TMI Tax Updates - e-Newsletter
May 11, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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Income Tax:
TDS u/s 195 - The payment of export commission by the Assessee to HMCL was not in the nature of payment of royalty or fee for technical services attracting disallowance under Section 40 (a) (i) of the Act. - HC
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Income Tax:
The capital gain would be taxable in the year in which such transactions are entered into even if the transfer of the immovable property is not effective or complete under the general law - The completion of "transfer" of an immovable property as per the general law is not a requirement for the applicability of the provisions of sub-clause (v) of section 2(47). - AT
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Income Tax:
Undervaluation of closing stock - CENVAT benefit was not available to the assessee therefore enhancement in the value of closing stock on account of CENVAT was not warranted - AT
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Income Tax:
TDS u/s 194C - non deduction of tds on labour charges - whether the labourers are the employees of assessee or they are working in contractual capacity attracting the provisions of TDS? - The character of the relationship of the employer and employee cannot be changed on the basis whether an organization is registered under PF and ESI. - AT
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Income Tax:
Case basis of accounting - Accrual of interest income - the stand of the assessee of offering interest income from Kisan Vikas Patra on cash basis cannot be held as incorrect - AT
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Income Tax:
Denial of exemption claimed u/s 11 - receipt of the assessee classified by it as "other income", comprised in it seminars/delegates fees, advertisement and miscellaneous income which far exceeded limits laid down in the second proviso to section 2(15) - exemption denied - AT
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Customs:
Classification - import of hardware with embedded software - the software has merged and formed part of the essential constituent of software for which reason, the identity of the software is lost and the hardware and software values will be inseparable - demand confirmed - AT
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Indian Laws:
Misconduct of Chartered Accountant - A Chartered Accountant is a person, who holds an office of confidence and not only his client, but even in Department in which Chartered Accountant represents the matter of his client, normally believe that he (Chartered Accountant) is performing his duties honestly. Confidence has been breached by respondent - Name from Membership removed for 5 years - HC
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Service Tax:
IPR services - Section 65 (105) (zzr) - The design or technical knowhow has to be first covered under an Indian law on the subject of intellectual property right, so that corresponding taxable service can be brought into picture - AT
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Service Tax:
Mandap Keeper Service - functions and activity of giving hotel rooms while organising functions in hotels is entirely different from Mandap Keeper Service - appellant need not be taxed under Mandap Keeper Service for the entire amount of the room rent collected by them. - AT
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Service Tax:
For another field formation of the same tax collection mechanism to take an alternative stand and, that too, for a limited period of time is best described, for want of another phrase, as ‘tax opportunism.’ That is contrary to the certainty that is the hallmark of tax collection authorised by the sovereign legislature and is reprehensible to the canons of taxation. - AT
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Service Tax:
Levy of penalty Penalty - amount of CENVAT credit reversed but without interest - When the assessee appellant has not paid the interest part of the demand confirmed by the lower revenue authorities, there is no merit in this appeal for setting aside the penalties - AT
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Central Excise:
Molasses lost due to mishap - The respondent has not applied for any remission of duty to the Proper Officer inspite of the provisions in the Central Excise Rules for claiming remission on goods lost or destroyed either by natural cause or unavoidable accident - demand confirmed - AT
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Central Excise:
CENVAT credit - input - case of Revenue is that rails were used to repair of the Bay by replacing the old worn out rail by a new rail and therefore, it would not come within the definition of input and capital goods under the CCR, 2005 - contention of revenue not correct - credit allowed - AT
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Central Excise:
Classification of NIDO Nutritious Milk for growing kids - flavouring agent of 0.03% of the total composition is added, which does not change the basic characteristic of the product and the product remains a nutritious milk drink only. - to be classified the Tariff Heading 0404 90 00 - AT
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Central Excise:
Refund of cenvat credit in cash - respondent is not able to utilize the cenvat credit account - During pendency of the appeal before the Commissioner (Appeals), the respondent has surrendered their registration certificate - Commissioner (Appeals) has rightly allowed the refund in cash - AT
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Central Excise:
Valuation - inclusion of amount collected towards compensation for non lifting of the goods - It is alleged that the recovery of amount from the customers as operational compensation is an additional consideration and will form part of the assessable value of the goods already cleared to such customer - such amount not to be inlcuded - AT
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VAT:
Reopening of assessment - The moment the petitioner on his own verification lodges an FIR against consignee agent regarding the use of the disputed Form-F, it is apparent that to some extent the petitioner is also convinced that there is some illegality or misuse in the utilization of the said Form-F - petition dismissed - HC
Articles
Notifications
News
Case Laws:
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Income Tax
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2017 (5) TMI 436
Powers of High court for condonation of delay - Held that:- Sub-section (2A) of section 260A of the Act was inserted which empowers the High Court to condone the delay. The question whether insertion of sub-section (2A) is prospective or retrospective need not be gone into in the present case, as in our considered opinion, the High Court has inherent jurisdiction to condone such delay of fourteen days. We, therefore, condone the delay of fourteen days and direct the High Court to decide the appeal on merits in accordance with law.
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2017 (5) TMI 435
TDS u/s 195 - Addition of export commission - treating the payment of export commission as royalty for the purposes of Section 9 (1) (vi) read with Section 40 (a) (i) - export of specified models to specified countries - Held that:- The specific wording of the clauses of both the LTAA and the EA, it is not possible to accept the contention that the export commission was in fact the monetisation of the negative covenant of the LTAA viz., abstaining from exporting to territories outside India. This argument at its best is ingenious but far removed from what the transaction in fact is. The consideration for the EA is clearly spelt out. Consequently, there was no question of there having to be an principal-agent relationship to justify the payment of the export commission. The amount spent on that score by the Assessee was for the benefit of its business and in fact resulted in a benefit. The payment of export commission by the Assessee to HMCL was not in the nature of payment of royalty or fee for technical services attracting disallowance under Section 40 (a) (i) of the Act. No substantial question of law - Decided in favour of assessee.
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2017 (5) TMI 434
Assessment of amalgamated company - Effective date of amalgamation - appointed date from which the scheme would be effective - Held that:- In the case at hand, the Bombay High Court in sanctioning the scheme of amalgamation has not specified any other date from which the scheme will be effective. Therefore, in the absence of any such date specified by the High Court, the appointed date mentioned in the scheme would be the relevant date from which the amalgamation/transfer takes place. Since the aforesaid date is 1.4.2008, the aforesaid company Rave Entertainment Private Limited stood dissolved and ceased to be in existence from the said date and was not liable for assessment for the Financial Year (1.4.2008 to 31.4.2009). The questions are answered accordingly in favour of the assessee and against the revenue and it is held that Income Tax Appellate Tribunal has not committed any illegality in holding 1.4.2008 as the effective date of amalgamation.
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2017 (5) TMI 433
Bar of limitation for imposing penalties - Penalty levied under Sections 271D and 271E - Held that:- This question came up for consideration in PCIT v. JKD Capital & Finlease Ltd. (2015 (10) TMI 1281 - DELHI HIGH COURT). The date on which the AO recommended the initiation of penalty proceedings was taken to be the relevant date as far as Section 275(1)(c) was concerned. There was no explanation for the delay of nearly five years in the ACIT acting on the said recommendation. The Court held that the starting point would be the ‘initiation’ of penalty proceedings. Given the scheme of Section 275(1)(c) it would be the date on which the AO wrote a letter to the ACIT recommending the issuance of the SCN. While it is true that the ACIT had the discretion whether or not to issue the SCN, if he did decide to issue a SCN, the limitation would begin to run from the date of letter of the AO recommending ‘initiation’ of the penalty proceedings. In the present case, the limitation in terms of Section 275 (1) (iii) of the Act began to run on 23rd July, 2012 and the last date for passing the penalty orders was 31st January, 2013. Therefore, the penalty orders issued on 26th February 2013 were clearly barred by limitation. - Decided in favour of assessee.
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2017 (5) TMI 432
Validity of assessment - time barred - pre-condition Clause (iii) of Explanation (i) to Section 153 (1) - Held that:- In the present case, the last date on which the Assessee was required to furnish the report was 7th July 2006 in terms of Section 153 (1) of the Act. The time for passing the assessment order expired on 6th September 2006 whereas it was passed only on 14th September 2006. The decision of this Court in CIT v. Bishan Saroop Ram Kishan Agro (P) Limited (2011 (5) TMI 540 - DELHI HIGH COURT ) squarely covers the issue in favour of the Assessee as it took note of the Circular dated 27th March 2009 of the Central Board of Direct Taxes (CBDT) regarding prospective application for amendment to the proviso to Section 142 (2C) of the Act which gave the AO ‘suo motu’ power to extend time for furnishing the audit report. For all the aforementioned reasons, the Court finds no error having been committed by the CIT (A) or the ITAT in holding that the assessment order in the present is barred by limitation. - Decided in favour of assessee.
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2017 (5) TMI 431
Benefit of Section 32 (1) (iii) - assets written off - claim of loss on account of writing off - Held that:- Section 32 (1) (iii) makes an express reference to “building, machinery, plant or furniture in respect of which depreciation is claimed and allowed under clause (i) and which is sold, discarded, demolished or destroyed in the previous year” Clearly, the only sub-clause (i) under which the deprecation could be claimed and allowed is second sub-clause (i) and not the first sub-clause (i). Provisions of clause (i) of sub- section (1) of section 32 do not apply in respect of the assets claimed to have become unusable and written off. See Commissioner of Income Tax v. Zoom Communication Pvt. Ltd. [2010 (5) TMI 34 - DELHI HIGH COURT] The Court is, therefore, unable to concur with the view taken by the ITAT, which, in turn, affirmed the view of the CIT(A) that the claim of the Assessee fell within the scope of Section 32 (1) (iii) of the Act. This is based on an erroneous reading of the provision as explained by this Court hereinbefore.Consequently, the question farmed is answered in the negative i.e. in favour of the Revenue and against the Assessee.
