TMI Tax Updates - e-Newsletter
May 19, 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:
Penalty u/s 271(1)(c) - assessee did not furnish inaccurate particulars with the intention to conceal income and rather it made a claim on the advise of the chartered accountant which was found to be not correct - No penalty - HC
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Income Tax:
Restriction on expenses - merely because GMDC agreed to pay diesel expenses to the extent of 30% the Assessing Officer was not justified in restricting the diesel expenses to 30%. - HC
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Income Tax:
Revision u/s 263 - While passing the order u/s.143(3), the AO has not uttered a single word with regard to applicability of provisions of Section 50C in respect of building sold by assessee to its Managing Director - revision proceedings sustained - AT
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Income Tax:
Loss arising on the demolition of a depreciable asset - where an asset is demolished, and the block of asset ceases to exist, the difference between the written down value and the salvage received shall have to be treated as short term capital gain or short term capital loss, as the case may be u/s 50 - AT
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Income Tax:
Determination of residential status of assessee - Relaxation of period of 60 days as per section 6(1)(a) to 182 days when employment is taken outside India as per clause (a) of Explanation 1 is applicable only "in relation to that year" i.e. the year in which employment is taken outside India. Thereafter, for subsequent years, the residential status has to be seen as per the provisions of clause (b) to Explanation 1 since owing to employment/self-employment the assessee is "being outside India"- AT
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Income Tax:
Levy of penalty - TDS deducted in paid in the next year - assessee had reasonable cause for non deduction of tax on such payments and after reconciliation the assessee admittedly has paid the TDS on in the succeeding year - No penalty u/s 271C - AT
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Customs:
Valuation of imported goods - includibility - Pull Buck Tug Charges, Tug/Launch Charges, and Port Tonnage Charges - these charges are not to be included in the assessable value u/r 10(2) (b) of Customs Valuation Rules, 2007, when 10% landing charges already included in the assessable value - AT
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Customs:
Scope of levy of ADD - glass woven roving - Revenue’s interpretation of the notification that only those glass woven rovings which are used only for thermoplastic applications are exempted cannot be accepted in absence of any substance to the contrary - ADD not levied on glass woven roving - AT
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Indian Laws:
Requirement of deposit of seventy-five per cent of the amount of award as a pre-condition for entertaining an application / appeal - While upholding the validity of Section 19 of MSME Development Act, 2006, it has to be held that the requirement of pre-deposit thereunder is not mandatory and the Court would be empowered to waive, either partially or completely, the requirement of pre-deposit in the same circumstances and conditions - HC
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Service Tax:
Business Auxiliary Service - the activity of cleaning of nullahs and removal of roadside garbage and waste soil is not an activity of business to NMC, and these services do not qualify as services on behalf of the client - No demand of service tax under BAS - AT
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Service Tax:
Reverse charge mechanism - Supply of tangible goods for use - The question of revenue neutrality would arise in this case as if appellant discharges the service tax under STGU under reverse charge mechanism, is undisputedly consuming the said services for supply of raw materials / inputs - demand set aside - AT
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Service Tax:
BAS - activity of providing Multi Level Marketing to its principal - such activity should fall under the Business Auxiliary Service - there was ambiguity in interpretation of the statutory definition of Business Auxiliary Service, thus, the demand for extended period of limitation cannot be sustained - AT
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Central Excise:
Refund claim - supply of goods to SEZ unit - the appellants have failed to follow the procedure which is prescribed in the SEZ Act for claiming exemption - appellants are not entitled to refund of the duty paid as they have not followed the procedure prescribed under law - AT
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Central Excise:
Reversal of CENVAT credit - inputs written off - The credit on inputs, which are rejected during the course of manufacture (line rejections) cannot be denied as they are already put in the process of manufacture is already held in many cases earlier. - AT
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Central Excise:
Refund of Additional Excise Duty - goods were inclusive of all duties therefore, the price was fixed. - It is not a case where the assessee had paid any duty and recovered the same. Therefore, the doctrine of undue enrichment would not be attracted - AT
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Central Excise:
The utilisation of CENVAT credit availed of Additional Duties of Excise (Textile and Textile Articles) for discharge of Additional Duties of Excise (Goods of Special Importance) is incorrect and unacceptable in law - AT
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Central Excise:
Diversion of goods for local consumption - Goods cleared under ARE-3 to 100% EOU/SEZ units - duty liability with interest upheld since appellant has not produced the re-warehousing certificate within the stipulated time. - AT
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Central Excise:
CENVAT credit - no manufacturer would carry on manufacturing operations without insurance of plant & machinery, cash in transit, goods in transit, vehicles & computers, etc. against any loss due to accident, natural calamities, etc - credit allowed - AT
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Central Excise:
SSI exemption - brand name/trade name - manufacture of Aqua Products - MBL were using the Brand name/Trade mark of another person (MVF) on their products and hence they will become ineligible for benefit of SSI exemption under the relevant notifications - demand upheld. - AT
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VAT:
Restoration of registration of dealer - the dealer filed returns and also paid the penalty. The dealer also paid the tax with interest. Nothing adverse to the dealer was found except non filing of the returns for the period between April 2014 to March 2015 - RC restored - HC
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VAT:
Scope of Section 29 of the U.P. VAT - The power of re-assessment is quite different and distinct from that of review or of the appellate power. Therefore, the assessing authority cannot utilize the power of re-assessment in the ordinary course as if it is sitting in review or in appeal over his own order of assessment. - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2017 (5) TMI 793
Addition u/s 41 - Debentures issued to a sister concern - Held that:- Issue notice on the question No.1 i.e. “Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the amount raised by the assessee by way of loan and interest expenditure pertaining thereto is for the purpose of business of the assessee being in nature of commercial expediency in view of the decision of Hon'ble Supreme Court in case of S.A. Builders Ltd. [2006 (12) TMI 82 - SUPREME COURT ]whereas the factual matrix of the case makes it very clear that the entire amount raised by way of convertible debenture was advanced by the assessee as a loan to the sister concern and the assessee has failed to prove that the loan was raised for the purpose of business of the assessee ?” - HC ref case 2016 (9) TMI 599 - BOMBAY HIGH COURT
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2017 (5) TMI 792
Condonation of delay - Held that:- The petitioner submits that, on 22.2.2017, three weeks' time was granted to cure the defects, as pointed out by the Registry. There was a delay of one week in curing the defects. Delay condoned. The special leave petition is restored to its original number. HC Ref case [2013 (8) TMI 819 - ALLAHABAD HIGH COURT]
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2017 (5) TMI 791
Condonation of delay - Held that:- As regards the electronic filing system introduced by this Court, sufficient advance notice had been given to the litigants and Advocates about the filing of soft copies of the paperbooks. Further, the Registry of the Court had made appropriate arrangements for scanning services at the filing counters to facilitate the making of soft copies so that the inconvenience if any caused to the Advocates and the litigants is minimised. The Department has itself been filing appeals after introduction of the e-filing system, without any difficulty. In any event the change could not have entailed a delay of nearly one year in filing the appeal. As regards the hierarchies and internal procedure of the Department that has been mentioned in the above paragraph, it requires to be noted that the Department has a cell in the High Court which is under the supervision of a Deputy CIT. He ought to be keeping track of the filing of appeals and should be able to know if any appeal entrusted to the panel counsel for filing has not been listed even once before the Court for a long time. Resultantly, the explanation offered by the Department is not acceptable.With there being no satisfactory explanation offered, the application for condonation of the delay of 335 days in filing the appeal is dismissed.
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2017 (5) TMI 790
Demurrage and warfage - Held that:- ITAT correctly deleted the addition made by Assessing Officer holding that same was incurred by the assessee wholly or exclusively for the purpose of business. Shortage deduction - ITAT has deleted the addition holding that deduction is not covered under the penalty, but the expenses has been occurred during ordinary course of business. Addition of unloading charges - Held that:- ITAT has deleted the addition stating that vouchers are self-contained, whereby, the vehicle trips have been entered and no further discrepancy has been pointed out by the Assessing Officer. Addition on account of vehicle maintenance expenses - Held that:- ITAT has deleted the expenses holding that on perusal of copy of vehicle maintenance, ledger account filed in the paper book most of the expenses are on account of Tyres and Tubes of the Trucks and the assessee is involved in the business of material transportation services, therefore, expenses incurred on the vehicle kept for the business cannot be said to involve personal element. Addition of disallowances under section 40 (a) (ia) - TDS not deducted by the assessee under section 194 (I) - Held that:- ITAT has deleted the addition holding that in the present case how the provisions of Section 194 (I) of the Act has been made applicable since the trucks hired by the assessee is not anyone of the components as provided under section 194 (I) of the Act. Section 194 (I) of the Act provides for deduction of Tax at source in case of payment towards rent. The rent can be that of land, building, machinery, plant, equipments, furniture or fittings. In the present case, the provision of 194 (I) of the Act is not applicable in view of the fact that trucks hired by the assessee is not anyone of the component as provided under section 194 (I) of the Act. Therefore, it was further held that addition is not permissible as provision of Section 40 (a)(ia) of the Act cannot be invoked. The findings of ITAT is based on due appreciation of documents and material available on record which cannot be found fault with.
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2017 (5) TMI 789
Allowability of deduction in respect of interest to financial institutions under Section 43B - Held that:- An affidavit dated 30.03.2017 has been filed by Smt. Anuradha Mukherjee, Commissioner of Income Tax, Faridabad to the effect that as per Section 43B of the Act, the interest liability incurred during the assessment year 1994-95 by the assessee was paid by it during the assessment year 1995-96 and claimed as deduction in computation of income for the assessment year 1995-96. Since payment of interest had been made during the assessment year 1995-96 for the interest liability incurred during the assessment year 1994-95, the allowance could be given for the assessment year 1995-96. It has further been stated that the above relief is subject to the fact that no deduction had been claimed for the assessment year 1994-95 for the amount of interest. - Decided against revenue. Allowability of depreciation - Held that:- A categorical finding has been recorded by the Tribunal that majority of the work was completed even prior to the commencement of the financial year and since as per the certificate of the Engineer installing the furnaces that the same were commissioned in the last week of August 1994 to March 1995, the assessee had rightly claimed depreciation thereon. It was thus concluded that whole of the expenses covered erection and installations were complete before the end of the financial year and hence entitled to depreciation. Thus, no error was found in the order passed by the Assessing Officer granting depreciation.- Decided against revenue
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2017 (5) TMI 788
Penalty under Section 271(1)(c) - whether the assessee had furnished inaccurate particulars of its income by claiming wrong deduction under Section 80IA on interest income? - Held that:- It has been categorically recorded by the Tribunal that even if it is assumed that the claim made by the assessee on the advise of Chartered Accountant was wrong, still it was not a good ground for imposing penalty under Section 271(1)(c) of the Act, as two conditions are required to be satisfied i.e. firstly there should be furnishing of inaccurate particulars and secondly, there must be concealment of income. Even if there was wrong claim, it could be denied by the Assessing Officer. It could be a good case for addition but not for penalty. It was concluded by the Tribunal that the assessee did not furnish inaccurate particulars with the intention to conceal income and rather it made a claim on the advise of the chartered accountant which was found to be not correct. Thus, the Tribunal rightly concurred with the findings recorded by the CIT(A) and dismissed the appeal filed by the revenue. - Decided in favour of assessee.
