be includable in the assessable value of the pipes, irrespective of whether the coating is done inside the factory or outside the factory. However, the Commissioner in the impugned order has not gone into this point for which, in our view, this matter would have to be remanded. If the appellant had availed cenvat credit in respect of the coating material and did not include the value of the coating in the assessable value of the pipes and this fact was not specifically intimated to the Department, it would amount to suppression of the relevant facts from the Department and extended period under proviso to section 11A(1) would be invokable. - Matter remanded back.
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2015 (4) TMI 894
Exemption under notification no. 6/2000-CE dated 01.03.2000, 3/2001-CE dated 01.03.2001, 6/2002-CE dated 01.03.2002 - whether the appellant for availing the exemption under notification no. 6/2000-CE, 3/2001-CE and 6/2002-CE were using fly ash to the extent of 25% or more in the manufacture of ACC pipes/ couplers - Denial of cross examination request - Held that:- Appellant in this regard were maintaining the records as prescribed in the exemption notification and were also filing a monthly return along with ER-1 returns. However, on this point the dispute is that these records were not been properly maintained as according to the Department some of the important columns regarding total quantity of finished products, total quantity of fly ash used and percentage of the fly ash in the finished products were being left blank. - It is seen that in April, 2003, the appellant premises had been visited by the Jurisdictional Central Excise Officers for checking the use of fly ash and at that time no irregularity had been found. In view of these circumstances, we are of the view that the appellants request for cross examination of Shri Darpan Jain of M/s Kaka Roadlines, Sh. Chandmal Kumawat of M/s Kumawat Industris the fly ash supplier and Sh Kailash Sharma of Shubham Fly Ash Products and M/s Nirmala Fly Ash Industries is genuine. It is also seen that in terms of section 9D(2) of Central Excise Act, 1944, the provision of sub section(I) shall, so far as may be, apply in relation to any proceeding under this act other than proceeding before the court as they apply in relation to proceedings before the court. Under section 9D(1) in course of prosecution proceedings, for offences under the Central Excise Act, 1944, the statement of a person can be used against an assessee only when the person who has made the statement is examined as a witness in that case before the court and the court is of the opinion that having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice. - In terms of sub section (2) of section 9D, the provisions of sub-section (1) have to be applied, as far as possible for adjudication proceedings also. Therefore, when the Department s case against an assessee is mainly based on statements given by some persons and those statements are not corroborated by some other independent evidence, and contradict each other, for using those statements, against the assessee for proving the charge of duty evasion against their, their cross examination would be necessary. - Matter remanded back - Decided in favour of assessee.
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2015 (4) TMI 893
Classification of goods - Marketability of product - Whether sugar syrup made by the appellant for captive use in the manufacture of exempted biscuits is chargeable to Central Excise duty under sub-heading 17029090 of the Central Excise Tariff - Held that:- Since the sugar syrup is used in the manufacture of the exempted biscuits, the benefit of Notification No. 67/95-CE would not be available. In this regard, the contention of the appellant is that in terms of the proviso to Notification No. 67/95-CE, the full duty exemption to intermediate products being used for captive consumption is available if a manufacturer discharges the obligation under Rule 6 of the Cenvat Credit Rules. - In this case, it is now known as to whether the appellant throughout during the period of dispute, were manufacturing only exempted final product or alongwith the exempted final product were also manufacturing dutiable final product. The proviso to notification is applicable only in a situation where by using common Cenvat credit availed inputs, a manufacturer manufactures dutiable as well as exempted final product and in respect of the exempted final product, the obligation under Rule 6 of the Cenvat Credit Rules has been discharged. For classification as sugar syrup blend in this sub-heading the product must contain 50% by weight of fructose sugar in dry state There is no evidence to show that before seeking classification of the goods, in question, under sub-heading 17029090, the samples drawn from the goods had been got tested by the CRCL to confirm as to whether the fructose content of the goods, in question, in dry stage is 50% by weight. Just because the appellant during period till June 2008 were paying duty on the goods by classifying the same under sub-heading 17029090, it cannot be presumed that they had accepted that the goods, in question, conform to the description of sugar syrup blends of sub-heading 170290 for which the sugar syrup in dry stage must contain 50% by weight of fructose. Marketability of the goods produced by a particular manufacturer cannot be presumed on the basis of the marketability of the similar goods in different condition being produced by another manufacturer, unless it shown that the two products are identical. In these cases, the Commissioner (Appeals) has held that the goods, in question, to be marketable only on the basis that the invert sugar syrup being manufactured by M/s Dhampur Speciality Sugars Ltd. is being sold to M/s Britannia Industries, M/s J.B. Mangaram Food Industries and M/s ITC Ltd. In our view this basis of holding that the goods, in question, are marketable is absolutely wrong, as it has been presumed that the sugar syrup being made by the appellants is identical to the invert sugar syrup being made by M/s Dhampur Speciality Sugars Ltd. for which there is no basis. Neither there is any evidence to prove that the goods, in question, are classifiable under 17029090 nor there is any evidence to prove that the goods, in question, in form in which they come into existence in the appellant s factories, are marketable. We, therefore, hold that the impugned order is not sustainable. The same is set aside. - Decided in favour of assesees.
