TMI Tax Updates - e-Newsletter
April 8, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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Income Tax:
Receipt of an award from B. D. Goenka Foundation for Excellence in Journalism - It being a payment of a personal nature, it should be treated as capital payment, being akin to or like a gift, which does not have any element of quid pro quo. The aforesaid prize money was paid to the assessee on a voluntary basis and was purely gratis - not taxable as income - HC
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Income Tax:
Measurement of distance for the purpose of agricultural land - Insofar as relevance of Section 11 of the General Clauses Act is concerned, it needs to be noted that here the relevant amendment prescribing distance to be counted must be aerial has come into force w.e.f. 1st April, 2014. - HC
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Income Tax:
Measurement of distance for the purpose of agricultural land - The distance between the municipal limits and assessed property/asset is to be measured having regard to the shortest road distance and not as per the crow's flies i.e. a straight line distance as canvassed by the Revenue - HC
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Income Tax:
Reopening of assessment - Since, question of ownership and depreciation thereon was accepted twice by the C.I.T (A), therefore, same cannot be allowed to be reopened in the garb of reassessment. - HC
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Income Tax:
Loan waived by the banks in favour of the respondent assessee in one time settlement - whether the principal amounts of loans retained by the assessee on account of one time settlement, constituted its income as per section 28(iv) though not under Section 41(1) - Held No - HC
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Income Tax:
Addition made under section 40A(3) - cash payment greater than ₹ 20,000/- - Single voucher was prepared to book the amount which does not mean that entire payment was made in a single day. - AT
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Income Tax:
Sale of agricultural land - The photographs depicts that the land was not used for cultivating agriculture crops, as it contains boulders and wild grass appears to be grown on the land - AO to re-verify the facts and documents - AT
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Customs:
100% EOU - Export obligation - from the unit at Bhimli goods were sent to Chennai unit and it is from Chennai unit that the export was effected - benefit of exemption cannot be dened - SC
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Customs:
There was a clear understanding between the supplier and the buyer to quote a lesser quantity in the bill of Lading and also to give an impression to the Department that the quantity actually imported was less - goods liable for confiscation - HC
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Customs:
Misdeclaration of goods - goods declared as Hot mix plant Batch type - On examination it was found that goods were only components of complete hot mix plant and not a complete hot mix plant - demand with penalty upheld - HC
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Wealth-tax:
Valuation of property - wealth tax - there is no material produced before us by the Revenue to show that the written down value does not represent the market value of the vehicles - HC
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Service Tax:
Cenvat credit - service tax paid on Access Deficit Charges - input service - assessee in this case is the user of the service provided by BSNL and that service is used for providing output service to the customers of the assessee - credit allowed - HC
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Service Tax:
Travelling expenses component of foreign currency expenditure - In spite of noting that these expenses were on foreign trips of employees, the adjudicating authority states "but still no service tax has been paid by the party" without even mentioning for which taxable service. This is shoddy. - AT
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Service Tax:
Non-application of mind (on the part of the adjudicating authority) is indeed writ bold and large across the impugned order. Such orders adversely and severely impinge upon the public's trust in the public authorities and for that reason a public authority displaying such egregiously irresponsible conduct and that too while performing quasi-judicial functions deserves to the put to costs. - AT
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Central Excise:
Excisability of Signages which are erected at various petrol bunks of IOC - both the Authorities have come to the conclusion that the final product is not immovable. - Therefore the circular is of no avail to the appellant. - HC
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Central Excise:
Valuation - whether the Tribunal could pass an order based on the statement made by the learned counsel for the respondent/assessee that the actual amortised cost has been included in the value of the components during the relevant period, which is not supported by any material - Held No - HC
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Central Excise:
SSI exemption - Clubbing of the clearance - Exercise of common managerial control was not sufficient to make out the others as dummy units - there is no evidence of financial flow back with the other units - no clubbing - AT
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Central Excise:
Classification of goods - Other furniture and parts thereof - the goods called as modular system furniture or workstations cannot be classified as a collective item as 'other furniture or parts', under CH 9403 of CETA, 1985. - AT
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VAT:
Benefit of the exemption - It is not specified that if a poultry farmer imports or effects inter-State purchase of chicks and chickens, it would be ousted from the purview of the notification and thus, not be entitled to the benefits of the notification - exemption allowed - SC
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VAT:
Classification of goods - carbon paper, stamp pad & ink of stamp pad and covert (eraser) - stationary items or not - If the Department intends to classify the goods under a particular heading or sub-heading different from that claimed by the assessee, the Department has to adduce proper evidence and discharge the burden of proof - HC
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VAT:
Classification of goods - stationary items or not - marker as well as highlighter can fall within the meaning of a pen and by highlighter as well as marker one can certainly write though the low by writing from a marker or a highlighter may not be to that extent but these are definitely instruments of writings. - HC
TMI Short Notes
Articles
Notifications
Income Tax-
33/2015 - dated
1-4-2015
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IT
Income-tax (Fourth Amendment) Rules, 2015
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99/2015 - dated
11-2-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Shree Brahma Samaj Seva Trust, Gujarat
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98/2015 - dated
11-2-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Siva Sakhti Sathya Sia Charitable Trust, Chennai
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97/2015 - dated
11-2-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On –Lupin Human Welfare & Research Foundation, Mumbai
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96/2015 - dated
11-2-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On –Bharat Sevashram Sangha, Kolkata
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103/2015 - dated
11-2-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On –Jankidevi Bajaj Gram Vikas Sanstha, Pune
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102/2015 - dated
11-2-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Karuna Trust, Ahmedabad
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101/2015 - dated
11-2-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – S. Mahatme Memorial Eye Welfare Charitable Trust, Nagpur
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100/2015 - dated
11-2-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Have A Heart Foundation, Bangalore
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2015 (4) TMI 255
Disallowance u/s 40(a)(ia) - non deduction of TDS - assessee submitted that having made the payment, section 40(a)(ia) cannot be attracted because it speaks of the amount “payable” and it does not cover the amount already paid - Held that:- Section 40(a)(ia) is not attracted in respect of payment already made by the end of the previous year. The AO is directed to verify the claim of the assessee and if it is in line with the view taken herein the same may be considered accordingly - Decided in favour of assessee for statistical purposes.
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2015 (4) TMI 229
Receipt of an award from B. D. Goenka Foundation - whether was taxable as assessee's income as the said institution was not covered by section 10(17A)? - Held that:- The causa causans in the present case is not directly relatable to the carrying on of vocation as a journalist or as a publisher. It is directly connected and linked with the personal achievements and personality of the person i.e. the appellant. Further, it is to be noted that the payment in this case was not of a periodical or repetitive nature. The payment was also not made by an employer; or by a person associated with the “vocation” being carried on by the appellant; or by a client of his. The prize money has in the instant case been paid by a third person, who was not concerned with the activities or associated with the “vocation” of the appellant. It being a payment of a personal nature, it should be treated as capital payment, being akin to or like a gift, which does not have any element of quid pro quo. The aforesaid prize money was paid to the assessee on a voluntary basis and was purely gratis. The correct legal position is that Section 10 exclusively deals with the exempt income not exigible to tax and should not per se be relied upon to ascertain whether the receipt would be a revenue receipt i.e. income chargeable to tax under sub-section (24) to Section 2 read with the charging provisions. The question of exemption under Section 10 would only arise if at the first instance, the receipt is found to be a revenue receipt. It would be incorrect to first examine whether a particular receipt has been exempted and then on the said reasoning and ratio proceed to decipher and hold that the amount/receipt is income for the purposes of the Act i.e. the Income Tax Act. In International Instruments vs. CIT, (1981 (3) TMI 59 - KARNATAKA High Court) it has been held that “A receipt may not be "income" at all within the proper connotation of that term and yet may come within the express exemption in this section, due to the over- anxiety of the draftsman to make the fact of non- taxability clear beyond possibility of doubt.” Just because a certain receipt is not exempt under Section 10, it doesn't follow that it is a revenue receipt and hence income. In G.R. Karthikeyan (1993 (4) TMI 9 - SUPREME Court), the Supreme Court has made an observation that when a particular “income” or “receipt” is exempt to a limited extent, it may be a relevant factor for determining the meaning of the expression “income”. However, this statement should not be read in isolation, bereft of the context in which it was made. This clearly illustrates that the main thrust there was on highlighting that the term "income" is of widest amplitude and should be given a natural and grammatical meaning. Casual "income" is income. Once, it is settled, that the receipt is income, partial exemption would necessarily indicate that the non- exempt part is taxable. ₹ 1 lakh received by the appellant- assessee as an award from B.D. Goenka Trust for Excellence in Journalism would be a capital receipt and hence not income taxable under the Act, i.e. Income Tax Act, 1961. - Decided in favour of assessee.
