TMI Tax Updates - e-Newsletter
May 3, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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Income Tax:
Penalty u/s 271(1)(c) - According to the assessee she was not having income exhibiting taxable limit in the past, but she has made small savings. When she filed the return for this year, she computed it as an opening capital balance - the explanation of assessee does not appear to be false - No penalty - AT
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Income Tax:
TDS - default u/s 201(1) - Since, the income of the recipient M/s. TTD is exempt from tax and also fact that the recipient has obtained no deduction certificate u/s 197 of the Act, the assessee not obliged to deduct tax at source on the impugned payments - AT
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Income Tax:
Estimation of income - additions towards unapproved creditors - once income is estimated, no additions can be made towards trade creditors which is arised out of such purchases - AT
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Income Tax:
Capital gains - development agreement - transfer of property or not - If the builder was merely a licence he would not derive any interest in the subject property and would not be referred as vendor in the sale deeds. It is immaterial that Power of Attorney was not executed - transfer is liable for capital gains - AT
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Income Tax:
Interest earned on Fixed Deposits with bank - the transactions with the bank who is not even a member of the society cannot be considered as a transaction for which principles of mutuality will apply. - AT
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Income Tax:
Credit of TDS denied - undisputedly there is a mistake committed by the deductor while deducting and depositing the TDS, but it does not mean that deductee should suffer for the act of deductor. - AT
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Income Tax:
Deemed dividend addition u/s 2(22)(e) - loan obtained by Assessee on interest - this amount is not a ‘benefit’ obtained by Assessee, but there is a ‘benefit’ to the company - No additions - AT
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Income Tax:
Stock Appreciation right expenses claimed by the appellant is not in a capital expenses, but revenue expenditure and ascertained liability therefore it is allowable expenses - AT
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Income Tax:
Revision u/s 263 - AO merely accepted the valuation report dated 15-10-2012 of the valuer submitted by the assessee without going into all these aspects - Pr. CIT has rightly invoked the provisions of section 263 - AT
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Service Tax:
Taxability of service - they help and guide their customers to get loan from banks for buying car. They also help the bank to enforce and recover amount from defaulters - the activities of the appellant are covered by the tax entry “Business Auxiliary Service”. - AT
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Service Tax:
Valuation - the appellants being an advertising agency and a pure agent is not liable to pay service tax on amount payable to media companies on behalf of their clients - The commission received by the appellant only would be chargeable to service tax. - AT
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Service Tax:
Club or association services - services to its members - the levy of service tax on the service provided by a club to its members has been purported ultra-virus under the category of club or association services - service not taxable - AT
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Service Tax:
Refund of CENVAT credit of service tax paid on various input services - Rule 5 of CCR - mining activity amounts to manufacture and credit is eligible to be availed - refund allowed - AT
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Central Excise:
CENVAT credit - eligible input service - office rental and the rental charges paid for car parking space - in or in relation to manufacture of goods - credit allowed - AT
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Central Excise:
CENVAT credit - input services - courier service - export of final products from the factory - Till the goods are delivered to the buyer, the ownership / property in the goods remain with the seller because the goods are sold on CIF basis - credit allowed - AT
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Central Excise:
Valuation - cash discount - whether the cash discount realized back by the Appellant through debit notes is chargeable to central excise duty? - Held No - AT
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Central Excise:
CENVAT credit - scope of input service - laying of the pipelines - whether the service received in relation to laying of the pipelines from outside the factory for water supply to plant are covered under the scope of definition of ‘input service’ as provided u/r 2(l) of CCR, 2004? - Held Yes - AT
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Central Excise:
Extended period of limitation - Mere omission to give correct information is not a suppression of fact unless it was deliberate to stop the payment of duty - entire demand is time barred - AT
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Central Excise:
Clandestine removal - Clearance of goods for job-work - there is no evidence for movement of hank yarn from the job worker’ to the factory of STL and that entries in RG-1 register to the contrary are doctored to cover up their actual modus - demand confirmed - AT
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VAT:
Luxury Tax - The mere fact that advance payment was taken as membership fee cannot lead to a conclusion that the accommodation provided/offered to the member is free of cost. - HC
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VAT:
Payment of tax before the disposal of the appeal - vacation of stay order - merely for the reason of the Tribunal having not disposed of the appeal, there can be no automatic recovery proceeded with - HC
Articles
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2017 (5) TMI 76
Reopening of assessment - penalty u/s 271(1)(c) of the Income Tax Act, 1961 - unexplained investment in mutual funds and unexplained investment in purchase of office space - the stand of the assessee was that no material exhibiting escapement of income in the hands of the assessee was obtained by the AO to form a belief that income has escaped assessment in her hand - Held that: - The asset was in the name of the assessee. Had the case of the assessee’s husband been reopened, he could have an explanation that asset does not stand in his name and his wife has source of such investment. Therefore, it was necessary for the AO to verify the details of the assessee. As far as addition of ₹ 3,47,391/- is concerned, the assessee has shown it as opening cash balance. She has submitted that she was a graduate taking tuition and she has savings from many years - Held that: - the AO ought to have not doubted total capital balance. He should have given a credit of her past savings. Considering these aspects, we are of the view that at the most a sum of ₹ 1,47,391/- could be treated as unexplained opening capital balance and a benefit of ₹ 2,00,000/- representing small savings in the past out of non-taxable income could be estimated. The ground raised by the assessee is partly allowed. Penalty on alleged concealed income of ₹ 3,47,391/- - Held that: - According to the assessee she was not having income exhibiting taxable limit in the past, but she has made small savings. When she filed the return for this year, she computed it as an opening capital balance - the explanation of assessee does not appear to be false - penalty deleted. Appeal allowed - decided partly in favor of appellant.
