TMI Tax Updates - e-Newsletter
May 13, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
While accepting the fact that the FDR was for obtaining letter of credit to purchase machinery but so far as interest earned thereon is concerned, that is nothing but income through other sources, as such, the CIT rightly treated the same as income taxable. - HC
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Income Tax:
Accrual of income - assessee has rightly treated difference between sale price claimed and price paid by the APTRANSCO as contingent sales, which is not accrued to the assessee for the relevant financial year. - AT
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Income Tax:
Maintainability of deduction u/s. 80-IA on ‘Clean Development Mechanism’ (CDM) receipt by the assessee in respect of it’s two power generating units - true, the CERs, though intangible, are to be valued as inventories, but it is only on account of the protocol that they stand to be recognized separately and are valuable/realizable - Deduction not allowed - AT
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Customs:
Interpretation of N/N. 17/2001-Cus - The interpretation of '-' under Col. 5 can only be interpreted as Nil rate of duty and not otherwise - as per the entry 245, there cannot be any rate charged in excess of '-' for additional duty which would only translate to the conclusion that there would be no additional duty in this case. - AT
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Service Tax:
When the appellant is a Govt. corporation, who paid entire tax demand (through may be some interest still remains payable as it was not quantified by the Revenue), before issue of SCN and where ‘intention to evade payment of tax’ cannot be alleged, then in the light of provisions of Section 73(3) and Section 80 of FA, 1994, no penalty is liable to be imposed on the assessee appellant - AT
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Service Tax:
CENVAT credit - credit availed on the strength of debit notes - nomenclature has no significant important criteria is that the information mentioned in Rule 4(A) of Service Tax Rules, 1994 should appear in the documents which is raised for service charges as well as service tax to the service recipient - credit allowed - AT
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Service Tax:
Levy of service tax - re-sale of licensed information technology software - Service Tax was not leviable in respect of the invoices which were issued before 16/05/2008 even for that part of the service which was rendered after 16/05/2008 where the obligation was created before 16/05/2008 - AT
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Service Tax:
CENVAT credit - inputs - furniture used in the office of the appellant premises - since the goods used for rendering services from the office, credit of excise duty duty paid allowed - AT
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Central Excise:
CENVAT credit - when the job worker has factually paid the duty and when as per the N/N. 214/86, the appellant supplier, who sends the goods for job work is responsible for the payment of duty, there does not appear to be any wrong in claiming Cenvat credit for the duty paid on the job work - AT
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Central Excise:
Refund claim - accumulated cenvat credit lying untilised - deemed export - as per procedure laid down under N/N. 5/2006 ibid, there is no condition on the manufacturer who cleared the goods to merchant exporter against the CT-1 certificate to execute any bond - AT
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Central Excise:
SSI exemption - job-work - the raw material supplier (appellants) cannot be saddled with the duty liability to pay Central Excise Duty or with penalty. - AT
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Central Excise:
CENVAT credit - input services - Shipping services availed at the port have to be held as cenvatable input services within the meaning of clause (l) of Rule 2 of the CCR, 2004 - AT
Articles
Notifications
Customs-
17/2017 - dated
11-5-2017
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ADD
Seeks to levy definitive anti-dumping duty, on Hot Rolled Flat Products of alloy or non-alloy steel originating in or exported from China PR, Japan, Korea RP, Russia, Brazil or Indonesia for a period of five years (unless revoked, superseded or amended earlier) from the date of imposition of the provisional anti-dumping duty, that is, 8th August, 2016
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46/2017 - dated
11-5-2017
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Cus (NT)
Amendments in the Notification No. 129/2013-Customs (N.T.) dated 11.12.2013
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44/2017 - dated
11-5-2017
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Cus (NT)
Amendment to notification 62/94 –Customs (N.T), dated 21.11.1994 so as to allow unloading of imported goods and loading of export goods or any class of such goods at Dharma Port, Odisha
Income Tax-
37/2017 - dated
11-5-2017
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IT
U/s 139AA of IT Act - Central Government notifies the provisions shall not apply to an individual who does not possess the Aadhaar number or the Enrolment ID
SEZ-
S.O. 1466(E) - dated
4-5-2017
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SEZ
Central Government notifies 12.15 hectares area at Gamanagatti, Hubli Taluk, Dharwad District, in the State of Karnataka and constitutes an Approval Committee
News
Case Laws:
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Income Tax
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2017 (5) TMI 540
Interest earned on Fixed Deposit receipts - Revision u/s 263 - revenue or capital receipt - process of setting up of industry - Held that:- It is not in dispute that the assessee had income of interest through FDRs and while setting off that the Assessing Officer as well as the ITAT did not examine the aspect as to under which provision the assessee claimed deduction or set off of his income from other sources against interest payable on the borrowed fund. The reason given is that the amount pertaining to FDR was not surplus amount but part of amount that was kept to obtain letter of credit for purchase of machinery. While accepting the fact that the FDR was for obtaining letter of credit to purchase machinery but so far as interest earned thereon is concerned, that is nothing but income through other sources, as such, the Commissioner of Income Tax rightly treated the same as income taxable. So far as the second question is concerned as to whether the Commissioner of Income Tax was justified in invoking powers under Section 263 of the Act of 1961 by holding that the enquiry conducted by the Assessing Officer before the assessment order was neither proper nor adequate, we would like to state that the order passed by the Assessing Officer nowhere reflects about any enquiry said to be made. It simply refers the explanation given by the assessee and nothing beyond that. We are inclined to accept this appeal. The order passed by the Income Tax Appellate Tribunal set aside and Commissioner of Income Tax's invoking powers under Section 263 stands restored.
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2017 (5) TMI 539
Reopening of assessment - slump sale transaction undisclosed - Held that:- Number of questions were raised by the A.O. during the original assessment proceedings with respect to the transaction in question, more particularly whether the sale is on slump sale basis or not. The original assessment was under section 143(3) of the Act. During the course of the assessment proceedings, the assessee produced / supplied requisite documents / materials / details, including details of bank accounts, month wise sale and purchase of the petitioner, all requisite financial details, copy of the Article of Association, details qua stock hypothetical, details related to Slump Sale, copy of the Slump Sale Agreement, details of the payment received under the Slum Sale and documents relating to Slum Sale, etc. and during the course of hearing the assessee also submitted detailed explanation with respect to slump sale and only thereafter the A.O. upheld the fact that the transaction was in fact a slump sale transaction. It was specifically declared by the assessee that what was sold by the assessee was activity of manufacturing elevators. Therefore, as such it cannot be said that the assessee did not disclose true and correct facts necessary for the assessment. It is required to be noted that even the issue as to whether the transaction can be said to be sale of goodwill and/or trademark also came to be considered in detail by the A.O. and only thereafter the transaction in question was considered on slump sale basis. - Decided in favour of assessee.
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2017 (5) TMI 538
Eligible for deduction under Section 80P - interest income earned on deposits made in commercial banks and interest earned on deposits made in cooperative banks - Held that:- The assessee is entitled to claim proportionate or suitable expenditure with respect to the income earned out of the non-exempt income i.e. interest earned from commercial banks. The AO shall carry out the necessary consequential exercise. The appeals are allowed in the above terms.
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2017 (5) TMI 537
Denying the benefit under section 11 & 12 - income applied for charitable purposes - charging of fee from members or non-members - Held that:- As in the assessee’s own case for the assessment year 2010-11 [2017 (3) TMI 1334 - ITAT DELHI] held that mere charging of fee from members or non-members for rendering services like training, conducting seminars would not ipso facto lead to denial of exemption. The dominant object of the assessee remains charitable and the aforesaid activities are only incidental to the main activity of the assessee. Also , the activities of the assessee are benefiting the public at large at submitted by the Ld. Counsel for the assessee. It is not the case of the department that any change in objects had taken place in the relevant year so as to take the assessee outside the ambit of section 2(15). The effect of the amendment has been discussed elaborately by the Hon’ble Delhi High Court in ITPO Case (2015 (1) TMI 928 - DELHI HIGH COURT) as well as the judgment of Apex Court in Andhra Pradesh Chamber of Commerce (1964 (10) TMI 19 - SUPREME Court ) and the test of dominant object has not been altered even after the said amendment. We therefore hold that the denial of exemption under section 11 and 12 in the case of the assessee is not in accordance with law and accordingly the additions made by the AO and confirmed by the CIT(A) are deleted. - Decided in favour of assessee.
