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TMI Tax Updates - e-Newsletter April 22, 2015 Case Laws in this Newsletter: Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax Indian Laws TMI SMS Service tax burden can be transferred by contractual arrangement to the third party -But assessee cannot escape from liability once not paid Unpaid service tax - Disallowance u/s 43B - S. 43B does not contemplate liability to pay service tax before actual receipt of the funds - HC Highlights / Catch Notes Income Tax: Disallowance of unpaid service tax u/s 43B - Section 43B does not contemplate liability to pay the service tax before actual receipt of the funds in the account of the assesee - HC Visit to Get Source Income Tax: Bid-loss - Claim of business loss - assessee was explaining the principle followed by them, which results in bid loss. What the AO wanted was to give evidence that the assessee actually incurred the said loss in following the said principle, which was not furnished - Order of ITAT allowing the claim of loss is not correct - HC Visit to Get Source Income Tax: Deduction u/s 80IA - When the assessee exercises the option, the only losses of the years beginning from initial assessment year alone are to be brought forward and no losses of earlier years which were already set off against the income of the assessee. - HC Visit to Get Source Income Tax: Addition of unexplained income under section 69A - The shares were held in the name of the partners on behalf the assessee firm and hence, naturally, the name of assessee firm would not find place in the transactions. Under these set of facts, the letters issued by the Stock Exchange could not be relied upon by the tax authorities - AT Visit to Get Source Income Tax: Deduction u/s 80IC - there is no denial of deduction u/s. 80-IC in case of manufacturing activities in the nature of job works, work contract etc - AT Visit to Get Source Income Tax: Interest u/s 234B - the interest u/s 234B of the Act is not leviable in the case of the assessee being nonresident when its entire income is subject to TDS u/s 195 of the Act. - AT Visit to Get Source Income Tax: Taxability of advertisement revenue & subscription revenue - Tax Treaty between India and USA - Appellant has a PE in India, both Advertisement and Subscription revenues constitute business income of the Appellant in India and that 10% of the Advertisement and Subscription revenues be treated as taxable income of the appellant in India. - AT Visit to Get Source Income Tax: Charitable activities in the nature of educational activities - bjects of the assessee-society are to promote research and development of higher education in professional management on scientific lines - though not provided formal eduction, exemption allowed - AT Visit to Get Source Income Tax: Dis-allowance of various expenses - self-made vouchers - some deficiencies in such self made vouchers were pointed out by the Assessing Officer by stating that the same did not contain complete details of the nature of work done, the quantum of work done, etc - disallowance of 10% of the total expenses was on the higher side - dis-allowance restricted - AT Visit to Get Source Customs: Detention of goods - Perishable goods - misdeclaration of origin of goods - goods can be permitted a provisional clearance on the petitioner executing a bond for the assessable value, paying duty on the consignment in terms of the SAFTA notification, and paying 35% of the differential duty (on tariff rate) in respect of the consignment that has been imported - HC Visit to Get Source Service Tax: Transfer of burden to discharge of service tax liability to another person - Undoubtedly, the service tax burden can be transferred by contractual arrangement to the other party. But, on account of such contractual arrangement, the assessee cannot ask the Revenue to recover the tax dues from a third party or wait for discharge of the liability by the assessee till it has recovered the amount from its contractors. - HC Visit to Get Source Service Tax: CENVAT Credit - Housekeeping and Landscaping Services - where an employer spends money to maintain their factory premises in an eco-friendly manner, the tax paid on such services would form part of the cost of the final products and the same would fall within the ambit of "input services" and, therefore, the assessee is entitled to claim the benefit - HC Visit to Get Source Service Tax: Development of software and system analysis for internet based trading services - services rendered by the appellant/assesssee during the period in question will fall under the Consulting Engineers Services with exemption from the payment of service tax liability - AT Visit to Get Source Central Excise: Denial of CENVAT Credit - SSI Exemption - delayed reversal of cenvat credit - in respect of inputs lying in stock or used in any finished excisable goods lying in stock on the date when option to avail exemption of duty was exercised - benefit of exemption Notification cannot be denied to the appellant which was otherwise available - SC Visit to Get Source Central Excise: CENVAT credit on oxygen and nitrogen gas - integrated steel plant - Though there are three separate units with separate registrations, the entire raw material is being converted into final dutiable product in continuous, inter connected and integrated process - credit allowed - HC Visit to Get Source Central Excise: Whether the parts of the boilers of Biomass Energy Producing Systems being manufactured by the respondent and which are not consumed within their factory but are used in the other factory would be eligible for exemption under notification no.6/2002-CE - Held No - AT Visit to Get Source Central Excise: Clandestine clearance of goods - statement made by person to be considered voluntary and true even if retracted when circumstances not showing any use of threat or coercion and also when corroborated by statements of other persons. - AT Visit to Get Source Articles LEGGINGS – TIGHTS? Doctrine of Unjust Enrichment will be applicable in case of refund of duty paid on Capital goods which are captively consumed Notifications DGFT 03 /2015-2020 - dated 20-4-2015 - FTP Export policy of sugar Circulars / Instructions / Orders DGFT - 01/2015 - dated 20-4-2015 Prescribed visiting hours for non officials/ members of trade for meetings with officials at DGFT Headquarters. News Global Exhibition on Services to Serve as a Platform to Enhance Strategic Cooperation and Develop Synergies Between Players of Services Sector Income Tax Department Awarded the Prime Minister’s Award for Excellence in Public Administration for ‘Easy Tax Compliance Through Quality Service’ RBI Reference Rate for US $ Government Decides to Fix Interest Rates at 8.7% for General Provident Fund(GPF) and other Similar Funds Including Special Deposit Scheme, 1975(SDS,1975) for Non-Government Provident, Superannuation and Gratuity Funds for the Financial Year 2015-16 Auction for Sale (Re-Issue) of Government Stocks Case Laws: Income Tax 2015 (4) TMI 707 Dis-allowance of interest paid to partners u/s 24(b) - Allowed the same in immediately preceding year - Held that:- Although the learned DR has strongly supported the impugned order of the learned CIT(Appeals) confirming the disallowance made by the AO on account of assessee’s claim for deduction u/s 24(b) for interest paid on partners’ capital account by relying on the various reasons given in the impugned order, the learned counsel for the assessee has filed a written submission to meet satisfactorily each and every point raised by the learned CIT(Appeals) while confirming the disallowance made by the AO on account of assessee’s claim for deduction u/s 24(b). A similar issue involved in the immediately preceding year i.e. assessment year 2006-07 was decided by the learned CIT(Appeals) in favour of the assessee in the similar facts and circumstances and the said decision of learned CIT(Appeals)d giving relief to the assessee has been upheld by the Tribunal vide its order dated 20th April, 2010 [2010 (4) TMI 1027 - ITAT MUMBAI]. As held by the Tribunal in the said order, the entire interest paid on the partners’ capital was related to the premises which were let out by the assessee and the same, therefore, was allowable as deduction u/s 24(b) while computing income of the assessee under the head “Income from house property”. Respectfully following the said decision of the Tribunal in assessee’s own case for assessment year 2006-07, we direct the AO to allow the claim of the assessee for deduction on account of interest paid on partners’ capital u/s 24(b). - Decided in favour of assessee. 2015 (4) TMI 706 Penalty for concealment of income / Furnishing any inaccurate particulars - Bonafide and inadvertent error - Assessee accepted the correct position and paid tax with interest - Held that:- In Price Waterhouse Coopers Pvt. Ltd. [2012 (9) TMI 775 - SUPREME COURT], the Supreme Court deleted the penalty and has accepted that human errors do happen in spite of calibre, expertise and due care. Mistakes, when explained and shown to be bona fide, do not justify levy of penalty. On the question relating to addition of ₹ 5,56,254/-, the tribunal has observed that the assessee had received the said amount as dividend from a mutual fund. As per Section 94(7) of the Income Tax Act, 1961, the assessee was required to reduce the dividend amount from the cost price of the units of mutual fund. This again, the tribunal has held, that was a bona fide mistake which was corrected/rectified by filing a revised computation of income. Full details and particulars had been submitted by the assessee to the Assessing Officer. We do not see any reason to interfere. - Decided against the revenue. 2015 (4) TMI 684 Disallowance of unpaid service tax under section 43B - Tribunal deleted addition - whether liability to pay service tax had not arisen without appreciating the fact that the assessee has shown the said amount as a liability in its Balance Sheet? - Held that:- Section 43B does not contemplate liability to pay the service tax before actual receipt of the funds in the account of the assesee. In our view, liability to pay service tax into the treasury will arise only upon the assessee receiving the funds and not otherwise. Accordingly, when services are rendered, the liability to pay the service tax in respect of the consideration payable will arise only upon the receipt of such consideration and not otherwise. In the facts and circumstances of the case, we are of the view that no substantial question of law arises. Accordingly, the Appeal has no merit and the same is dismissed. - Decided against revenue. 2015 (4) TMI 683 Stay of recovery - Held that:- The learned counsel for the petitioner has placed before us several orders passed by this court, whereby this Court has extended the stay initially granted by the Tribunal till the disposal of the appeal by the Tribunal in exercise of its jurisdiction under Article 226 of the Constitution. In fact, it is settled law that there is no bar for grant of such a relief if the Court is of the opinion that the circumstances and the ends of justice so warrant. This has also been stated clearly in Maruti Suzuki (2014 (2) TMI 1037 - DELHI HIGH COURT). We feel that since the petitioner had already been granted conditional stay by the Tribunal in respect of the said appeal and that the Tribunal is in the midst of hearing the appeal, it would be in the interest of justice that the stay order granted by the Tribunal is continued till the disposal of the appeal by the Tribunal. It is ordered accordingly. 2015 (4) TMI 682 Entitlement to deduction under section 80IB(10) - Review u/s 263 - Held that:- The contract between the two parties was self explanatory and the interpretation placed by the Assessee on clause 7 and claiming deduction under section 80IB(10) is in order. The interpretation of one of the Assessing Officer could not have substituted the parties interpretation of the relevant clause 7 of the AOP agreement with his own reasoning and that too to the detriment of the Assessee. The facts in the present case also reveal that the conclusions arrived at by the Tribunal vide order dated 12th October, 2012 are neither perverse nor giving rise to any error of law apparent on the face of the record. The issue cannot be reopened in the manner sought to be done in the present case and section 263 of the Act could not be resorted to for the purpose. The order of the Assessing Officer had obviously merged with the order of the First Appellate Authority. Accordingly, we find that the subject Appeal does not raise any substantial question of law. The Appeal is, therefore, dismissed. - Decided against revenue. 