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2017 (5) TMI 430
Denying exemption under Sections 11 and 12 - whether the activities carried out by the Assessee fall under the 4th limb i.e., “the advancement of any other object of General Public Utility” of the definition of the term “charitable purpose” under Section 2(15) of the Act and not under the 2nd limb “education”? - Held that:- The ITAT came to the erroneous conclusion that merely because the Assessee had generated profits out of the activity of publishing and selling of school text books it ceased carrying on the activity of ‘education.’ The ITAT failed to address the issue in the background of the setting up of the Assessee, its control and management and the sources of its income and the pattern of its expenditure. The ITAT failed to notice that the surplus amount was again ploughed back into the main activity of 'education'. The question to be asked was whether the activity of the Assessee contributed to the training and development of the knowledge, skill, mind and character of students? In the considered view of the Court, the answer to that question had to be, in the facts and circumstances outlined above, in the affirmative. The Court, accordingly, concludes that the ITAT was incorrect in setting aside the order passed by the CIT (A) and in denying exemption to the Assessee under Section 11 and Section 12 of the Act. The ITAT erred in holding that the activities carried out by the Assessee fell under the 4th limb of Section 2 (15) of the Act, i.e., ‘the advancement of any other object of general public utility’ and that its activities were not solely for purpose of advancement of ‘education’. Questions (i) and (ii) framed by the Court are, therefore, answered in the negative, i.e., in favour of the Assessee and against the Revenue. Consistency - Held that:- On the issue of consistency, the Court notes that in the present case, continuously from AYs 1971-72 till 2005-06, exemption had been granted to the Assessee under Sections 11 and 12 of the Act. When for AYs 1975-76 and 1976-77 the AO sought to take a different view, the ITAT reversed that view and the decision of the ITAT was not challenged further by the Revenue. Apart from the fact that the Assessee was earning more profits from its essential activity of education, there was no change in the circumstances concerning the said activity since AY 2005-06 to warrant a different approach in the AYs in question. - Decided in favour of the Assessee
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2017 (5) TMI 429
Reopening of assessment - reasons to believe - Held that:- There is no finding or the reason recorded by the Assessing Authority that the petitioner had failed to disclose fully and truly all material facts, which were necessary for the assessment. The petitioner admittedly had submitted the complete details of the lease rent paid to the Greater NOIDA Industrial Development Authority during the financial year and that he had not deducted any tax at source. No material in this regard was suppressed by the petitioner and at the same time, no incorrect disclosure in that regard was made by it. The above disclosure was well within the knowledge of the Assessing Officer during the regular assessment proceedings. In view of the above, the second condition as laid down in the proviso to Section 147 of the Act regarding non disclosure of full and true particulars necessary for assessment was not satisfied for issuing the notice under Section 148 of the Act after the expiry of four years from the end of the relevant assessment year. - Decided in favour of assessee.
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2017 (5) TMI 428
Eligibility to claim deduction under Section 80HHD(1)- preemptive utilization of the reverse - whether Income Tax Appellate Tribunal was justified in holding that there was a preemptive utilization of the reverse and, therefore, the appellant was not eligible to claim deduction under Section 80HHD(1) - Held that:- The sub-clause (4) is very clearly. The reserve of the previous year as shown on 31st March 1999 can be utilised for the benefit of Section 80HHD and reserved amount for the current year cannot be utilised for the same year. It has to be utilised in the subsequent year and before the expiry of the period of five years and sub-clause (4) contemplates for non utilization of reserve fund which can be taxed only on completion of five years of the assessment year. Therefore, the view taken by the Tribunal is just and proper. - Decided against the assessee.
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2017 (5) TMI 427
Settlement application as abated on account of it not being true and full disclosure of unaccounted income - report submitted by the Income Tax Department i.e. Volumetric Report relied upon - Held that:- The petitioner's application has been wrongly treated as not being full and true by the Settlement Commission merely on the basis of the report dated 24/07/2012. All the facts were fully disclosed before the Settlement Commission including the factum of wrong allegation of excess mining being levied by the Income Tax Department on incorrect facts and the Settlement Commission has not even discussed how the contentions of the petitioner are wrong in so far as secondary evidences were concerned. It has simply reproduced in a columnar form the submissions of the Income Tax Department and the averment of the petitioner without pointing out how the petitioner is at fault. The Settlement Commission thereafter, proceed to determine that the private Architect is an expert, his report is based on latest technology and the fact of withdrawal of petition by the petitioner and thereafter the application was treated as not being full and fair disclosure of facts. The Settlement Commission has even dismissed the report dated 17/06/2013 prepared by the State Government at the direction of this Court. The Settlement Commission has also dismissed the statutory mining plan prepared under The Mines and Minerals (Development and Regulation) Act, 1957 and approved by IBM. The entire order does not discuss the petitioner's submission or why the submissions were not true and full and this approach shows that the Settlement Commission was predetermined not to pass the final order but proceeded with singe minded determination to send the petitioner back to the Assessing Officer. This Court is of the considered opinion that the order passed by the Settlement Commission dated 17/02/2017 passed under Section 245D(4) deserves to be quashed and is accordingly quashed. The volumetric report dated 24/07/2012 prepared by the Income Tax Department through a private architect is also quashed and the matter is remanded back to the Settlement Commission to process the petitioner's application and to pass a final order afresh ignoring the volumetric report dated 24/07/2012. The Settlement Commission shall consider all the documents recovered during the search and seizure and other material produce by the department and shall be free to pass appropriate order in accordance with law.
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2017 (5) TMI 426
Addition on bogus purchases - addition made merely relying on information obtained from the Sales Tax Department, the statements / affidavits of third parties - Held that:- A.O. failed to cause any enquiry to be made to establish his suspicions that the said purchases are bogus, the assessee has brought on record documentary evidences to establish the genuineness of the said purchase transactions, transactions, the action of the A.O. in brushing aside these evidences cannot be accepted. Further in the case of CIT vs Ashish International (2011 (2) TMI 1506 - BOMBAY HIGH COURT) has held that the genuineness of the statements relied upon by Revenue is not established when the assessee disputes the correctness thereof and has not been afforded opportunity to cross examine these parties. Moreover, when the payments for the said purchases to the said 12 persons is through proper banking channels and there is no evidence brought on record by the A.O. to establish that the said payments were routed back to the assessee, the addition made by the A.O. is unsustainable. - Decided in favour of assessee.
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2017 (5) TMI 425
Non-chargeability of capital gains in respect of the land - Held that:- The capital gain would be taxable in the year in which such transactions are entered into even if the transfer of the immovable property is not effective or complete under the general law. The assessee entered into an agreement with the builder/developer for development of the impugned land and construction of flats thereon. Further, the assessee acted on the impugned agreement by accepting from the builder/developer payments in the financial year 2006-07. In view of the facts and circumstances discussed above, all the conditions of sub-clause (v) of section 2(47) are satisfied in this case and therefore, it has to be inferred that a "transfer" did take place within the meaning of section 2(47)(v). The argument that the deeds in respect of the sale of flats were not registered/executed is not a relevant consideration so far as provisions of sub-clause (v) of section 2(47) are concerned. The completion of "transfer" of an immovable property as per the general law is not a requirement for the applicability of the provisions of sub-clause (v) of section 2(47). Thus, this ground is dismissed. CIT(Appeals) observed that the value of share of consideration of 27% of saleable or super-built area including parking places of the project allotted to the assessee on transfer of undivided share of 73% of land surrendered in favour of developer to be valued on the basis of guideline value of said undivided share of land allotted to the developer. In our considered opinion, this is also not appropriate method to determine the consideration receivable by the assessee on account of JVA dated 10.09.2006. In our considered opinion, cost of construction of built-up area of 27% of saleable or super-built area including parking places of the project allotted to the assessee to be ascertained by the Assessing Officer after examining the relevant record of cost of construction incurred or to be incurred by the developer. Accordingly, this said cost of construction would constitute as sale consideration received by the assessee in kind and that should be brought to tax in the assessment year 2007-08. If necessary, he could take assistance of DVO or any experts so as to arrive the cost of construction of 27% of constructed area, which would be transferred to the assessee. Thus, the issue is remitted to the Assessing Officer for the limited purpose of determining the sale consideration and to compute the capital gains accordingly after giving opportunity of hearing to the assessee. The issue relating to the computation of capital gains in both the appeals is remitted to the Assessing Officer for fresh consideration. Addition u/s.37(1) - TNCA sponsorship - Held that:- The above expenditure incurred by the assessee cannot be considered as incurred wholly and exclusively incurred for the purpose of assessee’s business. This expenditure is nothing but charity or donation, which cannot be allowed as a deduction while computing the income of the assessee. We do not find any infirmity in the order of the CIT(Appeals) and the same is confirmed. The ground raised by the assessee is dismissed.
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2017 (5) TMI 424
Deduction u/s 80IA - captive power generation unit - eligible profit of that unit - Held that:- As in assessee’s cases itself in A.Y. 2003-04 & 2004-05 deleted the impugned disallowance stating that the assessee was consuming power from two sources i.e GEB and Captive generation plant of its own. The GEB was being paid at the rate of 4.9 per unit while the power procured from Captive Unit installed by the assessee for the purpose of computing eligible profit the assessee has taken the market value of the power produced by Captive plant at the rate of 4.9 per unit. We noted that the similar issue has arisen before the Mumbai Bench of the Tribunal in the case of West Coast Paper Mills Ltd V/s JCIT reported in (2005 (6) TMI 547 - ITAT MUMBAI) in which the Tribunal, on this issue, what should be the price attributable to the power generated and consumed by the assessee for the purpose of computing the deduction available under section 80IA after availing the provisions of section 80IA (9). The cost of electricity produced by the assessee at Captive Unit may be taken at market value at ₹ 4.9 per unit for the purpose of computation of the eligible profit of that unit - Decided against revenue Addition made on account of provision made for bonus (assessment year wise) - Held that:- The above bonus is very much in the nature of an ascertained liability not to be added for the purpose of computing Section 115JB book profits. Shri Shinde fails to point out any distinction on the relevant facts in the two sets of assessment years in question. We thus decline this latter substantive ground as well.- Decided against revenue
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2017 (5) TMI 423
Applicability of Section 14(2) r.w.r. 8D - Held that:- Details of investment reveal that there were excess withdrawals of ₹ 2157101 and ₹ 464738 from M/s Behari Lai Lila & Sons & M/s Rudraksh Art & Craft, therefore excess withdrawals were available to be used in other investments in M/s Venkteshwera and/or M/s Souryagarh Palace. Apart from this, there was assessee’s own capital of ₹ 5135397 also. That on basis of the reasons and the contentions submitted by the assessee and as per the reasons hereinabove stated by us, we hold that in the case of assessee, the applicability of Section 14(2) read with Rule 8D will not be valid. We reverse the findings of the ld. CIT(A) by allowing the appeal of the assessee.