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2015 (4) TMI 228
Ascertaining the perquisite value on account of motor car - Tribunal directing AO to compute disallowance as per Rule 3 - Held that:- Mrs.Vasanti Patel appearing on behalf of the assessee that there is judgment in the field, namely, of the Commissioner of Income Tax Vs. British Bank of Middle East (2001 (8) TMI 12 - SUPREME Court) directly on the point. Since that covers the issue or question against the assessee and in favour of the revenue, we hold accordingly. - Decided in favour of revenue. Exclude from the profits and gains items of other income while working out the deduction under section 80-I as directed by Tribunal - Held that:- In the circumstances, for relevant assessment year, namely, 1987-1988 with which we are concerned, if the benefit was granted by the tribunal relying on the Assessing Officer's order but eventually what it has held is that though the amounts are termed "miscellaneous income", "other income" are derived from two industrial units situated at Ambernath and Kumbari. The same has nexus with the industrial activity of the assessee. In the circumstances the Assessing Officer was directed to consider these items under the head "Other income" and not exclude them for the purpose of deduction under section 80-I of the Income Tax Act. Thus, we are concerned for the year 1987-1988 but the ground in the present memo of appeal is framed in such a manner that it is difficult to ascertain whether the revenue is really aggrieved by what is done by the Assessing Officer for the year 1986-1987 or that the Assessing Officer will have to follow the direction in paragraph 11 of the order of the tribunal. We are of the opinion, that once the Assessing Officer has worked out details on the basis of items disclosed in the Profit and Loss account, then the directions given to him and issued in terms of paragraph 11 of the tribunal's order do not raise any substantial question of law. Expenditure incurred by the assessee is not in the nature of advertisement and no disallowance under Rule 6B can be made as directed by Tribunal - Held that:- We are of the view that the tribunal has followed the judgment of this Court in the case of the Commissioner of Income Tax Vs. Allana and Sons reported in (1993 (4) TMI 13 - BOMBAY High Court). If that is how the matter has been approached and equally the tribunal found that the facts and circumstances in case of Allana and Sons, are identical to the assessee before us then even this question cannot be answered, otherwise but in favour of the assessee. Relying on the judgment, this is not substantial question of law at all because the answer to it has been given by this Court in the judgment reported prior to the impugned order. Hence, the said question will have to be answered in favour of the assessee. Premium of group Insurance policy not be considered as salary or perquisite for disallowance under Section 40A (5) - Held that:- As far as disallowance and which has been made pertaining to the premium to group insurance policy, the tribunal held that the premium of group insurance should not be considered as salary or perquisites for disallowance under section 40A (5) of the Income Tax Act is the conclusion reached by the Commissioner (Appeals). However, this point or question has been repeatedly raised but stands covered against the revenue and in favour of the assessee. Production incentives - Held that:- The tribunal held that once the revenue could not establish that the nature of production of incentive payments for the assessment year 1987-88 are different from earlier years, then, the tribunal's view for earlier assessment year on facts would bind the revenue. We do not know how such view can give rise to any substantial question of law. Decided in favour of the assessee Exgratia payments made to retiring employees - deletion of addition by tribunal - Held that:- Tribunal has upheld the Commissioner's view. In doing that the tribunal has referred, in the impugned order to its findings in its order and pertaining to the same assessee for the assessment year 1982-83. That would bind the revenue. There are series of orders but the tribunal for the sake of reference points out its order for the assessment year 1982-83. In the circumstances, we are of the view that there being no distinction on facts and the tribunal's consistent view being not questioned successfully because the departmental application for reference was rejected by the tribunal itself, then this question is also not substantial question of law. In any event, the authoritative pronouncement by the Division Bench of this Court in the decision brought to our notice, namely, the Commissioner of Income Tax Vs. Maina Ore Transport (P) Ltd. (2008 (8) TMI 504 - BOMBAY HIGH COURT ) answers the question in favour of the assessee. Include depreciation on guest house while computing the disallowance under section 37 (4) - Held that:- It is fairly conceded by Ms.Patel that the decision of the Hon'ble Supreme Court in the case of Britania Industries Ltd. Vs. the Commissioner of Income Tax (2005 (10) TMI 30 - SUPREME Court) answers it against the assessee and in favour of the revenue. Investment allowance under section 32A in respect of the 10 items though the same were not used directly for manufacturing activities - Held that:- Once again it has been brought to our notice that in the assessee's own case pertaining to disallowance, namely, Investment allowance under section 32A, the tribunal has passed the order in years 1979- 80, 1980-81, 1982-83 and 1983-84. In the first assessment year 1979-80 the department sought to make reference of a question of law to this Court but that application was rejected by the Income Tax Appellate Tribunal. Thereafter for the assessment year 1981- 82 the department application to seek reference of the identical question was dismissed by the Income Tax Appellate Tribunal. We find that for some years the department endeavored to make an application and sought reference of the question of law to this Court for its opinion. However, for some years it did not make such attempt. In the circumstances, the tribunal was justified in concluding that the view taken by it earlier and pertaining to this assessee continues to bind the revenue. In any event, there is judgment of this Court in the field namely, Associated Bearing Co. Ltd. Vs. the Commissioner of Income Tax (2005 (10) TMI 75 - BOMBAY High Court ). That makes a reference to all prior decisions of this Court. Having perused them we do not find that the findings of tribunal can be termed as perverse or vitiated by a error of law apparent on the face of record. This question is answered in favour of the assessee and against the revenue. Allowing higher rate of Investment Allowance of 35% on machineries installed for the purpose of manufacturing Sulphuric Acid by tribunal - Held that:- As far as last question is concerned, we do not find how it is framed for it does not arise from any of the tribunal's findings or grounds However, we do not find any reference being made to higher rate of investment allowance of 35% on machinery installed for the purpose of manufacturing Sulphuric Acid. This question, therefore, could not have arisen and from paragraph 32 of the tribunal's order as well. We cannot conclude that such question can be termed as substantial question of law. From the order passed by the Commissioner, we could not discern that any such reference and particularly to the product has been made. In the circumstances, we do not think that question no.9 can be termed as substantial question of law.
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2015 (4) TMI 227
Measurement of distance for the purpose of agricultural land - ITAT held that the distance of 8 kms. ought to be measured by the approach road and not by the straight line method ? - Held that:- If the assessee has earned business income and not the agricultural income, Section 11 of the General Clauses Act will prevail unless a different intention appears to the contrary. The impugned order appears well reasoned in the facts and circumstances to clearly indicate that any consideration received out of sale of the agricultural land cannot be treated as business income for the purpose of income tax. The distance between the municipal limits and assessed property/asset is to be measured having regard to the shortest road distance and not as per the crow's flies i.e. a straight line distance as canvassed by the Revenue. The income out of transactions of immovable property in the nature of agricultural land is held as capital gain exempted under the Income Tax as arising from the agricultural land. See DLF United Ltd. vs. Commissioner of Income Tax [1995 (9) TMI 51 - DELHI High Court] Insofar as relevance of Section 11 of the General Clauses Act is concerned, it needs to be noted that here the relevant amendment prescribing distance to be counted must be aerial has come into force w.e.f. 1st April, 2014. The need of amendment itself shows that, in order to avoid any confusion, the exercise became necessary. The Parliament noticed the Judgments being delivered and therefore, emphatically pointed out aerial distance as the relevant norm. This exercise to clear the confusion, therefore, shows that benefit thereof must be given to the assessee. It is settled law that, in such matters, when there is any doubt or confusion, the view in favour of the assessee needs to be adopted. The Circular No.3/240, dt.24.1.2014 shows vide clause no.4 amendment in definition of 'Capital Asset' and clause 4.5 dealing with applicability expressly stipulates that it takes effect from 1.4.2014 and therefore, prospectively applies in relation to the assessment year 201415 and subsequent assessment years. Hence, the question whether prior to the said assessment year 201415 the Authorities erred in computing the distance by road does not arise at all. The IT cannot be questioned on that ground. For these reasons, Section 11 of the General Clauses Act also has no application in the present matter where the ITAT was concerned with the assessment year 200910 or prior to the time when amendment took effect. - Decided in favour of assessee.