2015 (4) TMI 681 Treatment to lending transactions - Tribunal treated it on par with borrowing transactions in conservation to the provision of Section 92B - Tribunal directing the Assessing Officer to benchmark the interest at prevailing EURIBOR rate instead of rupee loan rate to compute the Arms Length interest on the loan amounting to EURO 20,50,000 advanced by the assessee to its AE - Held that:- The impugned order of the Tribunal inter alia has followed the decisions of the Bombay Bench of the Tribunal in cases of VVF Ltd. v. Dy. CIT [2010 (1) TMI 781 - ITAT, Mumbai] and Dy. CIT v. Tech Mahindra Ltd.” (2011 (6) TMI 140 - ITAT, MUMBAI) to reach the conclusion that ALP in the case of loans advanced to Associate Enterprises would be determined on the basis of rate of interest being charged in the country where the loan is received/consumed. Mr. Suresh Kumar the learned counsel for the revenue informed us that the Revenue has not preferred any appeal against the decision of the Tribunal in VVF Ltd. (supra) and Tech Mahindra Ltd. (supra) on the above issue. No reason has been shown to us as to why the Revenue seeks to take a different view in respect of the impugned order from that taken in VVF Ltd. (supra) and Tech Mahindra Ltd. (supra). The Revenue not having filed any appeal, has in fact accepted the decision of the Tribunal in VVF Ltd. (supra) and Tech Mahindra Ltd. (supra). - Decided against revenue. 2015 (4) TMI 680 Bid-loss - Claim of business loss - Whether the Tribunal was correct in holding that a sum of ₹ 7,20,32,155/- should be allowed as a bid loss since the assessee was following Completed Contract Method of accounting without considering the nature of loss on account of which the Assessing Officer and the Appellate Commissioner had disallowed the claim? - Held that:- All that the assessee did was, filed a written submission on 03.02.2006 stating that as the tickets have been bid at the early stage of the duration of respective chit groups, when there will be high competition, the assessee has been foregoing a higher amount of bid loss. This is due to the principle of the discounted auction flow where one has to forego a higher rate of discount and obtain a specified amount of money rather than at a later date. In other words, the assessee was explaining the principle followed by them, which results in bid loss. What the Assessing Authority wanted was to give evidence that the assessee actually incurred the said loss in following the said principle, which was not furnished. Therefore he disallowed the said bid loss. Therefore, the Tribunal was not justified in setting aside the well considered order passed by the First Appellate Authority. In that view of the matter, the impugned order cannot be sustained. However, if the assessee is able to substantiate the said claim by producing acceptable evidence, in law the assessee would be entitled to the benefit of deduction. - Matter remanded to the Assessing Authority to decide the claim of business loss claimed by the assessee. - Decided in favor of revenue. 2015 (4) TMI 679 Penalty u/s 271(1)(c) - Whether the Appellate Authorities were correct in holding that there was no concealment or furnishing of inaccurate particulars when the original amount declared was ₹ 25,07,933/- to which an additional of ₹ 42,08,079/- was made by relying on the judgment of the Apex Court in Ashok Pai & Dilip Shroff [2007 (5) TMI 199 - SUPREME Court] it is no longer good law? - Held that:- The use of phrases like (a) penalty proceedings are being initiated separately, and (b) penalty proceedings under section 271(1)(c) are initiated separately, do not comply with the meaning of the word "direction" as contemplated even in the amended provisions of law. The direction should be clear and without any ambiguity. A direction by a statutory authority is in the nature of an order requiring positive compliance. When it is left to the option and discretion of the Income-tax Officer whether or not take action, it cannot be described as a direction. It is settled law that in the absence of the existence of these conditions in the assessment order penalty proceedings could not be proceeded with. The proceedings which are initiated contrary to the said legal position are liable to be set aside. Therefore, the appellate Authority was justified in setting aside the order imposing penalty. Accordingly, the substantial question of law is answered in favour of the assessee and against the revenue. 2015 (4) TMI 678 Deduction u/s 80IA - Calculation of the profits from the eligible business - Deduction of losses set off against the profits from other business is to be taken into consideration as held by Tribunal - whether in view of provision of Section 80-IA(5) the profit from the eligible business for the purpose of deduction under Section 80-IB of the Act has to be computed after deduction of notional brought forward losses of eligible business even though they have been allowed to set off against other income in the earlier years as held by Tribunal? - Held that:- The non-obstante clause in sub-section (5) means it over-rides all the provisions of the Act and other provisions are to be ignored. In the absence of non obstante clause, what the judgment of the Madras Court in Velayudhaswamy Spinning Mills P. Ltd. [2010 (3) TMI 860 - Madras High Court] states is the legal position, because of the non obstante clause, the set off amount against other income of the assessee has to be ignored and because of the fiction created in the sub-section notionally, the set losses is to be treated as "losses being carried forward and after deducting the said losses, the profit prior to business is to be calculated. Eligible business were the only source of income, during the previous year relevant to initial assessment year and every subsequent assessment years. When the assessee exercises the option, the only losses of the years beginning from initial assessment year alone are to be brought forward and no losses of earlier years which were already set off against the income of the assessee. Looking forward to a period often years from the initial assessment is contemplated. It does not allow the Revenue to look backward and find out if there is any loss of earlier years and bring forward notionally even though the same were set off against other income of the assessee and the set off against the current income of the eligible business. Once the set off is taken place in earlier year against the other income of the assessee, the Revenue cannot rework the set off amount and bring it notionally - Decided in favour of revenue. 2015 (4) TMI 677 Addition of unexplained income under section 69A of the Income Tax Act, 1961 - Purchase & sale of shares - De-materialised shares - Stock exchange denied any such transaction on exchange platform - Held that:- The foregoing discussions would show that the tax authorities have proceeded to assess the amount of ₹ 1.00 crores on suspicion, conjectures and surmises. Further they have not disproved the various documents furnished by the assessee in support of purchase and sale of shares by conducting specific enquiries with the brokers who had purchased and sold the shares on behalf of the assessee. The strong fact relating to the dematerialization of shares was not disproved by the tax authorities. The fact of purchase of shares was disclosed by the assessee in its return of income filed for AY 2002-03. The source of purchase was the speculation profit arising on sale of certain shares and the said speculation profit was also assessed in AY 2002-03. The assessee has dematerialized the shares through M/s RBK Share Broking Ltd, one of the depository participants of M/s CDSL. Without availability of physical shares, one cannot set them for de-materialisation. These factual aspects have not been disproved by the tax authorities. The shares were sold in the off-market and hence the transaction of sales was not routed through the stock exchange. The shares were held in the name of the partners on behalf the assessee firm and hence, naturally, the name of assessee firm would not find place in the transactions. Under these set of facts, the letters issued by the Stock Exchange could not be relied upon by the tax authorities. The case law relied upon by the Ld CIT(A) were also not found to be supporting the case of the tax authorities. We have also noticed that the assessing officer has assessed the Long term capital gain arising on sale of impugned shares. Under these set of facts, we are of the view that the tax authorities are not justified in suspecting the claim of purchase and sale of shares and also assessing the amount of ₹ 1.00 crore as undisclosed income of the assessee. Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the assessing officer to delete the assessment of ₹ 1.00 crore made in the hands of the assessee. - Decided in favour of assessee. 2015 (4) TMI 676 Revision of assessment order - Deduction u/s 80IC of Income Tax Act,1961 - Deduction already allowed in the immediately preceding assessment year - Sale to related companies at a high margin - Pre-requisite conditions of eligibility of deduction examined in first year itself - Held that:- it is observed that the assessee claimed deduction u/s 80IC for the first time in the immediately preceding assessment year, namely, AY 2005-06 in respect of profit from the manufacturing unit established at Baddi in Himachal Pradesh. The assessment for the AY 2005-06 was taken up by the AO u/s 143(3) and the claim of deduction u/s 80IC was allowed as claimed. A copy of the assessment order for the AY 2005-06 is available on record. This shows that all the pre-requisites for the claim of deduction u/s 80IC were examined by the AO in finalizing the assessment for the earlier year and he got fully satisfied with the eligibility of deduction. The instant year is second year of the claim for deduction u/s 80IC. With the above background in mind, we will take up all the objections raised by the ld. CIT one by one and see if the assessment order can be held to be erroneous and prejudicial to the interest of the Revenue. The first objection of the ld. CIT is that the assessee had not undertaken substantial expansion and, thus, the basic pre-requisite for deduction u/s 80IC was not satisfied.In view of the fact that the pre-requisite conditions can be examined in the first year of the claim, which were duly found to have been fulfilled in the preceding year, we are of the considered opinion that this objection of the ld. CIT that the assessee did not undertake substantial expansion, is bereft of any force. The same is, therefore, dismissed. Objection nos. 3 and 4 of the ld. CIT are that the assessee made sales to its related concerns.As sales to the related companies constituted roughly 80% of the total turnover and there was abnormal profit shown, it was incumbent upon the AO to investigate this aspect of the matter further rather than stopping at the receipt of sales account. In our considered opinion, the ld. CIT was justified in directing the AO to re-examine this aspect of the assessee’s claim for deduction u/s 80IC. We uphold these objections taken by the ld.CIT. Objection no. 7 of the ld. CIT, It is obvious that Kapashera Delhi office was not undertaking any income producing activity and the loss of ₹ 65,326/- was only towards administrative expenses incurred by it, As such, there can be no question of shifting profit from the eligible unit at Baddi to Kapashera Delhi. We, therefore, reject this objection taken by the ld. CIT. The sum and substance of the above discussion is that the order of the ld. CIT is sustainable on objection nos. 3 and 4 and not on the remaining eight. In such a scenario, the entire order cannot be set aside. It goes without saying that if the order passed u/s 263 is sustainable on one of the various objections taken by the ld. CIT and not on others, the order is not vitiated. However, the direction to the AO by the ld. CIT gets restricted to the points on which the order is sustainable. As the impugned order is sustainable in respect of two objections only, we direct the AO to restrict himself only on these issues in the assessment to be finalized u/s 143(3) pursuant to the order u/s 263 of the Act. - Partly allowed in favour of assessee. 