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2017 (5) TMI 536
Approval of exemption u/s 80G(5)(vi) - expenditure for a non-chartiable purpose - Income & Expenditure account of the applicant trust shows that the main expenditure was incurred by the applicant by way of donation to another trust - Held that:- There is no such clause in the trust deed that the assets and properties of the trust shall be considered for transfer to any other society / trust with identical aims and objects. The Ld. CIT(E) observed that on perusal of the Income & Expenditure account of the applicant trust shows that the main expenditure was incurred by the applicant by way of donation to another trust namely Shri Krishan Parnami Manav Sewa Trust, Hisar, However, the applicant trust himself has not made any such expenditure for a charitable purpose, which is covered u/s. 2(15) of the Income Tax Act. We also note since the Applicant was not qualified for exemption u/s. 12AA of the I.T. Act, 1961 and its application for registration u/s. 12AA was rejected by the Ld. CIT(E) vide his order dated 7.5.2015. And against the Ld. CIT(E)’s aforesaid order, the Assessee appealed before the Tribunal and the Tribunal while dealing in assessee’s own case has set aside the issue in dispute to the file of the Ld. CIT(E) to decide the issue afresh and at present the Assessee has not been exempted u/s. 12AA of the I.T. Act, therefore, the Applicant was not qualified for grant of approval under section 80G of the Income Tax Act, hence, the Application for grant of approval u/s. 80G was rightly rejected by the Ld. CIT(E) - Decided against assessee.
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2017 (5) TMI 535
Unexplained cash credit u/s.68 - Held that:- The addition to the income of the assessee as unexplained cash credit can be made where any sum is found credited in the book of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory. No error in this finding of the CIT(A) could be pointed out by ld D.R. during the course of hearing. Further, it is observed that regarding balance four loan creditors from whom loan of ₹ 24,00,000/- was taken by the assessee, the assessee filed the loan confirmations, copy of income tax returns, balance sheet, computation of income and capital account of the loan creditors. Thus, the assessee has discharged its initial burden of proving the identity, genuineness and creditworthiness of loan creditors. Thereafter, the Assessing Officer has not brought any material on record to show that either the loan creditors are bogus or that they did not have the capacity to advance the loan to the assessee. Therefore, in our considered view, the addition u/s.68 of the Act to the income of the assessee is not warranted. - Decided in favour of assessee. Addition on account of interest on unsecured loan - Held that:- The disallowance of interest was made by the Assessing Officer as he had held that the unsecured loan as not genuine and added the same u/s.68 of the Act. As we have confirmed the order of the CIT(A) that the loan creditors are genuine, therefore, the disallowance of interest paid to the loan creditors cannot be made. Accordingly, we hold that the CIT(A) was justified in deleting the disallowance of interest made by the Assessing Officer - Decided in favour of assessee. Addition on low withdrawals for household expenses - Held that:- CIT(A) correctly deleted the addition on the ground that the wife of the assessee is income tax assessee who has shown withdrawal of ₹ 60,000/- for household expenses in her return of income filed. - Decided against revenue Estimating the net profit rate - Held that:- It is not in dispute that books of account of the assessee has not been rejected by the Assessing Officer before estimating the income of the assessee by applying net profit rate. Therefore, in our considered view, the addition to the income of the assessee cannot be sustained in law. See CIT vs. Utkal Alloys Steels Ltd. [2009 (3) TMI 379 - ORISSA HIGH COURT ] - Decided against revenue
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2017 (5) TMI 534
Penalty u/s 271(1)(c) - notice u/s 274 - no business during the year but still claimed the expenditure on depreciation and non-payment of certain interest expenses - defect in the notice - Held that:- Undoubtedly, notice u/s 274 was duly served on the assessee and the relevant clause of the standard printed form was duly ticked by the Ld. AO which shows due application of mind qua penalty proceedings. Mere non-deletion of few words, in our opinion, on the facts of the case, has not caused any prejudiced to the assessee particularly when the penalty proceedings were actively contested by him before the Ld. AO. The penalty could not be deleted merely on the basis of defect pointed by the Ld. AR in the notice and therefore, the legal grounds raised are rejected. We find that the assessee has suffered disallowance u/s 32 against depreciation & u/s 43B due to non-payment of certain interest expenses within stipulated period of time. It is not in dispute that the assessee did not carry out any business activity during the year. It is further noted that the block of asset in the books of accounts did not cease to exist and the assessee has duly explained that the suspension in business was temporary which could not be controverted by the revenue. All these factors gives strength to the various arguments of Ld. AR. So far as addition u/s 43B is concerned, we find that the nature or quantum thereof is not in dispute and the assesse, following mercantile system of accounting could debit the same in his Profit & Loss Account. It was only due to the specific provisions of Section 43B that it has suffered the said disallowance. Therefore, on the basis of these factors, we find that there were no furnishing of inaccurate particulars of income by the assessee and the penalty deserves to be deleted.
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2017 (5) TMI 533
Penalty u/s 271(1)(c) - deduction of 80-IB was denied on ‘other income’ - mandatory notice u/s 274 - Held that:- AO duly initiated the penalty proceedings in the quantum assessment and levied the penalty after issuance of the mandatory notice u/s 274. Further, the defect, if any, found in the standard printed proforma of notice u/s 274, stood cured by the provisions of Section 292B and do not invalidate the penalty proceedings. This point is further fortified by the fact that the assessee actively contested the penalty proceedings without an iota of doubt in his mind as to the ground for which he was being penalized. Therefore, the legal grounds raised by the Ld. AR stands rejected. It is to be noted that the assessee claimed 80IB deduction towards certain items and the Tribunal uphold the major claim of the assessee which proves the point that the assessee made a claim which was bona-fide and tenable in law. Therefore, the assessee made a legally valid claim, which was accepted to a major extent. In view of the same, we are of the considered opinion that the assessee do not deserves to be saddled with the impugned penalty particularly when it derived benefit only to the extent of 30%, being deduction u/s 80-IB. Therefore, by deleting the same, we allow the assessee’s appeal.
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2017 (5) TMI 532
Adjustment in view of the section 145A - Held that:- As submitted before the assessing officer assessee is following exclusive method of accounting in respect of modvat as prescribed by the accounting standards-2 of the Institute of charted accountants of India and also in accordance with the directions of ITAT Mumbai bench in the case of Hawking’s Cookers Limited vs ITO [2008 (8) TMI 904 - ITAT MUMBAI]. The assessee has also stated that the tax audit report clearly mentions that no adjustment in view of the section 145A of the Income Tax Act is required. The authorities below have rejected the submissions without pointing out any reason as to why the above submissions of the assessee deserve to be rejected. It is settled law that even administrative order have to be consistent with the rules of natural justice. This position was reiterated by the Hon’ble Apex Court in the case of M/s SAHARA INDIA (FIRM) [2008 (4) TMI 4 - Supreme Court ]. Hence in view of the above submissions of the assessee which have not been controverted by the authorities below by a speaking order, we set aside the order’s of the assessing officer on this issue and decide the issue in favour of the assessee. Disallowance u/s.40a(ia) - Held that:- Upon careful consideration we find that Ld. DRP also noted that assessee has furnished evidences and particulars which the DRP wanted the assessing officer to examine and act upon. In the interest of justice we remit this issue again to the file of the assessing officer. Assessing officer is directed to give effect to the direction of the Ld. DRP after giving the assessee proper opportunity of being heard. Addition of interest - Advance given without any purpose for the business carried on by the assessee - Held that:- The deposit was made at the end of the financial year for entering into the agreement for rent for the accommodation to be used by the employee. There was slight delay in finalising the agreement, which can be considered to be reasonable. Hence we agree with the Ld. Counsel of the assessee that facts and circumstances do not warrant and addition of notional income on the deposit in the hand of the assessee. Accordingly we said aside the order’s of the parties below the decide the issue in favour of assessee.