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2017 (5) TMI 75
Deduction u/s 80-IB(10) of the Income-tax Act, 1961 - denial on the ground that the floor space index exceeds 1500 sq.ft. - according to Revenue the private open terrace is nothing but an extension of floor space area for exclusive use of residential units - whether the private terrace attached with residential unit would form part of built-up area for the purpose of computing deduction under Section 80-IB(10)? - Held that: - it is necessary to examine the housing project approved by the local body. In other words, whether the so-called private open terrace said to be attached with private residential unit would form part of built-up area as per housing project or it was excluded from the approval granted by local authority. Since the copy of building approval was not available on record, this Tribunal is of the considered opinion that the matter needs to be reconsidered - appeal allowed by way of remand.
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2017 (5) TMI 74
TDS - default u/s 201(1) of the Act - rent - the assessee has submitted that the TTD has obtained no deduction certificate u/s 197 of the Act, from the department for nondeduction of tax at source on rent payments and hence, the assessee has not deducted tax at source - Held that: - No matter, whether the payment has been made by the assessee directly or paid on behalf of the directors, as long as the recipient income is exempt and also the recipient had got a certificate u/s 197 of the Act, for non-deduction of tax at source on the impugned payment, the assessee need not to deduct tax at source on such payments. M/s. TTD is an entity governed by section 12A of the Act had obtained certificate u/s 197 of the Act for non-deduction of tax at source on rental receipts from the tenants. Since, the income of the recipient M/s. TTD is exempt from tax and also fact that the recipient has obtained no deduction certificate u/s 197 of the Act, the assessee not obliged to deduct tax at source on the impugned payments - appeal dismissed - decided against Revenue.
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2017 (5) TMI 73
Validity of assessment order - estimation of income - additions towards unapproved creditors - hire charges - as the assessee failed to provide any information/evidence to clarify the nature of credit transaction, which was required to be submitted and examined as per the order of the ITAT, opined that the assessing officer is justified in making the impugned addition of ₹ 50,48,070/- - Held that: - the creditors have filed a confirmation letter indicating the nature of transactions and also amount outstanding as on the date - the assessee has filed a ledger extract of creditors evidencing the payment of credits in subsequent financial years - the assessee has proved the nature of credits with necessary evidences and as per which these creditors are arised out of purchases as well as rendering services. Even otherwise, the impugned additions cannot be sustained for the reason that once income is estimated, no additions can be made towards trade creditors which is arised out of such purchases - the additions made is directed to be deleted. Hire charges - addition made on the ground that this item of receipt is shown in the profit & loss account apart from contract receipts and also fact that the assessee did not clarify that this item so received was also derived from the contract business - Held that: - the assessee has failed to clarify that the item of receipt was also derived from the contract business. In the absence of such clarification, the A.O. was right in making additions towards hire charges. Disallowance of certain expenditure - oil and diesel expenses - roller charges - machinery maintenance - estimation of income on sub contract payment - Held that: - As most of the works have been sub contracted, the claim of huge expenditure under diesel and oil is in doubt and the assessee failed to substantiate the consumption or the use in its works. As regards the sub contract payment, the assessee failed to submit all the relevant details. Therefore, taking into account, the various discrepancies noticed, directed the A.O. to estimate net profit of 6% on gross contract receipts net of all deductions and directed the A.O. to re-compute the total income. - In so far as assessment year 2010-11, considering the totality of the facts and circumstances, the CIT(A) directed the A.O. to estimate net profit of 5% on total sub contract receipts. Appeal allowed - decided partly in favor of appellant.
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2017 (5) TMI 72
Deduction o/s 54F of the Act - denial on the ground that assessee has not invested the amount as specified in section 54F of the Act - case of assessee is that they had filed return of income u/s 139(1), the time limit available for him to invest on the cost of construction of the building u/s 139(4) of the Act - Held that: - to claim exemption under section 54 one has to be considered the extended time period provided in section 139(4) and not in section 139(1) - though the assessee has filed the return of income under section 139(1) by estimating the cost of construction, he was not able to utilize the entire amount at the time of filing of the return and utilized the same subsequently, and therefore, benefit u/s 54F cannot be denied to the assessee - appeal allowed - decided in favor of assessee.
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2017 (5) TMI 71
Capital gains - development agreement - transfer of property or not - assessee claims that there was no transfer of property for the Assessment Year 2006-07 under the development agreement and no transfer of property can take place on the basis of unregistered development agreement dated 24/08/2005 - Held that - assessee as well as builder undisputedly acted upon the very same agreement dated 24/08/2005. Either assessee or builder at any point of time has not disputed the development agreement. Also, as per the agreement dated 24/08/2005, builder constructed the flats and assessee also cooperated with the builder and all the transactions are completed by the builder without any dispute with the assessee. Simply because, the agreement was not transferred, it cannot be said that the transfer has not taken place, unless either of the parties disputed unregistered agreement. If the builder was merely a licence he would not derive any interest in the subject property and would not be referred as vendor in the sale deeds. It is immaterial that Power of Attorney was not executed. Thus, the recitals in the sale deeds, narrating the developer also as, vendor of the property clearly show that the transfer of interest had taken place under the Development Agreement in favour of the developer and such transfer is liable for capital gains in this subject year, being the year of transfer of site for development. Insofar as levy of interest under section 234-B & 234-C are concerned, these are consequential in nature, hence, same is dismissed. Appeal dismissed - decided against assessee.