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2015 (4) TMI 892
Exemption under notification 6/01-CE - Only one unit in working condition - Availment of exemption in respect of closed unit - Held that:- Tribunal in the earlier order had held that during the period of dispute, i.e., during period from September, 2001 to 31st March, 2003, the factory of M/s. Shamli was not working and only the goods produced in the factory of M/s. Sikka were being shown to have been manufactured and cleared from the factory of M/s. Shamli. - it is the contention of the appellants that factory of M/s. Shamli was functioning during period of dispute and there is record of production. It has been pleaded that though there was no power connection in the factory of M/s. Shamli there were 2 DG Sets each of 380 KVA each and at the time of officer s visit on 24/4/2003 while one DG Set was in working condition and the other was under repairs. With regard to the purchase of diesel it has been pleaded that the diesel was being purchased from M/s. Dee Cay Traders and was being delivered at their premises under GRs and that in this regard Shri Vinit Kumar of M/s. Super Oils had confirmed the delivery of HSD at the appellant s premises on various occasions. It had been pleaded that the records regarding purchase of raw material and diesel had been recovered from the appellant s premises besides the record regarding payment made to the labour contractors and the details of the tax deducted at source in respect of the payment made to the labour contractors - Some crucial documents had neither been considered by the Commissioner at the stage of the adjudication nor had been considered by the Tribunal, it would be proper to remand this matter to the Commissioner for de-novo adjudication - Decided in favour of assessee.
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2015 (4) TMI 891
Confiscation of seized goods and plant & machinery - Excess stock found lying in the factory - Demand of duty alongwith interest and penalty imposed on the basis of the pocket diary on Appellant No.1 - Fabricated evidence - Held that:- On perusal of the Panchnama, I find that there are some blanks in the panchnama. The investigating officers during cross examination deposed that the blanks were due to an oversight. - On being asked as to why 320 pcs were seized when as per diary there should be physical stock of 973 pcs and as per lot register, there should be 976 pcs, he stated that the seizure of that quantity of unaccounted goods were affected, which were available in the factory. Further, on being asked, on other issues, he stated that since considerable time has elapsed, he was unable to explain the exact reason, and he did not prepare the Annexure-A of the Panchnama. There is no dispute that some spaces in the Panchnama were left blank, which could not be explained by the investigating officers during the cross examination, appears to be a casual approach. The Adjudicating Authority observed it might be mistakenly shown as 3 bales against 27 bales in the pocket diary. In some cases, it is observed that the name of the consigner or the party code was not mentioned in the lorry receipts but the other details of lorry receipts are tallied with the gate-pass book of the transporters. It is relied upon the grey register recovered from the transporters to corroborate the pocket diary. The appellant disputed grey register of the transporters and requested the cross examination of the transporters, which has not been allowed. - there were discrepancies in the pocket diary and grey register as well as the documents of the transporters cannot be accepted as the cross examination of the transporters was not allowed. It is also disputed the contents of Lorry Receipts recovered from the transporter in so far as out of 17 LRs not a single LR is in the name of the Appellants either as consignor or as consignee. Further as per the said LRs deliveries were made from Bhiwandi to Saroli and no consignment was delivered from/to the Appellants address. As regards Grey Register, the said register is maintained truck-wise by Moongipa Roadways P Ltd. Further in the said register, nowhere the Appellant name was mentioned. None of the ingredients of sub rule (1) of 173(Q) of the said Rules would be applicable, and no Modvat Credit was availed by the appellant on the seized raw materials. So, confiscation of raw material and imposition of redemption fine would not sustained. The Tribunal in the case of Aishwarya Plast Exporters Pvt Ltd vs. Commissioner of Central Excise, Vadodara [2009 (4) TMI 653 - CESTAT, AHMEDABAD] held that excess raw material lying in factory premises, non-recording would not invite confiscation. So, the confiscation of the raw material, plant and machinery would not be sustained. - confiscation of seized goods, plant and machinery etc., and imposition of redemption fine and demand of duty alongwith interest and penalties on the appellant are not sustainable. Accordingly, the impugned orders are set aside. - Decided in favour of assessee.