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2017 (5) TMI 531
Accrual of income - applicability of AS-9 - whether pending disputed sale price, kept in contingent sales account is accrues to the assessee for the relevant financial year? - Held that:- This appeal is squarely covered by the decision of ITAT, Visakhapatnam in assessee’s own case for the assessment year 2009-10 wherein the coordinate bench has observed that the impugned contingent sale on account of differential sale price claimed by the assessee, which was pending before the Appellate Tribunal for Electricity is not accrued to the assessee as revenue for the relevant financial year. Also as decided in the case of Godara Electricity Company Limited Vs. CIT (1997 (4) TMI 4 - SUPREME Court) has held that the assessee has rightly treated difference between sale price claimed and price paid by the APTRANSCO as contingent sales, which is not accrued to the assessee for the relevant financial year. - Decided in favour of assessee.
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2017 (5) TMI 530
TPA - selection of comparables - Held that:- We find that the assessee is into contracts software development services, backup office support services, marketing support services, corporate IT etc. thus companies functionally dissimilar with that of assessee need to be deselected from final list of comparable.
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2017 (5) TMI 529
TPA - International Transaction - Corporate guarantee provided by assessee company to it’s A.Es - Held that:- The Explanation to Section 92B cannot be applied retrospectively and for the years under consideration the assessee having not incurred any costs in providing corporate guarantee it would not constitute “International Transaction” within the meaning of Section 92B of the Act and consequently, ALP adjustment is not warranted on this aspect. Since we are of the opinion that it falls outside the ambit of “International Transaction” the alternative contention urged before us need not be taken into consideration. Suffice to say, that each year being independent, merely because the assessee has accepted in the earlier year it would not come in the way of the assessee to urge the same issue in a subsequent year. Additional interest on loans given to A.Es. - Held that:- The principle that emerges from the decisions cited by the Learned Counsel for the Assessee particularly in assessee’s own case for the earlier years, show that benchmarking of ALP should be LIBOR + 200 basis points and TPO should not determine the ALP by taking into consideration the market rate prevailing in the respective countries. Even for A.Y. 2008-2009, the Hyderabad Bench accepted in principle that LIBOR + 200 basis points can be adopted as ALP. Under these circumstances, we set aside the matter to the file of the A.O. who is directed to adopt the LIBOR rate applicable for the years under consideration + 200 basis points to arrive at the ALP. This issue is disposed of accordingly. Allowability of claim of depreciation on goodwill - Held that:- It is not in dispute that this very issue was considered by the ITAT in assessee’s own case for the A.Y. 2007-08 wherein the Bench allowed the plea of the assessee to allow depreciation on goodwill. Allowability of business expenditure - Held that:- We direct the A.O. to verify the nature of the expenditure and disallow only such expenditure which was not incurred for the purpose of business of the assessee. This ground is accordingly treated as allowed for statistical purposes. Allocation of corporate overheads expenses to tax holiday units - Held that:- We direct the A.O. to allocate net expenditure of the corporate entity amongst all the units on the basis of turnover. This ground is disposed of accordingly. Jurisdiction of the DRP considering the matter of allowability of deduction referrable to profit share with DRL Swiss - Held that:- Even the matters not agitated by the assessee before the DRP can be considered for the purpose of enhancement. In fact, the DRP had issued a notice to assessee in 2013 by which time the Explanation to section 144C(8) was already in force. The case of the Revenue is also supported by the decisions of Tribunal referred to by the Ld. D.R. in the written submissions. Under the circumstances, we uphold the plea of the Ld. CIT-D.R. and hold that the DRP is well within its competence to consider the issue pertaining to profit sharing between DRL India and DRL SA. Correctness of disallowance of the claim of sharing of profits - Held that:- The sharing of profits between DRL, India and DRL SA is for bonafide business purposes and therefore, assessee is entitled to claim deduction on this count. It may not be out of place to mention that the A.O. was of the view that the assessee has a major role in product development and therefore, in the process of sharing profits between DRL US and DRL, India, assessee is entitled to larger share i.e., 60%. It is not in dispute that the DRL, US has undertaken the responsibility of warehousing and marketing the product in US territory which is the main role that requires to be played in selling a drug during the exclusivity period. Despite that assessee having initially done the Research and filed an abbreviated new drug application for the drug namely “Sumatripton” and got approval to manufacture and develop the product in India and to sell the same in USA, there was an agreement between DRL, US and DRL, India to share the profits equally. Under these circumstances, we are of the view that the DRP was justified in holding that the sharing of profits between India and US at 50%-50% cannot be questioned. As out of 50% share that the assessee earned it had to part with a portion of the profit with the DRL SA for the detailed reasons set-out in the above paras. Having regard to the circumstances of the case and in the backdrop of the principles laid down by the Hon’ble Supreme Court in the case of S.A. Builders [2006 (12) TMI 82 - SUPREME COURT] we are of the firm view that the agreement between DRL, India and DRL SA cannot be doubted. We direct the A.O. accordingly.
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2017 (5) TMI 528
Disallowance of claim for deduction u/s 80IA(4) in respect of the projects other than the Teesta Lower Dam project - Held that:- Assessee is a developer entitled for deduction u/s 80IA(4) of the Act. The grounds raised by Revenue are rejected on this issue. Disallowance u/s 14A deleted while computing income under normal provisions of the Act. Reduction of claim u/s 80IA(4) of the Act, i.e. attribution of expenses to the projects eligible for deduction u/s 80IA(4) - Held that:- We direct the Assessing Officer not to reduce the profit of eligible undertaking by these expenses while computing deduction u/s 80IA(4) of the Act. Grant credit for TDS in the year of deduction itself.
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2017 (5) TMI 527
Amortization or allowability of entire cost in the current year - Held that:- The claim of assessee is not in tune with the accounting policy in open market on this issue of amortization of TV programme/ Film Rights. No special reasons are demonstrated before us the reasons justifying the deviations by the assessee. Therefore, we are of the view that the AO is directed to apply the said order of the Tribunal in case of Zee Media (2015 (8) TMI 612 - ITAT MUMBAI ) of the granting reasonable opportunity of being heard to the assessee fully. AO is also directed to reduce the extent of cost already telecast i.e. ₹ 26,50,87,780/- from the total cost of ₹ 89.06 crore as there is no justification for not allowing the content, which is already telecast in the current year. Thus, AO should examine the correctness of the said figure and the extent relatable to both TVprogramme or Film rights before granting the full deduction out of ₹ 89.06 crore. On the balance, the accounting policies in the market relating to this industry should be applied. AO shall grant reasonable opportunity to the assessee. With these directions, the issue raised in both appeals are allowed as above. Sales promotion & advance expenses - Held that:- The revenue is on the matching principle ie assessee cannot be allowed to claim huge expenditure against meagre income reported in this year. In the process, revenue lost the much established accounting principle of ‘Mercantile System of Accounting’ by the assessee in this year under consideration. We also find that the decisions relied on by the AO are distinguishable on both facts and legal issue. They are not on the brand building related issues. On the other hand, the decision in case of Core Healthcare Ltd and others (2008 (10) TMI 74 - GUJARAT HIGH COURT ) on this issue only. Nothing is made out by the Ld. DR that cricket sponsoring expenditure constitutes capital nature. It is never the case of the revenue that ₹ 7.03 crore of expenditure is not revenue in nature. The question is only if they should be amortized over the period of 6 years or otherwise. In our view, the CIT(A) order, on this issue, constitutes fair and reasonable and it does not call for any interference. The expenditure incurred on account of sponsoring of cricket or launch expenditure are allowable revenue expenditure as they are in the nature of advertisement expenditure. Accordingly, the relevant grounds of the revenue on this issue are dismissed. Disallowance of legal and professional fee - Held that:- The expenses incurred till 31.08.2007 should be considered for capitalization and the date of set up of the business in place of assessee’s claim of 01.06.2007. Delivery date is 6.8.2007 and reasonable time is needed for unp0arking, distribution and installation. Therefore, it cannot reliably argued that all the above activities are done only the said due date of 6.8.2007 for delivery to the assessee in Mumbai. Therefore, on estimation basis, we grant till the end of the month for installation activity. This is needed for completion of the set up of business completely. Consequently, the expenditure incurred by assessee between 1.9.2007 to November 2007 are to be allowed as deductible expenses. AO is directed to recomputed the above allowable expenses and assessee the income accordingly. Accordingly, the grounds raised are partly allowed. Addition u/s 68 on account of share application money (SAM), share capital and share Premium - Held that:- We are of the view ‘on the investments by the residentcompanies’ that the AO has not made out proper case and not fortified his addition with any clinching evidences either on identity or on creditworthiness or on the genuineness of the transactions. Thus, the addition of ‘investment by IIMPL and IIPL in the equity share capital and preferential share capital with premium’ is unsustainable in law. Therefore, the conclusions of the CIT (A) on this issue are fair and reasonable and it does not call for any interference. Accordingly, relevant grounds of the Revenue are dismissed. Addition on account of non-resident foreign institution investments into the share application money and share application and the preferential share capital with premium - Held that:- There is no incriminating material so far gathered by the AO / investigation wing of the Department against the claim of the assessee. As on date, the CBDT has not come out with any incriminating material against the assessee. Therefore, we are of the view that it is premature to make any addition on this account without having any information against the assessee either on identity or creditworthiness or genuineness of the transactions. Present addition is a case of surmises, suspicion etc. Therefore, the addition is unsustainable in law. For all these reasons also, we are of the view, the order of the CIT (A) is fair and reasonable. Therefore, the decision of the CIT (A) does not call for any interference.