2015 (4) TMI 675 Addition of cash credits u/s 68 of the Income Tax Act, 1961 - Failed to prove credit worthiness of creditors - Disallowance of Interest expenses - Held that:- We notice that the assessee has discharged the initial burden of proof placed upon it u/s 68 of the Act by proving the credit worthiness of all the creditors. As pointed out by Ld CIT(A), the quantum of income declared in the income tax returns is not the sole factor that determine the credit worthiness. On examination of the Balance sheet filed by the creditors, the Ld CIT(A) has given a definite finding that all the creditors were having enough sources, either received through realisation of sundry debtors or through loans, for giving advance to the assessee. Before us, the Ld D.R could not controvert the above said findings given by Ld CIT(A). We notice that he assessing officer, as observed by the first appellate authority, has proceeded to assess the creditors u/s 68 of the Act on surmises and conjectures without rebutting any of the evidences furnished by the assessee. Hence, we do not find any reason to interfere with the order passed by the Ld CIT(A) in AY 2008-09. We have earlier noticed that the assessing officer has followed his reasoning given in the assessment order passed for AY 2008-09 to make the addition of creditors u/s 68 of the Act in this year also. However, the Ld CIT(A) has considered the financial statements furnished by the assessee in respect of each of the creditors and has given a definite finding that the creditors have enough sources to advance the loan to the assessee. Thus, the Ld CIT(A) has held that the assessee has discharged the initial burden of proof placed upon it u/s 68 of the Act. Hence, we do not find any reason to interfere with his order in AY 2009-10 also. Since the creditors are held to be genuine, the disallowance of interest made by the AO is also liable to be deleted. Accordingly we confirm the order of Ld CIT(A) on that issue also. - Decided against the revenue. 2015 (4) TMI 674 Dis-allowance of Interest expenses u/s.36(i)(iii)of the Income Tax Act,1961 - Direct nexus between borrowings and business purpose - Interest free advances given prior to taking such loans - Dis-allowance of reimbursement of expenses u/s 40(a)(ia), TDS not deducted - Held that:- Nothing contrary was brought to our knowledge on behalf of Revenue. Facts being similar so following same reasoning, we are not inclined to interfere in the order of CIT(A) because interest bearing funds were held not to be diverted for non business use and accordingly disallowance in question was rightly deleted by CIT(A). For sake of consistency, we uphold the same. In respect to matter of disallowance of reimbursement of expenses, it was held that CIT(A) rightly observed that no TDS is required to be deducted in case reimbursement bills were separately raised. Assessee has made payment to C&F Agent and separate bills were raised in respect of reimbursement expenses incurred by Agent on behalf of assessee. The fact that separate bills wee issued for services and for reimbursement was not disputed in assessment order. As discussed above, in M/s. Om Satya Exim Private Ltd. [2011 (5) TMI 894 - ITAT AHMEDABAD]held that assessee was not liable to deduct TDS on reimbursement of expenses incurred by Agent on behalf of assessee. Disallowance in respect of these items has not been made u/s. 40(a)(ia). Nothing contrary was brought to our knowledge on behalf of revenue. Facts being similar so following same reasoning, CIT(A) was justified in deleting addition made by Assessing Officer on account of disallowance u/s. 40(a)(ia) of the Act. We uphold the same. - Decided against the revenue. 2015 (4) TMI 673 Deduction u/s 80IC - Deduction denied on account of job work - No separate accounts prepared for manufacturing activity and job works - Depreciation on passive use of assets - Depreciation disallowed on the basis of individual assets in block of assets - Held that:- An industrial unit manufacturing or producing articles or things cannot be denied exemption u/s 80-IC merely on the ground that it is deriving profit by carrying out job work. Job work also tantamount to manufacture if otherwise the conditions required to classify the activity carried out by the undertaking result in manufacture of an article or thing. In Warren Laboratories (P) Ltd. [2005 (5) TMI 548 - ITAT MUMBAI],it has been held that Clauses (a) and (b) of section 80IC(2) does not say that the assessee company would be entitled to deduction, if it manufactures or produces articles or things, exclusively belonging to it. Therefore, when the goods belonging to others are manufactured by the assessee company and it derives a profit by way of job work charges, it is entitled to deduction under section 80IC. There is no requirement under law for maintaining separate books of account for manufacturing and non-manufacturing activities of an undertaking. Where Assessee Company carries on both manufacturing and non-manufacturing activity in its undertaking the assessing officer ought to have allowed deduction under section 80IC of the Act on some logical, rational and scientific basis as all the applicable conditions for allowability of deduction under section 80IC of the Act have been met by the said unit of the assessee company. It appears that there is no denial of deduction u/s. 80-IC in case of manufacturing activities in the nature of job works, work contract etc. In the background of the aforesaid detailed discussions and precedents relied upon by the Ld. CIT(A) in his order as well as by the assessee, as aforesaid, we are of the view that no interference is called for in the well reasoned order passed by the Ld. CIT(A), hence, we uphold the same by rejecting the grounds no. 1, 2 & 3 filed by the Revenue in its Appeal. We find that the Ld. CIT(A) has rightly held that the receipts of the unit has direct nexus with the operations of the unit and being operational income from main business activity of the unit, it would be eligible for deduction u/s.80IC of the IT Act. The assessee was required to keep its unit in ready for production stage at all times and the fixed minimum" guarantee received by it was not possible without keeping the plant of the undertaking in "ready for production stage" throughout the year. The Hon'ble Delhi High Court in the case of Capital Bus Service Pvt.Ltd.[1980 (2) TMI 69 - DELHI High Court] has recognized that even passive use of assets is entitled for depreciation. In Sanghvi Movers (P) Ltd. [2007 (8) TMI 401 - ITAT PUNE-A], it was held that depreciation is to be allowed even for passive use, i.e., while it is kept ready for use. Thus, the income derived by the assessee has sufficient nexus and is incidental to the main business of the industrial undertaking and is, therefore, eligible for deduction. We find that Ld. CIT(A) has rightly held that the Written Down Value of each block of assets is a single figure and due to this fact and because of the method of calculating WDV for the block of assets, it is not possible to work out the WDV for individual assets falls within the block of assets. We also find that this view is also buttressed by the finding of the Hon'ble Delhi High Court in the case of Bharat Alumunium Co. Ltd. [2009 (10) TMI 505 - DELHI HIGH COURT] , wherein, it was held that once a particular block of assets falls within the block, it is added to the Written Down Value and depreciation is to be allowed on the block. The individual asset loses its identity and the question whether an individual asset is put to use in a particular year or not is irrelevant inasmuch as the requirement of law is to establish the use of the block of assets and not the use of particular asset. - Decided against the revenue. 2015 (4) TMI 672 Accrual of interest - Addition being interest on N.P.A. accounts not credited to P&L account - whether provisions of section 43D would not be applicable to the appellant if it is not a scheduled bank? - Co-operative Bank not being a scheduled bank - assessee submitted that as per the RBI guidelines, the interest accrued on Non-performing Assets (NPA) cannot be subjected to tax - assessee also submitted that on the principles of “income recognition” as per guidelines of the RBI, the interest income is required to be offered for taxation on cash basis and not on accrual basis. Held that:- the assesses herein is a cooperative bank and it is not in dispute that it is also governed by the Reserve Bank of India. Hence the directions with regard to the prudential norms issued by the Reserve Bank of India are equally applicable to the assesses as it is applicable to the companies registered under the Companies Act. The Hon'ble Supreme Court has held in the case of Southern Technologies Ltd (2010 (1) TMI 5 - SUPREME COURT OF INDIA), that the provision of 45Q of Reserve Bank of India Act has an overriding effect vis-a-vis income recognition principle under the Companies Act. Hence Sec.45 Q of the RBI Act shall have overriding effect over the income recognition principle followed by cooperative banks also. Hence the Assessing Officer has to follow the Reserve Bank of India directions 1998, as held by the Hon'ble Supreme Court. Thus no reasons to interfere with the ultimate conclusion of the CIT(A) in deleting the impugned addition relating to interest income in respect of NPAs. The Hon’ble Coordinate Bench in the case of ACIT vs. Solapur Siddheshwar Sahakari Bank Ltd. [2015 (3) TMI 603 - ITAT PUNE] has noted that there is a divergent view between the Hon’ble Delhi High Court in the case of M/s.Vasisth Chay Vyapar Ltd. [2010 (11) TMI 88 - Delhi High Court] and the Hon’ble Madras High Court in the case of CIT vs. Sakthi Finance Ltd. [2013 (3) TMI 266 - MADRAS HIGH COURT] in respect of application of the judgement of the Hon’ble Apex Court rendered in the case of Southern Technology Ltd.(supra) on income recognition norms prescribed by R.B.I. - AO directed to delete the addition. - Decied in favour of assessee. 2015 (4) TMI 671 Validity of assessment u/s 153C (ITA No. 503/Lkw/2013.) -Satisfaction recorded by Ao is not proper - Additions by AO based on petition before settlement commission - Issue of telescoping - Held that:- It is seen that in the present case, satisfaction was recorded by the A.O. of the searched person and the case is covered against the assessee by the judgment of Hon’ble Jurisdictional High Court rendered in the case of classic Enterprises [2013 (4) TMI 520 - ALLAHABAD HIGH COURT]. Since this judgment is of Hon’ble Allahabad High Court, it is binding on us and therefore, we are not discussing various judgments cited by learned AR as noted above. Hence, by respectfully following the judgment of Hon’ble Jurisdictional High Court rendered in the case of classic Enterprises, we decide this issue against the assessee. We have considered the rival submissions. We find that as per sub section (3) to section 245HA, the A.O. can use all material and other information produced by the assessee before the Settlement Commission. This is not in dispute that the assessee provided this information before Settlement Commission about his additional income. Since, the assessee did not provide the detail about the year in which, this income was earned by the assessee, the A.O. made substantive addition in A.Y. 2005 - 06 being search year and made protective addition in 1999 - 2000 to 2004 - 05 on protective basis. It is noted by learned CIT (A) in Para 5.2 and 5.2.1 of his order that the learned AR of the assessee himself made an offer before him that if the addition is confirmed, the same be confirmed in A.Y. 2005 - 06 on substantive basis. Learned CIT (A) accepted the same and accordingly confirmed the addition on substantive basis in A.Y. 2005 - 06 being search year. We do not find any infirmity in the same. In view of peculiar facts of the present case where the addition is made and confirmed on the basis of offer before Settlement Commission, which is not specific, it has to be accepted that part of such income might have been earned in these earlier years and hence, in view of these peculiar facts, we grant telescoping and direct the A.O. that the additions confirmed by learned CIT (A) in A. Y. 1999 - 2000 to 2003 - 04 as noted above should be considered as part of surrender before Settlement Commission and therefore, the net addition in this year is confirmed to the extent of ₹ 344000 only (Rs. 438500 - 94500). In rest all appeals, matter was identical to the above mentioned appeal. - Decided partly in favour of assessees. 