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2017 (5) TMI 422
Reopening of assessment - disallowance of loss claimed - non commencement of business - Held that:- The assessment in this case has been completed u/s 143(3) and as seen from the order of the AO, he has examined various expenditure claims and disallowed two of the items, which would not have come to the knowledge but for the verification of the expenditure claims. Not only that, annual report and other documents placed on record indicate that assessee has correctly claimed the revenue expenditure. The issue of commencement of business is necessary to examine for allowing expenditure. It is the first year of business commencement and the AO will certainly examine the commencement of business before allowing loss or profit of the year. Therefore, it cannot be said that AO has not applied his mind when he allowed the loss as claimed with certain disallowances. The very basis of earlier opinion being reviewed by the AO in the reassessment proceedings will certainly come into the domain of the ‘review of the order’ by the successive officer. Review of the order cannot be done in the form of reopening of assessment without there being any tangible material to form a different opinion, when the assessment is reopened within the four years from the end of the assessment year. It cannot be stated that assessee has not commenced business during the impugned AY. This is a fact on record that assessee commenced its lab facility, which is its main activity on 8th February, 2006 i.e. almost 50 days prior to the close of the accounting year. Not only there is an evidence that employees have been recruited and paid salaries to them, but also orders for procurement of raw material have been placed and some of the raw material purchased and utilized during the year and Assessee’s claim of depreciation was allowed by the AO in the original assessment. Assessee has commenced its business activity during the year under consideration and on merits, assets have been put to use. Thus reopening of assessment is bad in law - Decided in favour of assessee.
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2017 (5) TMI 421
Validity of the assessment proceedings initiated under section 147/148 - reference to the TPO under section 92CA(1)- Held that:- Aspects of the present case before us are identical to the facts before the Tribunal in Maximize Learning (P.) Ltd. vs. ACIT [2015 (2) TMI 662 - ITAT PUNE ]. In view thereof, we hold that when no assessment proceedings were pending in relation to the relevant assessment year, the Assessing Officer was precluded from making a reference to the TPO under section 92CA(1) of the Act for the purposes of computing the arm's length price in relation to the international transaction. Consequently, order passed by the TPO under section 92CA(3) proposing an adjustment of ₹ 12,17,43,370/- to the arm's length price of the international transaction was a nullity in law and void ab initio. In view of the above-said facts and circumstances, such an order passed by the TPO was not a valid material for the Assessing Officer to entertain a belief that certain income chargeable to tax had escaped assessment within the meaning of section 147 of the Act. Consequently, we hold that the reasons recorded for reopening the assessment under section 147 of the Act do not meet the requirements of the section and hence the Assessing Officer had no jurisdiction to issue notice under section 148 of the Act. Consequently, the subsequent order passed by the Assessing Officer under section 143(3) r.w.s. 147 and 144C of the Act is liable to be quashed. - Decided in favour of assessee.
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2017 (5) TMI 420
Validity of assessment u/s 153A - time limit for issue of notice u/s 143(2) expired - additions made towards disallowance of interest and deemed dividend u/s 2(22)(e) - Held that:- The time limit for issue of notice u/s 143(2) of the Act has been expired. The A.O. has made additions towards disallowance of interest and on account of deemed dividend without any incriminating materials. Therefore, we are of the view that the A.O. has no jurisdiction to make additions for the assessment years 2003-04, 2005-06, 2006-07 & 2008-09, in the absence of any incriminating materials. We further observed that the A.O. has made additions towards disallowance of interest and on account of deemed dividend based on the books of accounts and financial statements, which were already part of regular return filed by the assessee u/s 139(1) of the Act, but not based on any incriminating materials unearthed during the course of search - Decided against revenue Additions towards inflation of expenditure - Held that:- We do not find any merits in the arguments of the assessee, for the reason that the assessee himself had admitted inflation of hostel expenditure mainly with regard to the purchase of vegetables and other provisions. We further observed that the expenditure incurred towards purchase of vegetables and other provisions is supported by self-made vouchers and did not have proper evidence to prove the veracity of the expenditure, therefore, we are of the view that the A.O. was right in disallowing inflation of expenditure. The CIT(A) after considering the relevant explanations of the assessee has rightly upheld additions made by the A.O. We do not find any error in the order of the CIT(A). - Decided against assessee. Additions towards unexplained deposit in the bank account - Held that:- In the absence of any specific finding as to utilization of source available in the form of additional income out of inflation of expenditure, the A.O. ought to have telescoped the sources available towards additions made towards unexplained cash deposits in the bank account in the name of the employees. The CIT(A) without appreciating the facts, simply upheld additions made by the A.O. Therefore, we direct the A.O. to allow the benefit of telescope towards additional income available in the form of inflation of expenditure. In so far as unexplained investment in purchase of site, the assessee himself admitted that the said investment is outside the books of accounts. However, claims that the sources of income available in the form of additional income offered towards inflation of expenditure should be telescoped towards additions made on account of unexplained investment in purchase of site. Therefore, we direct the A.O. to allow benefit of telescoping on additional income offered towards inflation of expenditure to unexplained investment in purchase of site. Additions towards suppression of receipts - Held that:- A.O. has made additions solely on the basis of MIS report sent from branch office to head office which was found and seized during the course of search operations. We further observed that the additions made by the A.O. is not supported by valid evidences, except internal MIS report sent from branch office to head office for their accounting purposes. The assessee, on the other hand, categorically proved that the books of accounts has been prepared based on the actual receipt of fees collections as per which the fees receivable at the end of the financial year is at ₹ 10,62,000/- but not ₹ 15,78,750/-, thus there is no difference in fees collection. The A.O. without appreciating facts, simply made additions towards suppression of receipts. Therefore, we direct the A.O. to delete additions made towards suppression of receipts.- Decided against revenue Additions towards deemed dividend u/s 2(22)(e) - Held that:- the transaction between the assessee and his company is not a gratuitous payment, which falls under the ambit of deemed dividend u/s 2(22)(e) of the Act. Therefore, we direct the A.O. to delete additions made towards deemed dividend. - Decided against revenue
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2017 (5) TMI 419
Revision u/s 263 - unexplained investment in properties - capital gain computation - difference in the payment of stamp duty between the amount as reflected in Balance Sheet and an amount reflected in the reply submitted before the AO during the assessment proceedings - Held that:- It is not a case where no enquiries have been made by AO or an inadequate enquiry were made by the AO. In case of differential in stamp duty of ₹ 7,73,000/- as pointed out by learned CIT, the assessee duly explained that the value reflected as stamp duty in Balance Sheet comprised of stamp duty of ₹ 34,48,500/- and registration charges of ₹ 6,00,000/- and there is no difference in the value as reflected in Balance Sheet in the replies filed by the assessee before the AO during proceedings u/s 143(3) r.w.s. 153A of the 1961 Act. The said amounts were duly reflected in the Balance Sheet of the assessee. Investments were reflected in the Balance Sheet of the assessee. The evidences for above assessment years were filed before the AO in proceedings u/s 143(3) r.ws. 153 A of the 1961 Act which were verified by the AO. Hence, it could not be said that the said view is erroneous so far as prejudicially to the interest of revenue so as to be covered under the mandate of Section 263 of the 1961 Act which is fortified further by the AO itself dropping both the grounds of invocation of Section 263 of the 1961 Act by learned CIT in an assessment order dated 30-03-2014 framed u/s 143(3) r.w.s. 263 of the 1961 Act, wherein no additions were made on grounds of differential in stamp duty as well investments in properties and its sources. With respect to treatment of short term capital gains on sale of shares as business income invoked as one of the grounds by learned CIT for applying Section 263 also lacks merit as the AO had while framing assessment order dated 29-12-2010 passed u/s 143(3) r.w.s. 153A of the 1961 Act had made proper and detailed enquiries against which the assessee submitted detailed replies and arrived at conclusion to treat the gains arising from sale of share as capital gains which is a plausible view both on facts and on law. The replies filed by the assessee on this ground in proceedings before the AO u/s 143(3) r.w.S 153A of the 1961 Act is reproduced in preceding para's of this order and are not repeated again for sake of brevity. Thus, the order dated 25-03-2013 passed by learned CIT u/s 263 of the 1961 Act is even not sustainable on this ground. AO itself in original assessment framed u/s 143(3) of the 1961 Act vide assessment orders dated 19-12-2007 and also in assessment orders dated 29-12-2010 passed u/s 143(3) r.w.s. 153A of the Act has accepted gains on sale of shares as capital gains while it is brought on record that detailed enquiry was made by the AO before passing assessment order dated 29-12-2010 passed u/s 143(3) r.w.s. 153A of the 1961 Act. Even keeping in view the newly inserted explanation 2 to Section 263 of the 1961 Act, in our considered view this order dated 25-03- 2013 of the learned CIT u/s 263 of the 1961 Act is not sustain able in the eyes of law - Decided in favour of assessee.
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2017 (5) TMI 418
Unexplained cash credit u/s.68 - Held that:- We noticed that assessee has provided copy of I.T. return, bank account no. etc of the parties who had contributed towards share capital of the assessee-company. The assessee had received total share capital of ₹ 2,73,51,600/- and the Assessing Officer made an addition of ₹ 21,72,700/- u/s.68 of the Act in the case of the assessee on the basis of cash deposited in the bank account of 13 parties as stated above in this order. We find that Ld.AO has not conducted any enquiry to find out the source of above stated cash deposit in the bank account of the parties and Assessing Officer has also not initiated any proceedings to verify the source of cash deposit. Accordingly no further proceedings has been initiated to tax the unexplained cash deposit if any in the hand of the shareholders. Therefore, after considering the detailed findings of Ld.CIT(A), we do not find any reason to interfere in the order of Ld.CIT(A). - Decided in favour of assessee Interest attributable to the funds utilized for acquiring the capital assets - disallowance u/sec.36(1)(iii) - Held that:- Assessing Officer has stated that interest attributable to the funds utilized for acquiring fixed assets has not been capitalized by the assessee and he further held that assessee has also not proved the fund flow statement. We further noticed that the Ld.CIT(A) held that the Assessing Officer had not identified capital borrowed for acquiring capital assets. We observed after perusal of the records that assessee had not furnished necessary break-up with the fund flow statement for reconciliation of funds used in acquiring capital assets. Therefore, we do not incline with the decision of Ld.CIT(A) and in the interest of justice we restore this matter to the file of the Assessing Officer to decide a fresh after examination of the relevant details furnished by the assessee and after providing due opportunity to the assessee. Undervaluation of closing stock - assessee has not included in the value of closing stock amount of tax, duty and cess etc. actually paid or incurred by the assessee to bring the goods to the place of its location - Held that:- As noticed the contentions of the Ld.Counsel that the assessee was paying excise duty at concessional rate and it has not claimed benefit of CENVAT credit. We have considered the contentions of the Ld.Counsel that CENVAT benefit was not available to the assessee therefore enhancement in the value of closing stock on account of CENVAT was not warranted. We have also considered the findings of Ld.CIT(A) and the decision of the Hon’ble High Court of Gujarat in the case of Voltamp Transformers Ltd. v/s. CIT (2008 (4) TMI 518 - Gujarat High Court) that assessee was following exclusive method of accounting and the CENVAT was not debited or credited to the Profit and Loss account. Therefore, we uphold the order of Ld.CIT(A) on this issue.