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2017 (5) TMI 526
Undisclosed receipt from beauty parlors - Held that:- The search statement cannot override the evidence seized by the department in the shape of documents. The gross receipts cannot be taxed as income. Therefore, under the facts and circumstances of the case, CIT-A correctly directed the AO to give credit of the expenses recorded in the seized documents but not found recorded in the regular books of account . The A/R of the assessee has made working for this. The comparative chart is placed at PB pg 100 to 102 which shows the total expenses of ₹ 14,63,159/- are recorded in the seized documents but not in regular books of the parlour. This expenses were incurred to earn the suppressed receipts of the parlour therefore, it should be deducted from the suppressed receipts of the parlour. Therefore, CIT-A correctly directed the AO to delete the addition of ₹ 14,63,159/- and rest of the addition of ₹ 25,38,273 – ₹ 14,63,159 = ₹ 10,75,114/- is sustained. Addition on account of goodwill receipt - it was contended that assessee herself generated the name for herself by setting up and creation of chain on this account which is capital in nature only and not liable to tax being not a revenue receipt - Held that:- It is noted from the available records that the assessee had repaid the amount of ₹ 21.50 lacs as against the receipt of amount of ₹ 21.00 lacs from Smt. Saroj Joshi which includes the impugned amount of ₹ 16.00 lacs. In the books of account the assessee treated ₹ 16.00 lacs as receipt on account of goodwill and ₹ 5.00 lacs on account of contribution in capital account of firm. - taking into consideration all the facts and circumstances of the case, we find no reason to interfere with the order of the ld. CIT(A) that the amount of ₹ 16.00 lacs is not taxable receipt in the hands of assessee, accordingly , therefore, direct the AO to delete the addition made by him on account of goodwill. - Decided in favour of assessee.
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2017 (5) TMI 525
Deemed dividend addition u/s 2(22)(e) - taxability of the loan obtained by the assessee firm from the Private Limited Company, in the hands of the assessee firm - Held that:- So long as the assessee firm is not a shareholder, any loan obtained by the assessee firm from the Private Limited Company, wherein the partners of the assessee firm are the shareholders, is not taxable in the hands of the assessee. We, therefore, find that the orders of the authorities below cannot be sustained and the appeal has to be allowed deleting the addition made by the AO treating the loan as a deemed dividend u/s 2(22)(e) of the Act. - Decided in favour of assessee.
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2017 (5) TMI 524
Disallowance of interest under section 36(1)(iii) - addition on proportionate basis, i.e., on account of diversion of borrowed funds (cash credit advances from two banks) for non-business purposes - Held that:- As in the case of borrowing against hypothecation of stocks, if the assessee has maintained adequate stocks, i.e., inclusive of margin, during the year, no diversion of the relevant borrowed capital, to any extent, can be imputed. The relevant facts being not on record, we restore the matter back to the file of the Assessing Officer (AO) to allow the assessee an opportunity to state it’s case. The AO shall decide on merits, issuing definite findings of fact. Needless to add, in the event of the assesseee not leading the facts, the AO shall draw all reasonable inferences on the basis of the material on record, and decide accordingly. We decide accordingly. Disallowance under section 14A - working the disallowance of interest expenditure - Held that:- As in the present case, it is on a long term basis, so that it would result in long-term capital gain (on the sale of shares) and dividend income (during the currency of the investment), both taxexempt, it matters little whether the investment is in shares of a ‘group’ or an ‘outside’ company. No business purpose of the impugned investment, as also noted in the context of disallowance u/s. 36(1)(iii), has been advanced by the assessee at any stage, claiming, rather, the investment to be ‘strategic’ (refer para 3 of this order). Why, where for a business purpose, the expenditure disallowed, which is on interest as well as indirect, administrative expenditure, would stand to be allowed u/s.36(1)(iii) or, as the case may be, sec.37(1) itself, so that the question of disallowance under section 14A does not arise. We find no merit in the assessee’s case and, accordingly, confirm the impugned disallowance. In working the disallowance of interest expenditure, however, only the expenditure net of that disallowed u/s. 36(1)(iii) would be taken into account, else it would amount to a double disallowance, also taking care to exclude – so as to maintain proper basis, the corresponding assets. That is, the entire interest considered for allowance or, as the case may be, disallowance u/s. 36(1)(iii), would stand excluded in reckoning the indirect interest disallowable u/s. 14A inasmuch as the application of borrowed capital, to that extent, stands resolved, and it is only the balance borrowed capital, entering the general pool of funds, which shall survive for being considered. Needless to add, corresponding adjustment for assets, both in the numerator and denominator, shall also be made Maintainability of deduction u/s. 80-IA of the Act on ‘Clean Development Mechanism’ (CDM) receipt by the assessee in respect of it’s two power generating units - Held that:- In the facts of the present case, the assessee itself regards it as business income, claiming deduction u/s. 80-IA thereon, and which is the bone of contention between the parties. Continuing further, true, the CERs, though intangible, are to be valued as inventories, but it is only on account of the protocol that they stand to be recognized separately and are valuable/realizable. Similar view, in fact, stands also expressed by the tribunal in Appollo Tyres Ltd. v. Asst. CIT [2015 (3) TMI 760 - ITAT COCHIN] holding the income arising on sale of CERs as business income u/s. 2(24)(vd) and, further, as not eligible for deduction u/s. 80-IA. Thus confirming the assessment of the impugned receipt as business income and disallowance of deduction u/s. 80-IA in its respect.
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Customs
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2017 (5) TMI 547
Interpretation of Statute - N/N. 17/2001-Cus. dated 1.3.2001 - interpretation of the symbol '-' - effective additional duty of customs chargeable on the goods imported by the appellant - rate of duty for automatic cone winding machine with yarn splicer and auto doffing system - Held that: - The language of the statute should be read as it is, as opined by Justice G.P. Singh in his book "Principles of Statutory Interpretation". The intention of the Legislature is primarily to be gathered from the language used, which means that attention should be paid to what has been said as also to what has not been said. The interpretation of '-' under Col. 5 can only be interpreted as Nil rate of duty and not otherwise - as per the entry 245, there cannot be any rate charged in excess of '-' for additional duty which would only translate to the conclusion that there would be no additional duty in this case. This is only logical and legal interpretation that can be drawn from this Notification. Appeal allowed - decided in favor of appellant.