2015 (4) TMI 670 Taxability of advertisement revenue & subscription revenue - Tax Treaty between India and USA - Article 27 of Treaty relating to Mutual Agreement Procedure (‘MAP') - rate of tax @10% or 20% - Interest u/s 234B where entire income is subject to TDS u/s 195 - Held that:- The issue has been decided in favour of the assessee by the CIT(A) for AY 2004-05 wherein it was observed that, the Appellant has a PE in India, both Advertisement and Subscription revenues constitute business income of the Appellant in India and that 10% of the Advertisement and Subscription revenues be treated as taxable income of the appellant in India CIT(A) was right in granting relief for the assessee and in holding that to ensure the consistency of assessment over the years, by following the basis of taxability of the advertisement and subscription revenue constitute business income of the assessee in India and 10% of the advertisement and subscription revenue itself to be treated as taxable income of the assessee in India. - Decided against the revenue. Interest u/s 234B - Following the decision of Jurisdictional High Court of Delhi in the case of Jacabs Civil Incorporated [2010 (8) TMI 37 - DELHI HIGH COURT] and the decision of ITAT “C” Bench Delhi in the case of G.E. Energy Parts Inc. [2014 (7) TMI 683 - ITAT DELHI], we are inclined to hold that the CIT(A) was right in holding that the interest u/s 234B of the Act is not leviable in the case of the assessee being nonresident when its entire income is subject to TDS u/s 195 of the Act. Hence, we are unable to see any valid reason to interfere with the conclusion of the CIT(A) on this issue and we uphold the same. Accordingly, ground no. 2 in both the appeals of the revenue being devoid of merits is also dismissed. - Decided against the revenue. 2015 (4) TMI 669 Treatment of Land as Agricultural land - No agriculture operations carried out on land - Dis-allowance of expenses - Held that:- We have heard rival contentions of both the parties. Looking to the facts and circumstances of the case, we find that the Ld. CIT(A) has verified the sale deed, record of rights and the certificate of village Panchayat Batim. The Ld. CIT(A) has held that the land has been purchased and it is sold within three financial year. The land has cashew nuts, mango trees, teak wood plantation and tenant is cultivating the same and pressing his tenancy right. The Ld. CIT(A) has given this fact on the basis of the evidence that the tenant has filed the suit against the owner of the property. Ld. CIT(A) has also further held that the land is not within 8 km. from the municipal limit. Ld. CIT(A) has held that assessee is a real estate developer, but he has not shown this purchase of land as stock-in-trade in his books of accounts. The Ld. CIT(A) has verified the balance sheet of the assessee and found that the land is recorded as investment. The assessee sought permission from village Panchayat for construciton of farm house. The Ld. CIT(A) has held that this land is agricultural land this is a finding of fac. The Ld. CIT(A) has also relied upon the decision of Hon’ble Supreme Court in the case of Sarifabibi Mohmed Ibrahim [1993 (9) TMI 10 - SUPREME Court]. These tests were considered by Hon’ble Bombay High Court in the case of Ms. Debbie Alemao and Jaoquim Alemao [2010 (9) TMI 560 - Bombay High Court]. Learned CIT(A) relied upon this decision and held that the land in questions an agricultural land and income from sale of such land will not farm part of gross total income. Hence, Ld. CIT(A) has allowed the appeal of the assessee. Therefore, we confirm the action of Ld. CIT(A) and appeal of the Department is dismissed. In relation to dis-allowance of expenses , it was held that we have heard rival contentions of both the parties. The Ld. CIT(A) has verified the vouchers of the assessee and did not find any mistake, therefore he has deleted the addition. During the course of hearing, learned DR did not point out any material against the finding of Ld. CIT(A). Therefore, we confirm the same. - Decided against the revenue. 2015 (4) TMI 668 Charitable activities in the nature of educational activities - It was observed that assessee is not engaged in providing structured education programme - assessee is neither providing formal education nor is instrumental in awarding degrees or certificates from any recognized universities/institutions. - Assessee submitted that, assessee is receiving grants from overseas in order to achieve its objectives. The objects of the assessee-society are to promote research and development of higher education in professional management on scientific lines. - Held that:- It is an undisputed fact that the assessee is enjoying benefit of sec.12A(a) of the Act since 1980. The assessee is carrying on its charitable activities viz. providing education in accordance with its objects. The status of the assessee as charitable organization has been accepted by the Department right from the beginning. For the first time in assessment year 2009-10, activities and the objects of the assessee were questioned. We are in complete agreement with the view taken by the Tribunal that the activities of the assessee are related to education and, therefore, is entitled to exemption under section 11 of the Act. At this stage, it is required to be noted that right from the assessment year 1995-96 till 2008-09 the activities of the assessee has been considered by the Revenue as educational activities. Considering various activities of the assessee as narrated by the Assessing Officer in paragraphs 4 and 5 of the assessment order and considering the decision of the Division Bench of this court in the case of Gujarat State Co-operative Union [1992 (2) TMI 74 - GUJARAT High Court], we confirm the view taken by the Tribunal that the activities of the assessee is related to education and, therefore, is entitled to exemption under section 11 of the Act as claimed. As we have observed earlier that the objects of the assessee are similar to the objects of Ahmedabad Management Association. Thus, we are of considered view that the judgment rendered by the Hon’ble Gujarat High Court in the case of Ahmedabad Management Association [2013 (11) TMI 1332 - ITAT AHMEDABAD] squarely applies to the present case as well. Accordingly, we uphold the findings of the Commissioner of Income-tax(Appeals), - Decided against the revenue. 2015 (4) TMI 667 Revision of assessment order - Deduction u/s 35D and disallowance u/s 14A - AO had verified the issues at the time of assessment proceedings - Held that:- In the present case, it is seen that Section 263 has been invoked on two grounds namely deduction u/s. 35D and disallowance u/s. 14A. With respect to deduction u/s. 35D it is an undisputed fact that the expenses were incurred by the Assessee in the year ending 31st March, 2007 relevant to assessment year 2007-08 and the first year of claim was A.Y. 2007-08 and in that year the claim of the Assessee has been accepted u/s. 143(1) and no action u/s. 147 or 263 has been taken in for A.Y. 2007-08. For the year under consideration, from the query of the A.O raised during the course of assessment proceedings, it is seen that Assessee in the revised return had claimed higher deduction from that claimed in the original return. The claim of Assessee in the revised return, after considering the submissions of the Assessee, was not found acceptable to the A.O and he therefore granted the deduction as per the original claim made by the Assessee. With respect to the disallowance u/s. 14A, it is seen that the query was raised during the course of assessment proceedings to which the Assessee had replied and after considering the reply of the Assessee, A.O had considered the disallowance u/s. 14A at ₹ 10,43,772/-. Thus it can be seen that both the issues on which ld. CIT has reported to revisionary proceedings u/s. 263 has been examined by the A.O. We find that Hon’ble Apex Court in the case of Max India Ltd. [2007 (11) TMI 12 - Supreme Court of India] had held that where two views are possible and ITO has taken one view which ld. CIT does not agree the order of A.O cannot be treated as erroneous order prejudicial to the interest of Revenue unless the view taken by the A.O is unsustainable in law. We further find that ld. CIT was of the view that Section 35D was only applicable to an industrial undertaking and activity of the Assessee cannot be regarded as an industrial undertaking and therefore not eligible for deduction u/s. 35D. We find that prior to A.Y. 2009-10, deduction with respect to 35D with respect to certain specified preliminary expenses was available to an industrial undertaking or unit. However, the word “industrial” were omitted by Finance Act, 2008 with effect from 01.04.2009. Thus it can be seen that after the amendment made by Finance Act 2008, benefit of 35D was also available to assessees who are not industrial undertaking and therefore we do not agree with the contention of ld. CIT that Assessee was not eligible for deduction u/s. 35D . Before us, Revenue has not brought any material on record to demonstrate that the view taken by the A.O was an impressible view, was contrary to law or was upon wrong application of legal principles initiating the exercising of revisionary powers u/s/ 263. In view of the aforesaid facts, we are of the view that in the present case Ld. CIT was not justified in resorting to revisionary powers u/s. 263 of the Act, we therefore set aside the order of CIT cancelling the order dated 26.12.2011 passed u/s. 143(3) of the Act.- Decided in favour of assessee. 2015 (4) TMI 666 Additions for unexplained cash credits - Dis-allowance of various expenses - Assessee fail to produce documents to establish the identity and capacity of the concerned creditors - Held that:- It is observed that advances aggregating to ₹ 17,89,500 were claimed to be received by the assessee from four parties during the year under consideration in cash against supply of material. No supply of material against the said advances, however, was made by the assessee and since the advances were claimed to be repaid in the subsequent year again in cash, the Assessing Officer required the assessee to establish the identity and capacity of the concerned creditors as well as the genuineness of the relevant transactions by furnishing relevant evidence. The assessee, however, failed to discharge its onus satisfactorily in as much as the confirmation letters of the concerned creditors filed by him did not contain the relevant details such as mode of payments, Permanent Account Number of the concerned creditors etc. Copies of the said confirmation letters are placed on record before us in the paper book filed by the assessee and a perusal of the same shows that the said letters worded identically, do not even contain the dates of issuance of the confirmation letters. The assessee also failed to file any other documentary evidence such as income tax particulars of the creditors or their balance sheets to show that the advances claimed to be given by them to the assessee were duly reflected in their income tax return or even in their Balance Sheets. Despite this failure of the assessee to discharge the onus of establishing the creditworthiness of the concerned creditors, the learned CIT(A) strangely deleted the addition made by the Assessing Officer under Section 68 vide his impugned order, and that too, in our opinion, on all irrelevant and immaterial grounds. It is undisputed that the advances in question received by the assessee in cash represented cash credits and the assessee having failed to discharge the primary onus that lay upon him to establish inter alia the capacity of the concerned creditors, the provisions of S.68 were clearly attracted, as rightly held by the Assessing Officer relying on the decision of the Kerala High Court in the case of K.M.Mahim [1994 (11) TMI 88 - KERALA High Court]. In our opinion, the relief allowed by the learned CIT(A) on this issue was totally unwarranted and his impugned order on this aspect is liable to be set aside. Accordingly, we set aside the impugned order of the learned CIT(A) on this issue and restore that of the Assessing Officer. Grounds (b) to (h) of the Revenue in this appeal are accordingly allowed. As regards the issue involved in grounds (i) and (j) relating to the disallowance of ₹ 1,71,572 made by the Assessing Officer out of various expenses, which is sustained by the learned CIT(A) to the extent of ₹ 70,000, it is observed that the relevant expense claimed by the assessee such as block cutting charges, champering charges, machinery maintenance, polishing charges, cleaning chares, etc. were in the nature of the business expenditure regularly required to be incurred by the assessee going by the nature of his business. Moreover, the nature of these expenses claimed by the assessee is such that they are sometimes required to be paid by way of self-made vouchers. Although some deficiencies in such self made vouchers were pointed out by the Assessing Officer by stating that the same did not contain complete details of the nature of work done, the quantum of work done, etc., we are of the view that the disallowance of 10% of the total expenses made by the Assessing Officer for such deficiencies was on the higher side keeping in view the nature of the expenditure claimed by the assessee as well as the nature of assessee’s business, and the learned CIT(A) was quite fair and reasonable to restrict the same to ₹ 70,000. - Decided partly in favour of revenue. 