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2017 (5) TMI 787
Disallowance in respect of payment to sole selling agent - revenue or capital expenditure - Held that:- It is required to be noted that there was a valid reason for the assessee to terminate the sole selling agreement prematurely. The graphic division was sold w.e.f. 30/6/2006 as the graphic division was running in loss. That was the reason why the assessee thought it fit to terminate the sole selling agency and as the same was not viable and therefore, it discontinued the sole selling agency prematurely. As rightly observed by the learned tribunal, it was not for the A.O to consider the sufficiency of the reasons and/or to consider whether to continue or not the agency and whether the agency was viable or not. The learned tribunal has rightly observed that the A.O. cannot sit in the proverbial “armchair” of the assessee to decide the incurring of expenditure. As rightly observed by the learned tribunal, it was the prerogative of the assessee to run the business in a particular manner. Under the circumstances, making above observations in para 3.3 when the learned tribunal has treated and considered the payment of ₹ 2.5 Crores paid to sole selling agency - M/s. ATE Marketing (P) Ltd. as revenue expenditure, it cannot be said that the learned tribunal has committed any error. Receipt in lieu of sale of goodwill - LTCG - Held that:- We are in complete agreement with the view taken by the learned tribunal, more particularly when against the total sale consideration of ₹ 15.24 Crores, a sum of only ₹ 10 Lacs only was treated on sale under the head of goodwill and that sale consideration of ₹ 15.24 Crores included the amount of ₹ 10 Lacs under the head of goodwill. It is also required to be noted that in fact, the assessee had offered entire sale consideration as Long Term Capital Gain, however, out of the aforesaid, only ₹ 10 Lacs was claimed on sale under the head of goodwill. Considering the aforesaid facts and circumstances of the case, it cannot be said that the learned tribunal has committed any error in treating the receipt of ₹ 10 Lacs on sale of goodwill and treating the same as Long Term Capital gain.
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2017 (5) TMI 786
Addition on account of low Gross Profit - Held that:- The reasoning given by the Assessing Officer that in the earlier years with respect to the same contract the respondent – assessee estimated the profit at 53.32%. However, the Assessing Officer has not properly appreciated the fact that there may be number of reasons for decline in the profit. The expenditure might have increased and /or maybe for some or the other reason the profit might have decreased. Merely with respect to the same contract in the earlier years the respondent – assessee estimated the Gross Profit at 53.32% on the aforesaid ground alone the Assessing Officer was not justified in estimating the Gross Profit for the year under consideration. One of the ground, which has been weighed with the learned tribunal in not accepting the Gross Profit ratio at 48.39% claimed by the respondent – assessee is, for the year under consideration the income has increased, and therefore, there was justification in decrease in the Gross Profit. Under the circumstances, the learned tribunal has rightly observed and held that the Assessing Officer was not justified in estimating the Gross Profit ratio at 53.32% against the claim of the respondent – assessee of Gross Profit at 48.39%. Whether the assessee is doing the huge turnover without maintaining site wise stock register, work-in-progress register - Held that:- What was weighed with the Assessing Officer was that in the contract between the GMDC and the respondent – assessee it was agreed that GMDC will pay the diesel expenses to the extent of 30%, and therefore, the Assessing Officer restricted the diesel expenses to 30%. However, it is required to be noted that as per the terms and conditions of the agreement between the GMDC and the respondent – assessee, GMDC agreed to pay diesel expenses to the extent of 30% only and whatever expenses above 30% was required to be borne by the respondent – assessee, and therefore, merely because GMDC agreed to pay diesel expenses to the extent of 30% the Assessing Officer was not justified in restricting the diesel expenses to 30%.
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2017 (5) TMI 785
Addition u/s 68 - Held that:- AO has made no additions under Section 68 of the Act even in the case of Rapid Packaging Ltd. which is one more of the 'conduit companies' like the Assessee herein. - Decided in favour of assessee.
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2017 (5) TMI 784
Disallowance under Section 40 [a](ia) - retrospectivity - Held that:- This issue is now not res integra in view of the decision of the Division Bench of this Court in the case of Commissioner of Income Tax Vs. Omprakash R. Chaudhari and Others [2015 (2) TMI 150 - GUJARAT HIGH COURT] wherein specifically observed and held that the amendment to Section 40[a](ia) of the Income Tax Act by Finance Act, 2010 shall be made applicable retrospectively. - Decided against revenue
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2017 (5) TMI 783
Condonation of delay - Held that:- The reasons given in the present application are wholly unsatisfactory. The mere fact that the Assessing Officer was busy in other time bearing assessments can hardly be an excuse, particularly given the fact that under Section 260A of the Income Tax Act, 1961, the time period for filing of an appeal is 120 days. No other statute prescribes the time period of over three months. Moreover, there is no explanation for every day’s delay. The delay of 190 days cannot be said to be routine.
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2017 (5) TMI 782
Commission in accommodation entries - bogus bills produced - Held that:- Amongst the reasons that weighed with the ITAT were that the Assessee purchased the goods on the fictitious bills. Further, the Assessee submitted the purchase letter as well as the sale bill. The Assessee was earning commission from bogus entries of issuing sales bills and then buying purchase bills. In the circumstances, the reduction of by the ITAT of the percentage of commission from 5.67% as determined by AO to 2% could not be said to be so improbable or perverse so as to warrant interference by this Court. - Decided against revenue
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2017 (5) TMI 781
Revision u/s 263 - AO has not correctly applied the provisions of Section 50C accordingly his order was erroneous as well as prejudicial to the interest of the Revenue - Held that:- From the record, we found that the assessee company has sold the property and shown sale consideration at ₹ 30 lakh whereas the stamp duty value of the property ₹ 1,42,83,000/- and accordingly the Assessee arrived at loss of ₹ 44,87,519/- on sale of the residential property. While passing the order u/s.143(3), the AO has not uttered a single word with regard to applicability of provisions of Section 50C in respect of building sold by assessee to its Managing Director. The provisions of the Section 50C are applicable in the case of transfer of land and building including depreciable capital asset. In the instant case, the property has been transferred to Mrs. Alka B Birewar, the Managing director of the assessee company for ₹ 30 lakhs against the stamp duty valuation of the property of ₹ 1,42,83,000/ -. The Hon'ble Bombay High court in the case of Bhatia Nagar Premises Co-Operative society Ltd. [2010 (3) TMI 813 - Bombay High Court] had an occasion to consider the scope of on 50 C and it is held by their Lordships that Section 50C is a measure provided to bridge the gap as it was found that the assessee were not correctly declaring the full value of consideration or in other words resorting to the practice of under valuation. We can safely conclude that not applying the provisions of Section 50C to the facts of the instant case has rendered the order of the AO not only erroneous but also prejudicial to the interest of Revenue, accordingly, CIT has correctly invoked the provisions of Section 263. It is pertinent to mention here that nowhere CIT has disturbed the order of the AO with regard to exemption allowed u/s 54 EC of the IT Act. Accordingly, the argument of learned AR is of no relevance in so far as the assessee will continue to enjoy the exemption u/s.54EC of the IT Act. - Decided against assessee.
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2017 (5) TMI 780
Loss arising on the demolition of a depreciable asset - whether demolition of asset does not constitute transfer of capital asset? - Held that:- From the Depredation Statement shown under Annexure I to the 3CD Tax Audit Report for the said assessment year 2003-04, it is seen that Building has been shown as a depreciable asset with opening written down value (WDV) of ₹ 1087702/-. A reference to the depreciation statement of earlier years would also show that depreciation has been claimed on the said Building every year. Therefore the asset under question is a depreciable asset. Once an asset is a depreciable asset and forms apart of a Block, and such block of assets has ceased to exist at the end of the previous year the provisions of Section 50 of the Act become applicable which deals with capital gain relating to depreciable assets Thus a harmonious reading of sections 43(6)(c) and section 50 of the Act would bring out the fact where an asset is demolished, and the block of asset ceases to exist, the difference between the written down value and the salvage received shall have to be treated as short term capital gain or short term capital loss, as the case may be. In view of the above discussion, the action of the Assessing Officer in adding back the short term capital loss of (-) ₹ 9,87,702/- to the Income of the assessee is erroneous and is not in accordance with the Law. Therefore, direct the AO to delete the addition made on this count. Accordingly, the grounds raised by the assessee are allowed.
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2017 (5) TMI 779
Income determined by the AO on the basis of the statement furnished by the assessee u/s. 131 at the time of survey operation - Rejection of books of accounts u/s 145(3) - estimating the professional income - Held that:- The assessee has produced the audited financial statements and no reference has been made to such books of accounts and accordingly no defect in books of accounts was pointed out. We also find that the ld. CIT(A) has clearly recorded his finding in his order that the AO has not specified manner of quantification of professional fees of ₹ 44 lakhs only. Addition has been made merely on the basis of statement/presumptive basis and no corroborative material has been brought on record. Presumption cannot take the shape of evidence, however, strong it may be. See D.S. AGENCIES AND ASSOCIATES & USHA DISTRIBUTORS Versus ACIT [2015 (12) TMI 1459 - ITAT MUMBAI]. Thus it can be concluded that the impugned addition was purely based on the statement recorded u/s 131of the Act. Thus the statement of the assessee cannot be the sole basis addition. The provisions of the law require the Revenue is to tax the real income of the assessee which should be based on the documents. AO is directed to delete the same. - Decided in favour of assessee. Disallowance of foreign travel expenses - assessee claimed the cost of foreign trips was sponsored by the company - Held that:- The assessee before the lower authorities has furnished the confirmation from the party ERIS in respect of Canada tour. Therefore it can be concluded that the assessee has not incurred Canada tour expenses outside the books. In this regard we also find that the lower authorities should have confirmed the same from the company whether the Canada tour was sponsored by it under section 133(6) of the Act. But we find that the AO failed to exercise his power given under the Statute. However the assessee before us failed to furnish the details in respect to the tour expenses to Thailand. Therefore, we are inclined to confirm the same to the extent of ₹ 1.08 lakh in respect of Thailand tour. Thus, in view of above we delete the addition made by the lower authorities in respect of Canada tour for ₹ 1.16 lakh only. Thus this ground of the appeal of the assessee is partly allowed.
