TMI Tax Updates - e-Newsletter
April 1, 2017
Case Laws in this Newsletter:
Income Tax
Customs
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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Income Tax:
Clarifications on the Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 - Circular
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Income Tax:
CBDT notifies new Income Tax Return Forms for AY 2017-18 - Circular
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Income Tax:
Deduction u/s 35D - "premium" collected by the appellant-Company on its subscribed share capital cannot be treated “capital employed in the business of the Company" - benefit of deduction not allowed - SC
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Income Tax:
Assessment u/s 171 - partial partition or complete partition - immovable property of the HUF had been gifted to certain members - AO treated the same as partition of a Hindu undivided family - AO passed orders of substantive assessment against the individual members and orders of protective assessment against the appellant HUF - ITAT directed to re-examine the facts - HC
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Income Tax:
Addition u/s 68 - proof of genuineness of transactions - The AO strangely failed to conduct any scrutiny of documents and rested content by placing reliance merely on a report of the Investigation Wing. This reveals spectacular disregard to an AO’s duties - HC
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Income Tax:
Addition u/s 40A - excessive payment to firm of advocates - one director being a partner of the firm receiving the fees - Revenue has not even remotely attempted to establish that the payment made to the Advocates for professional services was excessive. - HC
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Income Tax:
Onus lay upon Assessee to displace said presumption. As we have seen that Assessee gave explanation disowning documents stating that same related to some others but those others denied. It shows that a false statement given by Assessee. Assessee, therefore, fails to dislodge presumption, which, the authorities were justified, in drawing against Assessee, in view of Section 132(4A) of Act, 1961 - HC
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Income Tax:
Addition on unexplained investment in Jewellery and Silver - No credit could be given for HUF, for the simple reason that an HUF cannot wear any jewellery by itself. - The maximum relief that could be given to the assessee in addition to what was given by the AO was 650 grams of gold only - AT
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Income Tax:
TDS u/s 195 - payment on FTS - employees seconded to the assessee - once these payments cannot be brought to tax under the provisions of the India US DTAA, there cannot be any occasion to invoke Section 9(1)(vii) of the Act either because it cannot be more beneficial to the assessee- as is the condition precedent, under section 90(2), for invoking the same. - AT
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Income Tax:
TDS u/s 195 - professional fees paid to Mahta Partners, LLC USA a non resident - in the nature of Royalty or not - DTAA - the assessee benefits from rich experience of the service provider is wholly irrelevant in the present context - further, it is not even the case of the authorities below that ‘make available’ clause is satisfied - demand raised uu/s 201 r.w.s. 195 stand quashed - AT
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Customs:
Clarification regarding amendment in Special Economic Zone Rules, 2006 in Rule 47, after sub-rule (4) dated 05.08.2016 – reg. - Circular
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DGFT:
Clarification regarding Public Notice No 38 dated 6.10.2016 and Public Notice No. 63 dated 27.3.2017 - Trade Notice
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Indian Laws:
Entitlement to get the lease deed renewed - land was taken for Oil Mill but huge commercial construction was done - the appellant cannot claim that he is entitled to renewal of the lease deed as a matter of right. - SC
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Service Tax:
Denial of Refund for the services namely, terminal handling charges, documentation charges, bill of lading charges - N/N. 41/2007-ST - the service tax paid by the service provider on the services availed by the appellants are at port, therefore, all the services are covered under port services. Therefore, the appellants are entitled for refund claim - AT
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Service Tax:
Refund - export of goods - claiming drawback by the appellants does not bar for claiming refund of Service Tax paid on the services covered under N/N. 41/2007 for export of the goods. - AT
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Service Tax:
Refund claim - debit note/expense voucher - so long as the documents (debit notes) reveal the essential details like registration no, service provided, service recipient, value of taxable service, refund cannot be rejected (merely because the documents are debit notes). - AT
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Service Tax:
Job work - Material, used in repair, transferred to principal - levy of tax - there is transfer of materials in the repair and maintenance done by the respondent-assessee and accordingly no service tax is eligible on the same - AT
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Central Excise:
Classification of goods - blanks for components out of CR/HR sheets/coils of iron and steel - As the Blanks in question cannot be used as part of the motor vehicle part and they are required to be further processing which has been done by the buyers of the goods - the appellant has correctly classified the said goods under Chapter 72 of the CETA. - AT
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Central Excise:
Reversal of credit - the capital goods have been acquired prior to 1994 - provisions of Rule 3(5) of CCR, 2004 are not applicable to the facts of this case, assessee were not required to reverse cenvat credit at all as they have not taken cenvat credit. - AT
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Central Excise:
Classification of goods - Mincing Machine for Meat - to be classified under Tariff Item No.73239100 or under Tariff Item No.84385000 which covers “Machinery for the Industrial preparation or manufacture of food or drink” - goods correctly classified under Tariff Item No.73239100 covering “Kitchen or other household articles and parts thereof” - AT
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Central Excise:
SSI exemption - brand name - The agreement confers exclusive rights to the assessee to use the ‘trademark’ and, from this, it would appear that the impugned mark is no longer that of the overseas collaborator for the purpose of the specified territory but is that of the assessee - benefit of exemption allowed - AT
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VAT:
Input tax Credit - duty paying documents - Works contract - whether the awarder of the contract, namely, Karnataka Water Supply Board is ‘Government’, and therefore, the Running Bills prepared by the Board can be construed as “Tax Invoices” within the meaning of Rule 27(2) Proviso of Karnataka Value Added Tax Rules, 2005? - Held Yes, Credit allowed - HC
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VAT:
Compounding of offences - KVAT Act - For compounding an offence, which of the compounding fees should be paid by the assessee: the one prevailing when the evasion took place or the one prevailing at the time of actual compounding? - The compounding fee as prevailing at the time of the assessee’s deciding to pay it shall alone apply - HC
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VAT:
Interest on delayed payment - an assessee cannot foresee the additional demand of tax on account of reassessment or in revision and the interest would become payable only from the date, the demand is raised and not from the date of filing of return - demand of interest set aside - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2017 (3) TMI 1533
TPA - MAM - Held that:- Both the assessee and the TPO had applied TNMM method to benchmark the international transactions and PLI of assessee for the said segment by applying OP/OC was worked out at 3.66% (or 3.67%). The TPO had calculated the margins of comparables and the arithmetic mean of final list of comparables worked out to 8.54%. Proviso to section 92C(2) of the Act provides a benefit to the assessee that no transfer pricing adjustment would be made in case the arm's length price determined by the TPO was within range of +/- 5% of the actual revenue from the international transaction. The perusal of the order of TPO and the details filed by the assessee reflect that the margins of international transaction relating to manufacturing segment was were within +/- 5% of actual revenue earned from the manufacturing segment and hence, we direct the Assessing Officer to verify the claim of assessee and delete the addition. The grounds of appeal No.2 and 3 raised by the assessee are thus, decided on preliminary issue. Selection of comparables - Held that:- The assessee had provided support services to its associate enterprises i.e. supply based development services, wherein the revenue earned was ₹ 9,34,38,095/-. Further, the assessee had made provision of IT services to the extent of ₹ 59,64,133/- which constitute IT and other business support services. Thus companies dissimilar with that of assessee need to be rejected as comparable. Adjustments made to application engineering services segment - Held that:- The application engineering services was comprised of customization of business of turbocharges to particular vehicle models of different customers, where the best design of turbocharges is already developed and patented and the assessee provides services relating to customization of the best design as per the requirements of customer. Thus companies dissimilar with that of assessee need to be rejected as comparable.
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2017 (3) TMI 1532
Stay of demand in relation to the assessment year 2010-11 - Held that:- Corresponding appeal for the relevant assessment year was also posted today for hearing along with the instant stay application. Since the appeal has been heard and the order has also been passed, the instant stay application has become infructuous. In the result, the stay application is dismissed.