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2017 (5) TMI 546
Misdeclaration in the quantity and value of imported goods - during the course of physical verification, the goods were not found as declared. Therefore, the appellant contended that it is an inadvertent mistake of the supplier of the goods - confiscation - penalty - Held that: - the malafide intention of the appellants are missing - It is a fact on record that the appellant has declared the description, quantity and value of the goods as per the invoice/ packing list, therefore, the benefit of doubt goes in favor of the appellant that it is an inadvertent mistake of the supplier by non supplying the goods as per the invoice/order/ packing list - confiscation and penalty set aside. The goods on physical verification found different as per declaration made by the appellant and the value has been enhanced on the basis of market survey. As no market survey report has been placed on record, the value adopted by the adjudicating authority can be said to the true value of the goods. Matter remanded back to the adjudicating authority to decide the issue afresh after providing the copy of market survey to the appellant defend their case - appeal allowed by way of remand.
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2017 (5) TMI 545
Revocation of CHA licence - Did CESTAT in the facts and circumstances of this case fall into error in directing the Competent Authority to conclude the investigation and take a final decision in the inquiry, contrary to the Customs Broker Licensing Regulation, 2013 (CBLR), as interpreted by this Court in its various judgments? - The case of the Appellant is that despite repeated requests, the documents relied upon were not supplied. The Commissioner of Customs (General) by an order dated 1st June, 2016 proceeded to revoke the Appellant’s licence without following the procedure outlined under the CBLR 2013. Held that: - Regulation 20 (1) of the CBLR 2013 is categorical in that prior to revocation of the licence, a SCN in writing has to be issued to the Customs Broker. The SCN has to be issued within a period of 90 days from the date of receipt of the 'offence report'. The SCN in the present case was issued only on 16th December 2016, more than six months after the revocation of the Appellant's licence. It was issued in fact after the impugned order dated 17th October, 2016 of the CESTAT - Unless the Department is able to show that there is a final report which is dated not later than 90 days prior to the SCN dated 16th December, 2016, there would be no compliance with the mandatory time limit set down under Regulation 20 (1) of CBLR 2013. Nowhere in the counter-affidavit is there a positive averment that a ‘final’ offence report was dated within the period of 90 days prior to 16th December 2016, when the SCN was issued to the Appellant for the first time. The entire action in proceeding to revoke the Appellant’s licence was contrary to CBLR 2013 - appeal allowed - decided in favor of appellant.
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Corporate Laws
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2017 (5) TMI 542
Validity of anti-competitive agreement - offending the provisions of Section 3(3) of the Competition Act, 2002 - penalty imposed by COMPAT - CCI jurisdiction to hold enquiry - Held that:- Merely because the purported agreement between the appellants was entered into and bids submitted before May 20, 2009 are no yardstick to put an end to the matter. No doubt, after the agreement, first sting was inflicted on May 8, 2009 when the bids were submitted and there was no provision like S. 3 on that date. However, the effect of the arrangement continued even after May 20, 2009, with more stings, as a result of which the appellants bagged the contracts and fruits thereof reaped by the appellants when Section 3 had come into force which frowns upon such kinds of agreements. We are, thus, of the opinion that inquiry into the tender of March 2009 by the CCI is covered by Section 3 of the Act inasmuch as the tender process, though initiated prior to the date when Section 3 became operation, continued much beyond May 20, 2009, the date on which the provisions of Section 3 of the Act were enforced. We agree with the COMPAT that the role of the appellants did not come to an end with the submission of bid on May 08, 2009. No doubt, clause (d) of sub-section (3) of Section 3 uses both the expressions bid rigging and collusive bidding , but the Explanation thereto refers to bid rigging only. However, it cannot be said that the intention was to exclude collusive bidding . Even if the Explanation does contain the expression collusive bidding specifically, while interpreting clause (d), it can be inferred that collusive bidding relates to the process of bidding as well. Keeping in mind the principle of purposive interpretation, we are inclined to give this meaning to collusive bidding . It is more so when the expressions bid rigging and collusive bidding would be overlapping, under certain circumstances which was conceded by the learned counsel for the appellants as well. We are, therefore, of the opinion that the two expressions are to be interpreted using the principle of noscitur a sociis, i.e. when two or more words which are susceptible to analogous meanings are coupled together, the words can take colour from each other. We, thus, answer Issue No. 1 in the negative by holding that the CCI was well within its jurisdiction to hold an enquiry under Section 3 of the Act in respect of tender of March, 2009. Jurisdiction of DG/CCI to investigate into the boycott of 2011 FCI s tender - Held that:- The starting point of inquiry would be the allegations contained in the complaint. However, while carrying out this investigation, if other facts also get revealed and are brought to light, revealing that the persons or enterprises had entered into an agreement that is prohibited by Section 3 which had appreciable adverse effect on the competition, the DG would be well within his powers to include those as well in his report. Even when the CCI forms prima facie opinion on receipt of a complaint which is recorded in the order passed under Section 26(1) of the Act and directs the DG to conduct the investigation, at the said initial stage, it cannot foresee and predict whether any violation of the Act would be found upon investigation and what would be the nature of the violation revealed through investigation. If the investigation process is to be restricted in the manner projected by the appellants, it would defeat the very purpose of the Act which is to prevent practices having appreciable adverse effect on the competition. We, therefore, reject this argument of the appellants as well touching upon the jurisdiction of the DG. 2009 tender of the FCI, all the three appellants had quoted the same price, i.e. ₹ 388 per kg. for the APT - Held that:- We feel that COMPAT has examined the matter in right perspective. After examining the record, one finds that important fundamental conditions were the same which used to be in the earlier tenders. In 2009 tender, a specific quantity of 600 MT was prescribed. At that time, all the three appellants participated and did not object to the same. As against this in 2011 tender, the tentative annual requirement of APT was stated to be 400 MT and not 75 MT per month. The condition referred to by the appellants was not for supply of 75 MT per month. It only stated that in a given month the tenderer should have capacity to supply 75 MT. It was nowhere stated that 75 MT will have to be supplied by the successful tenderer every month. In any case, from the conduct of the three appellants, it becomes manifest that reason to boycott the May 2011 tender was not the purported onerous conditions, but it was a concerted action. Otherwise, if the appellants were genuinely interested in participating in the said tender and were aggrieved by the aforesaid conditions, they could have taken up the matter with the FCI well in time. They, therefore, could request the FCI to drop the same (in fact FCI dropped these conditions afterwards when the matter was brought to their notice). However, no such effort was made. As pointed out above, M/s. Excel Crop Care wrote the letter only a day before, just to create the record which cannot be termed as a bona fide move on its part. We feel that COMPAT has examined the matter in right perspective. After examining the record, one finds that important fundamental conditions were the same which used to be in the earlier tenders. In 2009 tender, a specific quantity of 600 MT was prescribed. At that time, all the three appellants participated and did not object to the same. As against this in 2011 tender, the tentative annual requirement of APT was stated to be 400 MT and not 75 MT per month. The condition referred to by the appellants was not for supply of 75 MT per month. It only stated that in a given month the tenderer should have capacity to supply 75 MT. It was nowhere stated that 75 MT will have to be supplied by the successful tenderer every month. In any case, from the conduct of the three appellants, it becomes manifest that reason to boycott the May 2011 tender was not the purported onerous conditions, but it was a concerted action. Otherwise, if the appellants were genuinely interested in participating in the said tender and were aggrieved by the aforesaid conditions, they could have taken up the matter with the FCI well in time. They, therefore, could request the FCI to drop the same (in fact FCI dropped these conditions afterwards when the matter was brought to their notice). However, no such effort was made. As pointed out above, M/s. Excel Crop Care wrote the letter only a day before, just to create the record which cannot be termed as a bona fide move on its part. Penalty - whether penalty under Section 27(b) has to be on total/entire turnover of the company covering all the products or it is relatable to relevant turnover ? - Held that:- In the absence of specific provision as to whether such turnover has to be product specific or entire turnover of the offending company, we find that adopting the criteria of relevant turnover for the purpose of imposition of penalty will be more in tune with ethos of the Act and the legal principles which surround matters pertaining to imposition of penalties. Cases at hand itself amply demonstrate that the CCI s contention, if accepted, would bring about anomalous results. In the case of M/s. Excel Crop Care Limited, average of three years turnover in respect of APT, in respect whereof anti-competitive agreement was entered into by the appellants, was only 32.41 crores. However, as against this, the CCI imposed penalty of ₹ 63.90 crores by adopting the criteria of total turnover of the said company with the inclusion of turnover of the other products as well. Likewise, UPL was imposed penalty of 252.44 crores by the CCI as against average of the three years turnover of APT of ₹ 77.14 crores. Thus, even when the matter is looked into from this angle, we arrive at a conclusion that it is the relevant turnover, i.e., turnover of the particular product which is to be taken into consideration and not total turnover of the violator.