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2017 (5) TMI 70
TPA - ALP determination - TNMM - It was the contention of assessee that Comparable Un-controlled Price [CUP] method should be adopted for Medical Transcription Services, whereas assessee has no objection for TNMM on ITES - Held that: - similar issue was considered by the Co-ordinate Bench in earlier year i.e., AY. 2011- 12 in the case of iMedX Information Services Private Limited Versus The Income Tax Officer, Ward-2 (3) , Hyderabad and Vice-Versa [2017 (3) TMI 478 - ITAT HYDERABAD], where it was held that TPO should have adopted CUP method only for analysing the assessee’s International transactions and AO/TPO was directed to adopt CUP method for the medical transcription services and TNMM for the software development services- Since the Co-ordinate Bench has already come to a conclusion on the issue agitated by assessee, respectfully following the same, we direct the AO/TPO to re-do the exercise afresh giving due opportunity to assessee and determine the ALP accordingly, as directed in AY. 2011-12 - appeal allowed by way of remand.
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2017 (5) TMI 69
Power of AO to rectify mistake - mistake in uploading the return - denial of exemption u/s 10A of the IT Act - case of assessee is that they has wrongly entered the amounts in different columns which resulted in the deduction being denied. Assessee claims that their business profits are eligible for u/s 10A of the IT Act and the same was correctly mentioned in the return also and subsequently, Assessee filed a revised return on the advice of Add. CIT in writing - Held that: - there is a mistake apparent from record which is required to be rectified - the A.O as well as the CPC, Bengaluru directed to rectify the mistake and accept the application filed by Assessee under the provisions of Sec. 154 of the IT Act - appeal allowed - decided in favor of assessee.
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2017 (5) TMI 68
Interest earned on Fixed Deposits with bank - taxability - interest received from non-members - principle of mutuality - Held that:- There is no dispute that assessee is allowed the benefit of mutuality to the extent of incomes earned amongst the members. The issue is with reference to the interest earned from the bank which is not a member of the Society. As in assessee’s case, the bank is not even a member of the society. The nature of the transaction between the assessee and the bank would disqualify application of the principle of mutuality. Therefore, the transactions with the bank who is not even a member of the society cannot be considered as a transaction for which principles of mutuality will apply. Not only on the principles laid down in the subject but also on the fact that the interest was received from a non-member, the principles of mutuality do not apply. The orders of the AO and CIT(A) are accordingly upheld both on facts as well as on principles of law. Find no merit in assessee’s grounds and accordingly, the same are dismissed.
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2017 (5) TMI 67
Credit of TDS denied - TDS deducted and deposited by certain customers wrongly in the erstwhile name of the appellant - Held that:- We find that undisputedly there is a mistake committed by the deductor while deducting and depositing the TDS, but it does not mean that deductee should suffer for the act of deductor. When there is mismatch in the TDS accounts, the AO should make necessary verification and if it is found that TDS was deducted and paid in the Government account, credit of the same should be given to the deductee. This aspect was also clarified by the CBDT by issuing Instruction No.5/13. In the light of this Instruction, we set aside the order of CIT(Appeals) and restore the matter to the file of Assessing Officer to adjudicate the issue afresh, after making necessary verification and if it is found that the deductor has deducted the TDS and deposited in the Government account, credit of the same should be given to the assessee. - Decided in favour of assessee for statistical purposes.
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2017 (5) TMI 66
Assessment against non-existing entity - amalgamated company - Held that:- The assessment for the A.Y 2008-09 in respect of the amalgamating company and also the amalgamated companies have been completed separately, but in the name of the amalgamating company only. The only difference is in the PAN Nos. mentioned in the assessment years. As rightly held by the CIT (A), the amalgamating company was in existence for the A.Y 2008-09, though by the time of the assessment, it had amalgamated with the amalgamated company. On bringing the factum of amalgamation to the notice of the AO, the case has been transferred to the jurisdiction of the AO under whom, the amalgamated company’s registered office was located and the assessment is also made in the name of the amalgamated company. The mention of the PAN No. of the amalgamating company is only to differentiate between the amalgamated and amalgamating companies. Therefore, we see no reason to interfere with the order of the CIT (A) and the assessee’s ground of appeal No.1 is thus rejected. Computing deduction u/s 10A - treating the forex fluctuation gain as export turnover as well as total turnover - Held that:- We find that the forex gain is on account of the export turnover of the assessee and therefore, it is to be part of the export and total turnover as rightly held by the CIT (A). The CIT (A) had followed the decisions of various High Courts and the Tribunal which are reproduced at Para 6.4 of the CIT (A)’s order. The CIT (A) has also brought out the distinguishing facts in the case of Shah Originals (2010 (4) TMI 216 - BOMBAY HIGH COURT) that in that case the forex gain or loss was on account of re-statement of EEFC account and not as to whether it pertains to difference in billed amount as per the invoices and realized amount. Therefore, we see no reason to interfere with this finding of the CIT (A). However, as regards the miscellaneous income of ₹ 32,65,209 is concerned, there is no breakup of the income and as to the exact nature of such income. Therefore, we are of the opinion that the same is to be excluded both from the export turnover as well as the total turnover for computing the deduction u/s 10A of the Act. The profits and gains of each of the eligible unit is to be computed independently for allowing deduction u/s 10A of the Act with regard to an undertaking. The foreign exchange gain is part of the operating income of the assessee and therefore, to be included both in export as well as total turnover for computing deduction u/s 10A of the Act.