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2017 (3) TMI 1531
Deduction u/s 35D - whether premium collected by the appellant-Company on its subscribed share capital is capital employed in the business of the Company ? - Held that:- The premium amount collected by the Company on its subscribed issued share capital is not and cannot be said to be the part of capital employed in the business of the Company for the purpose of Section 35D(3)(b) of the Act and hence the appellant-Company was rightly held not entitled to claim any deduction in relation to the amount received towards premium from its various shareholders on the issued shares of the Company. This we say for more than one reason. First, if the intention of the Legislature were to treat the amount of premium collected by the Company from its shareholders while issuing the shares to be the part of capital employed in the business of the company , then it would have been specifically said so in the Explanation(b) of sub-section(3) of Section 35D of the Act. It was, however, not said. Second, on the other hand, non-mentioning of the words does indicate the legislative intent that the Legislature did not intend to extend the benefit of Section 35D to such sum. As rightly pointed out, Section 78 of the Companies Act which deals with the issue of shares at premium and discount requires a Company to transfer the amount so collected as premium from the shareholders and keep the same in a separate account called securities premium account . It does not anywhere says that such amount be treated as part of capital of the company employed in the business for one or other purpose, as the case may be, even under the Companies Act. - Decided against assessee.
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2017 (3) TMI 1530
Stay applications rejected - directed the appellant to deposit 15 per cent of the total tax demand - Held that:- Without going into the merits of the matter, as the same is pending before the Commissioner of Income Tax (Appeals) in appeal filed by the appellant, we consider it proper and in the interest of justice to dispose of these appeals with the following directions: (1) The CIT (Appeals) is directed to decide the pending appeals filed by the appellant herein within one month from the date of production of the copy of this order, in accordance with law, without granting unnecessary adjournments; (2) The Income Tax Department (respondent herein) is directed to withdraw the amount of ₹ 400/crores approximately already attached by the respondent; (3) The term deposit of ₹ 1000 crores approximately which has been invested by the appellant shall be kept by the appellant in the form of security in favour of the respondents in relation to the disputed amount in question till the disposal of the appeal by the CIT (Appeals); (4) The respondent (Income Tax Department) shall not attach any other accounts of the appellant or take coercive steps during the pendency of the appeal before the CIT (Appeals).
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2017 (3) TMI 1529
Validity of notice under Section 158BD - Authorization of issue u/s 132 – Notice under Section 132 issued in the name of a dead person andwas duly received by the present petitioner as the legal heir of the dead person - if the original search warrant is invalid the consequential action under Section 158BD would also be invalid? - Held that:- The issue of invalidity of the search warrant was not raised at any point of time prior to the notice under Section 158BD. In fact, the petitioner had participated in the proceedings of assessment initiated under Section 158BC of the Act. The information discovered in the course of the search, if capable of generating the satisfaction for issuing a notice under Section 158BD, cannot altogether become irrelevant for further action under Section 158BD of the Act. HC Ref case [2014 (10) TMI 573 - GUJARAT HIGH COURT]
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2017 (3) TMI 1528
Attachment orders - stay petition - Held that:- It is not in dispute that the petitioner Co-operative Bank, after suffering an order of assessment, has preferred an Appeal before the First Appellate Authority namely, the Commissioner of Income Tax (Appeals) Pondicherry, who in turn dismissed such Appeal only on 20.03.2017, by serving a copy of the same on the petitioner only on 23.03.2017. It is also evident that the 1st respondent, in the meantime, has issued the impugned attachment order as on 21.03.2017, i.e., just immediately a day after the disposal of the appeal by the Appellate Authority, without even waiting for the petitioner to approach the Tribunal and seek for appropriate interim relief while filing the Appeal challenging the order of the First Appellate Authority. It is also seen from the proceedings of the 2nd respondent dated 22.03.2017 that in pursuant to the impugned order of attachment, a sum of ₹ 1,51,07,000/- was also debited from the account of the petitioner to the credit of the 1st respondent. This Court, at this stage, cannot go into the correctness or otherwise of the order of attachment as confirmed by the Appellate Authority, as the petitioner is still having further remedy of Appeal before the Income Tax Appellate Tribunal as provided under the statute itself. It is also not in dispute that the petitioner is entitled to seek for interim relief of stay of the proceedings while preferring the appeal and it is for the Tribunal to consider such request and pass orders on the same on its own merits and in accordance with law. But in the meantime, in pursuant to the order of attachment, already a sum of ₹ 1,51,07,000/- was debited from the account of the petitioner. Therefore, in all fairness, the 1st respondent has to wait till the Income Tax Appellate Tribunal passes an order on the stay petition to be filed by the petitioner while preferring the appeal. The petitioner shall prefer an Appeal before the Income Tax Appellate Tribunal within a period of 30 days from the date of receipt of a copy of this order along with a stay petition.Such Stay Petition filed by the petitioner shall be taken up by the Income Tax Appellate Tribunal and decided on its own merits and in accordance with law within a period of 7 days from the date of such filing.
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2017 (3) TMI 1527
Rectification of mistake - M.As again which are on the same set of facts - Held that::- Second rectification application on the same grounds on which earlier application were made shall not be maintainable. See CIT. Versus Smt. Vasantben H. Sheth [2014 (8) TMI 487 - GUJARAT HIGH COURT]
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2017 (3) TMI 1526
Disallowance u/s 14A - Held that:- There was no claim of the assessee for exemption of income for payment of tax, and therefore, relying upon the decision of the Division Bench of this Court in the case of Corrtech Energy P. Ltd.(2014 (3) TMI 856 - GUJARAT HIGH COURT ), the learned tribunal has rightly held that no disallowance can be made under Section 14A of the Income Tax Act. In view of the aforesaid, it cannot be said that the learned tribunal has committed any error in deleting the addition Appeal admitted on question nos.(A) to (E)
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2017 (3) TMI 1525
Assessment u/s 171 - partial partition or complete partition - immovable property of the HUF had been gifted to certain members - AO treated the same as partition of a Hindu undivided family - AO passed orders of substantive assessment against the individual members and orders of protective assessment against the appellant HUF - Held that:- In view of the undisputed fact regarding non-consideration of Section 171 of the Act, we are of the considered opinion that the Income Tax Appellate Tribunal is required to reexamine the matter keeping in mind and in the light of the provision of Section 171 of the Income Tax Act and thereafter, arrive at a finding as to its import and impact in the facts of the present case, as in the absence of any such finding in the impugned order, it is impossible for this Court to exercise its power of judicial review for examining the validity of the contention raised by the parties, moreso, as this Court is precluded from looking into the finding of fact recorded by the Assessing Authority or the other authorities in the present case. Matter remitted back to the Income Tax Appellate Tribunal to reexamine the same in the light of the provisions of Section 17 and the other provisions of law, consider the import and impact of the same and record a finding in that regard in the facts and circumstances prevailing in the present case.