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Service Tax
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2017 (5) TMI 570
Reverse charge mechanism - payment through CENVAT credit - The period covered in the present appeal is from October 2007 to March 2008 - Held that: - An amendment has been brought forth w.e.f. 01.03.2008, barring the use of CENVAT credit for payment of service tax under reverse charge mechanism - the demand for the period prior to 01.03.2008 requires to be set aside. With regard to the demand for the period after 1st March 2008 to the tune of ₹ 23,201/-, Since the appellant is utilising the CENVAT credit for payment of service tax which he is liable to pay under reverse change mechanism, definitely the situation would be revenue neutral one. Extended period of limitation - Held that: - The issue whether CENVAT credit can be used for payment of service tax under reverse charge mechanism was under much debate and had travelled upto the Larger Bench - On the said set of facts, there can be no suppression of facts with intent to evade payment of service tax - the demand for the period from 1st March 2008 onwards is also unsustainable. Appeal allowed - decided in favor of appellant.
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2017 (5) TMI 569
Penalty - VCES Scheme - non-payment of interest amount - appellant claims that they paid advance service tax under VCES and some extra amount to cover amount of interest - Revenue pointed out that the entire money was paid under the one head so it cannot be accounted as interest in Revenue’s account - Held that: - Though the liability of interest has not so far been quantified by the Revenue, the appellant deposited service tax as well as some excess amount in service tax head as mentioned by the Revenue - When the appellant is a Govt. corporation, who paid entire tax demand (through may be some interest still remains payable as it was not quantified by the Revenue), before issue of SCN and where ‘intention to evade payment of tax’ cannot be alleged, then in the light of provisions of Section 73(3) and Section 80 of FA, 1994, no penalty is liable to be imposed on the assessee appellant - penalties set aside - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 568
CENVAT credit - credit availed on the strength of debit notes - denial on the ground that debit note is neither invoice nor bill or challan as per prescribed under Rule 9(1)(f) - whether Cenvat credit is allowable on the strength of debit note issued by service provider? - Held that: - the debit note is only document which was issued by service provider M/s. BPCL for service charges as well as service tax paid thereof. In this circumstances the said debit note should be accepted as invoice or bill or challan. Thus nomenclature has no significant important criteria is that the information mentioned in Rule 4(A) of Service Tax Rules, 1994 should appear in the documents which is raised for service charges as well as service tax to the service recipient - credit allowed - decided in favor of appellant.
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2017 (5) TMI 567
Levy of service tax - re-sale of licensed information technology software - Held that: - contracts were crystallized before 16/05/2008 and some part of the service was rendered after 16/05/2008 through the obligation created before 16/05/2008 and said service was subjected to levy of Service Tax on 16/05/2008 - Service Tax was not leviable in respect of the invoices which were issued before 16/05/2008 even for that part of the service which was rendered after 16/05/2008 where the obligation was created before 16/05/2008 - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 566
Refund claim - export of services rejection on the ground that the appellant has not furnished bank reconciliation certificate and there was no one to one co-relation between input services and the output services provided - Held that: - FIRC statement has already been submitted by the appellant at the time of refund claim. The Bench had directed the appellant to furnish BRC and the appellant had accordingly furnished the same on 20.01.2017. The same was furnished to the department for verification and thereafter case has been taken up for hearing today. The appellant has complied with the procedural requirement mandated by N/N. 27/2012. All the input services except fleet management services/rent-a-cab services were held to be eligible for refund in the appellant’s own case [2016 (11) TMI 1352 - CESTAT HYDERABAD] - the appellant is eligible for refund in respect of all services except rent-a-cab service - appeal allowed - decided partly in favor of appellant.
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2017 (5) TMI 565
Refund claim - denial on account of nexus - Held that: - The Rule 5 of CCR, 2004 has under gone an amendment as noted by the Commissioner (Appeals). The word ‘used’ in the said provision earlier to 01.04.2012 has been deleted - reliance was also placed in the case of M/s Xilinx India Technology Services Pvt. Ltd. Versus The Commissioner. C.C. E&ST, Hyderabad-IV [2016 (7) TMI 598 - CESTAT HYDERABAD] - refund allowed - appeal dismissed - decided against Revenue.
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2017 (5) TMI 564
Penalty u/s 78 - GTA services - demand on the ground that the appellants did not take registration and did not file returns during the relevant period, and thus, the appellants are guilty of suppression of facts - Held that: - the appellants have paid the service tax along with interest on 29.06.2009 which is much before the issuance of the SCN. Therefore, the penalties imposed u/s 78 is unwarranted - penalties set aside - demand of tax and interest upheld - appeal allowed - decided partly in favor of assessee.
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2017 (5) TMI 563
CENVAT credit - inputs - furniture used in the office of the appellant premises - Held that: - The Board Circular clarifies that credit is eligible on furniture and stationary used in the office within the factory - reliance placed in the case of [2016 (2) TMI 316 - CESTAT MUMBAI], where it was held that the said tables and chairs are used for rendering services of general insurance, accordingly, the appeal filed by the appellant on this issue needs to be allowed. - denial of the credit is unjustified - appeal allowed - decided in favor of assessee.
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Central Excise
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2017 (5) TMI 562
SSI exemption - N/N. 108/95-CE dated 20.11.9 - demand on the ground that the appellants have not supplied the certificate before clearance of the goods in terms of the condition of the notification - Held that: - If the clearance for which required certificate is not produced and the same are added to the clearance as per chart, the total clearance remain within the exemption limit under Notification - appellant is entitled for SSI exemption. Whether the data retrieved from the CD is admissible evidence in terms of section 36(b) of the Central Excise Act or not? - Held that: - the data retrieved from the CD can be admissible evidence if it satisfies the provision of section 36(b) of the Act - the condition of section 36 has not been met out. Moreover, the printouts have been taken in the absence of the appellants and panchnama was drawn. The panchas were not allowed for cross examination by the appellants and the data retrieved from the CD was never confronted with the appellants during the course of investigation - the data retrieved from the CD is not admissible to confirm the demand. Whether on the basis of data retrieved from the CD without further investigation, the demand can be confirmed against the appellants or not? - Held that: - In the absence of any corroborative evidence on the basis of the data retrieved from the CD, the demand is not sustainable - Further in the case of clandestine removal of the goods, the matter should be investigated in a prescribed manner - demand set aside. Whether the statement made by Shri Arun Kheria during the course of investigation on 17.2.2005 agreed to duty on the clearance made to Kerala and Tamil Nadu Government is admissible in the facts and circumstances of the case or not? - Held that: - Merely making statement by Shri Arun Kheria does not cast liability on the appellant when the appellant is able to produce requisite certificate under Notification No.108/95-CE for clearances made to Kerala and Tamil Nadu Government. In that circumstance, the demand cannot be confirmed on the basis of statement of Shri Arun Kheria. Whether the penalty can be imposed on the appellants in the facts and circumstances of the case or not? - Held that: - the demands are not sustainable against the appellants, therefore, the question of imposition of penalty on the appellants does not arise. Appeal allowed - decided in favor of appellant.