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2017 (5) TMI 65
Deemed dividend addition u/s 2(22)(e) - loan obtained by Assessee on interest - Held that:- As far as the amount considered as deemed dividend as a loan from M/s RPC is concerned, this is not a loan obtained during the year but repayment made during the year. There was an opening balance of ₹ 16,98,000/- at the beginning of the year and Assessee paid an amount of ₹ 1,00,000/- on 08-07-2006 and year ending balance has been reduced to ₹ 15,98,000/-. Since the amount is a repayment to the company and not a loan obtained from the company, invoking provisions of Sec. 2(22)(e) of the IT Act on this amount does arise, accordingly, this amount is deleted. On the issue of loan from M/s VTC, the account copy indicates that there was opening balance as well to an extent of ₹ 1.08 Crores. We were informed that no proceedings u/s 2(22)(e) of the IT Act were initiated in earlier year. However these amounts are not interest free. Assessee paid interest at 8% per annum to an extent of ₹ 9,92,477/- during the year, thus, we are of the opinion that this amount is not a ‘benefit’ obtained by Assessee, but there is a ‘benefit’ to the company. Thus the order made by A.O and sustained by Ld. CIT(A) on account of loan received by Assessee, on which consideration in the form of interest was paid by Assessee to the benefit of the company, is not sustainable.See Pradip Kumar Malhotra Versus Commissioner of Income-tax, West Bengal-V [2011 (8) TMI 16 - CALCUTTA HIGH COURT ]. - Decided in favour of assessee.
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2017 (5) TMI 64
Unexplained deposits in bank account - Held that:- The assessee has filed the copies of the pattadar pass books of his parties during the assessment proceedings itself, but had not filed the confirmation letters due to which both the AO as well as the CIT (A) were not inclined to accept the assessee’s contention. We have also gone through the news paper report dated 28.8.2012 in which the news of the assessee’s arrest is published. The arrest of the assessee is also during the same period during which the appellate proceedings were taken up by the CIT (A). Therefore, we are convinced that the assessee was prevented by reasonable cause in producing the relevant material before the CIT (A). In view of the same, we are inclined to admit the additional evidence filed by the assessee and remand the same to the file of the AO for verification Unexplained cash deposit - Held that:- CIT (A) confirmed the order of the AO as the assessee did not submit any specific source for this deposit. Similarly with regard to the sources of deposits in the cash flow statement, the assessee had shown only ₹ 4,10,000 as deposit in the said Bank on 22.9.2008 as out of the flow of cash in the cash flow statement, but the assessee has not shown the source of cash deposited of ₹ 5.00 lakhs on 30.06.2008 and ₹ 2.00 lakhs on 26.08.2008 as outflow in the cash flow statement. AO, therefore, treated the sum of ₹ 7.00 lakhs as unexplained investment and brought it to tax u/s 69 of the Act which was confirmed by the CIT (A) and the assessee is in appeal before us by raising grounds of appeal Nos 3 & 4. Even before us also, the learned Counsel for the assessee reiterated the submissions made before the authorities below, but has not been able to substantiate his contention with any evidence. As the AO and the CIT (A) have verified the cash flow statement and found that the sources for the cash deposits shown as cash withdrawal are not correct, we do not see any reason to interfere with their orders. Income from other sources - contention of the assessee that a sum of ₹ 4.00 lakhs was received from his father who is the owner of vast agricultural land - Held that:- we are inclined to accept the assessee’s contention as the transaction is between a father and son and father is a person with resources and the probability of the payment cannot be doubted. The fact that the assessee’s father has sufficient source to give a loan to his son is sufficient to delete the addition. This ground of appeal is accordingly allowed. Addition made on account of low withdrawals - Held that:- We find that the assessee is stated to have withdrawn only a sum of ₹ 2,90,000 for the relevant A.Y, for his personal needs though he was the owner of a Scorpio Car and maintained the same. The AO has estimated the personal expenses of the assessee at ₹ 50,000 p.m. as reasonable expenditure and has accordingly made an addition of ₹ 3,10,000 on account of low withdrawals and the CIT (A) has confirmed the same. As the assessee has not furnished any proof or evidence before us to demonstrate that the sum of ₹ 2,90,000 is sufficient for his standard of living, we do not see any reason to interfere with the orders of the authorities below. This ground of appeal is accordingly rejected. Addition of sum received by the assessee from his wife - Held that:- The assessee has filed a copy of the return of her income wherein the assessee’s wife has returned business income of ₹ 1,94,714 and agricultural income of ₹ 7,25,000 i.e. nearly ₹ 9,15,000 from which the assessee has explained that ₹ 9.00 lakhs was received from his wife. Though the assessee’s wife is shown to have sufficient income, but it cannot be accepted that the entire income has been given to the husband which is shown as source of cash deposits. Therefore, we accept only a sum of ₹ 8.00 lakhs as a loan from her and the balance addition is confirmed. Addition on agricultural income - Held that:- Assessee filed certain bills reflecting the sale of agricultural produce. None of the authorities below have verified the assessee’s contention on this issue. In view of the same, we deem it fit and proper to remand the issue to the file of the AO with direction to look into the assessee’s land holdings, the nature of the crops grown and whether they coincide with the sale bills filed by the assessee and reconsider the issue in accordance with the law.