2015 (4) TMI 665 Applicability of Section 50C of the Income Tax Act, 1961 on depreciable assets - Dis-allowance under section 14A - Adhoc disallowance of vehicle expenses & miscellaneous expenses - Adhoc disallowance to cover the leakage of revenue - Held that:- We have carefully considered the rival submissions. On this aspect, we find that the said plea has been raised by the assessee before us, and it was not raised before the lower authorities. We deem it fit and proper to remand this aspect back to the file of the Assessing Officer, who shall examine the same in accordance with law. Needless to say, the Assessing Officer shall allow the assessee an opportunity of being heard before passing an order afresh on this aspect. Thus, on this aspect assessee partly succeeds for statistical purposes. The Grounds of Appeal Nos.2.1 to 2.3 raised by the assessee relate to a disallowance of ₹ 75,000/- sustained by the CIT(A) in terms of section 14A of the Act.On this aspect, it was a common ground between the parties that the similar disallowance retained by the CIT(A) in assessment year 2004-05 was not challenged by the Department before the Tribunal and therefore the said decision had become final. The Ld. Representative also pointed out that even assessee had not challenged the decision of the CIT(A) before the Tribunal for assessment year 2004-05 in sustaining the disallowance of ₹ 75,000/-.In view of the aforesaid factual matrix, we deem it fit and proper to affirm the order of the CIT(A) on this aspect and accordingly the Grounds of Appeal No.2.1 to 2.3 of the assessee and the cross-Ground raised by the Revenue in its appeal are dismissed. The CIT(A) has deleted a sum of ₹ 2,96,000/- and retained a disallowance of ₹ 3,00,000/- on an ad-hoc basis. In coming to such conclusion, the CIT(A) followed the order of his predecessor in the assessee’s own case for the assessment year 2004-05. At the time of hearing before us, it was submitted by the Ld. Representative that in assessment years 2003-04 and 2004-05, the Tribunal in assessee’s own case vide ITA Nos.1005/PN/2007 and 88/PN/2008 respectively dated 30.06.2011 has setaside the issue back to the file of the Assessing Officer for fresh verification. Following the aforesaid precedent, which is not disputed by the Ld. Departmental Representative, on this aspect we restore the matter back to the file of the Assessing Officer to decide it afresh. By way of Ground of Appeal No.4, assessee has challenged the order of the CIT(A) in confirming an ad-hoc disallowance of ₹ 10,57,860/- made out of miscellaneous expenses. At the time of hearing, the Ld. Representative for the assessee pointed out that similar issue came before the Tribunal in assessee’s own case for assessment years 2003-04 and 2004-05 wherein the Tribunal vide its order dated 30.06.2011 (supra) has set-aside the matter back to the file of the Assessing Officer for fresh verification. Following the aforesaid precedent, which continues to hold the field and has not been disputed by the Ld. Departmental Representative, we set-aside the impugned order of the CIT(A) and restore the matter back to the file of the Assessing Officer who shall decide the issue afresh. In Ground of Appeal No.5, issue raised by the assessee is with regard to a sum of ₹ 98,816/- which represented cost of club services disallowed by the lower authorities. On this aspect also, it was a common point between the parties that the said issue is covered by the decision of the Tribunal in the assessee’s own case for assessment year 2003-04 vide order dated 30.06.2011 (supra). The Tribunal vide para 14 of its order dated 30.06.2011 (supra) has allowed the claim of the assessee. Following the aforesaid precedent, we set-aside the order of the CIT(A) and direct the Assessing Officer to delete the addition of ₹ 98,816/- made out of cost of club services. Thus, on this aspect assessee succeeds. In the last Ground of Appeal, assessee has challenged the action of the CIT(A) in confirming an ad-hoc disallowance of ₹ 3,17,240/- being 0.2% of staff welfare expenses, sales promotion, advertisement expenses and traveling expenses to cover the leakage of revenue.It is quite evident that the disallowance in question is made in an ad-hoc manner and is based on mere surmises and conjectures. We therefore setaside the order of the CIT(A) and direct the Assessing Officer to delete the addition of ₹ 3,17,240/-. Thus, on this aspect assessee succeeds. Customs 2015 (4) TMI 688 Conviction under Section 18 of the Narcotic Drugs and Psychotropic Substances Act 1985 - Offence punishable under Sections 457 and 380 of the Indian Penal Code - Assessee broke open the lock of the malkhana of the Court and stolen the opium - accused appellant led to discovery - Held that:- the term “possession” for the purpose of Section 18 of the NDPS Act could mean physical possession with animus, custody or dominion over the prohibited substance with animus or even exercise of dominion and control as a result of concealment. - requisite degree of control when, even if the said narcotic substance was not within his physical control at that moment. - person would be in possession because he has the necessary animus and the intention to retain control and dominion. As the factual matrix would exposit, the accused appellant was in possession of the prohibited or contraband substance which was an offence when the NDPS Act came into force. Hence, he remained in possession of the prohibited substance and as such offence under Section 18 of the NDPS Act is made out. The possessory right would continue unless there is something to show that he had been divested of it. On the contrary, he led to discovery of the substance which was within his special knowledge, and, therefore, there can be no scintilla of doubt that he was in possession of the contraband article when the NDPS Act came into force. - Certainly, on the date of recovery, he is in possession of the contraband article and possession itself is an offence. In such a situation, the accused-appellant cannot take the plea that he had committed an offence under Section 9 of the Opium Act and not under Section 18 of the NDPS Act. After dealing with the concept of possession, we think it apt to address the issue raised by the learned counsel for the appellant that he could have convicted and sentenced under the Opium Act, as that was the law in force at the time of commission of an offence and if he is convicted under Section 18 of the NDPS Act, it would tantamount to retrospective operation of law imposing penalty which is prohibited under Article 20(1) of the Constitution of India. Article 20(1) gets attracted only when any penal law penalises with retrospective effect i.e. when an act was not an offence when it was committed and additionally the persons cannot be subjected to penalty greater than that which might have been inflicted under the law in force at the time of commission of the offence. The Article prohibits application of ex post facto law. In Rao Shiv Bahadur Singh and Anr. v. State of Vindhya Pradesh [1953 (5) TMI 12 - SUPREME COURT], while dealing with the import under Article 20(1) of the Constitution of India, the Court stated what has been prohibited under the said Article is the conviction and sentence in a criminal proceeding under ex post facto law and not the trial thereof. High Court has noted that the information was given to the competent authority. That apart, the High Court has further opined that in the case at hand Section 43 applies. Section 43 of the NDPS Act contemplates seizure made in the public place. There is a distinction between Section 42 and Section 43 of the NDPS Act. If a search is made in a public place, the officer taking the search is not required to comply with sub Sections (1) and (2) of Section 42 of the NDPS Act. As has been stated earlier, the seizure has taken place beneath a bridge of public road accessible to public. The officer, Sub-Inspector is an empowered officer under Section 42 of the Act. As the place is a public place and Section 43 comes into play, the question of non-compliance of Section 42(2) does not arise. On perusal of the evidence, it is clear that there has been substantial compliance of Section 57 of the NDPS Act and, therefore, the question of prejudice does not arise. There is no shadow of doubt that the accused-appellant was in police custody. Section 27 of the Indian Evidence Act, 1872 provides that when any fact is deposed to as discovery in consequence of the information received from a person accused of any offence in custody of a police officer, so much of such information whether it amounts to confession or not as relates distinctly to the fact thereby discovered may be proved. It is well settled in law that the components or portion which was the immediate cause of the discovery could be acceptable legal evidence [See A.K. Subraman and Others v. Union of India and Others [1974 (12) TMI 71 - SUPREME COURT] The words employed in Section 27 does not restrict that the accused must be arrested in connection with the same offence. The FSL report, Ex. P-14, dated 15.9.1986 states that a letter along with a sealed packet was received with seals intact. The said report further mentions that packet was covered in white cloth and on opening of the packet, the examiner found a cylindrical tin and the substance on examination was found to be an opium having 1.44% morphine. The seal being intact, the description of the case number and the impression of seal having been fixed on memo of recovery, there is no reason or justification to discard the prosecution case on the ground of delay on this score. - Decided against the appellant. 2015 (4) TMI 687 Pilferage of 10 kg Heroin from malkhana of Narcotic Control Bureau - Sentence awarded by the trial court under Sections 21(C), Section 29 and Section 32 of the NDPS Act - Reliance on retracted statement - Admission by the co-accused - Held that:- An inculpatory statement, which is in the nature of an admission, can be legitimately retracted but such a retraction can only be accepted if it is made expeditiously namely at the time when the accused is produced before the Magistrate or soon thereafter and then also by putting forth credible facts that would indicate, but would not prove force/coercion. The ultimate principle that governs acceptance of a retraction and a consequent discarding of such a statement, is the facts disclosed in a retraction to primafacie suggest coercion, force or manipulation as opposed to absolute proof of such facts. The facts regarding coercion, force and manipulation must be specific and must broadly, if not specifically set out the acts that constitute coercion and force for otherwise it would be near impossible for a prosecution in such cases to succeed and render meaningless provisions in various statues relating to economic crimes and smuggling of drugs. The facts of the present case do not enable us to accept the retraction as not only was it not proffered when Naseeb Chand was produced before the Magistrate for the first time but the application for retraction is devoid of even rudimentary particulars of any acts that may constitute force or coercion. The mere fact that Naseeb Chand was in the NCB office, is irrelevant as Naseeb Chand is not an ordinary individual. Naseeb Chand is an informer and has been in jail before and, therefore, would not capitulate easily. We, therefore, affirm the opinion recorded by the trial Court that the retraction by Naseeb Chand does not detract from the admission made in his statement recorded under Section 67 of the NDPS Act. At this stage, it would be appropriate to point out that even