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2017 (5) TMI 417
TDS u/s 194C - non deduction of tds on labour charges - whether the labourers are the employees of assessee or they are working in contractual capacity attracting the provisions of TDS? - Held that:- In the instant case we find that the labourers are working under the direct supervision of the assessee. They have no other separate business organization. They are representing the organization of the assessee. The payment was made to individual labourers and not to the labour contractor. Therefore the individual labourers can be treated as employee of the assessee. Thus in our considered view there exists an employer and employee relationship between the assessee and labourers. The payment to the employees can be in the form of fixed salary plus incentive commission as mutually agreed. Similarly the payment of PF and ESI by the employer cannot be the basis of deciding whether there exist employer and employee relationship. For the applicability of PF and ESI there are certain conditions attached to an organization. The character of the relationship of the employer and employee cannot be changed on the basis whether an organization is registered under PF and ESI. Thus we hold that the assessee is not liable for TDS deduction under section 194C of the Act. The assessee gets the relief accordingly.
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2017 (5) TMI 416
Reopening of assessment - permission from competent authority - Held that:- From the provisions of Section 151(2), it is evident that if the case is reopened by any Assessing Officer who is below the rank of Joint Commissioner within four years no approval from the higher authority is required. The officer below the rank of the Joint Commissioner are Income Tax Officer, ACIT, DCIT to reopen the assessment within four year u/s.151(2) mandatorily did not have any approval from their superior authority. The reliance was placed on the decision in the case of S. Sewa Singh Gill vs. CIT (1962 (3) TMI 110 - PUNJAB HIGH COURT) where it has been held that competency of ITO cannot be doubted and challenged as the assessment drafted by the ITO is final assessment and the CIT(A) making the approval regarding assessment is not valid. In the circumstances and the facts of the present case, the AO has acted at the behest of the superior authority and accordingly assumption of jurisdiction was bad. Accordingly, it will be a case of failure to exercise the discretion all together and such direction is held to be illegal and unwarranted, therefore, order so passed by the AO is directed to be quashed.
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2017 (5) TMI 415
Quashing the assessment made u/s 143(3) - legality of service of notice - deemed service of notice - Held that:- The assessee had changed its name. Further the assessee had not challenged the service of notice before the Assessing Officer and the assessee participated the assessment proceedings. In such a situation, the ld. CIT(A) is not justified in quashing the assessment made u/s 143(3) of the Act by the AO which is contrary decision of The Hon'ble Punjab & Haryana High Court in the case of Ramsh Khosla vs. ITO (1983 (12) TMI 35 - PUNJAB AND HARYANA High Court ) wherein held held that notice dispatched by the registered post either not received back or received back with endorsement ‘’refused’’ is deemed service.. Thus the appeal of the Revenue is allowed.
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2017 (5) TMI 414
Addition u/s 41 - cessation of liability - Held that:- The assessee has claimed that these were bona fide purchases of raw material made in earlier years for which payments were not made by the assessee to these parties. The assessee did not gave explanation before the authorities below nor filed any confirmations , but now has claimed before the tribunal that purchases were genuine/bonafide and these liabilities were outstanding to be payable as at 31-03-2012 which were reflected in books of accounts and there were no cessation of liability. The assessee has also claimed before us that the assessee had already offered the said amount for taxation in the assessment year 2015-16. The contentions of the assessee about genuineness/bonafide of purchases as well that these two accounts stood adjusted/written back and the income was offered to tax in assessment year 2015-16 , for which necessary verification needs to be done by the authorities below as to said claims of the assessee. Thus, we are inclined to restore this matter to the file of the A.O. for verification of the afore-said contentions of the assesse and de novo determination of the issues on merits in accordance with law after considering the submissions/explanations of the assessee in the light of evidences filed by the assessee. The assessee is directed to produce all necessary and relevant evidences and explanations before the A.O. to substantiate its claim in its defense which shall be admitted by the AO in the interest of justice - Decided in favour of assessee for statistical purposes
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2017 (5) TMI 413
TDS u/s 195 - tax to be deducted at source with regard to the payment made to agents - Held that:- There is no doubt that the persons receiving the commission incomes were located outside India and they had no permanent establishment in India. It is also a fact that services were not rendered in India. In the circumstances, we are of the opinion that considering the peculiar facts and circumstances of the case it has to be held that provisions of section 40(a)(i) could not be applicable to the payments made by the assessee to the foreign agents. Considering the above, we are of the opinion that the FAA was not justified in sustaining the partial disallowance. So, reversing his order, we decide the first ground of appeal in favour of the assessee. Disallowance made u/s. 14A - Held that:- As stated earlier, the assessee had not these the issue before the FAA. Before us, it was argued that the AO had made disallowance of ₹ 17.18 lakhs, that the AO was not justified in making disallowance under the head interest expenditure, that the assessee had sufficient own interest-free funds to make investments, that it had made strategic investment, that the AO had not arrived at the conclusion that disallowance made by the assessee was not as per the provisions of the law. The DR stated that order of the AO did not require any interference. We have admitted the additional ground, raised by the assessee with regard to 14A disallowance. In our opinion, in the interest of Justice, the matter should be restored back to the file of the AO for fresh adjudication. He is directed to afford a reasonable opportunity hearing to the assessee. Second ground is decided in favour of the assessee, in part.
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2017 (5) TMI 412
Penalty u/s 271(l)(c) - non-deposit of tax deducted at source with the Central Government and also non disclosure of particulars of non-deposit of tax deducted at source with Central Government in the computation of income filed - Held that:- In the appellate proceedings before the ld. CIT(A), the assessee did not make any appearance and the averment of the assessee as contained in Ground No. 6 filed with the tribunal was that because of the illness of its authorized representative , the assessee could not make representation before the ld. CIT(A) and it is prayed that one more opportunity be provided to the assessee to present its case on merits. Keeping in view of the factual matrix of the case and in the interest of justice, we are of the considered view that the matter needs to be set aside and restored back to the file of the ld. CIT(A) for de-novo adjudication of the issue on merits by learned CIT(A) . The ld. CIT(A) is directed to give one more opportunity to the assessee to represent the case before him
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2017 (5) TMI 411
Penalty u/s 272A(2)(k) - delay in filing of the quarterly TDS statement in form no 24Q and 26Q - Held that:- Assessee has come forward with the reasons that the said delay occur due to non availability of PANs in respect of few deductee parties but no details/evidences were filed by the assessee to substantiate the said contentions . It is also claimed that the director of the assessee was diagnosed with cancer , but again no details/evidences were furnished by the assessee to substantiate the said contention . The levying of the penalty u/s 272A(2)(k) of 1961 Act is not mandatory as perusal of Section 273B of 1961 will clearly reveal that the penalty u/s 272A(2)(k) will not be imposed if there was a reasonable cause for the failure. The assessee has relied on various case laws as cited above and has tried to explain a reasonable cause for the said failure so that its case gets covered by exempting provisions of Section 273B of 1961 to take it out of clutches of penalty provisions as contained u/s 272A(2)(k) of 1961 Act , but evidences were not filed by the assessee to substantiate the same. Thus we are inclined to set aside and restore this matter back to the file of the A.O. for denovo determination - Decided in favour of assessee for statistical purpose.
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2017 (5) TMI 410
Validity of reopening of assessment - reasons to believe - direction of the Additional CIT - Held that:- If we analyse the reasons recorded by the AO, it becomes clear that he has taken a decision to issue the reassessment notice as per the direction of the Additional CIT, that he was not in possession of any material that could be considered to be lead to the belief that taxable income had escaped assessment. Re-opening of completed assessment is not a routine matter.Provisions of section 147 should be invoked in deserving cases. It is said that each re-opened case has to be decided on its own merits and reopening of assessment has to be viewed on the touchstone of the reason to believe as recorded while issuing the notice. The reasons recorded cannot be supplemented by affidavits and other material.In the case before us, the AO has stated that the assessee had claimed deduction to reduce his tax liability. Which were the deduction and how much was the tax effect is not mentioned in the reasons. Reasons recorded by the AO are of very general nature-rather they can be termed vague. Provisions of section 147 cannot be invoked on such frivolous grounds. Non application of mind is evident from the sentence that notice was issued as per the direction of the Addl. CIT. Thus, the entire re-opening proceedings stand vitiated. - Decided in favour of assessee.
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2017 (5) TMI 409
Income from house property - annual letable value of the house property - Held that:- In view of the decision of the Hon’ble Delhi High Court in CIT versus Moni Kumar Suba (2011 (3) TMI 497 - DELHI HIGH COURT ) we hold that the Ld. assessing officer as well as the Ld. CIT (A) were not correct in enhancing the annual value of the property by notional amount of interest on account of interest free refundable deposit given by the landlord to the assessee. In the result ground No. 4 to 10 of the appeal of the assessee are allowed. Method of accounting - interest income from Kisan Vikas Patra - Held that:- As considered the rival contentions and also per used the provisions of section 145 of the income tax act which provides that Income chargeable under the head "Profits and gains of business or profession" or "Income from other sources" shall, subject to the provisions of sub-section (2), be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. In view of this, we do not find any infirmity in the stand of the assessee of offering interest income from Kisan Vikas Patra on cash basis. In view of this we direct the assessing officer to delete the addition of ₹ 2 38007/– as well as interest from core molding of ₹ 9 0377/– amounting in all to ₹ 366618/- on account of interest income chargeable to tax under income from other sources.