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2017 (5) TMI 63
Claim for deduction u/s. 80IB(10) - Held that:- There can hardly be any dispute that ownership of the land in question is not a valid criteria to disallow the impugned deduction claim as held in CIT vs. Radhe Developers’ case (2011 (12) TMI 248 - GUJARAT HIGH COURT ). Assessing Officer is fair enough in admitting that the assessee had been given right of possession over the project land and it had exercised all rights of admission of prospective buyers, collection of consideration as well as finance arrangements. It has come on record that the assessee had placed the above development agreement before the Assessing Officer as well as the CIT(A). CIT(A) finds in lower appellate order that it is the assessee developer who has incurred total expenditure and received the sale consideration. We afforded ample opportunity to the Revenue to rebut this clinching finding by reading the corresponding terms in above development agreement. We notice that the same does not even form part of the case records. This clinching factor makes us to conclude that the learned CIT(A) has rightly held the assessee to have undertaken all risk and reward in developing the abovestated residential project so as to be eligible for Section 80IB(10) deduction in question. - Decided against revenue
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2017 (5) TMI 62
Taxable capital gains on sale of property - Addition in the hands of the appellant - Held that:- Assessee failed to dispute the fact that the assessee was one of the 15 co-owners of the immovable property in question fetching total consideration price of ₹ 30 lacs wherein his share was that of ₹ 2 lacs only. We therefore conclude that both the lower authorities have rightly made the impugned addition in assessee’s hands. Penalty u/s 271(1)(c) - Held that:- It is evident in this factual backdrop that the Assessing Officer’s scrutiny revolved around AIR information disclosing the assessee to have acted as power of attorney of the other fourteen co-owners in acting as the sole vendor receiving entire sale consideration of ₹ 30 lacs. The fact however remains that his share therein was of ₹ 2 lacs only. We therefore conclude that the lower authorities have erred in proceeding to impose the impugned penalty by treating the said AIR information and subsequent developments as the foundation for holding the assessee to have concealed his income. It is further not clear as to how the entire sale consideration of ₹ 2 lacs would be treated as assessee’s income since the same is either capital gains or business income to be subjected to the appropriate computation under respective heads. Be that is it may, we grant the assessee benefit of doubt as he was not there sole owner of the property in question. We therefore direct the Assessing Officer to delete the impugned penalty in question
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2017 (5) TMI 61
Assessment order completed under section 153A - Held that:- According to section 153A(1)(b) of the Act, in case of a person where a search is initiated under section 132 of the Act after 31st of May, 2003, the Assessing Officer shall assess or reassess the total income of six assessment years immediately preceding assessment year relevant to the previous year in which such searches is conducted. Since in the case of the assessee, second search was conducted on 25/08/2006, the relevant six assessment years to be assessed are from assessment year 2000-01 to 2006-07. Since the year under consideration is well within the period to be considered for assessment or reassessment, corresponding to the second search action dated 25/08/2006, the Assessing Officer has rightly completed assessment under section 153A r.w.s 143(3) of the Act after taking prior approval of competent authority, and thus, in our opinion, there is no error in the provisions of the Act under which assessment is framed Addition of expenses incurred on guest house for the purpose of business of the company - Held that:- the appellant has not discharged the onus cast on him by the provisions of Section 37(1) of the Act. No submissions/evidence is filed to rebut the presumption u/s 132(4A) of the Act regarding the expenditure mentioned in the documents seized during the search. In view of totality of facts and circumstances, the addition made by the Assessing Officer is sustained Disallowance of land development expenses - Held that:- We find that the assessee even did not furnish confirmation letters from the alleged contactors to establish the services rendered by them. This was the basic requirement, which the assessee was required to fulfill to discharge his onus particularly in the circumstances when many persons alleged to be contactors have admitted of not carrying out any contract work for the assessee. In the circumstances, we feel it appropriate to restore the issue of disallowance of land development expenses to the file of the Assessing Officer for examining afresh and decide after carrying out necessary Inquiries as deemed fit. It is needless to mention that assessee shall be afforded sufficient opportunity of hearing. Accordingly, the grounds of appeal raised by the Revenue are allowed for statistical purpose.
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2017 (5) TMI 60
Deemed dividend u/s 2(22)(e) - proof of transactions commercial in nature - “related party transactions” - Held that:- Facts of the transaction of loan/advance of ₹ 11 crore by M/s ‘Merry Gold’ to M/s ‘Nova’ are identical to facts of transaction of loan/advances discussed by the Tribunal in the case of Sh. Basant Bansal (2015 (4) TMI 1168 - ITAT JAIPUR), wherein the Tribunal has upheld the finding of the Ld. CIT-A, that the transactions are commercial in nature and cannot be considered as loan or advances for the purpose of 2(22)(e) of the Act. Thus, respectfully, following the finding of the Tribunal in the case of Sh. Basant Bansal (supra), we uphold the finding of the Ld. CIT-A that transaction in question between M/s ‘Merry Gold’ and M/s ‘Nova’ was a commercial transaction, not hit by the provisions of section 2(22)(e) Admission of additional evidence - Held that:- CIT(A) has admitted the additional evidence after examining the circumstances under which those evidences could not be filed before the Assessing Officer. The Ld. CIT-A has recorded the reasons in writing for admission of those evidences and allowed a reasonable opportunity to the Assessing Officer to examine those evidences, and thus Ld. CIT-A has complied the procedure laid down in Rule 46A of Income Tax Rules. We do not find any violation of Rule 46A of the Income Tax Rules in admitting those evidences Addition of deemed dividend - substantial shareholding in M/s. ‘Zenith’ as on the date of loan transaction - Held that:- In the remand proceeding, the Assessing Officer himself has verified the fact of assessee not fulfilling the required shareholdings in M/s ‘Zenith’ as on the date of loan transaction. In such