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2017 (5) TMI 778
Addition on statement made at the time of survey action u/s. 133A - Held that:- There is nothing on record to show that the statement of the assessee was recorded under coercion or threat. In such circumstances, the onus shifts to the assessee to prove that the statement given by him was wrong which is not the situation in the instant case. The statement of Mr. Mangilal Devashi was recorded u/s.132(4) of the Act which has got evidentiary value and as per that statement also, the amount was given by the assessee who had accepted it as his concealed income. As regards the statement made by the assessee during the course of survey, the CIT(A), Central VIII, Mumbai in his aforesaid order in case of the assessee for AY.2004-05 has held that "the statement of the assessee is on oath and is based on the entries recorded in the impounded documents. Accordingly we do not find any infirmity in the order of CIT(A). Accrued interest on the loans advanced and investments - Held that:- From the record, we found that in terms of documents found during course of survey u/s.133A, the AO found that assessee has not disclosed interest accrued on KVPs, investment in FDs, loans and advances and interest of loan advance to Shri M Joshi. Accordingly AO calculated interest on these deposits / investment / KVP and made the addition. No explanation was filed by assessee in support of these not declaring income on these FDs and KVPs etc., accordingly CIT(A) confirmed the action of the AO after having detailed observation at para 5. Nothing was brought to our notice by learned AR so as to persuade us to deviate from the findings recorded by lower authorities, accordingly ground raised by assessee is dismissed. Disallowance u/s.14A with Rule 8D - Held that:- Since, assessment year involved is 2006-07 which is prior to insertion of Rule 8D, therefore, we direct the AO to restrict the disallowance u/s.14A to the extent of 5% of the dividend income. We direct accordingly. Short term capital gain OR business income - Held that:- CIT(A) has dealt in great detail with each and every script dealt with by the assessee, its magnitude turn over and the frequency of purchases and sales and thereafter arrived at a conclusion that assessee’s claim of short term capital gain was not correct and held the same as business income. The detailed finding so recorded by CIT(A) has not been controverted by learned AR by bringing any positive material on record, accordingly we do not find any reason to interfere in his findings. Addition on account of deemed rent - Held that:- AO & CIT(A) has recorded detailed finding to support ALV of house and shops so arrived at. Nothing was placed before us by learned AR to controvert the findings of lower authorities. Accordingly we do not find any reason to deviate from the findings recorded by lower authorities. Disallowance u/s.14A read with Rule 8D - Held that:- We direct the AO to restrict the disallowance to the extent of exempt income which is to the tune of ₹ 5,75,408/-. We direct accordingly. Disallowance of set off of loss incurred in respect of speculation business, business loss and short term Capital Loss - Held that:- CIT(A) has recorded detailed finding for not allowing set off of such loss after observing that assessee has not filed relevant details either before the AO or before the CIT(A). CIT(A) also observer that even during the appellate proceedings, assessee has not furnished necessary details / explanation / submission supported by the documentary evidences. Accordingly, he held that assessee has not been able to discharge onus cast upon him in this regard. The detailed finding recorded by the CIT(A) at para 8.3.1 to 8.3.3 have not been controverted by learned AR by bringing any positive material on record. Accordingly, we do not find any reason to interfere in the order of CIT(A) for not allowing set off of loss
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2017 (5) TMI 777
Transactions pertaining to software development services provided by the assessee to its AE located in UK and Australia - Held that:- The maximum international transactions were undertaken by the assessee with its AEs of Canada as well as USA and only two transactions were undertaken with AEs of Australia and UK. Therefore the same ALP of 117.50% be applied with respect to remaining two international transactions. Accordingly, we set aside the order of CIT(Appeals) and direct the AO/TPO to apply the ALP of 117.50% with respect to the remaining transactions. Deduction u/s. 10A - Held that:- The requirement of Sec.10A and 10B are similar and therefore, in view of this categorical finding of the ld. CIT(A) that in the initial year, the percentage of old and used plant and machinery was more than 20%, the assessee is not eligible for deduction u/s. 10A of the Act, in the initial year as well as in subsequent years. Therefore, we find no reason to interfere with the order of the ld. CIT(A) on this issue in any of these two years which are before us by respectfully following the judgment of the Hon’ble Karnataka High Court rendered in the case of Sami Labs Ltd. (2010 (12) TMI 683 - Karnataka High Court ). Hence, we decline to interfere with the order of the ld. CIT(A) on this issue. Deduction u/s. 10A computation - Held that:- As the profits & gains u/s. 10A were not to be included in the income of the assessee at all, the question of setting off of loss of the assessee from any business against such profits & gains of the undertaking would not arise. Similarly, as per section 72(2), unabsorbed business loss is to be first set off and thereafter unabsorbed depreciation u/s. 32(2) is to be set off as deduction u/s. 10A has to be excluded from the total income of assessee, the question of unabsorbed business loss being set off against such profits & gains of undertaking would not arise. See C.I.T. & Another Versus M/s Yokogawa India Ltd. [2016 (12) TMI 881 - SUPREME COURT] Reduction of telecommunication expenses from the export turnover - Held that:- This issue is covered in the case of Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA HIGH COURT] in which it has been held that if certain expenses are excluded from the export turnover, the same should also be excluded from the total turnover.
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2017 (5) TMI 776
Reduction of deduction u/s 80-IB for the purpose of computing eligible profit for deduction under Section 80HHC of the Act - Held that:- The judgment of Madras High Court in SCM Creations v. ACIT (2008 (3) TMI 223 - MADRAS HIGH COURT) would cover the issue. Accordingly, the orders of lower authorities are set aside and the Assessing Officer is directed to decide the issue in the light of the judgment of Madras High Court in SCM Creations (supra) after giving a reasonable opportunity to the assessee. Addition of donation made by the assessee to M/s Public & Political Awareness Trust - Held that:- It is not the contribution made by the assessee to the welfare of the employees. It was made to a trust for creating political awareness, therefore, the judgment of Madras High Court in Cheran Engineering Corporation Ltd. (1998 (2) TMI 74 - MADRAS High Court) may not be applicable at all. Hence, we are unable to uphold the order of the lower authority. Accordingly, the same is set aside and the disallowance made by the Assessing Officer to the extent of ₹ 5.50 Crores is restored. Claim of the assessee under the provisions of Section 145A - Held that:- Once the assessee changed its method of accounting and consistently followed the same in subsequent years, the Department cannot doubt the method of accounting followed by the assessee. In the initial years, there may be fluctuation in the profit of the assessee due to increase in purchase price by changing the method of accounting. However, when the assessee was consistently following the same, there will be revenue neutral, hence there cannot be loss to the Revenue. Therefore, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly allowed the claim of the assessee under the provisions of Section 145A of the Act. This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Addition consequent to the block assessment - Held that:- The addition made in the present case is in the assessment made under Section 143(3) of the Act. Under the scheme of Income-tax Act, there can be simultaneous assessment one for regular assessment and another for block period. Therefore, as rightly submitted by the Ld. Sr. Standing Counsel for the Revenue, the block assessment made by the Assessing Officer was separate and distinct. However, it needs to be verified whether the same income which formed part of undisclosed income for the block period has been added once again in the regular assessment. For the purpose of verification, this Tribunal is of the considered opinion that the matter needs to be re-examined. Addition under Section 37 - expenses for issue of FCC Bonds - Held that:- It is not in dispute that the assessee-company is already in business, therefore, the expenses for issue of debentures need not be amortised under Section 35D of the Act and it has to be allowed under Section 37 of the Act. The CIT(Appeals), in fact, has placed his reliance in India Cements Ltd. (1965 (12) TMI 22 - SUPREME Court ). Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Disallowance towards notional interest on interest free loan advanced to wholly owned subsidiary company - Held that:- The fact that the advance was made to foreign countries and shifting of profit to other nation was not examined by the CIT(Appeals). Therefore, the matter needs to be reconsidered. Accordingly, the orders of the lower authorities are set aside and the transfer pricing adjustment made by the Assessing Officer is remitted back to his file. Double the amount towards management consultancy fee from TCM and CMT - Held that:- Unless and until the services rendered by the assessee are brought on record, the business size of CMT and TCM cannot determine the comparability of services rendered and consideration received by the assessee. Therefore, this Tribunal is of the considered opinion that it is obligatory on the part of the Transfer Pricing Officer to bring on record the exact nature of services rendered by the assessee and thereafter has to compare the transaction with other companies in the international transaction with uncontrolled transaction. Since such an exercise was not done, this Tribunal is of the considered opinion that the matter needs to be re-examined by the Assessing Officer after referring the matter to the Transfer Pricing Officer once again. Accordingly, the orders of the lower authorities are set aside and the entire issue is remitted back to the file of the Assessing Officer. The Assessing Officer shall refer the matter to TPO once again and determine the arm's length price in respect of services rendered by the assessee in the light of finding and conclusion that may be reached by the Transfer Pricing Officer. Addition towards management consultancy fees paid to M/s Twin Star Holdings Ltd., Mauritius - Held that:- Since the actual service rendered by M/s Twin Star Holdings Ltd. was not brought on record by the CIT(Appeals), this Tribunal is of the considered opinion that the matter needs to be re-examined. Accordingly, the orders of the lower authorities are set aside and the entire issue is remitted back to the file of the Assessing Officer. The Assessing Officer shall refer the matter to the TPO once again and TPO shall examined the actual service rendered by M/s Twin Star Holdings Ltd. to the assessee and thereafter determine the arm's length price after giving a reasonable opportunity to the assessee. Disallowance under Section 14A - Held that:- Tribunal is unable to uphold the order of the lower authority. However, since the nature of transaction and the relationship was not brought on record, the matter needs to be re-examined by the Assessing Officer. Accordingly, the orders of the lower authorities are set aside and the entire issue with regard to disallowance made under Section 14A of the Act is remitted back to the file of the Assessing Officer. The Assessing Officer shall reexamine the matter afresh and bring on record the purpose for which the investment was made in Balco and the relationship between the assessee and Balco and thereafter decide the issue afresh, in accordance with law, after giving a