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2015 (4) TMI 226
Reopening of assessment - Dolphin Drilling PTE Limited is not the owner of Belford Dolphin, in view of the document dated 04.05.2003, thus depreciation wrongly claimed - Held that:- Assessee has claimed depreciation of ₹ 3,05,73,40,212/- and declared loss of ₹ 99,30,56,370/-, during the course of the assessment proceedings of Assessment Year 2004-05, which was accepted by the Appellate Authority. Order further reveals that A.O. has estimated the cost of drillship at 130 million dollars instead of 260 million dollars, as on 09.10.2003, that is the day, when drillship was sold in India and depreciation has been computed as per Annexure No. “A” of the assessment order. Appellate Authority has further held that the actual cost of the drillship to the assessee is what has been claimed by it before A.O. The assessee has duly furnished form 3CEB which is a report under Section 92E of the Income Tax Act, alongwith its return of income before the A.O. Accordingly, we do not find any infirmity in the order of C.I.T. (A) for allowing the claim of depreciation. Respectfully, following the above decision of Hon’ble I.T.A.T for earlier Assessment Year 2004-2005, I also hold that appellant has rightly declared the cost of acquisition of the drillship at U.S. $ 270 million as on 09.10.1993 and accordingly the depreciation should be allowed for the instant year. Since, question of ownership and depreciation thereon was accepted twice by the C.I.T (A) in Assessment Year 2004-05 and 2005-06, therefore, same cannot be allowed to be reopened in the garb of reassessment. Assessee has claimed credit of T.D.S without offering the income for taxation - Held that:- Order passed by the appellate authority would further reveal that AO has not drawn any adverse inference about the declaration of such revenues in P&L Account vis-à-vis the TDS certificates claimed in the return of income. Judgment further reveals that both these points were assailed before the Appellate Authority i.e. Commissioner of Income Tax (Appeal)-1 by the Revenue. Further contention of Revenue was repealed and was not accepted by the Appellate Authority.Impugned notices for re-assessment are hereby quashed - Decided in favour of assessee.
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2015 (4) TMI 225
Loan waived by the banks in favour of the respondent assessee in one time settlement - whether the principal amounts of loans retained by the assessee on account of one time settlement, constituted its income as per section 28(iv) though not under Section 41(1) - Tribunal deleted the addition - tribunal's order held that on perusal of the loan agreement insofar as loan from ICICI Bank is concerned was for purchasing machinery and availed by the assessee - Held that:- This Court has consistently taken a view that the loan amount written off would not come within the purview of section 28(iv) of the Income Tax Act. The view taken by this Court in the case of Mahindra and Mahindra Ltd. Vs. the Commissioner of Income Tax (2003 (1) TMI 71 - BOMBAY High Court ) and Solid Containers Ltd. Vs. Dy. Commissioner of Income Tax (2008 (8) TMI 156 - BOMBAY HIGH COURT)would enable the tribunal and equally us to conclude that the loan written off would not be taxable under Section 28(iv) of the Act. That issue specifically came up for consideration in the matter of Mahindra and Mahindra and it was held that the said provision would apply only when a benefit or perquisite is received in kind and has no application where benefit is received in cash or money. Following this decision in the case of Commissioner of Income Tax Vs. Xylon Holdings Pvt. Ltd. [2012 (9) TMI 449 - BOMBAY HIGH COURT] this Court held that the waiver would not come within the purview of Section 28(iv) of the Income Tax Act. Having perused this decision and in the peculiar facts and circumstances of the present case we are of the view that the tribunal has rightly upheld the order of the Commissioner. It has concluded that the factual and legal position enables it to hold that the direction of the First Appellate Authority cannot be said to be perverse. The view taken by him as termed by the tribunal is rational and judicious. More so, when the assessee company is a BIFR unit and it is in the process of revival, therefore, the banks waived loan as well as interest component due from the assessee. Equally, the loan sanctioned by ADCB and subsequently waived off has also been offered to tax. It is only in the ICICI bank's case that the tribunal took the above view and which we do not find as perverse or vitiated by a error of law apparent on the face of record. - Decided in favour of assessee.
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2015 (4) TMI 224
Disallowance under Section 14A - Held that:- The AO, instead of adopting the average value of investment of which income is not part of the total income i.e. the value of tax exempt investment, chose to factor in the total investment itself. Even though the CIT(Appeals) noticed the exact value of the investment which yielded taxable income, he did not correct the error but chose to apply his own equity. Given the record that had to be done so to substitute the figure of ₹ 38,61,09,287/- with the figure of ₹ 3,53,26,800/- and thereafter arrive at the exact disallowance of .05%. In view of the above reasoning, the findings of the ITAT and the lower authorities are hereby set aside. The appeal is allowed and the matter is remitted to work out the tax effect to the AO who shall do so after giving due notice to the party. - Decided in favour of assessee for statical purposes.
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2015 (4) TMI 223
Extension of stay - Held that:- 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. The writ petition stands disposed of.
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2015 (4) TMI 222
Addition made under section 40A(3) - cash payment greater than ₹ 20,000/- having been made as evident from perusal of Cash Book - CIT(A) deleted the addition - Held that:- Single voucher was prepared to book the amount which does not mean that entire payment was made in a single day. The payments are not covered under the provisions of section 40A(3) of the Act, except the payments of ₹ 11,493/- (40,000- 28,507) paid on behalf of Kamlesh Bansal and ₹ 29,528/- paid in cash to Harish Express service which are hereby confirmed. The balance addition of ₹ 1,94,974/- [2,35,995/ - (29,528+11,493)] made on this count is, accordingly, hereby deleted - Decided partly in favour of assessee. Difference of salary between salary sheet submitted and profit and loss account - CIT(A) deleted the addition - Held that:- The difference of ₹ 3,88,OOO was on account of the fact that salary register being maintained was for ESI purposes and did not cover the salary of two employees (i.e. Gunjan Chhabra and Vandana Desai) working in Faridabad branch (as they were not covered under the purview of same). The month-wise and branchwise charts of salary for both as per salary register and books of accounts were submitted to the AO. The above difference was also explained by way of another chart wherein details of salary paid to the 2 employees not covered under ESI were also shown. Also, it is pertinent to note that both of these employees have been paid by cheques and they are assessed to income tax. Further, the difference of ₹ 72,153/- was on account of arrears paid to employees which were duly verified by the AO from the books of account during the course of assessment proceedings. Thus AO was not justified in making addition on account of difference of salary as above - Decided in favour of assessee. Disallowance of difference between stock loss claimed and insurance claim made by assessee - CIT(A) deleted the addition - Held that:- The concerned VAT legislation does not provide for availability of input credit against the output tax liability in case of loss of stock by fire, etc. Moreover, the input credit is even not available in a case where there has been normal loss, like evaporation credit is available only in respect of goods which have been or would be actually sold by the dealer. It is on the premise that where the goods have not been disposed by way of sale and there is no output tax liability in respect of such goods, the dealer is not entitled to get the benefit of input tax credit. Thus, the input tax credit is also a loss for the dealer, as VAT department does not allow the availability in view of specific provisions in the Act and the insurance company does not make the payment on account of same in the event of loss. In essence, that also means that in view of input credit reversal, the same is added back to the purchase price and is not available as credit for set-off against output tax liability. Accordingly, the loss on account of fire would need to be calculated based on the purchase price only. Thus, the appellant has satisfactorily explained the difference between stock Loss claimed and insurance claim made by assessee. - Decided in favour of assessee. Disallowance of rent expenses - CIT(A) deleted the addition - Held that:- AO has failed to note the fact that these agreements had an escalation clause and accordingly the rent actually being paid by the appellant after escalation was a sum of ₹ 8,ll,072/-. Further, the other rent payments have also been made by account payee cheques. Tax has been deducted at source under section 1941 of the Act, wherever the payments exceeded the specified limits.The premises-wise details of rent paid by the appellant have been furnished during the course of the assessment proceedings as well as in the appellate proceedings, which have been placed on record. Also, all the depots are registered with the VAT department in the respective states. Thus AO was not justified in making addition on account of rent expenses - Decided in favour of assessee.