circumstances, when the Assessing Officer himself has verified the fact that assessee was not satisfying the condition of holding substantial shareholding in M/s ‘Zenith’, which is one of the prerequisite for invoking section 2(22)(e) of the Act, and then only ld. CIT(A) has allowed relief to the assessee, filing the appeal on the same issue is not justified on the part of the Revenue. Addition of deemed dividend - Whether date of loan transaction M/s ‘Mikado’ i.e the company who gave loan was not having accumulated profit and thus one of the condition of section 2(22)(e) of the Act was not satisfied - Held that:- We find that this fact of M/s ‘Mikado’ not having accumulated profit at the time of giving loan to M/s ‘Orange’ has been duly verified by the Assessing Officer in remand proceedings and the Ld. CIT(A) has allowed relief relying on the factual verification made in remand report. We do not find any error in the order of the Ld. CIT(A) on the issue in dispute. Once the fact of M/s ‘Mikado’ having accumulated losses of ₹ 1.47 crores at the beginning of the year and losses of ₹ 1.41 crores at the end of the year has been verified by the Assessing Officer, then, one of the required condition of section 2(22)(e) of the Act is not fulfilled and thus, we uphold the finding of the Ld. CIT(A) in deleting the addition
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2017 (5) TMI 59
Stock Appreciation right expenses - Difference between purchase price of Stock Appreciation Right (‘SAR’) and the sale price of such SAR at the time of exercise by the employees - capital loss not allowable business deduction - Held that:- Referring to the order of ITAT passed in the case of M/s Religare Commodities Ltd [2017 (1) TMI 783 - ITAT DELHI ] held that Stock Appreciation right expenses claimed by the appellant is not in a capital expenses, but revenue expenditure and ascertained liability therefore it is allowable expenses. In the result the disallowance made by the Ld. and assessing officer and enhancement made to that taxable income of the appellant by Ld. 1 st appellate authority is held to be erroneous and therefore set aside - Decided in favour of assessee Disallowance of payment under section 40A(2)(b) - Held that:- As the assessee contested for the first time that provisions of section 40A(2)(b) was not applicable in the case of the assessee as entire share capital of the company was held by REL. Since this fact has not been verified either by the Ld. AO or by the Ld. CIT-A, we feel it appropriate to restore the issue to the file of the Assessing Officer to verify the applicability of section 40A(2)(b) of the Act and decide the issue afresh in accordance with law. Not taking on record Memorandum of Understanding holding that the same being in the nature of additional evidence - Held that:- As we find that this Memorandum of Understanding goes to the root of the matter hence, the Assessing Officer is directed to also consider this Memorandum of Understanding while adjudicating the issue no. 3. This ground of appeal is allowed. Depreciation on UPS - @ 15% or 60% - Held that:- The Hon’ble High Court in the case of BSES Rajdhani Powers Ltd. (2010 (8) TMI 58 - DELHI HIGH COURT ) held that the computer accessories are peripherals such as, scanners and server etc. form an integral part of the computer system and the same cannot be used without the computer. Thus, they are entitled to depreciation at the higher rate of 60%.
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2017 (5) TMI 58
Revision u/s 263 - AO has failed to make necessary enquiries as to justification for issue of non cumulative compulsory convertible preference shares of ₹ 10/- each fully paid up at a premium of ₹ 240/- per share - manner of computing fair value of shares for the purposes of Section 56(2)(viib) - Held that:- There are certain flash points which should have triggered further probe by the AO as to the valuation report dated 15-10-2012 furnished by the assessee as the assessee did not issued equity shares during the relevant previous year but instead issued 10% non cumulative compulsory convertible preference shares of ₹ 10/- each fully paid up issued at a premium of ₹ 240/- per share which are convertible into 1 equity share for every preference share held by the allottee or at such higher ratio of conversion at the end of the tenure of 10 years as may be decided by Board of Directors of the assessee company. These shares are also convertible at the option of allottee after three years at the conversion ratio to be decided by Board of Directors of the assessee company and assumption of the said CA V R Jain & Company who issued valuation report dated 15-10-2012 in assuming and presuming that each non cumulative compulsory convertible preference shares shall be converted into one equity share of the assessee company needed enquiry by the AO vis-à-vis its implication in computing income as contemplated u/s 56(2)(viib) of 1961 Act and any discounting factor is to be used in this regard. Further, the shares issued by the assessee were preference shares and not equity shares albeit preference shares are compulsorily convertible into equity shares. The AO should have also looked into this aspect that Rule 11UA(1)(c)(c) of 1962 Rules stipulates that in case of issue of shares other than equity shares , the Rule mandate valuation as per following method : (c) the fair market value of unquoted shares and securities other than equity shares in a company which are not listed in any recognized stock exchange shall be estimated to be price it would fetch if sold in the open market on the valuation date and the assessee may obtain a report from a merchant banker or an accountant in respect of such valuation.] The AO should have enquired into this aspect that convertible preference shares were issued which were although convertible into equity shares after a certain period but did the law equate the same to be equity shares for the purposes of valuation of shares as mandated under the provisions of statute and rules made there-under. Further , the AO needed to look into an explanation to Section 56(2)(viib) that explanation refers to value of assets also as per clause (ii) as well method prescribed as per clause (i) of the said explanation, as is contained in explanation to Section 56(2)(viib) of the 1961 Act as to the fact that manner of computing fair value of shares for the purposes of Section 56(2)(viib) of 1961 Act is provided in above explanation of being higher of the two sub-clauses. The AO merely accepted the valuation report dated 15-10-2012 of the valuer submitted by the assessee without going into all these aspects. In our considered view, the ld. Pr. CIT has rightly invoked the provisions of section 263 of the Act as the A.O. failed to make proper enquiry and verification as required for completion of the assessment u/s 143(3) of 1961 Act, which made the said assessment order dated 23-03- 2016 as erroneous in so far as prejudicial to the interest of Revenue. - Decided against assessee.