a retracted statement may, circumstances so permitting, form the basis of a conviction. The trial Court has duly considered various judgments of the Hon'ble Supreme Court on the point of retraction and the consideration of a retracted statement and only thereafter proceeded to rely upon the statement made by Naseeb Chand. We find no reason to differ with the opinion recorded by the trial Court that statement made by Naseeb Chand is sufficient to prove his culpability. Section 30 of the Evidence Act postulates that where more persons than one are tried jointly for the same offence and one such person makes a confession affecting himself and the other accused, a Court may take into consideration such a confession not only against the person making the confession but also against others who have been implicated. The illustration appended below Section 30 of the Evidence Act, makes it amply clear that an admission made by a co-accused being jointly tried against another may be taken into consideration not only against the person making such a confession but also against the other accused being tried with such person. As we have accepted the truth and the evidentiary value of the statement made by Naseeb Chand, have no hesitation in holding that the admission made by Naseeb Chand can and may be read against Saji Mohan to raise an inference of culpability. A perusal of the aforesaid table reveals a marked difference between the contents of the samples as originally tested and during the process of retesting. The fact that in certain cases the contents of diacetyl morphine has increased rather than decreased can be attributed to failure to make a homogeneous mixture but the overall facts that emerge from retesting definitely points to a fact that there was large scale pilferage of narcotics stored in the NCB, Chandigarh. The aforesaid evidence, in our considered opinion, when read alongwith the statements made by the experts who conducted the test further corroborate the statements Ex.P9 and Ex.PW18/H made by Naseeb Chand and Naveen Kumar respectively, and conclusively establishes the guilt of the appellants. As regards Criminal Revisions filed by Virat Dutt Chaudahry and Pushpdeep Singh, we have perused the impugned order as well as submissions made by counsel for the petitioners and as we have already held that a prima-facie perusal of their statements reveals that they may have deposed falsely with respect to the nature of the unclaimed seizure on the intervening night of 27/28.08.2008 and have also made an observation that the facts actually warranted their prosecution as accused alongwith the appellants, find no merit in the revisions - Decided against assessee. The case, in hand, exposes the murky underbelly of government agencies set up to stamp out the menace of narcotics, where the lines between the smuggler and the law enforcer are so blurred as to make it difficult to distinguish one from the other. The shadowy world of informers, spies, drug traffickers, officers of the Customs Department, the Narcotic Bureau are so enmeshed in a web of deceit and greed, as to be indistinguishable. A sad commentary on the functioning of these agencies. The case, in hand, is a glaring example of what fortifies our opinions. - appellants, apart from doubting the legality of a statement, under Section 67 of the NDPS Act, have criticised the statements by alleging that the notice served upon Naseeb Chand does not contain his address or the name of the officer who effected service and it has not been explained as to how notice dated 26.03.2009, issued from Chandigarh was served upon Naseeb Chand at Jammu and he appeared before NCB Chandigarh on 27.03.2009 after travelling a distance of more than 400 kms. Apart from this argument, counsel for the appellants have also submitted that as the statements stood retracted they could not form the basis of an opinion of culpability vis-a-vis any of the appellants. The statement by Naveen Kumar has drawn similar criticism and in addition it is urged that as Naveen Kumar has alleged to have stated that in November, 2008 Saji Mohan and Balwinder Kumar had in his presence taken out several lots of heroin and on the directions of Saji Mohan he and Balwinder Kumar mixed slaked lime in the lots and made another big lot which was handed over to Saji Mohan for showing a big seizure at Chandigarh but a perusal of the chemical analysis reports reveals that the samples were not analysed for presence of slaked lime, thereby in essence, nullifying the statement Ex.PW1/H made by Naveen Kumar under Section 67 of the NDPS Act. 2015 (4) TMI 686 Detention of goods - Perishable goods - misdeclaration of origin of goods - Held that:- Imports in question were effected after complying with the procedural requirements of the SAFTA notification, which enabled the petitioner to claim clearance of the goods at concessional rate of duty. The relevant documents, such as the certificate of origin issued by the Karachi Chamber of Commerce and Industry/Trade Development Authority of Pakistan, and the invoice that accompanied the consignment, clearly indicated that the goods were of Pakistani origin. As against this, the only material relied upon by the Customs authorities, to doubt the correctness of the aforesaid certificates and invoices, is the detection of certain gunny bags in the containers that held the imported goods, which gave rise to a suspicion that the goods could have been sourced from Indonesia. - goods can be permitted a provisional clearance on the petitioner executing a bond for the assessable value, paying duty on the consignment in terms of the SAFTA notification, and paying 35% of the differential duty (on tariff rate) in respect of the consignment that has been imported. The petitioner shall also furnish a bond, without any surety or security, in favour of the respondents towards the remaining portion of the differential duty. I make it clear that, if the petitioner complies with the aforesaid conditions, the respondents shall release the consignment of goods imported by the petitioner under Ext.P6 series of bills of entry, forthwith and without any further delay. - Decided conditionally in favour of asssessee. Corporate Laws 2015 (4) TMI 685 Failed to listing of shares in the stock exchanges - Breach of directions issued under scheme of arrangement approved under section 391(2) read with section 394 of the Companies Act, 1956 - Minority shareholder seeking exit option - Held that:- In the case of Babu Singh [2007 (11) TMI 589 - SUPREME COURT], the Hon’ble Apex Court has observed that even though the inherent powers of the Court are very wide their exercise must emanate logically from the underlying legal findings and the “judicial result must be seen to be principled and supportable on those findings” (underlining mine).The Hon’ble Apex Court in the case of Karan Singh [2002 (3) TMI 910 - SUPREME COURT],has held that the inherent powers of the Court cannot be invoked for reopening settled matters as the Court cannot act as an appellate or revising authority. As far as compulsory listing of the shares of the respondent company is concerned, in the context of the order dated 7.8.2008 passed by the Company Court, it is evident that the Court visualized the possibility of non-listing of the shares of the respondent company for the obvious reason that the jurisdiction of a company Court is limited under section 391(2) read with section 394 of the Act of 1956 to ensuring statutory compliance in the decision making process relating to a scheme ensuring that the scheme is not contrary to public interest. It does not extend to directing autonomous authorities such as SEBI and the Stock Exchanges to exercise their discretion in a particular way / manner. It has been held in the case of the Bombay Stock Exchange [2006 (10) TMI 244 - HIGH COURT OF MADRAS],that both SEBI and Stock Exchanges have the exclusive jurisdiction to allow or disallow listing of a company’s shares based on their lawful conclusions as to whether the statutory requisites mandated for listing have been satisfied/ fulfilled or not. A direction as to listing in the exercise of powers under section 391(2) and section 394 of the Act of 1956 or otherwise under Rule 9 of the Rules of 1959 as sought would be excess of the jurisdiction of the Company Court. Aside of the above, listing of the respondent company's shares on the Stock Exchange/s within a specified time cannot be to my mind held to the raison d’ ^etre of the sanctioned scheme dated 8.5.2006. And it has not been even so argued. A scheme sanctioned by the Company Court has its main object / purpose and “basic structure” (if one may borrow the expression from another context) on the one hand and ancillary / peripheral matters on the other in respect of which delayed implementation or even non-implementation would not make the sanctioned scheme incapable of “working satisfactorily”. The respondent company is however on record with the averment that the shares would be listed on the Stock Exchanges no sooner it would be appropriate and in the interest of all its shareholders with better business, profits, improved market condition and favourable macro-economic environment. The Hon’ble Madras High Court in Pentamedia Graphics Limited [2006 (10) TMI 244 - HIGH COURT OF MADRAS] has held that merely because the shares of the company are not listed as provided for in the sanctioned scheme, it would not render it bad or entail the violation of the Court’s order. The enunciation of the Madras High Court is premised on the unquestionable legal position that sanctioning of a scheme under section 391(2) read with 394 of the Act of 1956 is a jurisdiction wholly distinct, separate and unrelated to the powers of the Stock Exchanges /SEBI to demand statutory compliances before granting listing permission. In the instant case the issue in the application under consideration is with regard to the applicants being allowed “exit option” with the price of the shares to be sold in the exercise of such “exit option” to be determined as per the claim of the applicants either at ₹ 220/-, 156/- or 49.31. There is evidently no remedy provided under the Act of 1956 for the relief claimed by the applicants by resort to a particular Court or Forum by invoking any particular machinery. In the circumstances I am of the considered opinion that the applicants would be well within their rights to approach the jurisdictional Civil Court for ventilating their grievance with regard to the share price for their exit, if so advised. In my considered opinion no direction for listing of shares of the Company with reference to Clause 3.7 of the sanctioned scheme dated 5.8.2006 within a given time frame can therefore be issued by this Court. - Decided against the appellants. Service Tax 2015 (4) TMI 705 Transfer of burden to discharge of service tax liability to another person - extended period of limitation - bondafide belief - Sale of space or time for advertisement service to several advertising agencies - Held that:- We do not agree with the views of CESTAT that the service tax liability could not have been transferred by way of a contract. The reliance of DTC on the ruling in Rashtriya Ispat Nigam Limited (2012 (4) TMI 457 - Supreme Court of India) on this score was correct and it appears that the same has not been properly appreciated by CESTAT - The above ruling of Supreme Court in the case of Rashtriya Ispat Nigam Limited (supra), however, cannot detract from the fact that in terms of the statutory provisions it is the appellant which is to discharge the liability towards the Revenue on account of service tax. Undoubtedly, the service tax burden can be transferred by contractual arrangement to the other party. But, on account of such contractual arrangement, the assessee cannot ask the Revenue to recover the tax dues from a third party or wait for discharge of the liability by the assessee till it has recovered the amount from its contractors. - The fastening of liability on such account by such order on the contractors is, thus, a matter restricted to claims of the appellant against such parties. It would have no bearing insofar as the claim of the Revenue against the appellant for recovery of the tax dues is concerned. Extended period of limitation - Held that:- Plea of “bona fide belief” is devoid of substance. The appellant is a public sector undertaking and should have been more vigilant in compliance with its statutory obligations. It cannot take cover under the plea that contractors engaged by it having agreed to bear the burden of taxation, there was no need for any further action on its part. For purposes of the taxing statute, the appellant is an assessee, and statutorily bound to not only get itself registered but also submit the requisite returns as per the prescription of law and rules framed thereunder. - Imposition of the service tax liability under Section 73 read with Sections 68 and 95 of Finance Act, 1994 and the levy of interest thereupon in terms of Section 75 of the Finance Act, 1994 cannot be faulted. For the same reasons, the penalties imposed under Sections 76 and 77 of the Finance Act, 1994 also must be upheld. Levy of penalty u/s 78 - Held that:- It is indeed not the case of the Revenue here that service tax liability was avoided by the appellant with intent to defraud or on account of collusion or willful mis-statement or suppression of facts. In the given facts and circumstances and in light of explanations offered by the appellant even in response to the show cause notices, it is clear that there was no effort to “evade” the payment of service tax - Noticeably, the appellant was raising bills on the contractors also to claim the service tax dues in terms of the contractual terms, and - there is no dispute raised in this regard - the collections made from the contractors on account of service tax chargeable were deposited in the government account from time to time. The insistence of the appellant that it would deposit the service tax with the government only when the contractors discharged their liability on this account may not have been a proper stand. But, from this, it cannot be deduced that the effort was to evade tax liability - Thus, the inhibition under Section 80 of the Finance Act, 1994 was attracted and penalty under Section 80 could not have been imposed - Decided partly in favour of assessee. 