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2015 (4) TMI 890
Cenvat credit of SAD - appellant was not liable to pay SAD - refund claim was rejected - appellant found that they are unable to utilise the amount in the EPCG licence as they were going to redeem the licence in a shorter period and therefore they have taken credit in the Cenvat account - Held that:- Appellant is entitled to avail the cenvat credit of SAD as evident from the Notification in 97/2004-CUS, which was also noted by the DGFT authority and after considering that they have availed this amount in their cenvat account, this amount was not reduced towards the value of export obligation. Thus, it is clearly evident that the applicant is eligible to avail the cenvat credit on merit. - Challan is not a document for the purpose of availment of the cenvat credit. It is also observed that the appellant could have taken the credit in the cenvat account on the basis of Bill of Entry. It is revealed from the record that the appellant paid the duty by challan on the basis of the Bill of Entry generated through EDI on 13.3.2006. It is observed that the appellant has shown the reference of the Challan in their cenvat account. In my considered view, the appellant could have mentioned the reference of Bill of Entry number in their cenvat account. The appellant is also eligible to avail credit on the basis of Challan under Rule 9 of the Cenvat Credit Rule 2004 as held by the Tribunal in the case of Essar Oil Ltd (2014 (2) TMI 766 - CESTAT AHMEDABAD). - when there is substantial compliance of law the benefit of cenvat credit cannot be denied on procedural lapse - Decided in favour of assessee.
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CST, VAT & Sales Tax
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2015 (4) TMI 901
Valuation of liability - No VAT was collected from the customers - Held that:- petitioner further submitted that if an opportunity is given to the petitioner, they would be able to convince the authority. The learned counsel for the petitioner further submitted that the petitioner has also agreed to pay 20% of the amount as determined in the impugned order and if some time is granted, they would co-operate to enable the assessing officer to complete the proceedings afresh. - Respondent is directed to accept 20% of the amount as determined in the impugned order, which the petitioner has agreed to pay, which can be adjusted from the refund, if any, and give one more opportunity to the petitioner to putforth their objections and thereafter to pass appropriate orders on merits and in accordance with law - Petition disposed of.
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2015 (4) TMI 900
Denial of refund claim - Rejection on ground that petitioner failed to produce certain evidences, including chalan, cheque number/date as also contract agreement, purchase invoice and expenses made on labour and other expenses - Held that:- It is difficult to support any such action of the Deputy Commissioner, Commercial Taxes. Once the petitioners have produced the certificate for deduction of tax at source in Form C-II before him, it is not for the petitioners to produce any evidence regarding the deposit of any such tax deducted, rather if they are required to be verified they had to be verified by the authorities of the Commercial Taxes department from the Railways. Irrespective of whether the deposits had been made or not, once the tax had been deducted at source in terms of Rule 29 (6), the same had to be treated as payment of tax on behalf of the petitioners and credit had to be given for such deposits on the mere production of Form C-II and the only thing that could have been verified by the Department regarding the same would be regarding their genuineness and that they were not forged documents. Petitioners have admittedly not filed their applications before the Joint Commissioner. In the said circumstances, the entire proceedings before the Deputy Commissioner, including the order dated 29.12.2014 passed by him are without jurisdiction. The same are, accordingly, quashed. - Decided in favour of assessee.
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2015 (4) TMI 899
Detention of goods - Goods not accompanied with transit pass - Demand of tax - Imposition of compounding fees - Held that:- Court in a series of writ petition, directed the goods to be released on payment of the tax component. - Writ Petition is disposed of with a direction to the respondent to release the goods on payment of the tax component - Decided conditionally in favour of assessee.
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2015 (4) TMI 898
Reversal of Input tax credit - Non issuance of notice to petitioner - Violation of principle of natural justice - Held that:- While going through the averments and the contentions that are supported by the documents filed in the typed set of papers, it is seen that the impugned orders dated 28.11.2014 have not referred to the notices dated 26.11.2014 and that there is a blank about the notice date received by the petitioners - impugned orders are set aside and the matters are remitted back - Decided in favour of assessee.
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