reasonable opportunity to the assessee. Deduction allowed under Section 80-IA of the Act need not be reduced while computing relief under Section 80HHC Penalty levied by the Assessing Officer under Section 271G - Held that:- The orders of the lower authorities are set aside and the issue of penalty levied under Section 271G of the Act is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter afresh and bring on record the actual service rendered by the assessee to CMT and TCM and, thereafter decide the issue afresh after bringing on record the failure of the assessee to provide the exact information and documents which are required to be produced for international transaction and, thereafter decide the issue in accordance with law, after giving a reasonable opportunity to the assessee. Deduction under Section 80-IA - Held that:- This Tribunal in Mohan Breweries & Distilleries Ltd. (2007 (10) TMI 354 - ITAT MADRAS-B ) examined this issue elaborately and found that even though the power was generated for captive consumption, the assessee was eligible for deduction under Section 80-IA of the Act. A similar view was taken by Mumbai Bench of this Tribunal as well. Therefore, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly allowed the claim of the assessee. Hence, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Tsunami Relief Fund of Rajiv Gandhi Relief and National Welfare Trust - Held that:- It is common knowledge that the State of Tamil Nadu was very badly affected due to Tsunami and several lakhs of people were made homeless. The assessee is doing business in the State of Tamil Nadu, more particularly in the district of Tuticorin, therefore, there is an obligation on the part of the assessee to give donation to the rehabilitation work so that the assessee can carry on its business activity in a peaceful atmosphere. Therefore, even though technically speaking, the donation is not for earning any business income, it would definitely mitigate the difficulties suffered by the local people who are affected by Tsunami. Therefore, as found by the Madras High Court in Cholan Roadways Corporation Ltd. [1997 (2) TMI 38 - MADRAS High Court ] has rightly allowed the claim of the assessee. This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Disallowance under Section 14A - Held that:- It is not in dispute that Rule 8D is not applicable for the year under consideration. As rightly submitted by the Ld. Sr. Standing Counsel, this Tribunal is uniformly estimating the expenditure at 2% before introduction of Rule 8D of Income-tax Rules, 1962. The CIT(Appeals) without any basis has restricted the same to ₹ 5 lakhs instead of disallowing ₹ 27.48 lakhs which comes to 2% of exempt income earned by the assessee. Therefore, this Tribunal is unable to uphold the order of the lower authority. Accordingly we set aside the order of the CIT(Appeals) and restore the order of the Assessing Officer. Addition of loss on account of change in method of accounting - Held that:- When the assessee bonafidely changed the method of accounting as per the Accounting Standard adopted under Section 145 of the Act and continues to follow the same, even though there was loss at initial year, the same would not stand in the way of changing the accounting policy. In other words, the loss suffered in the first year would be set off in the subsequent year and there would be revenue neutral. Hence, there can be no loss to the Revenue. Therefore, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly found that the addition of ₹ 10.10 Crores on account of fall in net profit due to change in the method of accounting cannot be sustained. This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Addition towards prior period expenses - Held that:- It is not in dispute that the Tax Audit Report clearly says that the goods were transported in the earlier years, therefore, the payment to be made relates to the earlier assessment year. It is nobody’s case that the compensation was paid in respect of loss suffered during the year under consideration. It is also not known how the loss was quantified to pay compensation by the assessee. In the absence of any material available on record regarding the quantification of compensation and liability to pay the same, this Tribunal is of the considered opinion that the matter needs to be reconsidered by the Assessing Officer. Accordingly, the orders of the lower authorities are set aside and the issue of compensation is remitted back to the file of the Assessing Officer. The Assessing Officer shall bring on record the liability to pay compensation by the assessee and the year in which the liability was crystallized and thereafter decide in accordance with law after giving a reasonable opportunity to the assessee. Deduction claimed under Section 80-IB - only contention of the assessee before this Tribunal is that the Assessing Officer changed the year of claim to 9th and 10th year arbitrarily - Held that:- The fact remains that the assessee is eligible for deduction from 6th year to 10th year. Therefore, whether the claim is for 7th year or 8th year, so long it falls within the period of 6th to 10th year, the assessee is eligible for deduction under Section 80-IB of the Act at 30%. Therefore, as rightly submitted by the CIT(Appeals), the issue becomes infructuous. Accordingly, the same is confirmed. Management consultancy fee disallowance u/s 40(a)(i) for non-deduction of tax at source - Held that:- The assessee has paid management consultancy fees and Representative Office fees to its holding company in UK. In respect of Representative Office fees, the CIT(Appeals) himself found that the payment was made for the service rendered outside India, therefore, it was not liable for taxation in India. Accordingly, the CIT(Appeals) found that there is no need to deduct tax. Coming to management consultancy fees, it is not in dispute that UK company deputed their skilled employees to India to render services to the assessee. In fact, the assessee-company availed services of UK company in India. Therefore, the payment made to the assessee towards management consultancy fees is liable to tax in India. Hence the assessee has to necessarily deduct tax as mandated under Section 9(1)(vii) of the in respect of the payment of management consultancy fees. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Deduction under Section 80GGB - Held that:- After referring to the amendment carried out by the Parliament by Finance (No.2) Act, 2009 with effect from 01.04.2010, this Tribunal found that the contribution made by the assessee was to M/s Public & Political Awareness Trust and not to any political party. Accordingly, this Tribunal found that the CIT(Appeals) is not justified in allowing the claim of the assessee. Claim of the assessee under Rule 8D of the Income-tax Rules, 1962 - Held that:- The expenditure incurred by the assessee for earning exempt income cannot be allowed as expenditure for earning taxable income. Therefore, certain disallowance has to be made. This Tribunal consistently disallowing the claim at the rate of 2% of the exempt income earned by the assessee before the introduction of Rule 8D of Income-tax Rules, 1962. Therefore, the Assessing Officer is directed to disallow 2% of exempt income earned by the assessee for the year under consideration. Addition on account of bogus steel purchase - Held that:- Referring to the order passed by the Assessing Officer for the block period, this Tribunal found that the order passed by the Assessing Officer is barred by limitation. This Tribunal had no occasion to go into the merit of the disallowance made by the Assessing Officer. Accordingly, this issue was remitted back to the file of the Assessing Officer. For the sake of consistency, the order of the CIT(Appeals) is set aside and the issue of claim of bogus steel purchase is also remitted back to the file of the Assessing Officer. Deduction claimed under Section 80-IB - Held that:- Though the assessee claimed before the lower authorities that foreign exchange fluctuation on sale of finished goods, this Tribunal is of the considered opinion that profit on sale of finished goods, due to fluctuation in foreign exchange, the same has to be construed as derived from industrial undertaking. In case the profit was on the sale of raw material, the same cannot be taken as income derived from industrial undertaking at all. Since no details/materials are available before this Tribunal, it has to be first ascertained whether profit on foreign exchange fluctuation was due to sale of finished goods or raw material. No material is available on record to suggest that the foreign exchange fluctuation was due to sale of finished goods on export. Therefore, this Tribunal is of the considered opinion that the matter needs to be verified by the Assessing Officer. Unclaimed liabilities written back, the unclaimed liabilities relate to earlier assessment year, due to unclaimed liabilities of the earlier year, the same were written back in the books of account and treated as income of the assessee. This Tribunal is of the considered opinion that deduction under Section 80-IB of the Act is only in respect of current profit. The profit written back in the books of account as unclaimed of the earlier year cannot be construed as profit of current year, therefore, by including the unclaimed liabilities written back in the books of account, the assessee cannot inflate the eligible profit for the purpose of deduction under Section 80-IB of the Act. Interest received from customers, it is not known whether the interest was received on sale of finished goods or interest was received on any other situation. If the interest was received on sale price for delayed payment of sale price, then as found by Madras High Court in Madras Motors Ltd. (2002 (3) TMI 10 - MADRAS High Court ), assessee is eligible for deduction under Section 80-IB of the Act. If the interest was received for any other reason and not for delayed payment of sale price, the same cannot be construed as derived from industrial undertaking. In the absence of any material, the books of account need to be verified and find out whether the interest was received for delayed payment of sale price or for any other reason. Moreover, the scrape sale is concerned, whether the assessee generated the scrape sales during its own manufacturing activity or the scrape sale was a separate business needs to be verified. Interest on employees loan, it has to be ascertained whether the loan given to employees was to reduce the cost of manufacturing activity or not. In the absence of any details, this Tribunal is of the considered opinion that the matter needs to be verified. Accordingly, the orders of the lower authorities are set aside and the claim of deduction under Section 80-IB of the Act is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter afresh decide the issue in accordance with law, after giving a reasonable opportunity to the assessee. TDS u/s 195 - payment made to M/s Vedanta Resources Plc, UK - non TDS deduction - Held that:- Admittedly, the assessee-company nominated M/s Vedanta Resources Plc, a UK company to represent it in London. The assessee-company availed the services of M/s Vedanta Resources Plc to expand its business operation and interact with its consultant in London. The UK company appears to have not made available any technical knowledge to the assessee-company. The UK company rendered its services only in London Metal Exchange for the purpose of expanding its business operation in London. Since no activity was carried out in India by the foreign company, and entire advice was made by UK company to expand the assessee’s business in UK, namely, London Metal Exchange. Therefore, this Tribunal is of the considered opinion that the payment made to M/s Vedanta Resources Plc, UK is not liable to tax in India. Accordingly, the assessee is not liable to deduct tax under Section 195 of the Act. Disallowance of notional interest - Held that:- Tribunal found that the advance was made to companies outside India and the lower authorities have not examined whether the advance made to the companies outside India would amount to shifting of profit to other jurisdiction. Accordingly, the matter was remitted back to the file of the Assessing Officer. For the very same reason, the orders of the lower authorities are set aside and the disallowance of notional interest is remitted back to the file of the Assessing Officer.