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2015 (4) TMI 221
Validity of revision u/s 263 - CIT rejected the books of accounts - Assessee has taken new unsecured loan and AO has obtained confirmation only Bank A/c of lender has not been obtained to examine the creditworthiness - Assessee has paid designing charges and it is not enquired as to whether TDS was made on these payments - A.O. has not taken any details nor made any enquiry on a/c of fire loss claimed - Duty draw back is set off totally & negligible profit is shown Held that:- Unable to see whether the CIT provided opportunity of being heard to the assessee which is paramount and mendatory requirement of the Act prior to invoke provision of Sec. 145(3). The CIT rejected books of accounts by pointing out that the business results could not be ascertained or verified in the absence of bills, vouchers and other relevant records to support the same. The CIT also noted that the stock details are not verifiable as raw material are given in weight while finished goods in nos. and size of finished goods is also not given. The deficiencies as noted by the CIT cannot held inclusive until and unless the assessee is provided due opportunity of being heard to explain his stand which has not been granted by the CIT. Thus the CIT rejected books of accounts of the assessee in a unjustified manner and rejection of books and estimation of net profit in pursuant to it and enhancing the assessment without affording due opportunity of hearing to the assessee is not only against the scheme of the Act but also violative to the principles of natural justice and hence, conclusion of CIT is not sustainable cannot be held as valid in this regard. See B.S.Sangwan (2015 (1) TMI 1011 - ITAT DELHI) - Decided in favour of assessee.
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2015 (4) TMI 220
Sale of agricultural land - AO disallowed the claim of exemption of surplus on sale of agricultural land and brought the same to tax under the head short term capital gains - CIT (A) observed that as per the certificate given by the Director (Planning) HMDA, the land does not fall within the prescribed municipal limits, therefore, cannot be treated as capital asset u/s.2(14)(iii) and to be considered as as agricultural land, thus the gain on sale of land cannot be brought to tax Held that:- Relevant evidence/documents were not produced during the assessment proceedings with respect to carrying out agricultural activities. Also income from sale of agricultural produce (Jowar) was not substantiated by supporting the claim and furnishing bills and vouchers. The photographs which were taken during the post search clearly depicts that the land was not used for cultivating agriculture crops, as it contains boulders and wild grass appears to be grown on the land. Hence as could be seen from the photographs the land seems to be unploughed and unutilized, whereas according to the assessee, the land has been actually put to use for agricultural purpose. In these circumstances, we are of the opinion that the issue of land being agricultural land has not been proved beyond doubt and hence the issue is set aside to the file of the AO who shall verify all the necessary documents as well as the bills and vouchers for the sale of agricultural produce before concluding whether the land is agricultural land. Further for the exclusion of land from the definition of capital asset, the definition of capital asset is to be as per section 2(14)(iii). Hence, the AO shall verify whether the land is a capital asset as per section 2(14)(iii) - Decided in favour of Revenue for statistical purposes.
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Customs
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2015 (4) TMI 239
Confiscation of goods - appellant had failed to deposit the recovery amount depicted - Held that:- It is apparent, that in view of the appellant's written acknowledgement he could have been required to make good the deficiency in the goods deposited with him, by making payment therefor. The complaint also alleges, that action was initiated against the appellant, only on account of his having not deposited the required amount, consequent upon the issuance of Demand Notice - ends of justice would be met, if the the appellant deposits the amount indicated in the Demand Notice dated 05.09.1995, along with interest at the rate of 9%. The appellant undertakes to deposit the amount claimed from him by the Collectorate of Customs and Central Excise, Shillong , along with interest above-mentioned, within four weeks from today. In the event of the appellant not making the above deposit, the instant appeal will be deemed to have been dismissed, resulting in the revival of the proceedings pending before the Chief Judicial Magistrate, Imphal , Manipur. In case such a deposit is not made, it shall also be open to the Customs Department, to recover the amount due, as arrears of land revenue. - Decided conditionally in favour of assessee.
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2015 (4) TMI 238
Benefits of Notification No.64 /88 dated 01.03.1998 - import of hospital equipments - Non fulfillment of conditions of Notification - Held that:- Appellants had not complied with those conditions, a show cause notice was issued by the Commissioner as to why the duty be not charged and penalty be imposed. It resulted into passing of an order dated 10.12.1999 by the Commissioner confirming the demand of duty of ₹ 16 ,16,089 /- and imposing penalty of equivalent amount on appellant No.1 as well as ₹ 1 lakh on appellant No.2 . The appellants challenged this order by filing two appeals before the Customs, Excise & Gold (Control) Appellate Tribunal. The Tribunal vide the impugned judgment dated 16.04.2003 upheld the finding of the Commissioner. However, insofar as fine is concerned, the same is reduced to ₹ 10 lakhs and the penalty has also been reduced to ₹ 25 ,000 - pure finding of fact has been recorded on the basis of material produced before it to the effect that though first condition was fulfilled by the appellants, they failed to fulfill the second condition - Appellant seeks to withdraw petition - Petition withdrawn.
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2015 (4) TMI 237
100% EOU - Export obligation - Exemption under the Notification No. 13/81 dated 09.02.1981 - Held that:- it cannot be denied that the respondent, which is an E.O.U ., had fulfilled its legal obligation of exporting the manufactured goods as per Notification (General Exemption No. 127). Notification lays down three conditions and on fulfillment thereof, an E.O.U . becomes entitled to the exemption. - it could not be denied by the appellant that the respondent-undertaking had exported out of India 100 per cent of articles manufactured by it. The only argument which is sought to be raised is that the unit at Bhimli (Visakhapatnam) which was given the status of E.O.U . has not fulfilled this obligation and in fact, goods were sent to Chennai unit and it is from Chennai unit that the export was effected. We hardly see it to be a ground to deny the exemption. As mentioned above, it is the respondent, namely, M/s. Alsa Marine & Harvests Ltd., which is an E.O.U . and it is this undertaking which has fulfilled its obligation under the aforesaid notification. Whether it is done from Bhimli (Visakhapatnam) or Chennai unit, would be totally irrelevant and immaterial - No error in the order passed by the CESTAT - Decided against Revenue.
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2015 (4) TMI 236
Confiscation of goods - Penalty u/s 112(a) - Misdeclaration of goods - Held that:- There is sufficient evidence on record to show that there was a clear understanding between the supplier and the buyer to quote a lesser quantity in the bill of Lading and also to give an impression to the Department that the quantity actually imported was less. Therefore, the provisions of Sec.111(f) is clearly attracted. As regards Sec.111(i), whatever found excess is taken to be as concealed. Especially,w hen it is an LCL container, if the officers happen to be lax in supervision and the custodian also co-operates, it is possible to get away with misdeclaration, even though the chances are remote. Concealment does not necessarily mean that there should be a false bottom or it should be covered by something else. Importation of excess quantity over and above what is declared in the bill of Lading is also concealment and therefore, I hold that Sec.111(i) is also attracted in this case. Therefore, the goods under seizure are liable to confiscation under Sec.111(f) and 111(i) of the custom act, 1962. Tribunal erred in holding that since no Bill of Entry is filed to clear the subject import, there is no case of mis-declaration. The commissioner has not proceeded on the basis of Section 111(d) of the Customs Act. The Tribunal, however, misconstrued the appeal as one filed by the respondent in a case falling under section 111(d) which is not correct. It is a case of confiscation by invoking the provisions of Sections 111(f) and 111(i). Enormous material has been culled out by the Commissioner to justify invocation of Sections 111(f) and 111(i). The reasons given by the Commissioner on the basis of the admitted fact/statements and the documents established a case that the importers have, in fact, involved themselves in such an import which renders the goods liable for confiscation under sections 111(f) and 111(i) of the Customs Act. The Tribunal misdirected itself by holding that there is no question of mis-declaration as contemplated under Section 111(d), when the Commissioner has not proceeded with the matter in terms of Section 111(d) of the Customs Act. Hence, we have no hesitation to hold that the Tribunal order is erroneous. - Decided in favour of Revenue.