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2017 (5) TMI 408
Disallowance of exemption u/s 80P(2)(a)(iv) - Held that:- It is pertinent to note that there is a loss in respect of this particular assessment year. The stock register entry has also given the details wherein the figures are in the minus. There was no comment by the assessing officer as well as by the CIT (A) as to these figures are contrary to the stand of the assessee. In-fact the Assessing Officer though mentioned the statement of one of the employee it has not given any comment or any observation related to that statement that the sale was on the part of employees and not that of assessee. The statement was not dealt by the Assessing Officer while passing the assessment order. Therefore, in the interest of justice, it is necessary to remand back the matter before the Assessing Officer to verify the correctness of the statement as well as to verify the stock register as per the contentions of the Ld. AR before the authorities.
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2017 (5) TMI 407
Levy of fee payable u/s.234E - intimation u/s.200A - default in furnishing the TDS statements - Held that:- As decided in Maharashtra Cricket Association Vs. DCIT(CPC)-TDS, Ghaziabad [2016 (10) TMI 104 - ITAT PUNE] the amendment to section 200A(1) of the Act is procedural in nature and in view thereof, the Assessing Officer while processing the TDS statements / returns in the present set of appeals for the period prior to 01.06.2015, was not empowered to charge fees under section 234E of the Act. Hence, the intimation issued by the Assessing Officer under section 200A of the Act in all these appeals does not stand and the demand raised by way of charging the fees under section 234E of the Act is not valid and the same is deleted. The intimation issued by the Assessing Officer was beyond the scope of adjustment provided under section 200A of the Act and such adjustment could not stand in the eye of law. - Decided in favour of assessee
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2017 (5) TMI 406
Revision u/s 263 - AO had not examined the claim of the assessee to deduction under section 80-IA(4) vis-a-vis Explanation 13 to the said section which excludes profits earned from works contracts from deduction under section 80-IA(4) - Held that:- There is no dispute about the fact that in the preceding assessment year, i.e. the assessment year 2010-11, which was the first year of claim of deduction under section 80-IA, the assessee was allowed the same under section 143(3) of the Act. This means that for all purposes the claim of the assessee having been examined in the light of the parameters of eligibility laid down under section 80-IA, it could not be said that in the succeeding year those very same parameters had changed on the same set of facts. The Assessing Officer, after considering all the documents placed before it, had in the preceding year concluded that the assessee was carrying out an infrastructure related project which was not in the nature of works contract as defined under section 80-IA(13), read with Explanation and thus the assessee was eligible to claim deduction under section 80-IA of the Act. In the impugned case, which is the succeeding year, on the very same set of facts the findings of the preceding year on the fact that the assessee was carrying out eligible infrastructure project and not works contract, cannot now be disturbed, which is exactly what has been stated by the High Court in the order passed in the case of Micro Instruments Co. (2016 (9) TMI 210 - PUNJAB AND HARYANA HIGH COURT ). Following the same also we hold that the learned Principal Commissioner of Income-tax could not have exercised his revisionary powers since the claim of the assessee had been decided in the preceding year itself and without disturbing the same it could not have been dislodged in the impugned year. Thus we set aside the order of the learned Principal Commissioner of Income-tax on this count. The assessee's claim for deduction under section 80-IA was examined in all respects by the Assessing Officer during the course of assessment proceedings and duly allowed. Moreover the fact that the assessee had been allowed deduction on the same pattern in the preceding and succeeding years lends credence to the allowance of the claim by the Assessing Officer in the impugned year also. Further we find that the learned Principal Commissioner of Income-tax has no basis at all for stating that the profit earned on account of job work got done by sub-contractors was a separate contract which was not eligible for deduction under section 80-IA of the Act. What can be gathered from the findings of the learned Principal Commissioner of Income-tax is that the assessee is eligible for deduction under section 80-IA only on account of work/contract/project executed by it. We find that this understanding of the provisions of section 80-IA is incorrect and has no judicial precedents at all and on account of the same we hold that there is no error in the order of the Assessing Officer on this count also and set aside the same for this reason. The provisions of section 80-IA(8)/80-IA(10) are attracted only between transactions that take place between an eligible and non-eligible entity. The learned Principal Commissioner of Income-tax has not pointed out as to which among the two projects are eligible and which is not eligible. Having not pointed out the same we fail to understand how the learned Principal Commissioner of Income-tax came to the conclusion that an error had occurred in the order vis-a-vis the applicability of the provisions of section 80-IA(8)/80-IA (10) of the Act and so we find that the learned Principal Commissioner of Income-tax has failed to point any error in the order of the Assessing Officer in this regard. Further as stated above the issue had been examined during the assessment proceedings as held above by us and therefore there was no error in the order of the Assessing Officer. We therefore set aside the order of the learned Principal Commissioner of Income-tax on this count also. - Decided in favour of assessee.
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2017 (5) TMI 405
Denial of exemption claimed u/s 11 - rejection of claim for exemption from tax on subscription and delegates fees collected from members, based on the principle of mutuality - interpretation to section 2(15) - Held that:- Admittedly receipt of the assessee classified by it as "other income", comprised in it seminars/delegates fees, advertisement and miscellaneous income which far exceeded limits laid down in the second proviso. Thus, in our opinion the assessee could neither be considered performing charitable activities within the meaning of section 2(15) of the Act during the relevant previous year nor it could be considered as exempt on the principle of mutuality. We therefore, find no reason to interfere with the orders of the lower authorities. - Decided in favour of revenue
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2017 (5) TMI 404
Deduction under section 80P(2)(a)(i) - AO held the society to be a housing society and hence he has denied the deduction under section 80P(2)(a)(i) - Held that:- In this case it is evident that apart from providing credit facilities to its members the co-operative society is also engaged in activities of a housing co-operative society. Hence to the extent the profit of the assessee is attributable to the activity of providing credit facilities to its members the same be qualify for deduction under section 80P(2)(a)(i). The assessee's plea that in the past it has been provided deduction on the total income under section 80P(2)(a)(i) on the same set of facts cannot come to the rescue of the assessee. It is settled law from the honourable Supreme Court that a mistake cannot be perpetuated. As per the facts of the case and the mandate of law it is clear that the assessee is engaged in activities of providing credit facility as well as providing housing facility. Hence the assessee's activities which relate to the provisions of section 80P(2)(a) will get hundred per cent. deduction. In this regard it is noted that the assessee's books of account have not been maintained separately so as to depict profits attributable to both the segments. In this regard both the counsel agreed that the issue can be remitted to the file of the Assessing Officer and the assessee will co-operate in arriving at the profit attributable to both the segments. Accordingly in the interest of justice the issue of arriving at profits attributable to both the segments is remitted to the Assessing Officer. The Assessing Officer shall arrive at the figure of profits after giving the assessee an opportunity of being heard. See Chhattisgad Urban Credit Sahakari Sanstha Maryadit v. ITO [2015 (5) TMI 1088 - ITAT NAGPUR] Another issue on which the assessee has filed appeal is with regard to the learned Commissioner of Income-tax Appeals's direction that the assessee would not be eligible for deduction on interest income as it is not co-operative bank.
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Customs
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2017 (5) TMI 446
Quantum of redemption fine and penalty - import of photo copier - Since as per para 2.17 of the EXIM Policy 2004-09 import of second-hand goods except second-hand capital goods are restricted and permitted clearance only on the strength of license and since the importers failed to produce a valid license, the said goods were confiscated - What should be the percentage of redemption fine and penalty to be imposed on the importer who imports photo copier in violation of the Foreign Trade Policy? Held that: - the issue of imposition of redemption fine and penalty has been settled and now various Benches of the Tribunal have consistently held that the redemption fine of 10% of the value of the goods and penalty of 5% of the value of the goods is sufficient punishment to the importer - the imposition of redemption fine to the extent of 10% of the value of the goods and penalty of 5% of the value of the goods is sufficient - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 445
Classification - import of hardware with embedded software - Computer System with model VTP 560 SAMS workstation - "IT software CA" and SAM software with 2000 pieces of "Smart Cards" - Held that: - it is evident that software was very much part of the hardware imported. Adjudicating authority has noted that the software has merged and formed part of the essential constituent of software for which reason, the identity of the software is lost and the hardware and software values will be inseparable. Thus, it appears to reason that the software has been embedded along with hardware. Appellants have not been able to prove otherwise, either in the original adjudication or even before this forum. Reliance was placed in the case of Bhagyanagar Metals Ltd. [2016 (2) TMI 614 - CESTAT HYDERABAD], wherein Tribunal relied upon Apex Courts judgment in CC Chennai Vs Hewlett Packard India Sales (P) Ltd. [2007 (8) TMI 347 - SUPREME COURT OF INDIA] which held that preloaded operating systems software in the hard drive of a laptop forms an integral part of the laptop and therefore cost of such preloaded software forms part of the value of laptop. Accordingly, only laptop is imported with inbuilt preloaded operating system recorded on the hard disk. Such items forming integral part of the laptop and has to be classified as laptop and not as computer software separately - it was also held that in case of fixed wireless telephones, FWT, consisting of hardware and software, without software, activation of the telephones was not possible and hence there could not be two separate / distinguished goods for classification and assessment,since the software could not be considered as optional - appeal dismissed - decided against appellant.