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Customs
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2017 (5) TMI 83
Maintainability of review petition - condonation of delay - the interlocutory application was filed eleven months after the judgment in the civil appeal - the decision in the case of Commissioner of Customs, Mumbai-I Versus M/s. Seiko Brushware India [2015 (9) TMI 458 - SUPREME COURT] sought to be reviewed - Held that: - when interlocutory application was filed first and thereafter the review, delay because of that reason could have been condoned. However,in present case, even the interlocutory application was filed eleven months after the judgment in the civil appeal. Therefore, there is no valid justification for condoning the delay - delay on condoned - review petition dismissed.
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2017 (5) TMI 82
Natural justice - violation of actual user condition - filing of contemporaneous documents - Held that: - when voluminous documents were relied upon to prove and establish that there is no breach or violation of the alleged condition, then, it was incumbent upon the appellate authority, which is the final fact finding authority, to have gone into the record. It was its bounden duty to have rendered complete finding consistent with the materials on record. It is an appellate authority and exercising appellate powers. In these circumstances, a cryptic finding does not serve the ends of justice. The order is virtually unreasoned and even does not take into account that there was medical reason which prevented the petitioner from attending the office and the personal hearing - the matter shall stand restored to the file of the Appellate Committee at New Delhi for re-examination - appeal allowed by way of remand.
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2017 (5) TMI 81
Mis-declaration of description - Appellant declared the goods as Prime CRGO Electrical Steel Sheet in Coils and Slit Coils - The inspection team found that the goods were secondary grade and not prime CRGO Coils of different dimensions and not eligible to the benefit of exemption granted under N/N. 21/02? - Held that: - there is no record to prove that the goods imported were prime in character. In absence of any rebuttal by the appellant, before the authority below, mis-declaration of description and value was established - confiscation, redemption fine and penalty upheld - appeal dismissed - decided against appellant.
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Corporate Laws
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2017 (5) TMI 77
Violation of PFUTP Regulations - high quantity orders repeatedly at prices far away from the market prices - Held that:- We do not find merit with the argument of the senior counsel for the appellant that large number of cross deals made through the appellants by his clients were just normal trades of buying and selling in the securities market and as a broker he only placed orders in the trading system and obtained the brokerage. Data given in para 7 clearly show that orders were placed at prices far away from the prevailing market price and that too in many instances. While the order price may be within the circuit filter range, the intention behind placing such orders at far away prices is not normal. It is an admitted fact that the appellant was aware of the impending order of the UTI as recorded by the investigating officer of SEBI. We also note that the cross deals were all very substantial ranging from 25000 to 75000, while the synchronised deals with the UTI orders were for 2 lakh shares. Even if some of the orders placed by the clients did not fructify because they were at far away prices very fact that orders were placed at far away prices is sufficient to give a false picture to the investors in the scrip. Therefore the argument of the appellant that non- fructified orders do not impact the market and as long as the orders are within the range of the circuit filters there is no abnormality in placing the orders cannot be accepted. Where the orders are found to have been placed at far away prices to manipulate the market then it would amount to violating the PFUTP Regulations. In the instant case, inference drawn by the WTM of SEBI that placing high quantity orders repeatedly at prices far away from the market prices constituted violation of PFUTP Regulations cannot be faulted. Above inference is further fortified by the fact that there were synchronised trading of large quantities. We also note that the enquiry officer had recommended suspension of the licence of the appellant for a period of 2 years while the WTM of SEBI has ordered suspension of certificate for a period of only one month.
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Service Tax
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2017 (5) TMI 104
Natural justice - opportunity of being heard - the petitioner, has in fact appeared on 30.09.2016, with all the details and however, he was informed that already an order came to be passed on 29.09.2016 itself - Held that: it is evident that the petitioner's representative appeared on 20.09.2016 and sought for 10 days time for production of those documents and that the respondent has also granted such time. However, the fact remains that the impugned order came to be passed on the 9th day itself, viz.,29.09.2016 - the petitioner must be given one more final opportunity for placing all the materials, for the first respondent to consider and decide the matter on merits - matter is remitted back to the first respondent for passing a fresh order, after giving due opportunity of personal hearing to the petitioner - appeal allowed by way of remand.
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2017 (5) TMI 103
Refund claim - commission to foreign agents outside India - Terminal Handling Charges - denial on the ground that prior to 07.07.2009, the N/N. 41/2007 did not specify the Terminal Handling Charges - Held that: - the issue of refund has been decided by this Tribunal in the case of Narhar Fibres Vs. C.C.E. Chandigarh-I [2013 (12) TMI 330 - CESTAT NEW DELHI], where it was held that by N/N. 17/2009-S.T., dated 7-7-2009 the Government issued further exemptions, exempting taxable services enumerated in the table, received by an exporter of goods and used for export of goods from the whole of the Service Tax leviable thereon; this Notification enumerates a broad category exemption for any service classified in Section 65(105) when the payment of Service Tax is for a service mainly known as terminal handling charges - the order of the Ld. Commissioner (Appeals) in relation to refund on Terminal Handling Charges is not sustainable and is set aside - appeal allowed. Refund claim - commission to foreign agents outside India - denial on the ground that the Service Tax was not deposited till the time of filing of refund claim due to non remittance of commission to foreign agents outside India - Held that: - the Service Tax has been paid on the commission paid to the foreign agents after filing of the refund claim with the proper officer. From the copy of the Adjudication Order dt. 24.02.2010 passed by Deputy Commissioner, Ludhiana, it appears that the Department has been sanctioning the refunds in the case of Overseas Commission Agents after deposit of the Service Tax subsequent to the filing of the refund claim - the refund claim along with proof of payment of service tax by appellant in the form of GAR 7s challans needs to be re-examined and verified with invoice wise details by the Adjudicating Authority - matter on remand. Appeal allowed - part matter decided in favor of appellant and part matter on remand.