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2017 (5) TMI 775
Validity of assessment u/s 153A - downward revision of the cost of acquisition - Held that:- No incriminating material was found in the course of search which could justify downward revision of the cost of acquisition from ₹ 58.52 to ₹ 40 per square metre. Moreover, the findings recorded by the learned Commissioner of Income-tax (Appeals) have not been controverted by the Department. If the very premise on which the addition was made has no legs to stand then the addition had rightly been deleted by the learned Commissioner of Income-tax (Appeals). In the result, ground No. 1 is dismissed. Sale of flats - Held that:- The basis of the addition was the instances found in the case of M/s. R. B. Enterprises. Further, the learned Commissioner of Income-tax (Appeals) has observed that the assessee had also shown that there were instances of sale of flats in the same vicinity which were much lower than shown by the assessee. The learned counsel pointed out that the business model of M/s. R. B. Enterprises is entirely different from the assessee since no evidence had been found in the case of the assessee suggesting receipt of on-money over and above is stated consideration. Therefore, the addition was rightly deleted by the learned Commissioner of Income-tax (Appeals). Sale of plots - valid transfer u/s 2(47) - Held that:- The terms of memorandum of understanding with Aggarwal Associates Ltd. are not at all disputed. Admittedly, the assessee had given right of passage and all kinds of privileges and rights to Aggarwal Associates Ltd. and, therefore, there was constructive transfer in favour of Aggarwal Associates Ltd. We, therefore, do not find any reason to interfere with the order of the learned Commissioner of Income-tax (Appeals) on this count. In the result, the cross-objection filed by the assessee is dismissed.
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2017 (5) TMI 774
Determination of residential status of assessee - Resident v/s not resident - period of stay in India - business activity in India - status of the assessee - Held that:- Relaxation of period of 60 days as per section 6(1)(a) to 182 days when employment is taken outside India as per clause (a) of Explanation 1 is applicable only "in relation to that year" i.e. the year in which employment is taken outside India. Thereafter, for subsequent years, the residential status has to be seen as per the provisions of clause (b) to Explanation 1 since owing to employment/self-employment the assessee is "being outside India". In the instant case the assessee is having a special visa type allowing him to work in the UK and the fact that he is working abroad in the UK as a retainer-cum-incentive basis in the year under consideration has also not being doubted by either the Assessing Officer or by the learned Commissioner of Income-tax (Departmental representative). The Assessing Officer has also not doubted the submissions made by the assessee that it has not rendered any services in India with regard to its overseas assignments during visits to India and further that no business activity is being carried on by assessee in India. The basic document which would show intention of assessee is his passport. In the instant case copies of visa's issued by the UAE and the UK have been placed on record of the Assessing Officer. The Assessing Officer has noted in his order that "in the present case, the assessee is a citizen of India. Assessee is on Indian pass port. For Dubai or the UK he might be having some special visa" however after noting as such undue importance has thereafter been given by the Assessing Officer to the economic/legal presence of the assessee in India. Thus no reason to interfere with the finding of CIT(Appeals) directing the Assessing Officer to assess the assessee as a "non- resident". - Decided in favour of assessee Deletion of addition made by the learned Assessing Officer being the total amount remitted by the assessee in India therefore does not warrant an interference and we are inclined to uphold the same
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2017 (5) TMI 773
Reopening of assessment - denying the claim of exemption u/s. 54F by assessing the capital gains in respect of the sale of property - assessment re-opened by an erroneous reason - Held that:- Once the applicability of provisions of section 53A of the Transfer of Property Act fails, there cannot be no transfer of capital asset within the provisions of section 2(47)(v) of the Act and accordingly no capital gains could arise for the assessee in assessment year 2007-08. Admittedly, the sale deeds were executed by the assessee in favour of four purchasers on 31.10.2007 and 30.05.2008 on which date only, the purchasers were placed in possession of the property by the assessee. In these facts and circumstances, the capital gains, if any, could arose only in assessment years 2008-09 and 2009-10 as the case may be and not in the year under appeal i.e., assessment year 2007-08. Merely because the assessee had erroneously admitted the capital gains in Asst Year 2007-08 and had claimed exemption u/s 54F in respect of reinvestment in property at Kodaikanal and had filed a return in response to notice u/s 148 of the Act, this very action alone would not strengthen the reasons recorded by the ld AO and confer him power to frame the reassessment. Though the assessee based on mistaken understanding of provision of Income Tax Act had filed the return in response to notice u/s. 148 of the Act disclosing capital gains and claiming exemption us 54F of the Act for the assessment year 2007-08, that mere act alone could not be treated as a reason fastening unwarranted tax liability by the assessee for the year under appeal. It is well settled that there is no estoppel against the statute and reliance in this regard placed on the decision in the case of Maynak Poddar (HUF) Vs. WTO [2003 (2) TMI 45 - CALCUTTA High Court] is very well founded. Thus we deem it fit and appropriate to admit the additional grounds raised by the assessee as it goes into the root of the matter and does not involve any investigation of facts in the light of the decision of National Thermal Power Corporation Ltd. (1996 (12) TMI 7 - SUPREME Court ). The re-assessment framed by the Ld. AO for the assessment year 2007-08 is not sustainable in law. - Decided in favour of assessee.
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2017 (5) TMI 772
Levy of penalty under section 271C - short/non-deduction of tax at source - Held that:- In case of payments on which the assessee had deducted the tax at source under section194C of the Act and merely because the debate was whether the provisions of section 194J are attracted or not and even if the stand of the Assessing Officer was such, does not make the assessee exigible to levy of penalty under section 271C of the Act and hence the same is deleted. See CIT Vs. Cadbury India Ltd. [2011 (3) TMI 239 - DELHI HIGH COURT] The total amount of payments on which tax in default is ₹ 44,878/- and further short deduction was on amounts totaling ₹ 44,766/-. The assessee has failed to explain as to why the TDS was not applicable on the amounts payable at ₹ 44,878/-. Further the assessee has admitted that it has by oversight not deducted the tax at source on payments on which TDS of ₹ 44,766/- has been held to be in default. We find that where the assessee has short deducted the tax at source and has admitted to have done the same, then the assessee is liable to levy of penalty on such short deduction of tax at source amounting to ₹ 44,766/-. Similarly, the assessee having not established its case of TDS not applicable on which short deduction was to the extent of ₹ 44,878/- the assessee is exigible to levy of penalty under section 271C of the Act. Accordingly, we uphold levy of penalty under section 271C of the Act. TDS on such amounts which were paid in the succeeding year - The assessee claims that there was some reconciliation pending in the case of two transporters and on reconciliation of the amounts the TDS was paid in the succeeding year. In respect of such a claim of the assessee, we find merit in the bonafides of the same and we hold that the assessee had reasonable cause for non deduction of tax on such payments and after reconciliation the assessee admittedly has paid the TDS on a total sum of ₹ 70,387/- in the succeeding year. There is no merit in the levy of penalty under section 271C on such payments.- Decided partly in favour of assessee.
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Customs
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2017 (5) TMI 802
Confiscation - seizure of gold bars - notice u/s 150 of the CA, 1962 - Held that: - section 150 states that where any goods, not being confiscated goods, are to be sold after notice to the owner of the goods following the procedure as specified therein - the seized Gold was released on payment of Redemption Fine and penalty along with Customs duty payable thereon. Therefore, the provisions of section 150 would not be applicable herein as the goods were confiscated by the Authority. Board s Circular No.711/4/2006 Cus (AS) dated-14/02/2006 clarifies that the requirement to issue notice to the owner of the goods shall also obtain in case all appeal/legal remedies have not been exhausted by the owner of the goods - In the present case, all appeal/legal remedies have already been exhausted and the confiscation was not set aside. Hence, the said circular is not supporting the case of the appellant. Appeal rejected - decided against appellant.
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2017 (5) TMI 801
Valuation of imported goods - includibility - Pull Buck Tug Charges, Tug/Launch Charges, and Port Tonnage Charges - case of importer is that these charges are not to be included in the assessable value u/r 10(2) (b) of Customs Valuation Rules, 2007, when 10% landing charges already included in the assessable value - Held that: - the matter is covered by the judgment of Hon'ble Supreme Court in the case of Coromandal Fertilzers Ltd Vs Collector of Customs [1999 (12) TMI 59 - SUPREME COURT OF INDIA], where it was held that landing charges cover the totality of all that an importer expends to bring imported goods to land - these charges not required to be included in assessable value - appeal dismissed - decided against Revenue.
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2017 (5) TMI 800
Revocation of CHA licence - forfeiture of security deposit - illicit export of ‘red sanders’ - time limit to complete inquiry proceedings - Held that: - the inordinate delay in completing the inquiry proceedings has vitiated the detriment visited upon the appellant. Accordingly, the revocation of the license and forfeiture of the security deposit is held to be violative of the Regulations - Revocation of licence and forfeiture of security amount withheld - appeal allowed - decided in favor of appellant-CHA.
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2017 (5) TMI 799
Revocation of CHA licence - forefeiture of security deposit - inordinate delay in completion of inquiry - Held that: - compliance with the time-frame stipulated in the Regulations is an essential pre-requisite for the proceedings to be accorded legality and sanctity. There is no doubt that the charge-sheet was issued within the stipulated period but the inquiry did take an inordinately long time for completion - the inordinate delay in completing the inquiry proceedings has vitiated the detriment visited upon the appellant. Accordingly, the revocation of the license and forfeiture of the security deposit is held to be violative of the Regulations and is set aside - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 798
Power of Commissioner of Customs (General) to review orders of Commissioners of Customs - section 129D (1) of CA, 1962 - Held that: - In terms of Custom House Agents Licensing Regulations, 1984 (which we are concerned with in the present instance), the power to license is vested in the Commissioner of Customs. That authority is, therefore, the ‘master’ to whom the agent owes its existence. It is the Commissioner of Customs who is responsible for the operation and functioning of the Customs House and any detriment to efficient functioning of the Customs House will ultimately reflect on that authority - There is no other authority more concerned with weeding out of unacceptable elements and, therefore, there is no cause for any other authority to sit in judgement on the decision of a Commissioner that continued operation of licencee is detrimental to the functioning of the Customs House. We cannot countenance reading down the general provisions of review and appeal to apply to dropping of disciplinary proceedings against customs house agents in the face of specific and deliberate non-inclusion of such contingency in section 146 of Customs Act, 1962 and the Regulations framed thereunder. There is no such provision for review in the Customs House Agents Licencing Regulations, 1984 - appeal rejected - decided against Revenue.