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2015 (4) TMI 235
Misdeclaration of goods - goods declared as Hot mix plant Batch type - On examination it was found that goods were only components of complete hot mix plant and not a complete hot mix plant - denial of exemption from duty in terms of Notification No.17/2001-Cus. - Imposition of penalty - Held that:- On examination of the imported goods, import documents and the correspondences between the respondent/importer, the supplier and the local representative, the Commissioner came to the conclusion that the importer misdeclared the goods. Further, it is admitted by the respondent/importer that the goods imported are certain components of the hot mix plant and not a complete plant. Since the respondent has misdeclared the goods as hot mix plant, the Commissioner came to the conclusion to confiscate the goods. Once confiscation is ordered, penalty is automatic. As the respondent/importer had admitted the position and their evidence is also very clear stating that they had imported only parts of hot mix plant and not entire plant, the above-said decision in the case of IVRCL (supra) does not apply to the facts of the present case. Further, the correspondences between the respondent/importer, the supplier and the local representative clearly show that the importer was aware that the goods were only components and not entire plant. - Following decision of Commissioner of Customs (AIR), Chennai V. A.P.Pinherio reported in [2014 (12) TMI 610 - MADRAS HIGH COURT] - Decided in favour of Revenue.
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Corporate Laws
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2015 (4) TMI 234
Application for restoration of company name as per Section 560(6) of the Companies Act - Provision allows restoration only in case of company is aggrieved - Name strike off due to unable to manage affairs of the company - Held that:- It is no-doubt true that sub-section (6) of Section 560 provides that company aggrieved could approach this Court. Further, the said provision itself contains that this Court could consider the same, if it is otherwise just that the company be restored to the register. If this aspect of the matter is kept in view and when there are no allegations against the petitioner company with regard to misdemeanor on their part and the application for striking off the company being sought for any collateral purpose, the claim as put forth by the petitioner considering that striking had been in the circumstance when they were unable to manage the affairs of the company would have to be accepted. In such circumstance, when the board of the company has presently resolved to revive the company and is seeking restoration of its name in the Registrar of Companies, the contention put forth by the petitioner would have to be accepted. In any event, restoration would be subject to the condition that the petitioner company would comply with other statutory requirement for the periods from the date it was struck off till the date of its restoration. - Decided in favour of appellant.
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2015 (4) TMI 233
Penalty due to violation of clause 35 of the Listing Agreement and Regulations 3(d) and 4(2)(f) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations (PFUTP), 2003 - Non disclosure of encumbrance on shares to the stock exchange - Encumbered pursuant to an order passed by the arbitrator in the arbitration proceedings Held that:- In view of the words ‘shares pledged or otherwise encumbered’ in the format annexed to clause 35 of the Listing Agreement (as amended), appellants were obliged to disclose to the Stock Exchanges details of shares which are otherwise encumbered by the promoter/promoter group and since the appellants have failed to make such disclosures, appellants have violated clause 35 of the Listing Agreement as well as PFUTP Regulations is unjustified, because, firstly, neither any regulation framed by SEBI nor clause 35 of the Listing Agreement cast an obligation on the promoter/promoter group to make such disclosures to the listed Company, and in the absence of such disclosure made by promoter/ promoter group, SEBI is not justified in directing the listed Company to disclose to the Stock Exchanges details of shares which are ‘otherwise encumbered’ by the promoter/ promoter group. Secondly, as per the press release issued by SEBI on January 21, 2009, clause 35 of the Listing Agreement was to be amended so that details of pledged shares and release/sale of shares are first made by promoter/promoter group to the listed Company and in turn, the listed Company would disclose the same to the public through the Stock Exchanges. Since the promoter/ promoter group are not obliged to disclose to the listed Company details of shares that are otherwise encumbered by them, SEBI is not justified in directing the listed Company to disclose to the Stock Exchange details of ‘otherwise encumbered’ shares which are not furnished to it by the promoter/promoter group. Thirdly, when an Adjudicating Officer of SEBI has already construed the words ‘shares pledged or otherwise encumbered’ and held that the said words would cover particulars relating to pledged shares only, the Adjudicating Officer in the present case is not justified in taking a contrary view that too without assigning any reasons.Such a conduct on part of the Adjudicating Officer is highly objectionable. We hope that the officers of SEBI shall henceforth ensure that no orders are passed by them which are mutually contradictory to each other. For the reasons stated hereinabove, we set aside penalty of ₹ 1crore and ₹ 1.25 crore imposed on each appellant by SEBI on ground that the appellants have failed to disclose to the Stock Exchanges, fact that the shares of the appellant Company held by the respective promoter/promoter group have been encumbered pursuant to an order passed by the arbitrator in the arbitration proceedings between the promoter/promoter group and some third party. -Decided in favour of appellant.
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FEMA
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2015 (4) TMI 232
Contravention of Section 9 (1) (b) and (d) of the Foreign Exchange Regulation Act, 1973 - Penalty u/s 50 - Criminal prosecution for Economic Offences - Economic Offences Court acquitted the appellant holding that the prosecution has not proved the guilt of the appellant beyond all reasonable doubt - Imposition of pre deposit condition for hearing appeal against imposition of penalty - Held that:- In view of the decision of the Supreme Court in Standard Chartered Bank's case (2006 (2) TMI 272 - SUPREME COURT OF INDIA), which has also been rendered under the provisions of the Foreign Exchange Regulations Act, the plea of the appellant that on his acquittal in the criminal case, no penalty is imposable on him, does not merit consideration, since the Supreme Court has categorically held that adjudication and prosecution are two independent proceedings and the finding in one is not conclusive in the other. In view of the above decision of the Supreme Court, this Court finds no reason to interfere with the order passed by the Appellate Tribunal. - Decided against appellant.
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Service Tax
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2015 (4) TMI 254
Benefit of Cenvat credit - outdoor catering services - services provided in the factory for employees of the factory and outward freight services - whether the assessee can utilise the cenvat credit facilities in respect of outdoor catering services, provided in the factory for its employees and outward freight service as input service - held that:- Court dealt with the issue with regard to outdoor catering service, in a batch of appeals in [2015 (3) TMI 736 - MADRAS HIGH COURT] held in favour of the assessee by following the decision of the Bombay High Court in the case of CCE V. Ultratech Cement Ltd. reported in [2010 (10) TMI 13 - BOMBAY HIGH COURT], wherein all the contentions raised by the Revenue has been considered in extenso including the definition of 'input service' as defined in the case of Maruti Suzuki Ltd. V. CCE reported in [2009 (8) TMI 14 - SUPREME COURT] . The Bombay High Court came to the conclusion that the decision of the Larger Bench of the CESTAT in the case of CCE V. GTC Industries Ltd. [2008 (9) TMI 56 - CESTAT MUMBAI] is a correct law, however, with a rider that where the cost of the food is borne by the worker, the manufacturer cannot take credit of that part of the service tax which is borne by the consumer. - Therefore, the issue as decided by the Tribunal and the various Courts clearly settled the issue that the Cenvat Credit has been properly availed in respect of outdoor catering services. Outward freight charges - Held that:- Kanartaka High Court in the case of CCE V. ABB Ltd., Bangalore reported in [2011 (3) TMI 248 - KARNATAKA HIGH COURT], which was rendered on the appeal filed by the Department as against the decision of the full Bench of the Tribunal, while answering the issue whether the services availed by a manufacturer for outward transportation of final products from the place of removal should be treated as an input service in terms of Rule 2 (1) (ii) of the CENVAT Credit Rules, 2004 and thereby enabling the manufacturer to take credit of the service tax on the value of such services - Decided against Revenue.