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2017 (3) TMI 1524
Reopening of assessment - genuineness of the foreign creditors - Held that:- Assessing Officer while framing the scrutiny assessment under Section 143(3) of the Act, as such, seems to be satisfied, and therefore, did not doubt the genuineness of the transactions and/or with respect to the foreign creditors from whom the petitioner – assessee purchased the goods. Under the circumstances and in the facts and circumstances of the case, it cannot be said that there was any failure on the part of the petitioner – assessee in not disclosing true and correct facts. Under the circumstances, considering the proviso to Section 147 of the Act and as observed hereinabove, there does not appear to be any failure on the part of the petitioner – assessee in not disclosing true and correct facts necessary for the purpose of assessment, and therefore, the Assessing Officer is not justified in reopening the assessment beyond a period of four years. On the aforesaid ground alone, the present petition deserves to be allowed and the impugned reassessment proceedings deserves to be quashed and set aside. - Decided in favour of assessee
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2017 (3) TMI 1523
Procedure for block assessment - time limit entitled to file the return - Held that:- Section 158BC mandates that the Assessing Officer is to serve a notice to such person requiring him to furnish a return in the prescribed form and verified in the manner stipulated. The Assessing Officer must, therefore, serve such a notice, without which an assessee would not be liable to file a return in respect of a block assessment. The assessee is also entitled, as a matter of right, to a period not less than 15 days to file such a return. The Assessing Officer does not have the power to curtail this period. Thus, even if a notice under Section 158BC(a) specifies a period less than 15 days, it would not affect an assessee's right to file a return after a period of 15 days. The present case falls under Section 158BC(a)(ii). In such a case, an assessee would be entitled to file the return within the outer limit prescribed in Section 158BC(a)(ii) namely 45 days. Thus, while it is mandatory for the Assessing Officer to serve a notice requiring the assessee to file a return under Section 158BC and the assessee is entitled to not less than 15 days to file the return, the section does not indicate that if the notice inadvertently prescribes a period less than 15 days, it is void. Much less does the section indicate that the entire block proceedings relating to the block assessment would be void on account thereof. - Decided in favour of the assessee.
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2017 (3) TMI 1522
Penalty u/s 158BFA - addition made on the ground of enhanced GP rates - ITAT deleted penalty levy - Held that:- The first proviso contains four situations. All of them contemplate the filing of a return in block proceedings and the disclosure of income that was hitherto not revealed in the original proceedings. The second proviso applies only where the income disclosed during the block proceedings is exceeded in the final assessment proceedings, by an objective determination. In the facts of this case, the Revenue has in fact accepted the undisclosed income revealed by the assessee @ ₹ 21,36,111/-. All that it has done is that it has enhanced the amount to ₹ 50,01,857/- by applying a G.P. rate of 4.4% on estimate basis. Now, this is more of a derived or inferred income based upon estimation and not on the basis of the material seized or materials that can be deduced from the documents etc. so seized. For the foregoing reasons, the Court is of the opinion that in the circumstances of the case, the interpretation given by the ITAT to Section 158BFA (2) does not call for interference; it is reasonable. - Decided n favour of assessee.
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2017 (3) TMI 1521
Addition u/s 68 - proof of genuineness of transactions - Held that:- This Court notices that the assessee had provided several documents that could have showed light into whether truly the transactions were genuine. It was not a case where the share applicants are merely provided confirmation letters. They had provided their particulars, PAN details, assessment particulars, mode of payment for share application money, i.e. through banks, bank statements, cheque numbers in question, copies of minutes of resolutions authorizing the applications, copies of balance sheets, profit and loss accounts for the year under consideration and even bank statements showing the source of payments made by the companies to the assessee as well as their master debt with ROC particulars. The AO strangely failed to conduct any scrutiny of documents and rested content by placing reliance merely on a report of the Investigation Wing. This reveals spectacular disregard to an AO’s duties in the remand proceedings which the Revenue seeks to inflict upon the assessee in this case. No substantial question of law
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2017 (3) TMI 1520
Inclusion of Modvat in the opening stock - Held that:- The impugned order of the Tribunal while allowing the respondent assessee's appeal on this issue restored the issue for fresh examination by the Assessing Officer. This was done by following the decision of its coordinate bench on the same issue in respect of the same respondent assessee, dated 18th January, 2013 relating to Assessment Year 1999-2000. Royalty payment - Tribunal allowing the royalty payment @ 2% instead of 1% as was done by the TPO - Held that:- TPO is mandated by law to determine the ALP by following one of the methods prescribed in Section 92C of the Act read with Rule 10B of the Income Tax Rules. However, the aforesaid exercise of determining the ALP in respect of the royalty payable for technical know how has not been carried out as required under the Act. Further, as held by the CIT(A) and upheld by the impugned order of the Tribunal, the TPO has given no reasons justifying the technical know how royalty paid by the Assessing Officer to its Associated Enterprise being restricted to 1% instead of 2%, as claimed by the respondent assessee. This determination of ALP of technical know how royalty by the TPO was adhoc and arbitrary as held by the CIT(A) and the Tribunal. Brand usage royalty - Held that:- The impugned order of the Tribunal correctly proceeds to hold that in any view of the matter, even if there was no agreement to support the agreement, yet where the payment is made on account of commercial expediency, the same ought to be allowed. See Commissioner of Income Tax Vs. Associated Electrical Agencies[2003 (12) TMI 36 - MADRAS High Court] Addition u/s 40A - addition of professional fees paid to Crawford Bailey & Co. (Advocate & Solicitor) to the extent of 10% of the fees paid -one director being a partner of the firm receiving the fees - Held that:- The onus would necessarily first be upon the Revenue before it disallows the payment made to persons covered under Section 40A(2)(b) of the Act in respect of professional services to establish that the payment was excessive. This it could do by calling for the details of the services rendered and making enquiries of the fees for such services in comparable cases i.e. taking into account the Advocates involved i.e. the experience and expertise. Thereafter, it would be for the assessee to show why the comparison is not proper. No such exercise was done. Therefore, the disallowance of 10% is adhoc. Thus, in the present facts, the Revenue has not even remotely attempted to establish that the payment made to the Advocates for professional services was excessive. In the circumstances, no fault can be found with the orders of the CIT(A) and the Tribunal. Addition on account of club entrance fee - revenue expenditure treated by ITAT - Held that:- The issue of treatment to be given to club fees is settled by an earlier decision of this Court in Commissioner of Income Tax Vs. Otis Elevators (I) Ltd. [1991 (4) TMI 53 - BOMBAY High Court] to be treated as revenue in nature. Dpreciation is allowable on testing equipments even when the equipment is used by its clients. Addition on account of unaccounted production and sales - Held that:- Addition has been made in the absence of the regular books of accounts maintained by the respondent assessee, being found to be defective in any manner. More particularly, in the absence of any evidence that there were purchase and sales outside the regular books of accounts, it is not permissible to disregard the normal books of accounts. So far as the production loss is concerned, the CIT(A) as well as the impugned order of the Tribunal has followed an earlier order of its coordinate bench in respect of the same respondent assessee for A.Y. 1991-92 to hold that the production loss depends on number of factors and in the absence of any comparable data to show that the loss claimed was in excess, the same cannot be disallowed.
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2017 (3) TMI 1519
Condonation of delay - petition for condonation of delay show that the Chartered Accountant engaged in the matter, one, Mr.A.Johnson, FCA, was unaware of the fact that an appeal could be filed against the order of the CIT, post the amendment made in Section 253(1)(c) - Held that:- Not only the period of delay has to be taken in account, but also the quality of explanation, the legal assistance, if any, sought and rendered to the litigant, and the detriment that condonation of delay would cause to the opposing party. These are aspects, if, looked at, closely, will enable the Court to come to a conclusion as to whether the delay was intentional and/or deliberate. We find from the record that the Assessee, perhaps, did not receive the best legal assistance in the matter. Notwithstanding the fact that the period of delay is large, we are inclined to condone the delay, especially in the circumstances obtaining in the case, which is, that, if the Assessee were to succeed on merits, it could, hardly, be said that it would cause detriment to the Revenue, in a matter involving grant of registration. The Assessee has, ostensibly, been carrying on charitable activities. This, of-course, would have to be decided on merits, once, the Tribunal examines the claim made by the assessee in that behalf. The CIT, as noted above, has rejected this claim, which has not been tested before the Tribunal on merits. Therefore, for the foregoing reasons, we allow the appeal, and set aside the judgement of the Tribunal. The matter is remitted to the Tribunal for a decision on merits.