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2017 (5) TMI 797
Scope of levy of ADD - glass woven roving - case of Revenue is that only glass woven roving which are meant for thermoplastic applications, are excluded from the scope of glass woven roving which is a specified item for the purpose of levy of ADD - Held that: - Chartered Engineer opines that glass woven roving are mainly used, for a manufacture of various items mentioned therein and are not used in the thermoplastic application. If that be so, the Revenue’s interpretation of the notification that only those glass woven rovings which are used only for thermoplastic applications are exempted cannot be accepted in absence of any substance to the contrary - ADD not levied on glass woven roving - appeal dismissed - decided against Revenue.
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Corporate Laws
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2017 (5) TMI 794
Guilty of violating the SEBI (PFUTP Regulations) and SEBI (PIT Regulations) - restraining the appellants from accessing the securities market and prohibiting the appellants from buying, selling or otherwise dealing in securities, directly or indirectly for a period of 14 years also the WTM has directed the appellants to disgorge the unlawful gains arising on sale/ pledge of Satyam shares during the period from 2001-2008 with interest at the rate of 12% per annum from 07.01.2009 till the date of payment Held that:- Argument of the appellants that the impugned order passed on 15.07.2014 without giving inspection of documents and without permitting the appellants to cross-examine the persons whose statements were relied upon in the show cause notice, is violative of the principles of natural justice cannot be accepted because, admittedly, before commencement of the criminal trial in February 2011 all documents relating to the charge of inflating/ manipulating the books of Satyam were made available to the appellants and inspite of receiving requisite documents appellants (excluding Prabhakara Gupta) failed and neglected to file detailed reply to the show cause notices till May 2014. Moreover, during the period from 2011 till May 2014 appellants, including Prabhakara Gupta consistently failed and neglected to participate in the proceedings before the WTM even though their request for keeping the proceedings in abeyance till conclusion of the criminal trial was repeatedly rejected and repeatedly the appellants were warned that ex-parte order would be passed if they fail to avail the opportunity of hearing. In these circumstances, in the facts of present case, argument of the appellants that the impugned order is violative of the principles of natural justice cannot be accepted. Email admittedly sent by Ramalinga Raju on 07.01.2009 as also the statements of the appellants recorded by SEBI and the documents referred to in the show cause notices issued to the appellants clearly establish that the appellants were instrumental/ involved in inflating/ manipulating the books of Satyam during the period from 2001 to 2008. That information was a price sensitive information and while in possession of that unpublished price sensitive information, appellants had sold/ transferred shares of Satyam and made huge profits. In these circumstances, decision of the WTM that the appellants violated the provisions contained in the SEBI Act, PFUTP Regulations and PIT Regulations, 1992 cannot be faulted. The decision of the WTM in uniformly restraining all the appellants from accessing the securities market for 14 years without assigning any reasons is unjustified. Similarly, the quantum of illegal gain directed to be disgorged by each appellant is based on grounds which are mutually contradictory and also without application of mind. In these circumstances, we set aside the impugned order to the extent it relates to the period for which the appellants are restrained from accessing the securities market and the quantum of illegal gain directed to be disgorged by the appellants and remand the matter to the file of the WTM of SEBI for passing fresh order on merits and in accordance with law. Fresh order be passed as expeditiously as possible preferably within a period of 4 months from today. Appellants are directed to cooperate in the proceeding so as to enable the WTM to pass fresh order expeditiously. Statement made by counsel for each appellant as also the statement made by G. Ramakrishna appearing in person that they shall not access the securities market and shall not buy, sell or otherwise deal in securities, directly or indirectly till the WTM passes fresh order on merits and in accordance with law, is accepted. Accordingly, we direct that the appellants shall not access the securities market and shall not buy, sell or otherwise deal in securities, directly or indirectly till fresh order is passed by the WTM of SEBI on merits and in accordance with law.
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Service Tax
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2017 (5) TMI 827
Site Formation and Clearance, Excavation and Earthmoving and Demolition Service - liability of tax - contracts executed with 5 other companies - Held that: - It appears that these companies have placed orders for supply of explosives and accessories and there is no service element in the work order - Amount received by them in respect of supply of explosives, without involving rendering of service in respect of various contracts, cannot be subjected to service tax levy, without individually examining and appreciating the scope of supply/ work order. This has to be done by the Original Authority to correctly determine the service tax liability of the appellant - matter on remand. Benefit of N/N. 17/2005- ST dated 16/06/2005 - services with reference to drilling and blasting of rocks - Held that: - the quarrying of stone is done away from construction of road and it is only to produce raw material for road laying. The activity itself is not in the course of construction of road. However, the appellants claimed that in case of M/s R.K. Transport, they have undertaken the road cutting work themselves. This requires verification by the Original Authority, as the appellants produced only a certificate from M/s R.K. Transport - matter on remand. Transaction with M/s Jayaswal Neco Industries Ltd. - sale or service? - Held that: - the claim of the appellant that the activity involved is construction of road, is not acceptable in view of the reasons recorded earlier in this order. We also find no infirmity in the findings by the Original Authority in borrowing the definition of “mine” and “mining” from Mines Act, 1952 and Mines and Minerals (Development and Regulation) Act, 1952/1957 - demand upheld. Regarding the transactions with M/s Saumya Mining Ltd., the appellants contested the tax calculation on the ground that part of the consideration were received beyond the 5 year period from the date of show cause notice and is accordingly hit by time bar. This requires cross verification by the Original Authority. Regarding supply of tangible goods, we find that the appellant’s plea that they have provided van for transportation charges and, as such, cannot be considered as supply of tangible goods has force - since other issues are remanded, this issue will also be remanded for verification. Appeal allowed by way of remand.
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2017 (5) TMI 826
Sub-contract - Commercial or Industrial Construction Service - taxability - Held that: - Board vide Circular dated 7.10.98 did clarify that no service tax is required to be paid by the sub-contractor provided that the main contractor paid the service tax on the services rendered by him, in respect of the same service category - Though a revised clarification was issued vide circular dated 23.08.2007, the fact remains that there is a room for bona fide belief on the part of the appellant regarding non-liability to service tax for the works carried out in their capacity as sub-contractor - claim of the appellant that they have rendered service as a sub-contractor and the full service tax liability on the whole contract has been discharged by the main contractor, requires verification - appeal allowed by way of remand.
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2017 (5) TMI 825
Commercial or Industrial Construction Service/Construction of Complex Service/Works Contract Service - non payment of service tax - appellants claim that all the contracts executed by them are to be correctly classifiable as works contracts liable to service tax, if any, under tax entry “Works Contract Service” in terms of Section 65 (105) (zzzza) of FA, 1994 and such levy is tenable only w.e.f. 01/06/2007 - Held that: - it is clear the contracts under consideration are composite in nature involving supply of goods also. The said fact is apparently admitted by the lower Authority, who recorded that prior to 01/07/2007 (should be 01/06/2007) there was no exemption or concession granted for services classified as works contract. With that basis the demand was confirmed for the period prior to 01/06/2007 under other tax headings. Construction of independent houses for MPHB - taxability - Held that: - Existence of common facilities available to all residents of the locality or existence of common facilities in an approved lay out which is already in existence, wherein additional independent houses were built will not be covered in the scope of tax entry for construction of complex service. These aspects require re-examination - matter on remand. Various factual and legal issues have not been dealt with by the Original Authority before arriving at the decision in the impugned order - appeal allowed by way of remand for reexamination.
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2017 (5) TMI 824
Business Auxiliary Service - respondent herein was engaged in undertaking the work of cleaning of nullah, roadside garbage, soil etc. at designated places in Nagpur and has received payment for such activities from Nagpur Municipal Corporation (NMC) and from Kanak Resource Management Ltd. - Held that: - it cannot be disputed that cleaning of nullahs and removal of roadside garbage and waste soil is statutory function of NMC which they have outsourced to the respondent herein. Respondent is not providing any services to NMC, as the activity of cleaning of nullahs and removal of roadside garbage and waste soil is not an activity of business to NMC, and these services do not qualify as services on behalf of the client - appeal dismissed - decided against Revenue.
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2017 (5) TMI 823
Site Formation and Clearance, Excavation and Earthmoving and Demolition Services - appellant held the view that the nature of work undertaken by them was in respect of drilling, boring and core extraction services which will be a mining activity as per the definition of mining activity, all these services falls under the category of definition of “Mining Operation” which was introduced in the Budget of 2007 - Held that: - The entire work which has been undertaken by appellant is covered under work order - all the activities undertaken by appellant mentioned herein above are covered by the said services. It is also to be mentioned here that appellant themselves were aware and were informed by their client MOIL that they have to take service tax registration and appellant did obtain the service tax registration on 04.01.2006 under the very same category of ‘site formation and clearance, excavation and earthmoving and demolition services’. The activities undertaken by appellant would get squarely covered under “site formation & clearance, excavation and earth moving and demolition service”. It is nobody’s case that the appellant has not provided these services to MOIL. Demand upheld - appeal dismissed - decided against assessee.
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2017 (5) TMI 822
Reverse charge mechanism - Supply of tangible goods for use - deemed service provider - It was the case of the appellant before the lower authorities that this activity of paying rent would not be covered under STGU services and that the repacking of helium gas from the containers to small containers, is amounting to manufacture and hence the cost paid by the appellant is towards the manufacturing cost - Held that: - once the appellant has discharged the central excise duty on the very same gas which is transferred into smaller packs and considering the same as the activity of manufacturing, the question of rendering of service by the supplier under the category of STGU rentals, goes into the cost of manufacturing, on which duty is discharged. The containers which are transporting helium gas from the supplier situated abroad to the appellant herein are in the effective control and possession of the appellant till the helium gas is unloaded in equally specialized containers and the empty containers are re-exported to the foreign supplier. The question of revenue neutrality would arise in this case as if appellant discharges the service tax under STGU under reverse charge mechanism, is undisputedly consuming the said services for supply of raw materials / inputs which are for manufacturing of repacked gas and cleared by discharging central excise duty; accordingly tax paid under service tax would be available as credit to the appellant hence no necessity arises for any tax avoidance. Demand set aside - Appeal allowed - decided in favor of appellant.