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2015 (4) TMI 253
Cenvat credit - service tax paid on Access Deficit Charges - input service - Whether the Tribunal has fallen into error by holding that Access Deficit Charge is an Input Service as per the definition in Rule 2(l) of the Cenvat Credit Rules, 2004 - Held that:- Finding of fact by the Tribunal that the facility provided by BSNL to the assessee, who, in turn, provide such services to their subscribers, is nothing but a telecom service is justified. The Department has not produced any material to contradict this finding of fact. - A plain reading of Rule 2(l) of the Cenvat Credit Rules, 2004 makes it clear that the assessee in this case is the user of the service provided by BSNL and that service is used for providing output service to the customers of the assessee. Therefore, the definition squarely applies to the facts of the present case. Since the assessee has satisfied the requirement of Rule 2(l) of the Cenvat Credit Rules, 2004, the Department was not justified in taking a different view contrary to the said provision. - no reason to interfere with the order of the Tribunal - Decided against Revenue.
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2015 (4) TMI 252
Demand of service tax - Various services - Travelling expenses component of foreign currency expenditure - Held that:- In spite of noting that these expenses were on foreign trips of employees, the adjudicating authority states "but still no service tax has been paid by the party" without even mentioning for which taxable service. This is shoddy. In any case, the reimbursements made towards travelling expenses are not liable to service tax as there is no evidence that the same are in relation to any taxable service. - adjudicating authority has not undertaken any analysis of the appellants' submissions and merely records a fiat that the appellants are liable to pay service tax in spite of taking note of the appellants' submissions that they did not provide such services and merely reimbursed a part of marketing expenses. On the other hand, the appellants have been able to show that these amounts were actually expenses at their hands, which is also evident from the various schedules of profit and loss account, where they have been booked as expenses. Obviously, therefore, these expenses cannot be relating to the services rendered by the appellants also because if the appellants had actually rendered any such service, it would have generated an income for them and not expenses. Advertising and Marketing Expenses in Foreign Currency - The appellants claimed and submitted details showing that out of the expenses on advertising service, for payments made to various advertising agencies abroad, they have paid the service tax under reverse charge mechanism along with interest for the period 2006-07 to 2011-12. They had not paid service tax upto 2005-06 on such payments as the reverse charge mechanism came into effect with the introduction of Section 66A in the Finance Act, 1994 with effect from 18.04.2006. That the "reverse charge mechanism" did not have any legal basis prior to 18.04.2006 is no longer res integra and, therefore, idle parade of familiar judicial pronouncements in this regard (like Indian National Shipowners Assn Vs. Union of India) [2008 (12) TMI 41 - BOMBAY HIGH COURT] is avoidable - Appellant also asserted that they had not paid service tax on such foreign exchange expenses shown under this head which related to purchase of materials. In the absence of any evidence to the contrary, as the onus lies on the Department, it will have to be held that Revenue is not able to establish that any more service tax is leviable under this head than what has been discharged by the appellants along with interest. "Marketing Support" (including Marketing Support, Advertising and Sales Promotion) - adjudicating authority has not undertaken any analysis of the appellants' submissions and merely records a fiat that the appellants are liable to pay service tax in spite of taking note of the appellants' submissions that they did not provide such services and merely reimbursed a part of marketing expenses. On the other hand, the appellants have been able to show that these amounts were actually expenses at their hands, which is also evident from the various schedules of profit and loss account, where they have been booked as expenses. Obviously, therefore, these expenses cannot be relating to the services rendered by the appellants also because if the appellants had actually rendered any such service, it would have generated an income for them and not expenses. Income from lease of property - adjudicating authority in subsequent paras merely reproduced the legal definitions relating to "renting of immovable property service" "supply of tangible goods for use in India" and "Business Auxiliary Service" and thereafter simply moved on to the next component of demand namely "Income from Lease Vehicles" without even a whisper of any analysis and finding about the sustainability of this component of demand relating to what is called "Income from Lease of Property". This is nothing but a cavalier and careless attitude on full display. The appellants actually showed with reference to their profit and loss account that these were their expenses, which were incurred on leasing the immovable property for their use. Thus they were the recipient of the said service and therefore the question of they being liable to pay service tax is preposterous; it not being a case of import of service inviting reverse charge mechanism. It is admittedly unusual to copiously and verbatim quote paragraphs after paragraphs from the adjudication order. However, it was felt necessary in the present case to do so to drive home the point that the adjudicating authority has been highly and conspicuously non-speaking, non-reasoned, arbitrary and cavalier while passing the impugned order. Non-application of mind (on the part of the adjudicating authority) is indeed writ bold and large across the impugned order. Such orders adversely and severely impinge upon the public's trust in the public authorities and for that reason a public authority displaying such egregiously irresponsible conduct and that too while performing quasi-judicial functions deserves to the put to costs. Accordingly, we set aside the impugned order - Costs imposed - Decided in favour of assessee.
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Central Excise
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2015 (4) TMI 247
Excisability of Signages which are erected at various petrol bunks of IOC - Circular No.58/1/02-CX dated 15.1.2002 - Whether Tribunal in [2009 (4) TMI 258 - CESTAT, CHENNAI] was right in upholding the order of the Commissioner treating the signages as movable property contrary to the clarification issued by the Board - Held that:- findings of the Commissioner as well as the Tribunal are that the signages are capable of movable and are installed by fixing it on a concrete foundation and can be detached and shifted to another location without damaging them. Therefore, the decision of the Supreme Court [2006 (10) TMI 2 - SUPREME COURT OF INDIA] stands distinguished in the facts of the present case. Even otherwise, we find that the finding of fact by the Commissioner as well as by the Tribunal cannot be an issue for consideration in appeal. - first question of law is a question of fact and on the second question of law whether the Board's Circular is binding - general proposition is given with regard to immovable final products. In the present case, both the Authorities have come to the conclusion that the final product is not immovable. Therefore the circular is of no avail to the appellant. - Decided against assessee.
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2015 (4) TMI 246
Imposition of penalty - Whether imposition of penalty under Rule 96ZO(3) of the Central Excise Rules, 1944 equal to the amount of duty not paid during the stipulated period is mandatory - Held that:- Assessee, engaged in the manufacturing of M.S. Ingots/Billets of Non Alloy Steel, was in default of Rule 96-ZO(3) of the Rules for delay in depositing the duty, which was paid on later dates. The show cause notices were issued under Rule 96-ZO(3) and 209 of the Rules, in which the demand of interest amount of ₹ 24,095/- was liable to be paid, at the same time, attracting violation of the Rule 96-ZO(3) of the Rules, a penalty of ₹ 57 lacs was imposed by the order-in-original. - Commissioner(Appeals-I), reduced the penalty to ₹ 5 lacs. The Customs, Excise & Service Tax Appellate Tribunal, New Delhi(CESTAT), vide its previous judgment, relying upon Mool Chand Steels Pvt. Ltd. Vs. CCE, Meerut, (2004 (11) TMI 563 - CESTAT NEW DELHI), reduced the penalty to an amount of interest, at ₹ 26,000 In the judgments cited by the Central Excise Department, the question of vires of the Rules was not considered. The judgments were rendered in view of Dharmendra Textile Processors' case(2008 (9) TMI 52 - SUPREME COURT ), which was later on explained in Union of India Vs. Rajasthan Spinning & Weaving Mills(2009 (5) TMI 15 - SUPREME COURT OF INDIA), and in which, it was clearly stated by the Supreme Court that the judgment in Dharmendra Textile Processors' case(2008 (9) TMI 52 - SUPREME COURT ), was relevant only for the purpose of Section 11AC of the Central Excise Act, and that so far as several other statutory provisions are concerned, the Court is not making any observations. - once the Rule has been declared ultra vires by the High Court, having competent jurisdiction to provide such determination, the same Rule cannot be relied on for the purposes of imposing penalty, equal to the amount of central excise duty of the relevant period. - Decided in favour of the assessee.
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2015 (4) TMI 245
Power of Tribunal - Extension of stay - Extension beyond period of 365 days - Whether the Hon'ble CESTAT has erred in granting waiver of pre-deposit of assessed demand in favour of the respondent during pendency of the appeal thereby extending the period of stay beyond 365 days ignoring the recent amendment to Section 35C of the Central Excise Act, 1944 - Held that:- Following decision of Commissioner of Cus. & C.Ex., Ahmedabad Vs. Kumar Cotton Mills Pvt. Ltd. [2005 (1) TMI 114 - SUPREME COURT OF INDIA] - Matter remanded back - Decided in favour of Revenue.