2015 (4) TMI 704 Denial of CENVAT Credit - 'Housekeeping and Landscaping Services' - Held that:- where an employer spends money to maintain their factory premises in an eco-friendly manner, the tax paid on such services would form part of the cost of the final products and the same would fall within the ambit of "input services" and, therefore, the assessee is entitled to claim the benefit. This Court is in agreement with the ratio laid down in Millipore India Pvt. Ltd. case (2011 (4) TMI 1122 - KARNATAKA HIGH COURT), which is equally applicable to the case on hand and following the said decision, this appeal is liable to be dismissed. - Decided against Revenue. 2015 (4) TMI 703 Denial of rebate claim - Validity of Tribunal's order - Whether the CESTAT is right in law in holding that an appeal relating to the rebate claim is not maintainable before it - Held that:- Following decision of Commissioner of Service Tax-I Versus Ambe International [2015 (3) TMI 435 - BOMBAY HIGH COURT] - Tribunal was in error in dismissing the Revenue's Appeal. The Revenue's Appeal was maintainable before the Tribunal. It shall now be registered and proceeded with in accordance with law - matter remanded back - Decided in favour of Revenue. 2015 (4) TMI 702 Management Consultancy Services or Consulting Engineers Services - development of software and system analysis for internet based trading services - Held that:- Court called for the records and checked the invoices under which the appellant/assessee had billed the service recipient i.e. Financial Technology India Pvt. Ltd, Netfinex.Com India Ltd. and Multi Commodity Exchange of India. The invoices clearly indicate that the said consultation services are provided towards software and system development charges. It is on record as noted by the first appellate authority that the service of Design and Development of Computer Software rendered by the appellant/assessee are covered under Information & Technology Services would fall under Section 65(105)(zzze) and came into tax net in 2008. In our considered view, if the services rendered by the appellant/assessee are in respect of computer software then the tax liability may arise on them only from 2008. In our view the appellant/assessee has made out a strong case in their favour. - services rendered by the appellant/assesssee during the period in question will fall under the Consulting Engineers Services with exemption from the payment of service tax liability - Decided against Revenue. Central Excise 2015 (4) TMI 697 Denial of CENVAT Credit - SSI Exemption - delayed reversal of cenvat credit - in respect of inputs lying in stock or used in any finished excisable goods lying in stock on the date when option to avail exemption of duty was exercised - appellant had not debited the balance, when it had started availing the exemption from payment of duty but had done subsequently i.e. 03.10.2000 - Held that:- Commissioner took the view that merely because the earlier credit of ₹ 86 ,222 /- was debited on 03.10.2000 would not deny the benefit of the exemption Notification to the appellant which was otherwise available. - After discussing Rule 57 AG (2) and interpreting the same, the Commissioner took the view that the said Rule would not come as a handicap in the way of the appellant in claiming the benefit of the said Notification inasmuch as it nowhere provides that the MODVAT credit balance which was there with the appellant had to be debited before exercising the option to avail the exemption under the Notification. - interpretation given by the Commissioner on the facts of the present case is completely valid and correct. Contrary view which is taken by the CESTAT is unsustainable. - Decided in favour of assessee. 2015 (4) TMI 696 CENVAT credit on oxygen and nitrogen gas - common procurement of gas versus Diversion of gases - integrated steel plant - Strategic Alliance Agreement - Held that:- it appears, the companies joined hands to manufacture the final products in terms of the Strategic Alliance Agreement. In the circumstances, we hold that CENVAT cannot be demanded on the ground that credit is being availed by one factory and material inputs are used by three factories, because the CENVAT able input is being used for common share and continuous purpose of manufacturing dutiable goods. Though there are three separate units with separate registrations, the entire raw material is being converted into final dutiable product in continuous, inter connected and integrated process conforming to the definition of a single factory under Section 2 (f) of the Central Excise Act. - Following decision of The Commissioner of Central Excise and Service Tax, Bangalore Versus M/s. Biocon Ltd. [2014 (9) TMI 716 - KARNATAKA HIGH COURT] - Decided against Revenue. 2015 (4) TMI 695 Deemed credit - textile fabrics - Whether the Tribunal was right in giving benefit of deemed credit of 50% in terms of Notification Nos. 28 of 2000 dated 1st March, 2000, 7 of 2001 dated 1st March, 2001 and 28 of 2001 dated 11th June, 2001 to the Assessee - option to pay duty under Compounded Levy Scheme - Held that:- the show cause notice demanded differential duty - In the meanwhile, even the present Respondent continued to pay duty under the Advalorem Scheme. It paid that duty to the extent of 50% and which was accepted. If the stand of the Revenue was that it was not entitled to be considered as a new unit or was disentitled for any benefit and particularly under the Advalorem Duty Scheme, then, it is inexplicable as to why the Commissioner permitted them to pay duty under the said scheme, namely the Advalorem Scheme. It is that fact which has weighed with the Tribunal and that is how it has held the Assessee to be entitled to the benefit. If the application made on 12th September, 2001 for availing the option to pay duty under the Compounded Levy Scheme was rejected and as complained by the Respondent/ Assessee , without any hearing, which fact was complained to the Tribunal, then, all the more we do not find that the Tribunal was prevented while adjudicating and considering the legality and validity of the show cause notice and the order-in-original . The show cause notice was issued, but in the teeth of the fact that the Assessee /Respondent was entitled to avail of the benefit of the Advalorem Scheme. Despite issuance of such show cause cum demand notice, if the Assessee paid duty under the scheme, then, that fact has rightly weighed with the Tribunal. - Decided against Revenue. 2015 (4) TMI 694 Condonation of delay - application seeking rectification of the mistake - Held that:- report contains the statement of the concerned officer, who was to compute the period of limitation in filing the Appeal. It is, thereafter, he was to raise an appropriate office objection. He has stated that by inadvertence and mistake he computed and calculated the period of limitation from the date of the order on the application seeking rectification of the mistake. When that application was disposed of, he has taken the date of its disposal, as the starting point. That was not permissible in terms of the applicable provisions of law. - Delay condoned. 2015 (4) TMI 693 Waiver of pre deposit - Held that:- Tribunal could have at least recorded that on such an application, the Assessee sought stay of recovery of the amount of duty, interest etc. and that the argument on the point of limitation was the only argument canvassed. Then, possibly we would not have been required to admit this Appeal. The Tribunal's order does not indicate that what the arguments were or they are only restricted to this point. Thus, the Tribunal was required to see whether any prima facie case has been made out and to what extent. That would include the issue as to whether the demand raised was within the limitation in its entirety or in part. We do not find any consideration also on the point of financial hardship and how to balance the equities, if such was the situation. In the circumstances, this unreasoned and cryptic order of the Tribunal deserves to be quashed and set aside - Decided in favour of assessee. 2015 (4) TMI 691 Demand of duty - Clandestine removal of goods - Clearance of goods without accountal and payment of duty - Confiscation of goods - Held that:- The appellant manufacture industrial and decorative laminates and there is no dispute that more than 90% of the production is supplied to Indian Railways either directly or through dealers and through M/s.Shaktri Sales and M/s.P.A. Sales. There is no dispute that supply to Railways of the laminates are against the contract of the Indian Railways with CPPL and with M/s. P.A. Sales and M/s. Shakti Sales, in terms of which the laminates of only 3mm. thickness are to be supplied and were to be subjected pre-delivery inspection by RITES/DGS&D in the factory premises of CPPL. Therefore, there is no possibility that the laminates of below 3 mm. could have been supplied by CPPL to Railways in violation of the contract terms. However, there is huge difference between the quantity of the laminates supplied by CPPL to Indian Railways either directly or through M/s.P.A. Sales and M/s.Shakti Sales and the quantity manufactured by them as per the RG-I Register. According to the appellant, the balance quantity had been procured by them from several dealers through M/s.Aar Em Plywood and Sunmica and M/s. Ratnakar Enterprises. However, all the dealers from whom the laminates are claimed to have been purchased, have on inquiry stated that they had supplied the laminates of 0.6 mm. to 1.5 mm. thickness only and, therefore, the appellant s claim that the quantity of laminates supplied to Railways in excess of the quantity whose production is recorded by them during the period of dispute, had been procured by them from various dealers, is false. Absolutely no explanation in this regard had been given by the appellant. - it has to be presumed that the quantity of the laminates of 3 mm. thickness, which had been supplied by the CPPL either directly or through M/s.P.A.Sales and M/s. Shakti Sales to Indian Railways during the period of dispute, which is in excess of the quantity whose production was recorded by them during that period in the RG-I Register, had actually been manufactured by them without accountal and had been cleared without payment of duty under the guise of trading activity. - No infirmity in impugned order - Decided against assessee. 