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2017 (3) TMI 1518
Assessment u/s 153A - search u/s 132 - nexus between the seized documents and the assessee - obligation on the department to prove any such nexus in view of the presumption u/s 132(4A) of the I.T. Act, 1961. - Held that:- We failed to understand, how and why those documents and contents thereof could not have been treated to belong Assessee when same were seized from her premises, which fact was not disputed by her and she also gave a wrong statement that these documents related to some others but those others disowned and contradicted statement of Assessee. Thereafter Assessee did not furnish any otherwise explanation in respect of aforesaid documents. There was a statutory presumption, therefore, against Assessee. Onus lay upon Assessee to displace said presumption. As we have seen that Assessee gave explanation disowning documents stating that same related to some others but those others denied. It shows that a false statement given by Assessee. Assessee, therefore, fails to dislodge presumption, which, the authorities were justified, in drawing against Assessee, in view of Section 132 (4A) of Act, 1961. CIT(A) as well as Tribunal in this case have completed failed to consider that documents and entries were not disputed by Assessee and instead she submitted an explanation that documents relate to some other persons but those other persons denied it, hence Assessee failed to rebut presumption against her that documents pertain to her, the contents are true and transaction therein relates to Assessee. We answer the questions formulated above in favour of Revenue but hold that presumption under Section 132(4A) of Act, 1961 in the present case for making addition is justified with regard to Annexure-A17, the document referred to in para 3 of assessment order and to that extent order of Tribunal is set aside.
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2017 (3) TMI 1517
Deduction of write-off of advances made to another concern whose business was inextricably connected with the assessee's business disallowed - Held that:- We find that the impugned order of the Tribunal on the basis of the record before it has rendered a finding of fact that the bank guarantee of only ₹ 41.75 lakhs was given at the instance of appellant-assessee by its bankers to the customers of M/s. MPFSL and the same alone could be allowed as business losses. There is nothing in the impugned order of the Tribunal to indicate that bank guarantee was given at the instance of the appellant-assessee exceeding ₹ 41.75 lakhs to the customers of M/s. MPFSL. No fault can be found with the impugned order of the Tribunal. Deduction in respect of site expenses disallowed - Held that:- Tribunal renders a finding of fact that although the provision of ₹ 12.22 lakhs was made in respect of purchases for the Assessment year 2005-06 the purchase orders were placed in the next Assessment year i.e. 8th April, 2005 and 12th May, 2005. Thus this expenditure related to a subsequent year and could not be booked in the subject Assessment Year as “provision for site expenses”. Therefore the impugned order of the Tribunal has upheld the order of the CIT(A) and disallowed the claim of the appellant-assessee. We find that the finding of the fact arrived at by the Tribunal, that purchase orders for items in respect of which provision is made were in fact placed in the subsequent year. This finding of fact is not shown to be incorrect and/or perverse.
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2017 (3) TMI 1516
Addition on unexplained investment in Jewellery and Silver - Search & seizure action - Held that:- It is clear that Smt Neeta Bai [the assessee’s wife] had declared 900 grams of gold and 10 Kgs of silver only in her WT returns filed for a ys 1991-92 & 1992- 93. Hence , the assessee’s plea that the particulars contained in the earlier year return should be considered in favour of the assessee can not be accepted. With regard to the benefit claimed on the basis of Circular No. 1916 dated 11. 05.94 providing for non-seizure of certain minimum amount of gold jewellery, etc. as per the circular what could be given credit for a male member is only 100 gms. No credit could be given for HUF, for the simple reason that an HUF cannot wear any jewellery by itself. Vis-a-vis silver, circular does not mention anything about holding of silver or diamonds. Therefore, we are of the opinion that the maximum relief that could be given to the assessee is only on the value of gold jewellery The maximum relief that could be given to the assessee in addition to what was given by the AO was 650 grams of gold only and accordingly , we direct the AO to give such relief alone.
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2017 (3) TMI 1515
TDS u/s 195 - payment on FTS - employees seconded to the assessee - Permanent Establishment in India - payment to non-resident entity - Held that:- What is relevant is that the income embedded in the payments in question is taxable in India under the head ‘Salaries’, and if that be so, there are no tax withholding obligations under section 195. That precisely is the undisputed position on the facts of this caseas duly accepted by the income tax authorities. The income embedded in the impugned payments being in the nature of income chargeable to tax under the head ‘income from salaries’, the assessee cannot be said to have any tax withholding obligations under section 195. For this short reason alone, we must hold that the impugned tax withholding demands, under section 201 r.w.s 195, are wholly devoid of any legally sustainable merits. A lot of emphasis has been placed on the fact that there was a service PE in the present case. Nothing, however, turns on the existence of the PE because admittedly whatever has been paid to Burt Hill Inc USA is, in turn, paid by Burt Hill Inc UA to its employees seconded to the assessee. There cannot be any profits, therefore, in the hands of the Service PE, and what is taxable in the hands of the PE under article 7(1) is not the gross receipt but the profits attributable to the PE. The existence of service PE, in the present case, will be wholly academic inasmuch as whatever is the aggregate of receipts said to be attributable to the PE, is exactly the same as aggregate of expenditure attributable to the PE. As for the payments made by the assessee being in nature of the fees for technical services, this stand of the Assessing Officer is equally frivolous. There is not even an effort to show as to how any technical knowledge, skills, knowhow or processes etc are “made available” by these services inasmuch as these services can be performed by the assessee without any recourse to the service provider. Unless this condition, under make available clause under article 12(4)(b), is satisfied the fees for technical services cannot be brought to tax in India in the hands of entities fiscally domiciled in United States. It is even more elementary that once these payments cannot be brought to tax under the provisions of the India US DTAA, there cannot be any occasion to invoke Section 9(1)(vii) of the Act either because it cannot be more beneficial to the assessee- as is the condition precedent, under section 90(2), for invoking the same. Thus he demands raised on the assessee under section 201 r.w.s 195 are wholly devoid of any legally sustainable merits. - Decided in favour of assessee
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2017 (3) TMI 1514
TDS u/s 195 - professional fees paid to Mahta Partners, LLC USA a non resident - Royalty payment - DTAA - PE in India - Held that:- The payments made by the assessee are for rendition of these services and not for use of any information concerning industrial, commercial or scientific information”. While characterizing nature of payment what is to be seen is the activity triggering in consideration of which the payment is made. That activity, in the present case, is rendition of services. The fact that in the process of availing these services, the assessee benefits from rich experience of the service provider is wholly irrelevant in the present context. The payment is for rendition of services and not for right to use any information concerning industrial, commercial or scientific experience, in possession of the service provider. In this view of the matter, the authorities below were clearly in error in holding that the impugned payment was covered by the definition of royalty under article 12(3)(a). Coming to the taxability of impugned fees as fees for included services under article 12.4, it is only elementary that such on standalone basis a taxability can arise only when these services “make available” technical knowledge, experience, skill, Know-how or process etc, in the sense that recipient of services is enabled to perform such services, in future, on his own and without any recourse to service provider. It is not, however, the case of the revenue and rightly so, that such a condition is satisfied on the facts of the present case. Learned Departmental Representative fairly accepts that it is not even the case of the authorities below that ‘make available’ clause is satisfied. Thus we uphold the grievance of the assessee. The impugned demand raised under Section 201 r.w.s. 195, accordingly, stand quashed. - Decided in favour of assessee
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2017 (3) TMI 1513
Reopening of assessment - loans and advances - Held that:- Assessee vide its reply dated 03.10.2005 submitted the details of loans and advances given above ₹ 1 lac vide Annexure-F and also furnished details of interest charged. Copies of interest accounts vide Annexure-G were also placed on record. Thereafter, on 20.02.2006, assessment under Section 143(3) of the Act was completed at the returned income and ld. Assessing Officer has mentioned that all details were furnished as called for. All these series of facts clearly show that ld. Assessing Officer has made full application of mind on the details of loans and advances given and interest paid before finalizing the assessment under Section 143(3) of the Act and the alleged action of reopening under Section 147 of the Act cannot be held to be correct in this case wherein reopening has taken place after expiry of four years and there is no new material available with the Revenue to show that income chargeable to tax has escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. We, therefore in view of our discussion above and totality of facts, are of the considered view that reassessment proceedings under Section 147 are bad in law and liable to be quashed - Decided in favour of assessee.