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2017 (5) TMI 821
Reverse charge - GTA service - short-payment of tax - Held that: - Annexure-7 was prepared by the appellant based on the books of accounts maintained by it. However, without considering the said statement and the other documents submitted by the appellant, the ld. Commissioner (Appeals) has confirmed the demand of ₹ 93,850/-, which according to us is not sustainable - demand set aside - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 820
Business Auxiliary Services - activity of providing Multi Level Marketing to its principal - extended period of limitation - penalty - Held that: - the activity of Multi Level Marketing whether liable to levy of service tax was contentious issue, which was resolved by the Tribunal in the case of Charanjeet Singh Khanuja [2015 (6) TMI 585 - CESTAT NEW DELHI], holding that such activity should fall under the Business Auxiliary Service - there was ambiguity in interpretation of the statutory definition of Business Auxiliary Service, thus, the demand for extended period of limitation cannot be sustained - considering the fact that the appellant has not involved in the fraudulent activities concerning suppression fraud etc, the penalty imposed u/s 78 ibid can be set aside invoking Section 80 in the interest of justice. Matter remanded back to the original authority for quantification of service tax liability payable by the appellant within the normal period of limitation - the amount of ₹ 7,79,616/- paid by the appellant has been considered in the adjudication order, but the said amount has not been appropriated, the original authority should give adjustment of the amount so deposited if found reasonable - appeal allowed by way of remand.
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2017 (5) TMI 819
Man power recruitment and supply agency services - benefit of doubt - time limitation - Held that: - since the issue with regard to consideration of a person to commercial concern was not free from doubt, we are of the view that there was reasonable cause for the appellant for non-payment of tax for the said period. Thus the show cause notice issued to the appellant to deposit the tax from 01.05.2006 to 30.04.2006, in our opinion is barred by limitation of time - The appellant is not contesting the tax liability with effect from 01.05.2006. Thus the demand for the said period confirmed - For computation of service tax liability for the period from 01.05.2006 the matter is remanded to the original adjudicating authority - appeal allowed in part and part matter on remand.
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Central Excise
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2017 (5) TMI 818
Maintainability of petition - validity and correctness of final finding - violation of Principles of natural justice - despite the fact that Respondent No. 4 granted hearing on 2nd March, 2017 to various interested parties in the matter, the same was in complete exclusion to the Petitioner herein - Held that: - The power under Article 226 of the Constitution is an extraordinary one and should not be exercised in a routine manner especially when the Petitioner has an efficacious and adequate alternative statutory remedy available. Otherwise, the Court would be supplanting the functioning of the statutory appellate authority tasked specifically with reviewing the correctness of the orders of the subordinate statutory authorities This Court does have the jurisdiction to entertain the writ petition, in the facts and circumstances of the present case the Court finds that no case has been made out to persuade it to exercise its jurisdiction under Article 226 of the Constitution to examine the correctness of the Final Finding of the DA. Petition dismissed being not maintainable.
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2017 (5) TMI 817
Clandestine manufacture - Chewing Tobacco - production capacity of machine based on speed of machine - Held that: - It is admitted position at the time of visit of Chartered Engineer the speed of machines were found as 277.5 PPM, 277 PPM and 279 PPM respectively - the technical literature of the machines provided by the manufacturer shows that the maximum speed of the machines is 280 PPM. As the manufacturer of the machines itself has stated in the technical literature that the maximum speed of the machines is 280 PPM and on physical verification of the machines it was found that the speed of the machines is similar. In that circumstances, the observation made by the Chartered Engineer that the capacity of each machine could be operated to run at a speed of beyond 350 PPM provided the locking i.e. presetting for maximum number of pouches which the machines could be produced rest to higher value by the company or manufacturer of the machines through password and logical sequencing is without any positive evidence. The maximum speed at which machines declared by the appellant in Form-I and Form-II can operate in terms of Rule 6 of the Rules is about 280 PPM at present, till any deviation/alteration is not done in the machines - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 816
Refund claim - supply of goods to SEZ unit - The appellant cleared goods on payment of duty even after the receipt of approval by M/s. Infosys Technologies Ltd. as SEZ - denial of refund claim on the ground that the appellant had not followed the prescribed provisions of SEZ Rules which came into force from 10.2.2006 and has not cleared the goods to SEZ Unit of M/s. Infosys Technologies under the cover of Duty Procurement Certificate/ARE-1 - Held that: - the appellants have failed to follow the procedure which is prescribed in the SEZ Act for claiming exemption - appellant have also not followed the procedure as prescribed in N/N. 58/2003 which was in force at that point of time - appellants are not entitled to refund of the duty paid as they have not followed the procedure prescribed under law - appeal dismissed - decided against appellant.
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2017 (5) TMI 815
Clandestine removal - bogus invoices - According to the Revenue, the Depot of the Dealer issued invoices/bills without transferring /dispatching goods covered under the said invoices/bills in the name of the assessee and other customers to facilitate clandestine removal of the goods produced by the assessee - Held that: - the Revenue levied the charge of clandestine removal on the basis of various documents - the appellant did not refute the allegations with material evidences - there is no reason to interfere with the order of the Commissioner (Appeals) - appeal dismissed - decided against Assessee.
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2017 (5) TMI 814
Liability of interest - CENVAT credit availed wrongly was reversed - Held that: - In the present appeals there is no clear finding of non-utilisation of the credit availed during the passage of time - There is no clarity on the facts of the case in the present appeals and therefore, the said appeals cannot be decided merely on the basis of the case laws as cited by both the sides - the appeals are allowed by way of remand to the Adjudicating Authority to decide afresh - appeal allowed by way of remand.
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2017 (5) TMI 813
Reversal of CENVAT credit - inputs written off - Revenue's case is that the written off unit as recorded is actually removal of inputs as such - Held that: - Once it is recognized and established that the inputs have been put to intended purpose, it is not relevant whether some of them get damaged or rejected during the course of manufacture. Such damaged input/rejection resulting in scrapping of such inputs will have no impact on the credit availed on them - In the present case, admittedly, the appellant written off the full value of some of the inputs stating that these are material loss of bought out items, which are rejected/scrapped. The accounts maintained by the appellant to this effect is the sole basis for proceedings against them. There is no other evidence to allege that the inputs on which credit has been availed were in fact cleared as such. The credit on inputs, which are rejected during the course of manufacture (line rejections) cannot be denied as they are already put in the process of manufacture is already held in many cases earlier. Denial of credit not justified - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 812
Cash refund - Cenvat credit paid through PLA and Cenvat account under protest - area based exemption - N/N. 50/2003 dated 10.06.2003 - The appellant paid the amount under protest through PLA and by reversal to Cenvat credit but later-on filed refund claim of the said amount as they were not required to pay the said amount - Held that: - a similar issue has come up before this Tribunal in the case of Max Power Infosystem [2017 (1) TMI 1185 - CESTAT CHANDIGARH] where the Division Bench of this Tribunal has held that at the time of opting exemption N/N. 50/2003, the assessee is not required to reverse the Cenvat credit and the Cenvat credit/amount paid through PLA is to be given in cash - appellant is entitled to refund claim and refund is paid in cash - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 811
Refund of Additional Excise Duty - denial on the ground of unjust enrichment - whether in a case where goods have been sold by the appellant, cum-duty and the price is fixed, in that circumstances, merely mentioning AED in the invoices as per the statutory requirement of the Central Excise Rules, the bar of unjust-enrichment is applicable to the facts or not? - Held that: - The said issue has been dealt by the Hon ble Punjab & Haryana High Court in the case of Uniproducts (India) Limited [2009 (1) TMI 207 - PUNJAB & HARYANA HIGH COURT], where it was held that in pursuance to Rule 52A of the Rules the assessee is required to furnish various particulars/declarations as per Serial No. (ix) to (xiii) of the proforma as reproduced above. It is not a case where the assessee had paid any duty and recovered the same. Therefore, the doctrine of undue enrichment would not be attracted - bar of unjust-enrichment is not applicable to the facts of this case - refund allowed - decided in favor of assessee.
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2017 (5) TMI 810
Utilization of CENVAT credit - whether the appellant having availed credit of duty paid under Additional Duties of Excise (Textile & Textile Articles) Act, 1978 during the period April 2003 to 09/07/2004 utilised the same for payment of duty leviable under Additional Duties of Excise (Goods of Special Importance) Act, 1957? Held that: - There is specific provision that the CENVAT credit availed on Additional Duties of Excise (Textile and Textile Articles) can be utilised only for the discharge of duty liability under the said Additional Duties of Excise (Textile and Textile Articles) - the utilisation of CENVAT credit availed of Additional Duties of Excise (Textile and Textile Articles) for discharge of Additional Duties of Excise (Goods of Special Importance) is incorrect and unacceptable in law. Time limitation - Held that: - the adjudicating authority has not recorded any finding on the point of limitation urged by the appellant and the first appellate authority has simply brushed aside the grounds raised by the appellant - the adjudicating authority should be given an opportunity to consider the grounds of limitation in its correct perspective. The matter back to the adjudicating authority to come to a conclusion on the limited point of limitation raised by the appellant, after following the principles of natural justice - appeal allowed by way of remand.
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2017 (5) TMI 809
Statement in the Form specified in Annexure 19 as prescribed in para 13.2 of Part II of Chapter 7 of CBEC Manual of Supplementary Instructions - the assessee’s contention is that the statement is not substantive requirement under the N/N. 42/2001-CE (NT) - Held that: - This matter is covered by the Tribunal’s decision in appellant’s own case [2015 (2) TMI 1093 - CESTAT NEW DELHI], where it was held thatthe appellant is not required to file details as per annexure 19 to special instruction and as such, the letter of undertaking cannot be declared invalid by the lower authorities - the appellant is not required to file details as per annexure 19 - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 808
100% EOU - manufacture of Metering Panels, CT/PT Tank, Tank Fabrication, CSP Transformer etc. falling under Chapter 85 of the 1st Schedule to the Central Excise Tariff Act, 1985 - The allegation of the Department is that, the assessee-Respondents has not informed them about the DTA sale and raised differential duty demand of ₹ 12,48,021/- along with interest and penalty - Held that: - the only issue involved is that the assessee-Respondents have not informed the Department well within time about the DTA sale - the mistake was just merely a procedural one which was rectified later - demand set aside - appeal dismissed - decided against Revenue.
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2017 (5) TMI 807
Diversion of goods for local consumption - Goods cleared under ARE-3 to 100% EOU/SEZ units - non-production of re-warehousing certificates - demand of duty with interest - penalties u/s 11AC read with Rule 25 and 27 - Held that: - Non submission of re-warehousing certificate is an admitted fact as the said re-warehousing certificate has to be on the reverse of the ARE-3 form. This in itself cannot be conclusive of fact that the appellant might have diverted the goods cleared under ARE-3 for local consumption - duty liability with interest upheld since appellant has not produced the re-warehousing certificate within the stipulated time. As regards the penalty of equivalent amount on the appellant under section 11AC of the Central Excise Act, 1944 read with Rule 25 and 27 of the CER 2002, this penalty is unwarranted for the simple reason that the departmental officers were aware that the goods were cleared from the appellant's factory under ARE-3 and CT3. Further certificate from recipient of goods is also categorical that they had received the goods - penalty set aside. Appeal allowed - decided partly in favor of appellant.