2015 (4) TMI 690 Whether the parts of the boilers of Biomass Energy Producing Systems being manufactured by the respondent and which are not consumed within their factory but are used in the factory of ISGEC, Yamunanagar, Haryana, would be eligible for exemption under notification no.6/2002-CE (Sl.No.237) - Held that:- Respondent manufacture certain components of boilers of Biomass Energy Producing System. The boilers for Biomass Energy Producing System are manufactured by ISGEC, Yamunanagar, Haryana and the same can be treated as Biomass Energy Producing Devices. - parts of the Non-conventional Energy Devices/Systems would be covered for full exemption duty under this exemption only when such parts are used within the factory in which the same have been manufactured for manufacture of non-conventional energy producing systems. In other words, this exemption notification is applicable only to those parts manufactured in a factory which are captively used for manufacture of non-conventional energy devices/systems. We find that the identical issue has been considered by the Apex Court in its judgement in the case of Binny Ltd. reported in [2006 (3) TMI 150 - SUPREME COURT OF INDIA]. In that case, M/s. Binny Ltd. were manufacturing roof structures to be used for roofing of the digester of the biogas plant. But M/s. Binny Ltd. were not manufacturing the biogas plant or its digester but were supplying the roof structure to the manufacturers of the digesters. The facts of the case of M/s. Binny Ltd. are identical to the facts of this case - impugned order is not sustainable. The same is set aside and the order passed by the Joint Commissioner is restored - Decided in favor of revenue. 2015 (4) TMI 689 Clandestine clearance of goods - Removal of goods without issuance of proper invoices - Penalty u/s 11AC - Confessional statement by assessee - Whether duty could be demanded on the basis of confessional statement only as other evidences relating to manufacture, procurement of raw materials and transportation have not been produced by Revenue and such retraction of statement will have effect - Difference of opinion - Majority order - Held that:- statement dated 4.10.2001 had never been retracted until 1.8.2003 when the proprietor tried to claim that the entries in the loose sheets broadly tallied with their RG-I register. But for almost close to two years from 4.10.2001 there had been no representation alleging that the statement dated 4.10.2001 was obtained under duress. Indeed the statement dated 4.10.2001 was also confirmed by Shri Rajender Kumar, authorised signatory in his statement dated 8.10.2001 for which again there have been no allegations/representation that the same was obtained under duress. - proprietor was repeatedly summoned on 7.1.2003, 26.3.2003 and 1.8.2003 but he appeared only on 1.8.2003 when he so claimed. Difference between the quantities shown in the loose sheets and the RG-I register is precisely 500 pouches with respect of the pouches of ₹ 1 each and in full hundreds like 100, 200, 500 (save for one which is 150) for pouches of ₹ 2 each. Such neat differences are too neat to be really realistic in the given circumstances and raise a doubt about the genuineness of the RG-I register produced on 1.8.2003 when the said RG-I register was never produced by the appellants on the day of the visit/search and thereafter up to almost two years (i.e. up to 1.8.2003). The RG-I register was not recovered during search also. There was also no mention of the RG-I register in the statements of the proprietor or the authorised signatory; not even to the effect that it existed even if not found then, although RG-I register is required to be present in the factory 24x7 and is required to be made available to Central Excise officers on demand for verification. All of these facts, factors and circumstances are compelling to infer at least on the principle of preponderance of probability that the so called RG-I register produced on 1.8.2003 was nothing but a result of manipulation and fabrication. Further even at the time of recording statement dated 1.8.2003 Shri Praveen Kumar did not expressly retract his earlier inculpatory statement nor allege any duress or threat. Indeed the statement dated 4.10.2001 of Shri Praveen Kumar was written by his son and signed by him (i.e. Shri Praveen Kumar) and none of them in its immediate aftermath made any representation that the same was not voluntary. Indeed even the payment of duty has never been alleged by the proprietor or the authorised signatory to have been made involuntarily under duress or threat or inducement. In the case of K.G. Augustine Vs. CC - [1996 (5) TMI 253 - CEGAT, MADRAS], it was held that the statement made by person to be considered voluntary and true even if retracted when circumstances not showing any use of threat or coercion and also when corroborated by statements of other persons. In the case of K.I. Pavunny Vs. Assistant Collector (HQRS), Central Excise Collectorate, Cochin - [1997 (2) TMI 97 - SUPREME COURT OF INDIA], the Supreme Court held that confessional statement under Section 108 of the Act, 1962 is admissible as person giving statement is not an accused and voluntary statement is not to be a characterised to have been obtained by threat, inducement or promise and further, that the burden is on the person to prove that his statement was obtained by threat inducement or promise. - Decided favour of Revenue. CST, VAT & Sales Tax 2015 (4) TMI 701 Validity of Tribunal's order - Tribunal decided appeal on merits instead of dismissing it for non deposit of pre deposit order - Held that:- Tribunal is bound to obey the decision of the High Court. It is not open for the learned tribunal to ignore the directions, observations or orders passed by the High Court. If instead of the learned tribunal any other person would have ignored the order passed by the High Court it would tantamount to Contempt of Court. However, we refrain ourselves from making any observations - Following decision of State of Gujarat Vs. Tudor India Ltd. [2015 (4) TMI 618 - GUJARAT HIGH COURT] - Decided in favour of Revenue. 2015 (4) TMI 700 Maintainability of review petition - Held that:- The Registrar or his office can raise an objection that the revision is not maintainable and it will be for the assessee or his counsel to satisfy the Registrar that such revision is maintainable. Even if the Registrar holds against the assessee, the assessee will still have the right to claim that it is the Tribunal which should decide this issue and thereafter the Tribunal will have to decide that issue in accordance with law. - Court cannot accept the submission of the Registrar that because the petitions were not maintainable they were returned to the assessee-petitioner. Even if they had to be returned there should have been a noting by some competent authority that they are being returned for some specified reason. The only document which has been produced before us is the receipt and dispatch register which only shows that the revision petitions were returned. There is nothing to show why they were returned. It is by now well settled law that reasons give the strength and body to an order. If there are no reasons in an order then the order becomes an arbitrary order. From the dispatch register, we cannot fathom why the revision petitions were returned. It is not clear who took the decision to return the revision petitions. Therefore, whenever in future, any such order has to be passed even by the Registrar or his subordinates that order must be in writing and must be conveyed to the assessee so that the assessee knows why his appeal or revision is being returned by the Tribunal. - revision petitions which were produced before us in a sealed cover are being returned to Mr. S. Datta, learned counsel with a direction to the petitioners to re-file the same before the Tribunal on or before 9th March, 2015 and if they are so filed before 9th March, 2015, the petitions shall be deemed to have been filed on the date when they were originally filed before the Tribunal. 2015 (4) TMI 699 Levy of penal interest under Section 23 (3) of the KGST Act - Held that:- while filing the return, without including the amount of cess on rubber purchased in the turnover, the petitioner had paid tax on the turnover that was declared by it in the return. Thereafter, it was only while completing the assessment by Ext.P1 order that the demand consequent to the inclusion of cess on rubber purchased became due and payable from the petitioner. In otherwords, it is only from the date of the assessment order or the consequent demand notice that the liability of the petitioner to pay interest would arise in terms of Section 23(3) of the KGST Act. Since, in the instant case, the petitioner had paid the entire tax due as per the return, the liability of penal interest under Section 23 (3) of the KGST Act could not be fastened on it going by the decision of the Supreme Court in Maruti Wires's case (2001 (3) TMI 856 - SUPREME COURT OF INDIA). Interest under Section 23 (3A) of the KGST Act also would not apply to the petitioner for the assessment year in question namely 1996-1997. The provisions of Section 23 (3A) where introduced in the KGST Act only from 1998 and did not contemplate a retrospective operation for an anterior period. This being the case, the levy of interest on Section 23 (3A) would not apply in respect of a demand of tax pertaining to assessment year 1996-1997. - assessment order, to the extent it demands penal interest under Section 23(3) of the KGST Act on the petitioner, cannot be legally sustained. I quash Ext.P1 assessment order to the extent it demands penal interest under Section 23(3) of the KGST Act from the petitioner for the assessment year 1996-1997. - Decided in favour of assessee. 2015 (4) TMI 698 Whether the goods purchased by the petitioner for carrying on its business activities, are eligible for issuance of C Forms and whether it has to be appreciated by the authority concerned by examining the nature of goods purchased - Held that:- The first respondent would state that the petitioner is a manufacturer of Food items and Fried Chicken, the items purchased do not come within the purview of Section 8(3)(b) of the Act. However, such a decision was taken without affording a reasonable opportunity to the petitioner. Therefore, the petitioner gave a representation to the second respondent on 16.04.2014 by setting out all the facts. But, the second respondent, instead of considering the contentions raised by the petitioner, forwarded the same to the first respondent, which should not have been done. It is clearly an abdication of power vested with the statutory authority as pointed out by the Bombay High Court in decision cited supra that all these matters are quasi judicial and if an officer has rendered incorrect findings, then the same could be revised by the appropriate authority. The second respondent, having sufficient jurisdiction to revise the orders passed by the first respondent, ought not to have simply forwarded the matter to the first respondent, who has already rejected the petitioner's request. Therefore, this Court is convinced that the manner in which the application has been dealt with, is not in consonance with the provisions of the Act - Decided in favour of assessee. Indian Laws 2015 (4) TMI 692 Application for interim relief - Validity of Order passed by Excise authority - Violation of provisions of rules and regulations under Uttar Pradesh Sheera Niyantran Adhiniyam - Prospective effect or retrospective effect - Review of own previous judgment - Held that:- earlier reservation for 2012-13 of 20% of the product of molasses was to continue till a new policy was promulgated, which in the present case has been done on 14.8.2014. Learned Standing Counsel, on the other hand, contends that the decision in the case of M/s Triveni Engineering and Industries Limited (2011 (3) TMI 1526 - ALLAHABAD HIGH COURT) which has been relied upon and is Annexure-9 to the writ petition, has been considered by a coordinate Bench in the other case of Dwarikesh Sugar Industries Limited Vs. State of U.P. and others, [2015 (4) TMI 611 - ALLAHABAD HIGH COURT]. So far as the issue of the effect of the judgment in Dwarikesh Sugar Industries (2015 (4) TMI 611 - ALLAHABAD HIGH COURT) is concerned, we are of the opinion that we cannot review the said judgment, and it is a precedent of binding nature so long it is not set aside. Further even if the judgment does not lay down the law correctly, the same can only be assailed after the State is given an opportunity to file a counter-affidavit and the matter is heard. So far as the interim order passed by the Apex Court is concerned, the same does not come to the aid of the petitioner at this stage.
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