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Customs
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2017 (3) TMI 1494
Revocation of CHA licence - forfeiture of security deposit - penalty - it was alleged that there was a deliberate mis-declaration apropos the quality, quantity, value and weight of the consignments with the intention to defraud the government and illegitimately claim the benefit of duty-drawback - Held that: - Any act to defraud presupposes the intention to obtain something fraudulently - In the present case there is no evidence of active facilitation of clearance of the consignment through customs by the appellant, hence, no mens rea can be inferred to defraud the government for obtaining duty drawback through a fraudulent transaction. Consequently, the appellant cannot be faulted or punished in the manner it has been. The CHA is not an inspector to weigh the genuineness of the transaction. It is a processing agent of documents with respect to clearance of goods through customs house and in that process only such authorized personnel of the CHA can enter the customs house area. What is noteworthy is that the IE Code of the exporter M/s H.M. Impex was mentioned in the shipping bills, this itself reflects that before the grant of said IE Code, the background check of the said importer/ exporter had been undertaken by the customs authorities, therefore, there was no doubt about the identity of the said exporter. It would be far too onerous to expect the CHA to inquire into and verify the genuineness of the IE Code given to it by a client for each import/ export transaction. When such code is mentioned, there is a presumption that an appropriate background check in this regard i.e. KYC etc. would have been done by the customs authorities. There is nothing on record to show that the appellant had knowledge that the goods mentioned in the shipping bills did not reflect the truth of the consignment sought to be exported. In the absence of such knowledge, there cannot be any mens rea attributed to the appellant or its proprietor. The revocation of the appellant’s CHA license is unjustified and is accordingly, set aside - the forfeiture of the security amount and the imposed penalty of ₹ 1 lakh also is set aside - appeal allowed - decided in favor of appellant-CHA.
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2017 (3) TMI 1493
Monetary limits for filing appeal - appeals filed by the department in the year 2012 having monitory limits of below 15 / 20 lakhs - Held that: - appeal maintainable as within the monetary limits - once the appeals are disposed off in view of the above circumstances, based upon such circulars / instructions it shall not preclude such Commissioner of customs from filing any appeal, application, revision or reference in any other case involving the same or similar issues or questions of law - application allowed.
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2017 (3) TMI 1492
Benefit of N/N. 21/2002 dated 1/3/2002 - snap fasteners - According to the petitioners, they have been regularly importing snap buttons from the year 2002/2003 onwards, which would come squarely under Sl.No.140 and the duty was totally exempted, without any conditions attached to it - Revenue's claim that snap fasteners are covered under heading No.96061010, and therefore the goods are eligible for exemption as they are misdeclared - The Department therefore took up a contention that the snap fasteners which are imported by the petitioners under the respective bills of entry can no longer be assessed under Sl.No.140, but assessment can be made only under Sl.No.167. It is submitted that notification bearing No.12/2012 dated 17/3/2012 was published superseding notification No.21/2002 by which the items had been renumbered. The original Sl.No.140 has been renumbered as Sl.No.232 and Sl.No.167 has become Sl.No.282. Held that: - It is true that the entry buttons has not been taken away from Sl.No.232. But it is relevant to note that item 282 relates to fasteners, including buttons and snap fasteners. Apparently, there is some difference as far as buttons are concerned compared to that of fasteners. In Sl.No.232, buttons alone has been mentioned whereas in Sl.No.282, the word used is "fasteners" and it is qualified by the words "including buttons and snap fasteners, zip fasteners, including zippers in roll, sliders/pullers and end-stoppers." In other words, if it is merely buttons, it comes under Sl.No.232 and with respect to buttons which can be used as fasteners, it will come under Sl.No.282. There is a difference between both the commodities and it is for the various customs authorities to verify the same and arrive at a conclusion. Hence, I do not think that this Court will be justified in arriving at a conclusion as to whether the particular commodity was either "button" coming under Sl.No.232 or "fasteners"/snap fasteners" coming under Sl.No.282 The petitioners are permitted to prefer an appeal - goods to be released on furnishing of bank guarantee - petition allowed - decided partly in favor of petitioner.
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PMLA
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2017 (3) TMI 1483
Limitation for grant of bail under Section 45(1) of PML Act - Held that:- The fact remains that whilst there was an earlier raid in the year 2008 and Lokayukta is awaiting approval from the Government to prosecute the petitioner, the current raid by the Income Tax has taken place. The explanation with regard to legitimacy of ownership of properties listed in the complaint are all subject matters of previous raid in the year 2008 and investigation thereon. Thus, prima facie , it appears that petitioner after a raid in the year 2008, has again indulged in the offences alleged against him in the FIR registered by the CBI on 03.12.2016. There is no order passed by any competent Court holding that the offences alleged against the petitioner, which are scheduled offences are not made out. In the light of all discussions, two indubitable determinants emerge. Firstly, that even before he was cleared of allegation of acquisition of assets disproportionate to his known source of income of 1 02.69% during the check period 1.2.1985 to 18.12.1988, petitioner has been alleged of converting demonetized currency of ₹ 6,12,50,000/- out of which possession of ₹ 27 Lakhs has been admitted in the petition itself. Secondly, that the explanation to the possession of ₹ 27 Lakhs is not satisfactory. In the circumstances, petitioner’s case does not merit recording a finding of satisfaction by this Court to the effect that there are reasonable grounds for believing that the petitioner is not guilty of the offences alleged against him and that he is not likely to commit any offence while on bail. Grant of bail in this case is undebatably contingent upon this Court recording it’s satisfaction as required under Section 45(ii) of the PML Act. In view of the finding that the petitioner’s case does not merit recording such satisfaction, the said statutory requirement remains unfulfilled. Resultantly, this petition fails and is accordingly dismissed.