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2017 (5) TMI 444
Natural justice - condonation of delay - petitioner carried out re-packing of Muriate of Potash (MOP) on behalf of the exporters, who allegedly exported the said MOP to Malaysia - It is the case of the petitioner that without granting opportunity of personal hearing in the matter and without properly considering or giving his findings on the written submissions made by the petitioner, the third respondent vide imposed penalty of ₹ 3,00,000/- on the petitioner u/s 114(i) of the CA, 1962 - whether the order dated 14.10.2015 passed by the second respondent – Commissioner (Appeals) rejecting the application for condonation of delay suffers from any legal infirmity warranting interference? Held that: - On a plain reading of the provisions of section 128 of the Act, it is apparent that the same mandates that an appeal should be filed within sixty days from the date of communication of the decision or order that is sought to be challenged. However, in view of the proviso thereto, the Commissioner (Appeals) is empowered to allow the appeal to be presented within a further period of thirty days if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the period of sixty days. Thus, the Commissioner (Appeals) is empowered to extend the period for filing an appeal for a further period of thirty days and no more. Therefore, once there is a delay of more than ninety days in filing the appeal, the Commissioner (Appeals) has no power or authority to permit the appeal to be presented beyond such period. In the application for condonation of delay moved by the petitioner, it has been stated that the petitioner upon receipt of the order-in-original dated 10.10.2014 on or about 7th November, 2014 and the order-in-original dated 20.10.2014 on or about 11th November, 2014, forwarded the same to the Ahmedabad based advocate’s office, who advised him to first deposit 7.5% of the penalty amount imposed on the petitioner as a mandatory pre-deposit to prefer appeal before the concerned appellate authority - On a plain reading of section 129E of the Act, it is clear that what the same envisages is that an appeal shall not be entertained unless the appellant has deposited such percentage of duty as specified in clause (i) to clause (iii) thereof, respectively. The section, however, does not say that the appeal shall be accompanied by a challan evidencing payment of pre-deposit or that the appeal cannot be filed unless such payment has been made. The two notices for personal hearing came to be issued to the petitioner, who, however, for the reasons recorded hereinabove, did not appear before the adjudicating authority. On behalf of the petitioner, reliance has been placed on the proviso to sub-section (2) of section 122A of the Act for the purpose of contending that it was incumbent upon the adjudicating authority to grant at least three adjournments and that since only two opportunities were granted to the petitioner, the impugned order is bad as the procedure followed by the adjudicating authority is inconsistent with the statutory provisions. In the absence of any breach of the principles of natural justice or lack of jurisdiction or improper exercise of jurisdiction on the part of the adjudicating authority being made out, when there is an efficacious alternative remedy of appeal before the Appellate Tribunal under section 129A of the Act, the petition deserves to be dismissed as not maintainable. Petition dismissed - decided against petitioner.
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2017 (5) TMI 443
100% EOU - value of depreciation on capital goods - demand - Held that: - the Circular No.49/2000-Cus. dt. 22.05.2000 is applicable to the period under dispute. In para-17 of the said circular, it is provide that depreciation upto 90% is eligible on capital goods other than computer and computer peripherals, at the time of debonding. Therefore contention of the department that N/N. 22/2003-CE and 52/2003-CE are applicable is factually and legally wrong. Non-accountal of goods - appellant has not accounted for these items taking the view that these are merely scrap - Held that: - Appellant has not offered any satisfactory explanation for not accounting duty on these items except raising contention that these are scrap - demand upheld. Difference in the quantity of baby receiving blankets - appellant claims it to be inadvertent error - Held that: - The Tribunal in the case of SHRI RENUGA SOFT X TOWELS Versus COMMISSIONER OF CENTRAL EXCISE, MADURAI [2008 (9) TMI 694 - CESTAT, CHENNAI] has set aside the confiscation and penalties and the proceedings have attained finality. The Tribunal has found that fabrics were in semi finished conditions and were not fit for removal as final product (baby receiving blankets) - thus, the difference in quantity is only an error and the demand raised on account of difference in quantity of baby receiving blankets, also do not sustain. Appeal allowed - decided partly in favor of appellant.
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Corporate Laws
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2017 (5) TMI 440
Scheme of Demerger - Held that:- The accounting treatment seems to be in conformity with the established accounting standards. In short, there is no apprehension that any creditors of the demerged company or resulting company would lose or be prejudiced as a result of the proposed Scheme being sanctioned. The arrangement of demerger will, in no way, cost any additional burden on the shareholders of any of the companies involved in the Scheme and also it will not prejudicially affect the interest of any classes of the creditors. We do not feel that there is any requirement of any modification in the Scheme. Hence, the Company Petition is allowed and the said Scheme under reference is hereby sanctioned. This Scheme shall be binding on the Transferor Company, Transferee Company and secured & unsecured creditors both. The Petitioner Companies to the Scheme or other persons interested, shall be at liberty to apply to this Bench for any direction that may be necessary in regard to the working of the said Scheme. Accordingly, the Order of sanction of this Scheme shall be prepared by the Registry as per the format provided under the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. The Petitioner Companies shall file with the Registrar of Companies a certified copy of this Order within 30 days from the date of receipt of copy of the order.
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2017 (5) TMI 439
Scheme of Arrangement of Aura Merchants Private Limited and Enargy Tie-Up Private Limited (the Transferor Companies) and Freshlight Biotech Private Ltd. (the Resulting Company) whereby Strategic Real Estate & Share Investment Division of Transferor Company no. 1 and Transferor Company no. 2 will stand transferred to and vest in the Transferee Company on the terms and conditions as fully stated in the said Scheme of Arrangement.
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Service Tax
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2017 (5) TMI 468
Valuation - Clearing and Forwarding Agency Service - various components/considerations/reimbursements received from M/s. HUL - includibility - Held that: - Section 67 of the FA, 1994 clearly stipulates that when the considerations for provision of service is partly consisting of money, the other considerations should be arrived at in money terms, for tax purposes - there is no merit that the inclusion of the notional rent for tax liability as a part of consideration. Time limitation - Held that: - the appellant did make intimation, in statutory returns regarding receipt of non-taxable considerations by them. Apparently, any scrutiny and assessment of such returns could have revealed more details regarding various categories of amounts on which the appellants are not paying service tax. These facts reveal that there is no case for invoking suppression or willful mis-statement against the appellant - penalties not imposed on same ground. Demand restricted to the normal period and penalties are also accordingly set aside - appeal allowed - decided partly in favor of appellant.
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2017 (5) TMI 467
IPR services - agreement with DSL for granting an exclusive non-transferable and non-assignable right, to use licenced information to manufacture, sell, distribute and market their products - Revenue entertained a view that the appellants provided intellectual property right service in terms of Section 65 (105) (zzr) readwith Section 65 (55a) and Section 65 (55b) of the FA, 1994 - whether the appellant transferred any intellectual property right to DSL, for a consideration? - Held that: - It is clear that to be a taxable IPR under Finance Act, 1994, the same should be a right to intangible property namely trade marks, design, patent etc. under any law for the time being in force. It is clear and apparent that a right which is not recognized by any law for the time being in force in India cannot be brought under IPR for tax liability. The design or technical knowhow has to be first covered under an Indian law on the subject of intellectual property right, so that corresponding taxable service can be brought into picture. The amounts received by the appellant in terms of technical assistance agreements cannot be subjected to service tax under the category of IPR service - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 466
Refund claim - N/N. 11/2005-ST dated 19/04/2005 issued under Rule 5 of Export of Services Rules, 2005 - denial on account of time limitation - Held that: - provision of Section 11B of the Central Excise Act, 1944 dealing with refund/rebate have been made applicable to service tax by virtue of Section 83 of the Finance Act, 1994. Any application for refund of tax must be filed before the expiry of one year from relevant date. The limitation as prescribed by the law cannot be extended by any authority as no such relaxation or discretion is provided in the law. The appellants filed application for rebate on 02/02/2011. The period of payment of service tax is 2005-2006 to 2009-2010 - Applying the statutory time limit, it is found that the appellants have preferred the claim after one year of payment of tax. Clearly the claim is hit by limitation. Regarding the submission of the appellant that the amount which is not a tax cannot be retained by the Government, we note that the amount has been paid as service tax under proper heading and was duly appropriated towards the tax liability of the appellant. Any return of the amount collected as tax in terms of provisions of Finance Act, 1994 has to be made in terms of the provision applicable to such collection. We may note here that any money to be returned to the claimant is mainly on the ground that the same is not to be retained by the Government as per the provisions of law. Limitation is part of the law. Even to return an amount which is excess paid over and above the legal obligation (making the excess paid tax as not a tax) the provisions of appropriate tax law has to be applied. Refund rejected - Appeal dismissed - decided against appellant.
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2017 (5) TMI 465
Mandap Keeper Service - appellant herein were providing rooms for corporate clients for holding conferences, meetings, etc - It is the case of Revenue that appellant should have discharged service tax liability under the category of Mandap Keeper Service for the relevant period as they had extended the conference room to their clients for holding meetings, etc - Appellant contested the show cause notice on the ground that they are not charging separately for the conference room and hence they are not covered under Mandap Keeper Service as they charge only room rent; the question of rendering Mandap Keeper Service does not arise - Held that: - having discharged luxury tax on the room rent charged to the corporate clients they are not required to pay any service tax - the appellant was correct in contending before the lower authorities that they are not charging any additional amount towards the conference charges for use of conference halls - the view taken in the case of Merwara Estates and Rambagh Palace Hotels Pvt Ltd [2013 (12) TMI 556 - CESTAT NEW DELHI] clearly apply in this case wherein the Tribunal took a view that functions and activity of giving hotel rooms while organising functions in hotels is entirely different from Mandap Keeper Service - appellant need not be taxed under Mandap Keeper Service for the entire amount of the room rent collected by them. The assessment of charging service tax under Mandap Keeper Service on the 20% of the amount collected as room rent subject to further abatement as per N/N. 21/97-ST dated 26/06/1997. Appeal allowed - decided in favor of appellant.
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2017 (5) TMI 464
Taxability of reimbursements - taxability of consideration of sub-contractor - benefit of N/N. 02/2003 dated 1.3.2003, whether have retrospective effect or prospective effect? - situs of the provisions of service - whether the difference between the Annual Report and Service Tax return shall be taxable? - all the matter is remanded to the adjudicating authority to re-adjudicate the matter - appeal allowed by way of remand.