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2017 (5) TMI 561
SSI exemption - N/N. 8/2003-CE dated 01.03.2003 - use of brand name of others - Held that: - reliance placed in the case of Nebulae Health Care Ltd. [2015 (11) TMI 95 - SUPREME COURT], wherein it has been held that the goods cleared with the brand name of others on payment of duty are eligible for the benefit of N/N. 8/2003-CE dated 01.03.2003 - appellants are entitled for benefit of exemption N/N. 8/2003-CE dated 01.03.2003 - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 560
Penalty u/r 26 - issue of fake invoices - the charge on the appellants is that they have issued LRs for transportation between ICD Tughlakabad to Nakoda Trading Corporation, Bhiwandi - Held that: - the act of the appellants does not cover u/r 26 for the reason that the appellants have neither dealt with any goods, which is liable for confiscation - the issuance of LRs does not fall under any offence under Central Excise law. The LR is not a duty paying document on the basis of which Cenvat Credit can be claimed - The issue of fraudulent availment of Cenvat Credit is related to the cenvatable invoice issued by Nakoda Trading Corporation, Bhiwandi to Rashtriya Metal Industries Ltd. Therefore, it cannot be said that even regarding the offence of fraudulent credit, the present appellants are involved - penalty set aside - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 559
Reversal of CENVAT credit - write-off of inputs - sub rule 5(b) of Rule 3 of CCR w.e.f. 7-9-2007 - present case period involved is March, 2001 to February, 2002 - Held that: - the demand of Cenvat credit of ₹ 15,74,811/- is not on account of quantity written off in the books of account as in fact there is no quantity shown as written off in the books of accounts - Demand was confirmed on the quantity of inputs cleared for spares parts sale and the same was quantified and informed to the department by the appellant themselves in such case the demand was correctly confirmed. As regard the limitation, the appellant though have transferred certain quantity of inputs for spare parts sale in respect of which credit cannot be retained by the appellant but was not disclosed to the department therefore clear suppression of facts established on the part of the appellant - invocation of extended period justified. Appeal dismissed - decided against appellant.
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2017 (5) TMI 558
Clandestine manufacture and removal - the demand was confirmed on the basis of variation in electricity consumption - case of appellant is that the test check of the electricity consumption was carried out not during the relevant period but much subsequent to the period for which the demand was raised, and is thus not relevant for the purpose - Held that: - merely because of variation in the electricity consumption between the actual consumption and the consumption arrived at on the opinion of some expert, the demand cannot be confirmed - The demand on the basis of electricity consumption cannot be confirmed particularly in the facts of the present case when it is clear from the calculation chart itself that in some of the months the production is coming short as per the calculation of the production on the basis of 600 unit PMT and in most of the months the production is coming on higher side. As regards demands raised based on kachcha chit, it is found that the demand was confirmed for the period 2002-03 to 2005-06 whereas kachcha chit shows the entry for the period 18.6.2006 to 27.6.2006. Therefore, this evidence is not relevant to the period of the demand in the present case, the same cannot be relied upon. There is no evidence on record which can establish the clandestine removal of the goods - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 557
Refund claim - deemed export - accumulated cenvat credit lying untilised in their cenvat credit account on the ground that they have made clearances to various mega projects/100% EOUs and cleared the goods to merchant exporter against CT-1 - denial mainly on the ground that the respondent has not executed bond for the export of goods, the refund is to be rejected - Held that: - as per procedure laid down under N/N. 5/2006 ibid, there is no condition on the manufacturer who cleared the goods to merchant exporter against the CT-1 certificate to execute any bond, therefore, we do not find any merit in the Revenue's appeal - the Respondent is entitled for refund claims for the cenvat credit contained in the goods cleared to merchant exporter against CT-1 certificate - appeal dismissed - decided against Revenue.
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2017 (5) TMI 556
SSI exemption - exemption limit - case of appellant is that Since the aggregate assessable value on which excise duty was confirmed is much below the threshold limit under SSI exemption, the appellants was entitled for the same and therefore no excise duty would arise - Held that: - as per the final confirmation of demand the amount comes to ₹ 1.90 lakhs. If this is so, then the aggregate value of the excisable goods is very much below the SSI exemption limit. Both the lower authorities have not considered this submission of the appellants. I am therefore, of the view that the demand is not sustainable on the ground that the appellants are entitled for SSI exemption - demand set aside. Extended period of limitation - Held that: - the plea of the appellants that as per their bonafide belief the furniture manufactured by them is not excisable is found to be correct - extended period not invocable - the demand is not sustainable on limitation also. Penalty also set aside. Appeal allowed - decided in favor of appellant.
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2017 (5) TMI 555
Benefit of N/N. 6/2002 dated 01.03.2002 - clearance of electric parts under nil rate of duty - Respondents claimed the said exemption though the said parts were not consumed within the factory of production for manufacture of non-conventional energy device specified in list 9 - Held that: - there is no dispute that the items manufactured by the appellant are required for use in the products of the nature specified in sr.no. 16 of the List 9 of the said notification. Sr. No. 21 of the said notification exempts such parts only when they are consumed within the factory of production of parts for manufacture of goods specified at sr. No. 1 to 20 of List 9 - It is apparent that the goods manufactured by the appellant are not used within their factory for production of the items listed in sr.no. 16 of list 9. Thus on plain reading of the said notification it is apparent that the appellants are not entitled for the benefit of such notification - appeal allowed - decided in favor of Revenue.
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2017 (5) TMI 554
Refund claim - excess paid duty - the case of Revenue is that the amount was paid voluntarily and it was not a mistake of fact, hereby denying refund - Held that: - it appears that the appellant agreed with reconciliation and paid this amount voluntarily - the duty deposited was not mistake of fact because the appellant has been fully aware of reconciliation statement and payment was made in two instalments. Admittedly, the duty was not paid under protest. Hence, it was recovery of excess refund taken vis-a-vis what was admissible to them. The appellant's other plea is that the adjudicating authority has not given an opportunity of hearing to the appellant. This plea should have been taken before the first appellate authority in the proceeding. In any event, they were given personal hearing at the appellate level. From that angle, the impugned order of the Commissioner (Appeals) does not suffer from any infirmity. Appeal dismissed - decided against assessee.
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2017 (5) TMI 553
SSI exemption - job-work - The appellant did not include in the clearances of ₹ 76,70,795/- worth of readymade garments which were manufactured prior to March 2001, by job-worker, but cleared after 01.04.2001 while computing SSI clearances - case of appellant is that they never had a factory premises prior to 01.04.2001 and therefore the goods cannot be considered to be manufactured by them - Held that: - identical matter has been decided by the Tribunal in K. Prashant Enterprises [2004 (1) TMI 544 - CESTAT, MUMBAI], where it was held that the raw material supplier (appellants) cannot be saddled with the duty liability to pay Central Excise Duty or with penalty. Larger Bench has prescribed that the duty liability arose prior to 01.03.2001 at the end of job worker. No duty liability would therefore arise at the end of principal manufacturer prior to 01.03.2001. Thus the goods which were lying in stock of the appellant cannot be charged to duty once again. Appeal allowed - decided in favor of appellant.
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2017 (5) TMI 552
Handicrafts - N/N. 76/86-CE - case of appellant is that since the impugned goods are in the nature of handicraft and exempt under N/N. 76/86-C.E., no demand of duty can be confirmed against the appellant - circular no. 128/396/95-CX dated 25.05.1995 - Held that: - the onus to establishing that the goods cleared by them are handicraft is on the appellant - the appellant have produced certain certificates from the Development Commissioner wherein certain products have been certified to be handicrafts. The said certificates are not in respect of the impugned goods. It is also not clear if the said certificates are in respect of similar goods. The revenue had given the appellant an option to get the goods examined before clearance, however, the appellant chose not to do so. In the absence of any evidence to support the claim by the appellant that the goods are handicraft, we are unable to interfere with the impugned order in so far as the demand of duty is concerned. Penalty u/r 25 of CER - Held that: - the penalty u/r 25 cannot be imposed as the issue is of interpretation. The appellant had a bonafide belief and were in connection with the revenue for this purpose - penalty set aside. Appeal allowed - decided partly in favor of appellant.