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Service Tax
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2017 (3) TMI 1512
Refund claim - rejection on the ground that the goods have been exported and drawback is allowed on the export of goods - Held that: - the services which were used by the appellants for export of the goods does not form part of the drawback claim, therefore, the appellants are entitled for refund of the service tax paid on the said specified services. The refund claims cannot be denied on this account - refund allowed. Refund claim rejected on fumigation service as the appellants have not arranged the copy of the written agreement for availing those services - Held that: - in some of the cases, the refund claims were filed on account of fumigation services availed by the appellants and the copy of the written agreement have not been provided to the adjudicating authority. Therefore, the appellants are required to provide a copy of the agreement for such specified services. To examine the issue, the matter is remanded back to the adjudicating authority to consider written agreement availed by the appellants - matter on remand. With regard to the business auxiliary services, the refund claim was rejected on the ground that the exporter has not provided agreement or contract or any other documents requiring the commission agent located outside India has provided the service to the exporter in relation to the sale of goods - Held that: - the authorities below have not understood the true spirit of the notification. In fact, the notification specifies that any other documents which means if the appellant provides the copy of the invoice, for the commission paid, the same will serve the condition of the notification. Therefore, if the invoice of the commission agent is on record, in that circumstance, the appellants have complied with condition of the notification and the appellant is entitled for availing the refund - refund allowed. With regard to the services of CHA, the refund has been denied on the ground that the same appears to have been outsourced by the service provider as person who has issued the invoice is not the one who has provided the service - Held that: - the service provider has mentioned the shipping bill number in the invoice as the service provider has been recognized as service provider and has paid service tax on the service, in that circumstance, the appellants are entitled for refund of services tax paid on CHA service - refund allowed. Denial of Refund claims on GTA service - denial on the ground that the appellants were required to discharge service tax liability and to produce the copy of the GR challan - Held that: - the appellants have produced the copy of the invoices of the transporter who has transported the goods and paid service tax thereon. The proof of payment of service tax by the appellant does not arise as invoices have been issued by the transporter which indicate the payment of service tax, therefore, the invoice and lorry receipt is sufficient for claim of refund - refund allowed. Denial of Refund for the services namely, terminal handling charges, documentation charges, bill of lading charges - denial on the ground that the services received by the appellant, namely, terminal handling charges, documentation charges, bill of lading charges are the services in the nature of logistics services, therefore, they are covered under the business support service and are not entitled for availment of the benefit of N/N. 41/2007-ST as business support services are not eligible for refund claim - Held that: - the service tax paid by the service provider on the services availed by the appellants are at port, therefore, all the services are covered under port services. Therefore, the appellants are entitled for refund claim - refund allowed. Appeal allowed in part and part matter on remand.
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2017 (3) TMI 1511
Refund claim - denial on the ground that the appellants are claiming drawback - time limitation - denial also on the ground that the Courier Service and CHA are Business Support Services - Held that: - The drawback claim has been calculated on the basis of the inputs used for manufacturing of the export goods but does not include the services covered under N/N. 41/2007. Therefore, claiming drawback by the appellants does not bar for claiming refund of Service Tax paid on the services covered under N/N. 41/2007 for export of the goods. On the issue of time barred, refund claim has been filed by the appellant on 11.05.2009 for the period September, 2008 which is squarely covered by the decision of this Tribunal in the case of Raymond Ltd. Vs. CCE, Mumbai-III [2014 (1) TMI 1508 - CESTAT MUMBAI], where it was held that The said Notification was amended vide N/N. 17/2009 dated 07/07/2009 so as to allow filing of the refund claim within a period of one year from the date of export of the goods - refund claim filed by the appellant is within time. With regard to denial of Cenvat Credit for CHA Services and Courier Service, the said services has been availed by the appellant for export of goods and Service Tax is paid thereon which has not been disputed by the Revenue - the appellant is entitle for refund claim of the same. Appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1510
Penalty u/s 78 - Option of payment of reduced 25% penalty - Whether penalty imposed u/s 78 of the FA, 1994 can be reduced to 25% by invoking the provisions of first proviso to Section 78, when the assessee has not paid 25% of the penalty amount within 30 days of the order as required under the second proviso to Section 78 ibid - Held that: - Since the amount of duty was already paid even before issuance of SCN, we find that direction to deposit 25% of the penalty amount in terms of the second proviso to Section 78 is fair, reasonable and meets the ends of justice - in an identical situation the Hon'ble Punjab & Haryana High Court, in the case of COMMISSIONER OF CENTRAL EXCISE, LUDHIANA Versus M/s CITY CABLES [2011 (11) TMI 65 - PUNJAB AND HARYANA HIGH COURT] where on similar issue, benefit was extended - Respectfully following the above judgment of Hon'ble Punjab & Haryana High Court, which is the jurisdictional High Court, the amount of penalty is reduced to 25% - appeal allowed - decided in favor of assessee.
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2017 (3) TMI 1509
Refund claim - debit note/expense voucher - Whether the refund can be sanctioned on the basis of debit note submitted by the appellants? - Held that: - In the CBEC clarification dt. 11.12.2008 (supra) issued to streamline procedures for such refunds, it was clarified that Invoices/Challans/Bills issued by the supplier of taxable services in conformity with Rule 4A of Service Tax Rules, 1994 are reasonable evidences - reliance placed in the case of M/s Shivam Exports & Others Vs. CCE, Jaipur [2016 (2) TMI 259 - CESTAT NEW DELHI], where it was held that so long as the documents (debit notes) reveal the essential details like registration no, service provided, service recipient, value of taxable service, refund cannot be rejected (merely because the documents are debit notes). Whether refund of Terminal Handling charges paid by the appellants in terms of N/N. 41/2007-ST prior to 07.07.2009 can be allowed? - While the Commissioner acknowledges in his order that service of Terminal Handling are provided for export of goods at the port, he has rejected the refund stating that the same was not specifically included in the list of eligible services - Held that: - this particular issue has been decided by this Tribunal in their favour in their own case in Nahar Fibres Vs. CCE, Chandigarh [2013 (12) TMI 330 - CESTAT NEW DELHI], where By reference to the exemption provided at Sl. No. 16 of the table in N/N. 17/2009-ST, the adjudicating authority inferred; and in the considered view of this Tribunal erroneously, that terminal handling charges when provided within the port do not fall under port services vide the N/N. 41/2007-ST. This conclusion of the adjudicating authority which found resonance in the order of the Commissioner (Appeals), is in my considered view erroneous and proceeds on a fallacious interpretation of the provisions of N/N. 41/2007-ST - refund allowed. Appeal allowed - decided in favor of assessee.
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2017 (3) TMI 1508
Penalty u/s 77 and 78 of FA - appellant's claim that deduction for cost of materials supplied, which is included in the gross amount have not been given, resulted into wrong demand - Held that: - the appellant is entitled to deduction of the material component from the gross amount - as the appellant had paid the taxes and it appears have paid rather more amount then the amount actually payable as per the calculation produced before this Tribunal, which is categorical fact on record. Accordingly, the penalty u/s 78 set aside. However the penalty u/s 77 for ₹ 5000/- is retained - also, upon reducing the material component the turnover for the financial year remains ₹ 7,34,425/- and for this year for the first time the turnover is exceeding four lakhs, they will be entitled to the threshold exemption. Accordingly, the benefit of threshold exemption for the financial year 2005-06 is allowable under N/N. 6 of 2005-ST - matter on remand to the Adjudicating Authority for the limited purpose of recalculating the tax payable, after allowing the threshold exemption and the set off for material component - appeal allowed in part by way of remand.
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2017 (3) TMI 1507
Material, used in repair, transferred to principal - levy of tax - job-work - Held that: - the ld. Commissioner (Appeals) has rightly held that there is transfer of materials in the repair and maintenance done by the respondent-assessee and accordingly no service tax is eligible on the same - appeal dismissed - decided against Revenue.
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Central Excise
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2017 (3) TMI 1506
Personal penalties on co-noticees - job-work - shortage of stock - clandestine removal - Held that: - report submitted in reply to SCN was rejected on flimsy ground - the report furnished by the field formation on the correctness of the statement of the Appellant reconciling the difference in the physical stock and book balance carries due weight in adjudicating the case. Since a copy of the same has now been handed over to the learned Advocate for the Appellant, therefore, it is prudent to remand the matter to the Adjudicating Authority for deciding the issue afresh - appeal allowed by way of remand.