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2017 (5) TMI 463
Club or Association Service - whether the various services such as general guidance on the facets of business, representation of members’ problems and view at local, State and Central Government level, networking and information sharing opportunities, free access to commercial reference library, etc. provided by the appellant to its members, for which they were charging members one time registration fee and also recovering annual subscription from them is liable to be taxed under the head Club or Association Service? - Held that: - The issue is no more res integra as the Principal Bench of the Tribunal in the case of Federation of Indian Chambers of Commerce & Industry v. Commissioner of Service Tax, Delhi [2014 (5) TMI 183 - CESTAT NEW DELHI], where it was held that Services provided by the appellants to non-members and the consideration received for rendition of such service, fall outside the scope of the definition of “Club or Association” service and the taxable service defined in Section 65(25a) read with Section 65(105)(zzze) of the Act, prior to 1-5-2011 - activities undertaken by the Chamber of Commerce have been considered as amounting to public service and of non-chargeable nature - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 462
Intellectual property service - consideration for affixing of brand name - whether constitutes Business Auxiliary services of intellectual property services? - the licensee uses the well-known trademark of the appellant on the designated products and, with incorporation of section 65 (105) (zzr) in Finance Act, 1994 to tax the provision of ‘intellectual property service’ from 10th September 2004, the appellant had taken registration and had been discharging tax liability on the consideration received from the licensees - Held that: - It was the contention of Revenue that affixing of brand on the product of oil manufacturing companies amounted to rendering of this service and this view found judicial acceptance. For another field formation of the same tax collection mechanism to take an alternative stand and, that too, for a limited period of time is best described, for want of another phrase, as ‘tax opportunism.’ That is contrary to the certainty that is the hallmark of tax collection authorised by the sovereign legislature and is reprehensible to the canons of taxation - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 447
Levy of penalty - amount of CENVAT credit reversed but without interest - credit of service tax paid under reverse charge mechanism - service provider should have paid 25% service tax whereas the service provider has paid 100% of service tax; and the service receiver, the appellant has taken cenvat credit of entire amount of said service tax paid by the service provider - Held that: - When the assessee appellant has not paid the interest part of the demand confirmed by the lower revenue authorities, there is no merit in this appeal for setting aside the penalties imposed by the lower revenue authorities - penalties upheld - decided against assessee.
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Central Excise
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2017 (5) TMI 461
Manufacture - conversion of standard gold into Gold Potassium Cyandide (GPC) and Trivalent Gold Potassium Cyanide (TGPC) on job work basis - The case of the Revenue is that the appellant has failed to satisfy the conditions of job work as per N/N. 214/1986. Conversion of standard gold into GPC/TGPC amounts to manufacture since a completely new product emerges - Held that: - The purpose of the job work N/N. 214/1986 is to shift the responsibility for payment of duty from the job worker to the principal manufacturer who gets goods manufactured from the job worker - In the present case, there are back to back job work transactions - since the gold plated crowns would have been utilized in the manufacture of watches by the principal manufacturer i.e., M/s. Titan Industries, and the same would have been cleared on payment of duty in terms of the undertaking given under N/N. 214/86, the terms of the job work Notification has been satisfied and there is no justification to demand duty from the appellant in the absence of any findings on record to the fact that there has been any diversion or non-accountal of the goods GPC/TGPC. - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 460
Grant of trade discount - Held that: - the discounts by any name are allowable as abatement subject to the condition that it is known prior to the clearance of the goods - Since the stockists are allowed actual discount of 18.5% as per the law the party is entitled to claim 18.5% for all its clearances irrespective of the fact that the actual discount allowed to the sub-stockists is only 16% - discount allowed. Turnover discounts - Held that: - the issue stands decided in the case of Commissioner of Central Excise, Chandigarh vs. Goezte (India) Ltd. [2010 (7) TMI 363 - CESTAT, NEW DELHI] wherein it has been held that deduction of trade discounts for determining the assessable value is permissible only to the extent of the said discounts actually passed on to the buyers - matter remanded for verification. Whether adjustment of refund with the demands at the time of finalization of provisional assessment is permissible? - Held that: - The issue has been considered at length in the decision of Hon’ble Karnataka High Court in the case of Toyota Kirloskar Auto Parts Pvt. Ltd. vs. CCE, LTU, Bangalore [2011 (10) TMI 201 - KARNATAKA HIGH COURT], where it was held that there is no indication that when an assessee is permitted to pay duty in pursuance of a provisional assessment order, if he is dealing with more than one goods, they have to be treated separately - there is no reason to interfere with the findings of the Commissioner (A) on the question of adjustment at the time of finalization of the provisional assessment. Appeal disposed off - partly decided against Revenue - part matter on remand.
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2017 (5) TMI 459
CENVAT credit - capital goods - job-work - whether cenvat credit was correctly availed by the appellants on capital goods used exclusively for manufacturing goods as a job worker for their principal manufacturer? - Held that: - the issue involved has been decided in favor of the assessee in the case of S.M. Machines Pvt. Ltd. Versus C.C.E., Delhi [2017 (1) TMI 536 - CESTAT CHANDIGARH], where it was held that availment of MODVAT Credit on capital goods to be job work is in order - credit allowed - appeal dismissed - decided against Revenue.
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2017 (5) TMI 458
Molasses lost due to mishap - demand - penalty - case of Revenue is that bursting of the molasses tanks in the factory was not an accident as claimed by the assessee but purely on account of negligence on the part of the assessee for not maintaining the tank as storage worthy - respondent contended that molasses was lost as a result of auto combustion which is a natural phenomenon which is beyond the control of the assessee - Held that: - the accident which happened in the factory was as a result of negligence on the part of the respondent and lack of maintenance of storage tanks - inadequate maintenance of the storage tanks by the respondent stands confirmed - the duty demand on the quantity of molasses lost due to mishap is payable by the respondent. However, there is no justification to impose any penalty on the respondent. The respondent has not applied for any remission of duty to the Proper Officer inspite of the provisions in the Central Excise Rules for claiming remission on goods lost or destroyed either by natural cause or unavoidable accident. In the absence of any such claim for remission, the duty demand is required to be upheld. Appeal allowed - decided partly in favor of Revenue.
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2017 (5) TMI 457
Classification of goods - C.I. Castings - The assessee classified the items under Chapter 84 as parts of machines chargeable to duty at 13%. The department on the other hand entertained the view that the goods are nothing but CI castings and classifiable under 7325.10 of the Central Excise Tariff Act chargeable to 15% excise duty - whether they are to be classifiable as casting under Chapter 73 or as parts of machines under Chapter 84? - Held that: - CBEC Circular dated 1.7.96 clarified that castings coming out of the castings moulds up to the stage of proof machining and requiring further machining before being used as machine parts would be appropriately classifiable under Chapter 73. However, those castings which do not require any machining after their emergence from casting moulds viz. Precision castings and/or are, as such, ready to be used as machine parts would be regarded as articles having essential character of machine parts and would be classified under Chapters 84, 85, 86, 87, etc. It is not disputed that the goods in the assessee s case have undergone machining processes beyond the stage of proof machining. Consequently, the right classification would be under parts of machines under Chapter 84. Appeal dismissed - decided against Revenue.
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2017 (5) TMI 456
CENVAT credit - input - case of Revenue is that rails were used to repair of the Bay by replacing the old worn out rail by a new rail and therefore, it would not come within the definition of input and capital goods under the CCR, 2005 - Held that: - the appellant produced the photographs and the use of rails in the process of manufacture - the Tribunal, on the identical issue in the case of Tata Steel Ltd. Vs. Commr. of Central Excise, Jamshedpur [2016 (1) TMI 1059 - CESTAT KOLKATA], allowed the CENVAT Credit on rails and railway tracks - credit allowed - decided in favor of assessee.
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2017 (5) TMI 455
Refund claim - Higher Education Cess and the Secondary & Higher Secondary Cess paid on tea cess - whether the Education Cess and the Secondary & Higher Education Cess are not to be calculated on cesses which are levied under the acts administered by department/Ministries other than Ministry of Finance, Department of Revenue but only collected by the department of Revenue in terms of those Acts - Circular NO.978/2/2014-CX dated 07.01.2014. Whether the refund claims filed by the appellants of the Higher Education Cess and the Secondary & Higher Secondary Cess paid on tea cess for the period 2004 to 2014 are time barred and hit by the principle of unjust enrichment in terms of Section 11B of the CEA, 1944? Held that: - the present case is squarely covered by the decision of the Hon’ble Gujarat High Court in the case of Joshi Technologies International v. UOI [2016 (6) TMI 773 - GUJARAT HIGH COURT], where the Adjudication order was challenged, and it was held that Crude Oil Cess is not in the nature of excise duty and consequently, the Education Cess and Secondary and Higher Secondary Education Cess computed thereon, also does not bear the character of a duty of excise, but is merely an amount paid under a mistake of law. As a necessary corollary, it follows that the provisions of the Central Excise Act, 1944 would not be applicable for refund of such amount paid by mistake. - the reliefs granted by the Hon’ble High Court in the case of Joshi Technologies International on an identical situation would be binding on this Tribunal, when such an order of the Hon’ble Court is of consequential nature. Appeal allowed - decided in favor of appellant.
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2017 (5) TMI 454
Liability of Interest - Reversal of CENVAT credit - Rule 6(3A) of the CCR, 2004 - clearance of coarse ore without payment of duty - delay in reversal of credit or not? - Held that: - an identical issue has come up before this Tribunal in assessee-Appellants’ own case Hindustan Zinc Ltd. vs CCE, Jaipur [2016 (11) TMI 575 - CESTAT NEW DELHI], where it was held that there is a delay in reversing the proportionate credit by the appellant. The liability of interest for the delayed reversal of credit is confirmed against the appellant - in the present case there is no delay pertaining to the reversal of credit, hence there is no question of charging the interest - demand set aside - appeal allowed - decided in favor of assessee.
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2017 (5) TMI 453
Valuation - body building charge which is the price of the body plus cost of chassis - chassis supplied free of cost to appellant - includibility - Held that: - an identical issue in the assessee-Appellants own case Audi Automobiles vs CCE, Indore [2009 (5) TMI 426 - CESTAT, NEW DELHI], has come up before this Tribunal, where it was held that the said firms had cleared the goods in relation to the body fabricating and mounting on the chassis which were supplied to the said firms free of cost by the manufacturer of chassis. Being so, the activity for the purpose of valuation would squarely fall under Rule 10A and not under Rule 6, therefore, do not find any illegality in the impugned order as far as the demand of duty and interest payable thereon from the appellants. But no penalty can be imposed. Appeal allowed - decided partly in favor of assessee.