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2015 (4) TMI 244
Valuation - Power of Tribunal - whether the Tribunal could pass an order based on the statement made by the learned counsel for the respondent/assessee that the actual amortised cost has been included in the value of the components during the relevant period, which is not supported by any material - Held that:- Tribunal has merely recorded the statement made by the learned counsel for the assessee and dismissed the appeal filed by the Department. In this view of the matter, the findings of the Tribunal appears to be based on conjectures and surmises. Even though the Tribunal has accepted the findings of the Commissioner (Appeals), proceeded on a wrong premise and recorded a new and undecided fact at the instance of the counsel for the assessee to dismiss the appeal filed by the Department. - order passed by the Tribunal is not in consonance with the proceedings in issue or material available on record. Accordingly, this appeal deserves to be remanded back to the Tribunal for fresh consideration - Matter remanded back - Decided in favour of Revenue.
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2015 (4) TMI 243
Valuation of goods - Provisional Assessment – Quantity Discount – Cash Discount – Earlier department disallowed abatements towards cash discount, quantity discount etc which resulted in demand of differential duty - Validity of Tribunal's order - Held that:- The grievance of the Revenue is that in the present order of the Tribunal, the verification before the original authority is not qualified as has been done in the previous order. On a reading of both orders passed by the Tribunal, there appears to be some justification in the grievance of the Revenue. It is clear from the record that the remand order in the present case does not impose conditions as imposed in the earlier order dated 7.5.08. This Court is of the considered view that the order in the present appeal, if it is following the earlier order, should be in consonance with the directions contained in the earlier order with regard to finalisation of provisional assessment, whereby the assessee is bound to furnish documents to support the claim in the finalisation of provisional assessment. However, such is not the case in the present order, which does not qualify any verification before the original authority. In such circumstances, this Court holds that the order of the Tribunal, impugned in the present appeal, should be in consonance with previous judgment [2008 (5) TMI 634 - CESTAT CHENNAI] - Matter remanded back - Decided in favour of revenue.
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2015 (4) TMI 242
Denial of SSI exemption - registration was issued before the SSI exemption was extended to the cotton yarn - Two registrations taken with different initials - Clandestine removal of goods - Misdeclaration of goods - clearance of cheese yarn in the guise of PRH yarn - Held that:- old unit was registered with Central Excise in the name of G.M. Vyas and the second unit viz. Vyas Textiles "B" unit was registered in the name of M.G. Vyas s/o G.M. Vyas. Therefore, we find that the department's allegation that the proprietor has deliberately obtained two registrations by changing the initials of G.M. Vyas and M.G. Vyas appears to be factually incorrect. - Unit I was registered in the name of G.M. Vyas whereas the second unit was held by M.G. Vyas who is s/o of G.M. Vyas. As evident from the registration certificates, the department has not adduced any evidence to prove that M.G. Vyas is not the son of G.M. Vyas and both relates to same individual. Therefore, we do not find any merit in the Revenue's allegation that proprietor has obtained registration by falsely declaring the name by changing the initials. Both the units have obtained central excise registration certificates much prior to the SSI exemption extended to cotton yarn vide Notification No. 90/94 dt. 25.4.94. We find from the documents submitted by the respondents in their cross objections, the respondents had adduced two letters vide No. 311/VT/94 and No. 312/VT/94 both dt. 12.5.94 to the Collector of Central Excise, Coimbatore requesting for allowing SSI exemption upto to the limit of ₹ 30 lakhs as per Notification No. 1/93 dt. 1.3.93 as amended by Notification No. 90/94 dt. 25.4.94. - once the return is scrutinized and accepted by the jurisdictional Superintendent, the adjudicating authority has rightly held that there is no suppression of facts. Therefore, we are of the considered view that the respondents are eligible for SSI exemption of ₹ 30 lakhs for both the units in the year 1994-95. We find that there is no merit in the revenue contention and the adjudicating authority has rightly dropped the proceedings both on merits and on limitation. There is not even a single evidence either statutory document or private documents or even payment details or any other corroboratory statements of customers that they have received cheese yarn under the invoices which is described as Hank Yarn. The burden of proof is entirely on the department to establish that there was clearance of cheese yarn either from the respondents premises particularly when the demand of excise duty on cheese yarn of ₹ 22 lakhs covering the period of 5 years. The department has to establish mis-declaration and evasion of duty, there should be statutory proof beyond doubt other than the statements. Even if preponderance is to be applied in the case of clandestine removal, the department has to establish through corroborative documentary evidence and not merely relying on a general statement from the customers. Department has demanded excise duty on cheese yarn on the ground that respondents have clandestinely removed in the guise of PRH purely on oral statements without any corroborative evidence either from the respondent's premises or from the buyer's documents etc. Therefore, we find that the adjudicating authority has discussed the issues at length and has given a detailed order while dropping the demand proposed in SCN. By respectfully following the decision of the Hon'ble high court (2008 (9) TMI 603 - PATNA HIGH COURT), we do not find any infirmity in the impugned order passed by the adjudicating authority. - Decided against Revenue.
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2015 (4) TMI 241
Classification of goods - Other furniture and parts thereof - SSI exemption - Clubbing of the clearance value of all the three units - Held that:- it is evident that the appellants are engaged in the supply of modular office partitions, workstations and furniture by procuring components from various sources and integrate and install them at their customers' premises. Their activity of fabrication and assembly of components does not result in the emergence of any new commodity, which is movable or marketable as such. The individual components remain as such and there is no transformation into a distinct commodity. - the impugned goods called as modular system furniture or workstations cannot be classified as a collective item as 'other furniture or parts', under CH 9403 of CETA, 1985. Clubbing of clearance - Held that:- Exercise of common managerial control was not sufficient to make out the others as dummy units, as held in the case of Alpha Toyo Ltd. Vs. CCE, New Delhi - [1994 (3) TMI 203 - CEGAT, NEW DELHI]. On perusal of the records, there is no material available of flow-back of funds. It is well settled by a series of decisions that mere common partners and proprietor of other concern, and use of staff etc., would not sufficient to hold that units are one and the same. After going through the order of the Commissioner (Appeals), we do not find any reason for clubbing of the three units. On the identical issue the Revenue initiated the proceedings in other Commissionerates. The proceedings initiated in the Hyderabad Commissionerate and Bangalore Commissionerate were dropped by the respective Commissioner (A). There is no material that the order of the Tribunal was challenged before the higher Appellate Authority. In the present appeals also, Revenue took the same grounds as in other cases. We have already stated that there is no evidence of financial flow back with the other units. So, we agree with the findings of the Commissioner (Appeals) on both the issues. - No reason to interfere with the order of the Commissioner (Appeals). - Decided against Revenue.
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2015 (4) TMI 240
Denial of CENVAT Credit - Suppression of facts - Invocation of extended period of limitation - Held that:- There was a declaration filed by the assessee that the impugned capital goods would not be used exclusively in the production of final product, which was exempted from payment of whole excise duty leviable thereon. This was a statutory declaration filed by the assessee under the then Rule 57T of the erstwhile Central Excise Rules 1944. But, the fact remains that the appellant used the machinery exclusively in the manufacture of the exempted product. Thus, it is a clear case of mis-declaration of facts. The assessee deliberately declared that the imported capital goods would not be used exclusively in the manufacture of exempted product and then they are eligible to avail CENVAT Credit. Thus, it is a clear case of mis-declaration to evade payment of duty. Hence, the extended period of limitation would be applicable. - Decided against assessee.