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2017 (5) TMI 551
CENVAT credit - input services - Shipping Services - Documentation Charges - Terminal Handling charges - denial on the ground that services have been availed beyond the factory gate and hence, the credit of services availed after the place of removal is not admissible - Held that: - the issue of admissibility of input services credit on Shipping Service, Documentation Charges and Terminal Handling Charges used in respect of export of goods is no longer res-integra, and stands decided in the appellant's own case M/s. Jotindra Steel And Tobes Ltd. Versus CCE, Delhi-iv [2014 (6) TMI 517 - CESTAT NEW DELHI], where it was held that for export purposes, the place of removal get extended to the load port, the Shipping services availed at the port have to be held as cenvatable input services within the meaning of clause (l) of Rule 2 of the CCR, 2004 - credit allowed. Regarding contention of the Revenue that assessee should have claimed refund of service tax instead of availing the Cenvat credit, it was held in the case of M/s. Jotindra Steel And Tobes Ltd. Versus CCE, Delhi-iv that two option having been extended to the assessee, it is his choice to avail any one such option. Appeal dismissed - decided against Revenue.
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2017 (5) TMI 550
Interest - penalty - cenvat credit - receipt of invoice without receipt of goods - reversal of credit on being pointed - Held that: - duty has been paid by the appellants within 09 days of the availing the Cenvat Credit and same is within the same month. In that circumstances, demand of interest is not sustainable - As duty already being paid and there is no demand of interest therefore, as per the provision of Section 11 AC of the Act, penalty on the main party is required to be imposed to the tune of 25% of the duty involved. Penalty is reduced to the 25% of the duty. With regard to the penalty on the Director, the Director was having full knowledge of the availment of the Cenvat Credit by the company therefore, the Director is also liable to penalized u/r 26 of the CER, 2002. However, penalty imposable on the Director is highly excessive and the Commissioner (A) reduced the penalty of ₹ 25000/-. Appeal allowed - decided partly in favor of appellant.
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2017 (5) TMI 549
CENVAT credit - whether the appellant is entitle to avail Cenvat Credit on Different Outdoor Catering Services and Garden Maintenance Services under in terms of Rule 2(l) of the CER, 2004 or not? Held that: - the issue has already been settled by Hon’ble High Court of Bombay in the case of C.C.E. Nagpur Vs Ultratech Cement Ltd. [2010 (10) TMI 13 - BOMBAY HIGH COURT] wherein it has been held that the appellant is provide Outdoor Catering Services to its workers therefore, they are entitle for input credit service. With regard to the Garden Maintenance Services, the Hon’ble Karnataka High Court in the case of C.C.E. Bangalore-II Vs. Millipore India Pvt. Ltd. [2011 (4) TMI 1122 - KARNATAKA HIGH COURT], held that the appellant is entitled to avail Cenvat Credit on Garden Maintenance Service. Credit allowed - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 548
CENVAT credit - job-work - case of Revenue is that as the goods were sent by the appellant to job worker under N/N. 214/86, no duty was leviable from the job worker, that is why the duty paid by the job worker is not valid for Cenvat credit claim - Held that: - the appellant is responsible for the payment of duty of Central Excise on the final product received by them from the job worker - when the job worker has factually paid the duty and when as per the N/N. 214/86, the appellant supplier, who sends the goods for job work is responsible for the payment of duty, there does not appear to be any wrong in claiming Cenvat credit for the duty paid on the job work - credit allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (5) TMI 544
De-sealing of premises - validity of Section 5(2) of the DVAT Act, 2004 - Held that: - the Court considers it appropriate to direct that the Respondents pay a sum of ₹ 5 lakhs to the Petitioner as costs of these proceedings. The Petitioner is at liberty to pursue other appropriate remedies as far as the loss allegedly suffered by it as a result of the illegal sealing action of the Respondent of its three offices - petition disposed off - decided in favor of petitioner.
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2017 (5) TMI 543
Jurisdiction - power under Section-43 of the “OVAT Act” - suppression/escapement of fact present or not? - validity of reassessment proceedings - it is alleged that petitioner is selling ROM at a low price instead of selling CLO is an unusual thing as ordinarily mine owner sells CLO after processing of ROM spending a miniscule amount in order to achieve real market value - petitioner claims that the entire reassessment proceeding has been initiated on account of mere change of opinion and thus the same is clearly without jurisdiction - Held that: - it is not disputed that the notice under Annexure-7 was issued on the basis of information contained in tax evasion report under Annexure-9. The said tax evasion report does not dispute sale of ROM to “JSPL”. It also does not say that the petitioner has/had suppressed the quantum of sale/turnover or has received any undisclosed amount. It has simply proceeded on the basis of an assumption that business module of selling ROM at a low price instead of selling CLO is an unusual thing as ordinarily mine owner sells CLO after processing of ROM spending a miniscule amount in order to achieve real market value. In this context, law is well settled that the Taxing Authorities do not have the power to dictate as to what business module or method should be adopted by a businessman. It is upto him to manage his business affair according to his wisdom. The Assistant Commissioner, Sales Tax, Enforcement Wing, Bhubaneswar while preparing the tax evasion report has been swayed by assumed low price of sale of ROM without indicating anywhere in the tax evasion report as to how the said price is low. It also does not refer to prevalent market price of the relevant period. In this context, it is important to note here that the opposite parties in their counter affidavit at Paragraph-13 have admitted that the price of ROM is not decided by the Indian Bureau of Mines. In such background, the assumption that ROM is being sold at abysmally low price has no legs to stand. Moreover, there is nothing to show that there is any legal bar for selling of ROM - there exists no legal evidence/a scrap of paper to show that the petitioner has actually sold CLO and not ROM for the years 2008-2011. To our mind power under Section-43 of the “OVAT Act” cannot be exercised for reassessment unless facts relating to suppression/escapement are discovered. It cannot be exercised by inventing a new formula. Since change of opinion is the basis for issuance of notice under Annexure-7 and for passing the impugned order under Annexure-11, thus, both the impugned orders have been issued without jurisdiction and thus the writ application is maintainable - decided in favor of assessee.
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Indian Laws
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2017 (5) TMI 541
Entitlement for exemption from appearance in the business valuation paper for final CMA exam - Held that:- The plea that the Amendment is being given a retrospective effect, is a fallacy. I agree with the submission of Mr. G.S. Chaturvedi that Amendment was notified on May 25, 2012 and the number of chances given earlier before coming into effect of the Amendment, have not been taken into account. The Amendment was not applied for the term of June, 2012. The three exemptions granted were for the exams of December 2012, June 2013 and December 2013. The plea of the petitioner that Amendment was not given effect to the examination of June, 2012 would not mean that the cases like that of the petitioner were not covered under the Amendment. In fact, the stand of the respondent that Amendment was not applied for the examination of June, 2012 as the call letters for the examination in the said term had already been dispatched to 62,670 students and applying the Amendment immediately would have created chaos, is appealing. That cannot be a cause for grievance of the petitioner, rather, he was benefitted, because, the exam of June, 2012 was not counted as an exemption. Whether the petitioner has a right to avail the benefit of exemption for unlimited terms? - Held that:- The answer has to be “No” for more than one reason; (i) It is true that, the right of exemption has been incorporated in the Regulations. In other words, the petitioner was enjoying the benefit of the exemption, even before the impugned Amendment, in terms of the Regulations i.e. Regulation 41(2). In the absence of any challenge to the power of the respondent to amend the Regulations, which power, includes the power to limit the number of exemptions, the petitioner has no right to enjoy the benefit of exemption in perpetuity. (ii) The Amendment brought, whereby the exemption has been limited to three terms would still mean that the right of exemptions per se has not been taken away but has been limited to three terms and the benefit thereof has been given / availed by the petitioner. (iii) The objective being to improve the standard and conduct of the examination, by limiting the exemption to three terms, which is the subjective satisfaction of the concerned authority, no fault can be found with such a stipulation in the Regulation. That apart, the submission of Mr. Chaturvedi that the petitioner took advantage of the amendment and after exhausting all the three exemptions, being unsuccessful in clearing the examination has assailed the Amendment is appealing. Further the action of the respondent to limit the exemptions for three consecutive terms, i.e., December, 2012; June, 2013 and December, 2013, the same being consistent with the amendment, the action of the respondent cannot be faulted. Petition dismissed.
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