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2017 (5) TMI 452
Classification of goods - NIDO Nutritious Milk for growing kids - the Department contended that the product merits classification under the Tariff Item 1901 90 90 of the Central Excise Tariff Act, 1985 on the ground that addition of flavour is not permitted in the products of Tariff Heading 0404 - whether the product is classified under Tariff Item 0404 90 00 or Tariff Item 1901 90 90 of the Central Excise Tariff Act, 1985 - Held that: - an identical issue has come up before this Tribunal in the assessee-Appellants’ own case Nestle India Ltd. vs CCE, Delhi [2017 (3) TMI 1409 - CESTAT NEW DELHI], where it was held that Where flavouring agent of 0.03% of the total composition is added, which does not change the basic characteristic of the product and the product remains a nutritious milk drink only. The appropriate classification for the impugned product will be under Chapter tariff item 0404 90 00 of the Central Excise Tariff Act, 1985 - the classification for the impugned products will be under the Tariff Heading 0404 90 00 of the Central Excise Tariff Act, 1985, as claimed by the assessee-Appellants - appeal allowed - decided in favor of assessee.
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2017 (5) TMI 451
CENVAT credit - MS plates, angles, channels etc., - MS items are structural supports for capital goods like pipelines etc. - Held that: - The appellant had furnished Chartered Engineer’s Certificate as well as photographs regarding the use of the items for fabrication of such structural supports of capital goods - the credit was denied merely relying in the decision of the case of Vandana Global Ltd., [2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)], where the view was taken that when the supporting structures are fixed to the earth, they become immovable property and therefore are not eligible for credit, which is not correct - the disallowance of credit is unjustified. Time limitation - Held that: - appellants have disclosed the details of credit availed in the ER-1 returns. There is no evidence for suppression of facts. The demand therefore is time barred. Appeal allowed - decided in favor of appellant.
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2017 (5) TMI 450
Refund of cenvat credit in cash - respondent is not able to utilize the cenvat credit account - case of Revenue is that after March, 2010, no activity was undertaken by the respondent and their factory was actually closed by them, although they have not surrendered the registration certificate - Held that: - During pendency of the appeal before the Commissioner (Appeals), the respondent has surrendered their registration certificate. In that circumstance, the respondent was not able to utilize the Cenvat credit account for payment of duty as no duty liability was confirmed against the respondent. In that circumstance, the Commissioner (Appeals) has rightly allowed the refund in cash - appeal dismissed - decided against Revenue.
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2017 (5) TMI 449
Principle lex non cogit ad impossibiia - Abatement claim - closure of factory - denial on the ground that intimation regarding closure was not given 15 days prior to that - factory would remain closed w.e.f.30.6.2008 - manufacture of Pan Masala and Gutka - Held that: - the N/N. 29/08-CE (NT and 30/08-CE both dated 1.7.2008 came into existence from 1.7.2008 - the appellant filed intimation for closure of the factory on 29.6.2008 which is prior to the introduction of the said Rule but the factory was closed form 1.7.2008 when the rule came into existence. So it is not possible for the appellant to comply with the condition of the notification dated 1.7.2008 on 29.6.2008. Therefore, the principle lex non cogit ad impossibiia, is applicable to the facts of the case - rejection of claim of abatement not sustainable. Scope of SCN - The Commissioner in the impugned order has gone beyond the scope of the SCN - Held that: - the observations of the ld. Commissioner (Appeals) are only on assumption and presumption therefore, the impugned order deserves no merit and beyond the scope of SCN. Appeal allowed - decided in favor of appellant.
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2017 (5) TMI 448
Valuation - inclusion of amount collected towards compensation for non lifting of the goods - It is alleged that the recovery of amount from the customers as operational compensation is an additional consideration and will form part of the assessable value of the goods already cleared to such customer - Held that: - In terms of section 4 of the CEA, excise duty is required to be paid on the transaction value which is charged by the manufacturer from the whole sale customers. In the present case excise duty has already been paid on the transaction value of the components supplied to M/s. Eicher. The dispute is with reference to the compensation amount received by the appellant. Such amounts cannot be considered as additional consideration for the goods actually sold - similar issue decided in the case of JINDAL PRAXAIR OXYGEN CO. LTD. Versus COMMISSIONER OF C. EX., BELGAUM [2006 (8) TMI 461 - CESTAT, BANGALORE], where it was held that the compensation paid by the buyer to the assessee at previously agreed rate on account of the former's failure to lift the agreed quantity of excisable goods [Nitrogen etc.] was in the nature of liquidated damages for breach of contract, not includible in the assessable value of the goods. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (5) TMI 442
Anticipatory bail - Sale of Pan Masala and Tobacco within the State of Gujarat - misdeclaration that goods sold outside the State of Gujarat to avoid taxes - Section 438 of the Code of Criminal Procedure, 1973 - Held that: - From the facts of the case and from the submissions of the parties, the role of the applicant-accused could be comprehended. Submission on behalf of the applicant could not be brushed aside lightly that all the purchases were made after making advance payment and the refund orders were given by the authority after verification by the Value Added Tax officials. In any view, the investigation of the case could be said to be based on the documentary material. It cannot be said that custodial interrogation of the applicant is indispensable or imperative in the facts and circumstances - further looking to the allegations and the nature thereof as well as severity of punishment, prayer for anticipatory bail deserves to be favourably consider. It was pointed out that as far as the offence under Section 85 of the Gujarat Value Added Tax Act is concerned, punishment provided is for six months. The investigation would be on the basis of documentary material. It is trite that denial of anticipatory bail should result into a punishment. Application allowed - Bail granted, subject to stringent conditions - decided in favor of applicant.
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2017 (5) TMI 441
Reopening of assessment - The permission to reopen the assessment has been granted only for the reason that one of the Forms-F No.03Q-600527 issued by the consignee agent M/s Ram Badra Sales Agency, New Delhi was reported to be fake/furzi and was not issued by the department to the said consignee agent rather to some other dealer - whether the Additional Commissioner is justified in granting permission u/s 29(7) of the VAT Act to the Assessing Authority to reassess the petitioner? Held that: - he petitioner in the explanation accepted that on enquiry regarding the disputed Form-F it had come to its knowledge that there may be some irregularity in using the said Form but that is solely attributable to the consignee agent. Therefore, the petitioner has even lodged a first information report against him for the misuse of the said Form if any - The moment the petitioner on his own verification lodges an FIR against consignee agent regarding the use of the disputed Form-F, it is apparent that to some extent the petitioner is also convinced that there is some illegality or misuse in the utilization of the said Form-F - thus, the necessity to reassess the petitioner if any turnover of the petitioner has escaped assessment or if any wrong tax exemption in respect of the consignment covered by the aforesaid Form-F cannot be ruled out. It is not a fit case for interference in exercise of writ jurisdiction - petitioner is open to raise issues with regard to its bonafidy and the grant of tax exemption against the aforesaid Form-F etc. before the Assessing Authority - petition dismissed - decided against petitioner.
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Indian Laws
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2017 (5) TMI 438
Misconduct of Chartered Accountant - professional misconduct - He presented forged copies of income tax challans to partners of Assessees and collected/claimed amounts allegedly paid on behalf of Assessees. - Held that:- The report of DC shows that during the course of examination of witnesses, when respondent was present, he was confronted with relevant facts and his stand has been noted by DC in its report. Learned counsel for respondent could not show anything so as to persuade us to form a view that findings recorded by DC are on account of misreading of fact or otherwise perverse. It is in these facts and circumstances, we are in agreement with the report as well as resolution of affirmance of Council and confirm that respondent is guilty of "other misconduct", warranting appropriate punishment therefor. For the purpose of awarding punishment, we have heard learned counsel for parties and considered entire facts and circumstances. A Chartered Accountant is a person, who holds an office of confidence and not only his client, but even in Department in which Chartered Accountant represents the matter of his client, normally believe that he (Chartered Accountant) is performing his duties honestly. Confidence has been breached by respondent not only with the persons, who engaged him, but it has played fraud on the Department also. He is admittedly a person of having long-standing in the profession, still has shown such a conduct, which can never be expected of a Chartered Accountant. In the circumstances, ICAI has recommended removal of name of respondent from the register of Member for a period of two years. Looking to the conduct of respondent, and the tactics adopted by him in delaying proceedings, stretching it to almost one and half decade, in our view, appropriate punishment would be removal of his name from Membership of the Institute for a period of five years.
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2017 (5) TMI 437
Compromise decree - settlement formed - Held that:- In the instant case, the salient feature is that the original owner agreed to sale the tea garden to AGR Plantations Pvt. Ltd., the nominee of the decree holder for a consideration of ₹ 63,00,000/- out of which ₹ 1,00,000/- was already paid and a further sum of ₹ 6,00,000/- and ₹ 4,00,000/- are required to be paid on the date of the acceptance of the terms and conditions while decreeing the suit and within 60 days from the date of such decree. The balance consideration was agreed to be paid simultaneously with the execution and registration of the proposed Deed of Conveyance. The liability of the Vijaya Bank and the other liabilities including the provident fund of the said tea estate were to be borne by the said nominee and such Deed of Conveyance was agreed to be executed within 90 days from the date of the decree or within such extended period as may be mutually agreed. The decree further provides that so long the Deed of Conveyance is not executed the decree holder shall continue to pay a monthly rent or a lease rent at the rate of ₹ 50,000/- per month without any deductions and / or abatement. The other term which could be seen from the said settlement is that the said decree holder would provide all assistance in getting the necessary clearance required under the Income Tax Act, 1961 and also from the Deputy Collector of the Jalpaiguri. It is not in dispute that the objection was raised by the judgment debtor when an application seeking permission from the Deputy Collector of Jalpaiguri was filed under his signage yet the judgment debtor accepted the monthly rent in respect thereof. The sum and substance of the said settlement is that the judgment debtor would sale the property to the decree holder upon acceptance of the consideration money and in order to facilitate such sale would assist the judgment debtor in obtaining the necessary permission. The reciprocal obligation, which could be seen therefrom is that the payment of the sum within the time indicated therein which had in fact been paid by the decree holder. It is also not in dispute that the decree holder continued to pay the monthly rent till the time the judgment debtor with his associates illegally and forcibly took the possession of the tea estate and deprived the decree holder to enjoy the usufructs therefrom. It is manifest from the aforesaid facts that the decree holder all along performed his part of an obligation and none of the terms and conditions would be said to be reciprocal that such performance is dependant upon the performance of the other being so intertwined and / or interrelated that it cannot be separated and / or segregated therefrom. This Court therefore does not find that the objections of the petitioner that terms and conditions are reciprocal in nature and dependent upon the performance of the other. The application is thus dismissed.
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