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2017 (3) TMI 1505
Classification of goods - blanks for components out of CR/HR sheets/coils of iron and steel - whether the Blanks manufactured by the appellant are classifiable under Chapter 72 or CETH 8708/8714 or not? - Held that: - Blanks are metal sheets cut to the specification for use in further manufacture of products. The Revenue has assumed the character of products only after manufacturing process are carried out but in case these blanks are not useable or cannot be said as motor vehicle parts. They would become only blanks/motor vehicle part after various process carried out, therefore, it cannot be said that these blanks are classifiable under CETH 8708/8714 - Same view has been taken by this Tribunal in the case of Colts Auto Pvt. Ltd. Vs. CCE, New Delhi [1998 (9) TMI 229 - CEGAT, NEW DELHI] - As the Blanks in question cannot be used as part of the motor vehicle part and they are required to be further processing which has been done by the buyers of the goods. In that circumstances, the appellant has correctly classified the said goods under Chapter 72 of the CETA. Extended period of limitation - Held that: - the appellant has clearly stated in their ER-1 returns indicating the clearance of Blanks after classifying under Chapter 72 of CETA that fact has been admitted by the Revenue therefore, extended period of limitation is not invokable. Appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1504
CENVAT credit - non-existent dealer - fake invoices - denial on the ground that the dealer M/s S.K. Garg & Sons who has supplied the goods to the respondent is non existence and he has merely issued invoice not the goods - Held that: - no investigation conducted at the end of manufacturer/supplier or the transporter to reveal the truth whether manufacturer/supplier has supplied the goods in question to M/s S.K. Garg & Sons or the transporter has transported the goods to the premises of the respondents which is vital evidence to reveal the truth - M/s S.K. Garg & Sons was registered dealer during the impugned period and all the ER-1 returns were filed by M/s S.K. Garg & Sons which were accepted by the department - in the absence of any corroborative evidence to show that the respondents have not received the goods, it cannot be alleged against the respondents that they have received the invoices and not the goods merely on the ground that there was not storage facility specifically when the landlord made a statement that the godown was let out to the dealer - the cenvat credit cannot be denied to the respondents - appeal dismissed - decided against Revenue.
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2017 (3) TMI 1503
Whether the manufacturer had removed excisable goods under bond-ARE-1 on 31/03/2005, which were finally exported, after delay, on 10/03/2006 and had filed the evidence of export before the Assessing Authority? Whether issue of SCN dated 30/03/2006, for levy of duty and penalty is just and proper? Held that: - there is no dispute on the fact of export - further, there was no revenue implication, since the goods meant for export have been finally exported. Thus, the situation became revenue neutral and no SCN was required to be issued. As on the date of the issue of SCN, there was no case of duty being unpaid or short paid and/or the export having not taken place. The Adjudicating Authority should have allowed further time to file additional evidence, if required, in the shape of Shipping Bill & Bill of Lading - further the appellant have brought on record, Banking Realization Certificate, with respect to the export of goods under the bond - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1502
CENVAT credit - Sodium Saccharine - Acrylamide - Titanium Dioxide - N. Butanol - Dicyandiamide - denial on the ground that the said chemicals/inputs are not inputs for manufacturing of their final product and have not been transported to their factory - Held that: - the appellant has filed regular declaration/undertaking with regard to usage of these inputs and manufacturing of their final product as back as 1995-96 to the inputs in question has been used by the assessee in manufacturing of disproportionate resins/camphor and usage - As these facts have neither been examined and nor been contravened by the adjudicating authority, therefore, it cannot be held that these chemicals are not inputs for manufacturing of their final products. Therefore on this ground, the cenvat credit cannot be denied. The investigation for transportation of goods has been conducted in respect to the only one transporter M/s ABG Carrier in 2007 whereas, the goods have been transported during the period 2002-2003 to 2003-2004. It is only presumption that the goods have not transported by transporter. In fact, the invoices have mentioned the lorry numbers and no investigation has been conducted with the owner's of lorry or drivers of the said lorry. There are three others transporters, who have transported the goods, these transporters were not examined, therefore, in the absence of any positive evidence that cenvat credit cannot be denied to the asssessee. Demand set aside - appeal allowed - decided in favor of assessee.
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2017 (3) TMI 1501
Reversal of credit - the respondent sold old and used machinery without payment of duty, therefore, it was pointed out that the respondent is required to reverse cenvat credit on these capital goods in terms of Rule 3(5) of the CCR, 2004 - Held that: - as per provisions of Rule 3(5) of the CCR, 2004, the asseessee required to reverse cenvat credit availed on the capital goods if they are cleared as such - Admittedly, in this case, the respondent has not cleared capital goods as such. Moreover, the capital goods have been acquired prior to 1994. This fact has not been disputed by the Revenue with any cogent evidence - provisions of Rule 3(5) of CCR, 2004 are not applicable to the facts of this case, assessee were not required to reverse cenvat credit at all as they have not taken cenvat credit. Appeal dismissed - decided against Revenue.
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2017 (3) TMI 1500
Validity of SCN - demand not quantified in SCN - Benefit of SSI under N/N. 1/93-CE dated 28.02.1993 - Revenue's case is that since the final products were exempted and therefore untrimmed goods, which were intermediate goods manufactured for making final products, should attract duty - Held that: - the SCN dated 26.06.1997 has not quantified the demand raised. It has mentioned that the quantification would be done at the stage of adjudication. As the demand was not quantified through the SCN such SCN is not sustainable. There has been total failure of framing of charges. Therefore, the said SCN dated 26.06.1997 is not sustainable - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1499
Classification of goods - Mincing Machine for Meat - whether classified under Tariff Item No.73239100 covering “Kitchen or other household articles and parts thereof” as mentioned by assessee or under Tariff Item No.84385000 which covers “Machinery for the Industrial preparation or manufacture of food or drink” as claimed by Revenue? - benefit of N/N. 10/2006 dated 01/03/2006 - ld. Commissioner (Appeals) has passed a reasoned order in view of the fact that the goods supplied by respondents were small kitchen gadget of specific design used in the kitchen of Indian Army - Held that: - the ground raised by Revenue are not sustainable because the Explanatory Notes, on which Revenue placed reliance, have no force of law and they are only for guidance whereas the finding of ld. Commissioner (Appeals) is on the basis of CETA, 1985 enacted by Indian Parliament. Therefore, the ground raised by Revenue are not sustainable - appeal of Revenue dismissed - goods correctly classified under Tariff Item No.73239100 covering “Kitchen or other household articles and parts thereof” - decided against Revenue.
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2017 (3) TMI 1498
Penalties - Benefit of doubt - clandestine removal - duty paying documents - Held that: - The Revenue has not taken pain to investigate Dharamkanda owners or transporters to establish whether the goods have been weighed or transported. In the absence of any cogent evidence, particularly the buyers of the goods denied the receipt of the goods, the demand against the respondent namely, M/s.Vee Kay Concast Pvt.Ltd. is not sustainable, therefore, benefit doubt goes in favor of the respondents - the charge of clandestine manufacture and removal of the goods is not sustainable in the eyes of law - penalty set aside - appeal dismissed - decided against Revenue.
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2017 (3) TMI 1497
CENVAT credit - denial on the ground that appellant during the period 2004 to 2006 had availed Cenvat Credit on the Capital goods as well as benefit of depreciation u/s 32 of the Income Tax Act, 1961 - Held that: - the appellant has though initially claimed depreciation under Income Tax Act as well as benefit of Cenvat Credit on the capital goods for the respective years, but later surrendered the benefit of Income Tax in the year 2006-07. Hence, it cannot be said that they have availed both the benefits - credit allowed - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1496
Clandestine removal - whether the ld. Commissioner (Appeals) have rightly reduced the demand, confirmed on account of clandestine removal and also justified in reducing the penalty imposed on the respondent partner, Dinesh Kumar Johary? - Held that: - no case of deliberate default of the provisions of law is made out to the effect that the respondents were knowingly that the branded goods are liable to tax and clearing, the same without payment of duty, so as to evade payment of duty. Thus, no case of clearance with intent to evade duty is made out against the respondents. Further, under the facts and circumstances, the ld. Commissioner (Appeals) have erred in reducing the demand of duty and in view of the categorical admission by both the partners, wherein the proximate quantity of clearance have also been stated. I hold that ld. Commissioner (Appeals) have erred in reducing the duty demand and accordingly, I restore the demand of duty to ₹ 3,11,100/-. No case of deliberate defiance of the provisions of the Act and the Rules and/or suppression of facts is made out against the respondent firm and the partner, I set aside the penalties imposed on them. Appeal dismissed - decided partly in favor of appellant.