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2017 (5) TMI 806
CENVAT credit - eligible input services - credit availed on the basis of duty paying invoices issued by Input Service Distributor for various insurances services - Held that: - the issue is squarely covered under the ratio laid down in the judgment in the assesee’s own case M/s Hindustan Zinc Ltd. Versus CCE, Jaipur [2017 (3) TMI 60 - CESTAT NEW DELHI], where it was held that the issue is squarely covered by the ratio of judgment in assessee-Appellants' own case [2014 (7) TMI 485 - CESTAT NEW DELHI], where it was held that Insurance of plant and machinery, goods in transit, cash in transit and insurance of vehicles and laptop, is an integral part of manufacturing business, as no manufacturer would carry on manufacturing operations without insurance of plant & machinery, cash in transit, goods in transit, vehicles & computers, etc. against any loss due to accident, natural calamities, etc - credit allowed - decided in favor of assessee.
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2017 (5) TMI 805
Shortages and excesses of goods - demand on the basis of electricity consumption - Held that: - it emerges that there is a dispute which cannot be reconciled without examination and verification at the level of original adjudicating authority. Therefore, it is right that the matter is remanded for the limited purpose of examining the issue that how much demand is based only on electricity consumption which cannot be upheld against the appellant - if the penalty imposed on other appellant, M/s. Fairdeal Agencies is only on account of the disputed demand, which is based only on electricity consumption, then this penalty will not survive - appeal allowed by way of remand.
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2017 (5) TMI 804
Rectification of mistake - time limitation - the amounts charged should be considered as cum duty price/amounts and duty liability needs to be reworked out - Held that: - the adjudicating authority has clearly recorded that there was misstatement as to the bona fide plea of the assessee. The first appellate authority has not even recorded a single sentence on the said issue of limitation nor is there an appeal filed by the applicant or any cross objection filed by them before the Tribunal - In the absence of any contest to the order of the first appellate authority, non-addressing the issue of limitation cannot be termed as an error apparent on the face of the record necessitating recall of final order - the same findings would apply in the case and the error sought to be rectified in respect of the classification and the valuation of the parts manufactured and cleared as also the price being inclusive of all taxes and the duty liability is to be reworked out - ROM application dismissed.
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2017 (5) TMI 803
SSI exemption - brand name/trade name - manufacture of Aqua Products - it emerged that MBL manufactured and cleared dutiable goods with the trade mark/logo of MVF - Held that: - exemption contained in SSI notifications issued from time to time shall not apply to specified goods bearing a Brand name or Trade name, whether registered or not, of another person - In the instant case, there is sufficient evidence to establish that MBL were using the Brand name/Trade mark of another person (MVF) on their products and hence they will become ineligible for benefit of SSI exemption under the relevant notifications - demand upheld. Extended period of limitation - Held that: - When the assessee resorts to such stonewalling of investigation, it is but consequently that the investigations will get prolonged. The factum of the larger investigations involved is evident from the fact that the Show Cause Notice and it is annexure run into more than 20 pages - extended period of limitation invoked. Penalty u/s 173Q - Held that: - equal penalty of Section 11AC of the Act has been imposed - when equal penalty amounting to ₹ 78,76,135/- has been imposed, the penalty under Section 173Q is not warranted and is therefore set aside. Penalty on Sh. V. Siva Prasad Managing Director of MBL - Held that: - he was the kingpin of the entire exercise of the aviation and cannot observes responsibilities. He cannot therefore claim to have in appeal with clean hands. It is also observed that the penalty that considering the quantum of duty aviation and has also his entire role in the matter, penalty of ₹ 5,000/- imposed on him u/r 209 CER is not only justified but also proportionate to the Acts an omission - penalty upheld. Appeal dismissed - decided partly in favor of appellant as regards equal penalty.
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2017 (5) TMI 770
Forced Recovery/collection of undated cheques from parties - evasion of duty - Held that: - The Court would like to know on what instructions, orders and circulars the practice of collecting undated cheques from parties is being undertaken by the officers of the Anti Evasion Wing of the Central Excise Department - The Additional Commissioner, while filing the affidavit as directedabove, will after reading the aforementioned decision, place state the stand of the Anti Evasion Wing of the Central Excise Department - petition allowed - decided in favor of petitioner.
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CST, VAT & Sales Tax
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2017 (5) TMI 796
Jurisdiction - power to reassess - re-assessment on the ground that the turnover of sale of the air ventilators has escaped assessment as tax at the lower rate of 5% instead of 13.5% was charged - Held that: - Section 29 of the U.P. VAT Act, authorizes the assessing authority to draw proceedings for re-assessment provided it has reason to believe that (i) any turn over of the dealer has escaped assessment to tax; (ii) has been under assessed; (iii) has been assessed to tax at a rate lower than one prescribed; and (iv) if any deduction or exemption has been wrongly allowed in respect thereof - existence of reason to believe is an essential condition for exercising the power of re-assessment. Apart from the fact that the assessing authority has subsequently come to the conclusion that the air ventilators in which the petitioner deals were not taxable as a classified items at the rate of 5% but as un-classified item at the rate of 13.5% is nothing but a change of opinion on the allegation that the order of assessment was passed without application of mind. The assessing authority is not vested with any power to review its order or an order of assessment. The assessment order passed by the assessing authority is only open for re-assessment subject to fulfilment of the essential conditions as laid down under Section 29 of the U.P. VAT Act. The power of re-assessment is quite different and distinct from that of review or of the appellate power. Therefore, the assessing authority cannot utilize the power of re-assessment in the ordinary course as if it is sitting in review or in appeal over his own order of assessment. In the absence of any such material and a valid reason to believe that the income has escaped assessment the assessing authority was not competent to draw the proceedings for re-assessment and the Commissioner is not justified in law to grant permission under Section 29 (7) of the Act - petition allowed - decided in favor of petitioner.
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2017 (5) TMI 795
Restoration of registration of dealer - registration certificate of the dealer cancelled both under the VAT Act as well as Central Sales Tax Act solely on the ground that the dealer has not filed returns for three consecutive period i.e. April 2014 to March 2015 - Whether under the facts and circumstance, the learned Tribunal erred in deciding the registration certificate of the respondent were to be restored? - Held that: - It appears that thereafter subsequently and having been served with the order cancelling the registrations, the dealer filed the returns along with penalty of ₹ 8000/- and also paid the tax with interest. It appears that there was some criminal case pending against the dealer and their consultant and therefore, he could not consult with the consultant / practitioner and therefore, dealer could not file the return - However, the facts remain that the dealer filed returns and also paid the penalty. The dealer also paid the tax with interest. Nothing adverse to the dealer was found except non filing of the returns for the period between April 2014 to March 2015. It cannot be said that the learned Tribunal has committed any error which calls for the interference of this Court - appeal dismissed - decided in favor of Assessee.
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Indian Laws
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2017 (5) TMI 828
Restoration of due position in seniority list - Disturbance in seniority list - Held that: - In view of the admitted position that the private respondent has already retired from service and has got all his retiral dues for which the private respondent has no grievance, for all practical purposes, nothing remains to be decided in this case - petition has become infructuous and is dismissed.
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2017 (5) TMI 771
Maintainability of petition - Vires of Section 19 of the MSME Development Act, 2006 - requirement of deposit of seventy-five per cent of the amount of award as a pre-condition for entertaining an application - case of petitioner is that the requirement of pre-deposit of seventy-five percent of the amount awarded as a pre- condition for entertaining the appeal is onerous and oppressive. It renders the remedy of appeal wholly illusory - Ld. Counsel for the respondents, on the other hand, argued that the 2006 Act was the culmination of efforts spanning over two decades to introduce a mechanism to ensure timely realization and to protect the payments receivable by the Small Scale Industries. Held that: - the right to appeal is a creature of the statute, it can be conditional or qualified. The requirement about the deposit of the amount claimed as a condition precedent to entertainment of an appeal does not nullify the right of appeal and cannot be considered to be unconstitutional - even in the absence of an express provision to that effect, the Appellate Authority or Tribunal would have power to grant stay as incidental or ancillary to its appellate jurisdiction subject to there being a strong prima facie case established to the satisfaction of the Appellate Authority that the very purpose of the appeal would be frustrated or rendered nugatory if such stay was not granted. Section 19 of the 2006 Act applies to an application for setting aside any decree, award or order, made either by the Council or any institution or centre providing dispute resolution services to which reference has been made by the Council. Thus, before the application under Section 19 is made, the matter in dispute between the parties as to the amount due, has already been adjudicated by an impartial forum envisaged in the 2006 Act by following the procedure prescribed in the 1996 Act. The application made under Section 19 of the 2006 Act, thus not being a stage of initial adjudication of the dispute consequent on a unilateral determination by one of the parties, unlike in the case of the Section 17(2) under the 2002 Act. The condition incorporated in Section 19 of the 2006 Act that no application for setting aside any decree, award or other order shall be entertained by any Court unless the appellant (not being a supplier) has deposited seventy- five percent of the amount in terms of the decree, award etc. is arbitrary, illegal and unconstitutional. Whether the requirement of predeposit for entertaining the appeal, is a mandatory requirement or it should be read as directory, with an inherent power in the appellate authority to waive or reduce the amount where considered necessary? - Held that: - provisions of Section 62(5) of the VAT Act were directory in nature and that the first appellate authority was empowered to partially or completely waive the condition of pre-deposit by necessary implication and intendment and in the interest of justice. This power was not to be exercised in routine but only on a strong prima facie case being made out and the first appellate authority being satisfied that the entire purpose of the appeal will be frustrated or rendered nugatory by allowing the condition of pre-deposit to continue as a condition precedent to the hearing of the appeal before it. While upholding the validity of Section 19 of the 2006 Act, it has to be held that the requirement of pre-deposit thereunder is not mandatory and the Court would be empowered to waive, either partially or completely, the requirement of pre-deposit in the same circumstances and conditions. The matter is remitted to the Court to decide the application for interim injunction/protection before the appeal/ petition is taken up for hearing - petition allowed in part and part matter on remand.
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