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CST, VAT & Sales Tax
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2015 (4) TMI 251
Benefit of the exemption under the notification SRO No.1727 of 1993 - entire turnover from sales of chicks and chicken are exempt from the levy of tax under the KGST Act - Whether one-day chicks that the dealer purchases from the State of Tamil Nadu and rears in the State of Kerala are exempted from payment of tax in view of Notification No.1723 of 1993 which has come into effect from 04.11.1993 - Held that:- Object of the notification ought to be considered in placing correct interpretation on the entries employed thereunder and thus, must receive a liberal construction. It is well settled that a provision providing for an exemption has to be construed strictly. In cases wherein the language of the exemption contained in the notification is simple, clear and unambiguous, the exemption notification must be given its natural meaning and the object and purpose of the notification need not be looked into. [CCE v. Favourite Industries, (2012 (4) TMI 65 - SUPREME COURT OF INDIA)]. - Entry 24 of the notification contemplates two categories of dealers, (i) a poultry farmer and (ii) hatcheries. What is exempted under the notification is the turnover from sales of chicks and chickens by both types of dealers. It is not specified that if a poultry farmer imports or effects inter-State purchase of chicks and chickens, it would be ousted from the purview of the notification and thus, not be entitled to the benefits of the notification. In our considered opinion, language of the notification is clear and precise. The plain reading of the entry in the notification herein neither reflects any ambiguity nor creates confusion as to contents of the notification and therefore, we need not look into the object and purpose of the notification which prompted the State authorities to frame and issue the aforesaid notification. - High Court were not justified in allowing the Revision Petition and upsetting the order passed by the Tribunal - Decided in favour of assessee.
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2015 (4) TMI 250
Denial of exemption claim - Classification of goods - Rate of levy of duty @4% or 10% - Classification of marker & highlighter - Classification as pen - Classification of carbon paper, stamp pad & ink of stamp pad and covert (eraser) - Classification as stationary items - Held that:- As per notification dt. 04/03/1992 the category was "all types of fountain pens, ball pens and accessories thereof" and as per notification No.F.4(8)FDGR.IV/94-49 dated 7.3.1994 it was exchanged to "all types of pens including parts and accessories thereof, drawing materials and poster colours." Therefore, in my view, the scope of pen was enlarged and marker as well as highlighter can fall within the meaning of a pen and by highlighter as well as marker one can certainly write though the low by writing from a marker or a highlighter may not be to that extent but these are definitely instruments of writings. In the light of the judgment of the Hon'ble Apex Court [2008 (9) TMI 1 - SUPREME COURT ] as also definition of marker and highlighter as given above in my view marker as well as highlighter will literally fall in the category of "all types of pens" and accordingly, in my view, the Tax Board has rightly considered the said issue in favour of the assessee and against the revenue and I accordingly hold the same Claim of the assessee is well justified as in the notification dt.26/03/1999, the category is "All kinds of paper, stationery, greeting/wedding and other printed cards" and therefore, in my humble view, all three items will fall within the category of stationery. The sales tax enactment is one which touches the common man and his everyday life. Therefore, the terms in the said enactment must be in the manner in which the common man will understand them. In other words, the test is as to what a common man viewing or dealing with the article will understand it to be. In doing so, the particular use to which a particular customer may put in should be eschewed from consideration. Thus, in common parlance, (i) carbon paper, (ii) stamp pad & ink of stamp pad, (iii) covert (eraser) can certainly be called to be the items of stationery and in my view, the argument of counsel for the petitioner-Revenue is wholly unjustified that they form part of the residuary clause rather than the head of "All kinds of paper, stationery, greeting/wedding and other printed cards" . In my view, under the taxing statute, the words, which are not technical expressions or words of art, but words of everyday use, must be understood and given a popular meaning not in their technical or strong sense but in a sense as understand in common parlance and sense, which the people conversant with the subject matter, which the statute is dealing would attribute to it. Such words must be understood in their popular sense and at the place in which these are being told. The items namely; (i) marker & highlighter, (ii) carbon paper, (iii) stamp pad & ink of stamp pad, (iv) covert (eraser) will be available in a stationery shop alone and if one has to purchase such items, one will have to go to a shop of stationery only to get these items rather than from a textile or a grocery shop . Therefore, in my view, all these items can be understood according to the common commercial understanding of these terms and in my view, all these form part of stationery items and cannot be termed as falling within the general category. In so far as the classification of goods is concerned, the Hon'ble Apex Court in the case of HPL Chemical Ltd. (2006 (4) TMI 1 - SUPREME COURT OF INDIA) has held that classification of goods is a matter relating to chargeability and the burden of proof is squarely upon the Revenue. If the Department intends to classify the goods under a particular heading or sub-heading different from that claimed by the assessee, the Department has to adduce proper evidence and discharge the burden of proof. I notice that in the present case, except that the Revenue claims that it falls in residuary/general clause, nothing has been brought on record so as to come to the conclusion that these items are not items of stationery, burden was on the Revenue. - Decided against Revenue.
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2015 (4) TMI 249
Validity of the Himachal Pradesh Tax on Entry of Goods into Local Area Act, 2010 - held that:- Court has already taken note of the fact that the matter is pending before the apex Court, which involves identical issues and matters were adjourned till 12th August, 2013, in terms of order dated 12th June, 2013, passed by this Court - it is proper to dispose of these writ petitions by providing that all the writ petitions shall abide by the judgment of the apex Court read with the interim orders, referred to above. It is made clear that the writ petitioners/writ respondents are at liberty to lay motion in terms of the apex Court judgment, if need arises.
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2015 (4) TMI 248
Rejection of books of accounts - Best judgment assessment - Assessment done on the basis of SIB report - Held that:- Law laid down by the Division Bench of this Court in Ms. Vehalana Steels and Alloys Pvt Limited Muzaffarnagar vs. State of U.P. And others [2008 (1) TMI 864 - ALLAHABAD HIGH COURT] providing a copy of the report of the SIB to the revisionist during the assessment proceedings was absolutely imperative in order to enable the revisionist to prepare his defence. Having not done so the assessment order itself stands vitiated. In the present case since the Tribunal has itself remitted the matter to the assessing authority for consideration on certain questions, the order of the Tribunal deserves to be set aside. Order of the Tribunal dated 26.6.2014 and the assessment order dated 02.01.2010 and the appellate order dated 10.8.2011 are hereby set-aside. The matter is remitted to the Assessing Authority with the direction that the assessing authority shall make a fresh assessment after providing a copy of the SIB report to the revisionist and after giving him an opportunity to submit his explanation to the same. - Decided in favour of assessee.
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Wealth tax
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2015 (4) TMI 230
Valuation of property - Whether Tribunal was right in holding that the written down value of the cars and jeeps owned by the assessee should be taken as the market value for the purposes of wealth tax - Held that:- Following decision of Commissioner of Wealth Tax v. T.V.Sundaram Iyengar and Sons Ltd. [2006 (1) TMI 45 - HIGH COURT, MADRAS] - there is no material produced before us by the Revenue to show that the written down value does not represent the market value of the vehicles. Therefore, the said decision applies to the facts of the present case on all fours - Decided against Revenue.
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Indian Laws
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2015 (4) TMI 231
Abuse of dominant position by imposing unfair condition in agreement - Contravention of provisions of Section 4 of the Competition Act - Held that:- It is the case of the Informant that some of the clauses of 'the Agreement' are unilateral, one sided and unfair which is violative of the provisions of Section 4 of the Act. Such unfair clauses include the Opposite Party can unilaterally abandon of project without giving any reason to the buyers and its liability is limited to refunding the deposited money with 9 % simple interest; the Opposite Party can alter/modify the building plan, etc. without the consent of buyers; the buyer is required to pay an interest of 15% - 18% per annum for any delayed payment of instalment whereas the Opposite Party is to refund only the amounts received from the buyer without interest or in some cases 9% interest in the event of cancellation of the project, no provision for adequate compensation to buyers in case of failure on the part of the Opposite Party to deliver the possession within the stipulated time; unfair and one sided formation of owners' association by the Opposite Party, etc. Having examined the clauses of 'the Agreement' it appears that some of them are unilateral, one sided and loaded in favour of the Opposite Party. Based on the above, the Commission is of the view that the above said conduct of DLF Group, emanating from its dominant position in the relevant market, prima facie, amounts to imposition of unfair terms and conditions on the commercial office buyers which is anti-competitive as per the provisions of Section 4(2) (a) (i) of the Act.It is a fit case for investigation by the Director General (DG). - The Commission directs the DG for investigation into the matter.
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