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2017 (3) TMI 1495
SSI exemption - brand name - denial on the ground that assessee had been using an ineligible brand on the products cleared by them and the amount due was computed as the duty short-paid by ineligible availment of the exemption - Held that: - it is the goods that must be affixed with the ineligible brand name for the exclusion to take effect. There is no allegation that this is so - the exemption notification is not intended to govern the use or restrict eligibility arising from use of the ineligible brand name on any documentation. The agreement confers exclusive rights to the appellant-assessee to use the ‘trademark’ and, from this, it would appear that the impugned mark is no longer that of the overseas collaborator for the purpose of the specified territory but is that of the appellant-assessee. Appeal allowed - benefit allowed - decided in favor of assessee.
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CST, VAT & Sales Tax
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2017 (3) TMI 1491
Input tax Credit - duty paying documents - Works contract - whether the awarder of the contract, namely, Karnataka Water Supply Board is ‘Government’, and therefore, the Running Bills prepared by the Board can be construed as “Tax Invoices” within the meaning of Rule 27(2) Proviso of Karnataka Value Added Tax Rules, 2005? Held that: - The purpose of the Proviso to Rule 27(2) of the KVAT Rules giving the status of “Tax Invoices or Bill of Sale” even to the “Running Account Bills” to the awarders of the work contract to be executed by contractors by the Government or its departments is obviously to allow such contractors to take input tax credit on the basis of such tax invoices. Since running bills are prepared during the currency of the execution of contract itself since the final bill is not made at that point of time. There is no reason to hold that the Karnataka Water Board, in question, is not a Department of the Government or so as to fall outside the ambit and scope of the said Proviso to Rule 27(2) of the KVAT Rules - revision dismissed - decided against Revenue
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2017 (3) TMI 1490
Refund claim - unjust enrichment - on the aspect of applicability of Section-47 of the KVAT Act and its consequential effect, the matter has been remanded by the Tribunal to the Jurisdictional Local VAT Officer - Held that: - since the matter is at large to be examined by the Jurisdictional Local Vat Officer in accordance with law, the petition may be permitted to be withdrawn - all the rights and contentions of both parties including the question of applicability of Section-47 of KVAT Act shall remain open to be considered by the Jurisdictional Local VAT Officer - petition quashed.
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2017 (3) TMI 1489
Validity of assessment order - natural justice - no Notice of hearing has ever been given and ex-parte order has been passed - Held that: - Notice has been served upon the guarantors of the petitioners. Such type of service of Notice is no Notice in the eye of law, especially when tax liability is to be imposed upon the petitioners. The minimum requirement is that Notice of hearing should be served upon the Assessee before passing such order against the assessee - This minimum requirement has not been fulfilled in this case as a result of which work load of this court has unnecessarily been increased and therefore, such type of matters should be remanded - appeal allowed by way of remand.
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2017 (3) TMI 1488
Input tax credit - denial on the ground that the invoices could not be produced - the tax invoices were lost. The appellant failed before the First Appellate Authority and the Tribunal as he could not get duplicate copy of tax invoices and statutory VAT-C-4 by that time. Subsequently the appellant obtained duplicate copy from the Selling Dealer and also VAT-C-4 in original - Held that: - the appellant has produced the duplicate tax invoices and the statutory form VAT-C-4, along with the present appeal, in our view the appeal deserves to be accepted. The impugned orders passed by the Authorities are set aside. The matter is remitted back to the Assessing Authority for fresh determination of tax liability of the appellant after the appellant furnishes duplicate tax invoices and original statutory form VAT-C-4 - benefit of input tax credit allowed - appeal allowed by way of remand.
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2017 (3) TMI 1487
Compounding of offences - KVAT Act - For compounding an offence, which of the compounding fees should be paid by the assessee: the one prevailing when the evasion took place or the one prevailing at the time of actual compounding? Held that: - If it is a continuing offence, the penalty applicable at the terminus is the penalty the erring assessee shall be mulcted with - If it is non-recurring (for want of a better expression), the liability stipulated when the offence has been committed alone shall apply. We shall, in a while, examine whether either of these contingencies applies to the case on hand. Compounding is in relation to an offence; what was imposed, however, is fee. No quarrel can we have with the proposition that imposing fee is a taxing aspect of the State under Article 265 of the Constitution of India. Equally indisputable is that fee can be levied even retrospectively as it falls beyond the mischief of Article 20(1) of the Constitution, which concerns punitive sanctions: punishment and penalty, neither of which is fee. Viewed alternatively, we may, before parting with the matter, observe that the appellant has not made out any positive case that the nomenclature notwithstanding, what is being collected is penalty rather than fee. The compounding fee as prevailing at the time of the assessee’s deciding to pay it shall alone apply - appeal dismissed - decided against appellant.
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2017 (3) TMI 1486
Interest on delayed payment - Revenue's case is that once it is established that the amount of tax as was due in terms of the provisions of the Act and the notification issued thereunder had not been paid along with the returns, there is nothing wrong in raising the demand of interest for its delayed payment - Held that: - an assessee cannot foresee the additional demand of tax on account of reassessment or in revision and the interest would become payable only from the date, the demand is raised and not from the date of filing of return - demand of interest set aside - petition allowed - decided in favor of petitioner.
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Indian Laws
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2017 (3) TMI 1485
Entitlement to consider any value other than the transfer consideration paid by the appellant or the amount as has been specifically directed by the Central Electricity Regulatory Commission in its impugned Judgment to M/s. National Thermal Power Corporation Limited for the purpose of depreciation - Held that:- The Appellate Tribunal has merely stated that the treatment for depreciation under the Income Tax Act and for determination of tariff under the Electricity Act are different. However, such point which has been decided by the Tribunal, in our considered view, cannot come within the purview of accounting principle and, therefore, it has been noted that the Judgments which have been relied upon before us substantially support the claim of the appellant – herein and accordingly, we set aside the order so passed by the Tribunal. As a consequence thereof, whatever consequential orders are necessary to be passed in the matter, the concerned Authorities shall take necessary steps in the matter.
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2017 (3) TMI 1484
Entitlement to get the lease deed renewed - land was taken for Oil Mill but huge commercial construction was done - Held that:- Municipality has no authority to grant a lease for a period exceeding 10 years without prior permission of the State Government. In the present case, the State Government had only granted permission to lease the land till the year 2012. Therefore, the appellant has no inherent right to claim that fresh lease be granted in its favour. The original lease was granted for running an oil mill and as on date admittedly there is no oil mill situated on the land. The leased property is a public property leased out at a very meagre rent. It cannot be utilised for a purpose other than the purpose for which it was leased out. True it is that the appellant may have been permitted to raise construction on the leased land but it is obvious that the construction to be raised should have connection with the original business of the company i.e. running an oil mill. The appellant has raised a huge commercial complex earning crores of rupees but is paying only a few hundred rupees to the Municipality. The appellant is not entitled to claim that lease deed must be renewed in his favour. The High Court of Gujarat was perfectly justified in holding that the appellant cannot claim that he is entitled to renewal of the lease deed as a matter of right. The finding of the High Court that the appellant is earning huge profits by way of rent is not denied. It has also been stated that the land is required by the Municipality for educational purposes.
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