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2017 (5) TMI 102
Business Auxiliary Service - liability of tax - During the course of their business, they also help and guide their customers to get loan from banks for buying car. They also help the bank to enforce and recover amount from defaulters. In consideration of the said activities, the appellants get remuneration from banks/financial institutions - whether the appellant is liable to pay tax on such remuneration? - Held that: - The Board vide Circular dated 20.06.2003 clarified the scope of activities covered under “Business Auxiliary Services”. Among other things, service provided in relation to getting a customer, verification of prospective customer, etc. are clarified to be covered by the tax entry - Reading together the statutory scope of the tax entry as above and the activities carried out by the appellant as narrated in the agreement, it is clear that the activities of the appellant are covered by the tax entry “Business Auxiliary Service”. Invocation of section 73(3) - validity of SCN and proceedings initiated against assessee - the appellant deposited the service tax along with interest during the course of investigation itself - Held that: - the service tax due on taxable services were discharged by the appellant, though belatedly, with interest, upon initiation of enquiry by the department. In normal course, service tax is self assessed by the assessee. Here, the tax liability not paid in time was pointed out and as such paid later. Such payment is towards tax dues and cannot be considered as a deposit of amount for undetermined liability to be decided in future. The appellants paid service tax as per the obligation cast on them in terms of Section 68 of FA, 1994. We have already held that upon payment of such tax due, the provisions of Section 73(3) will come into play in the present case. Refund of excess amount paid by assessee - Held that: - The appellants shall be entitled for return of excess amount of tax, if any, paid by them. They have claimed that there is error in totaling the amount received as consideration from the banks. We find that this requires verification and the Original Authority can examine the correct factual position with records for settling the request made by the appellant regarding excess payment. Concession under Section 67(2) - Held that: - When the gross amount received by the appellant has been taken into account for calculating service tax, concession under Section 67(2) can be considered where there is no service tax element separately shown in the documents. We direct that the jurisdictional authority to verify whether there is any indication regarding service tax in the invoices etc. issued by the appellant. The appellants are liable to service tax during the material time. The correct amount of tax liable to be paid shall be cross verified by the jurisdictional authorities to examine the claim of excess payment and claim for cum tax benefit by the appellant. In case of excess payment on these grounds the same shall be refunded to the appellant subject to refund provisions - the case was fit for closure u/s 73(3) of the FA, 1994 and as such, penalties imposed on the appellant are set aside. Appeal partly allowed and part matter on remand.
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2017 (5) TMI 101
Valuation - advertising agency service - discount on the gross value of media time/space - commission - role of the appellant as a “pure agent” - Held that: - the appellants have fulfilled all the conditions of a pure agent acting on behalf of M/s Dabur - the appellants being an advertising agency and a pure agent is not liable to pay service tax on amount payable to media companies on behalf of their clients - The commission received by the appellant only would be chargeable to service tax. CENVAT credit - denial on the ground of improper documentation - invoices were addressed to unregistered premises of the appellant - Held that: - The denial of credit is only with reference to address in the document - in various decisions, this Tribunal held that the credit cannot be denied on this reason - credit allowed. Appeal allowed - decided in favor of appellant.
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2017 (5) TMI 100
Club or association services - services to its members - Revenue is of the view that all these services are under the category of club or association services as per Section 65 (105)(zzze) read with section 65 (25a) of the FA, 1994 - Held that: - the levy of service tax on the service provided by a club to its members has been purported ultra-virus under the category of club or association services - service not taxable - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 99
100% EOU - refund of CENVAT credit of service tax paid on various input services - Rule 5 of CCR - denial on the ground that ron ore was not a manufactured product and the appellant was not entitled to avail input services - Held that: - the Commissioner (A) has misconstrued the definition of mining activity and has wrongly held that it does not amount to manufacture whereas the mining activity amounts to manufacture and is an excisable goods within the meaning of Section 2(d) of Central Excise Act, 1944 - the CBEC vide Circular No.943/4/2011-CX has also clarified with regard to few services for which the CENVAT credit is permissible - refund allowed - decided in favor of appellant.
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Central Excise
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2017 (5) TMI 98
Natural justice - deferring of adjudication to go before Settlement Commission - whether the assessee would have a right after adjudication? - Held that: - It is true that Section 32E (1) as it stood before the amendment of 22 of 2007 enabled an assessee to make an application at any stage of a case. But the first proviso to Section 32E (1) even before amendment made it clear that no application can be entertained by the Settlement Commission in cases, which were pending with the Appellate Tribunal or any Court. The same prescription is retained under the third proviso to Section 32E (1), even after amendment. The question as to whether the assessee would have a right after adjudication does not arise any more, after Amendment Act 22 of 2007. The right is conferred by Section 32E (1) only before adjudication and not after adjudication, at least after Amendment Act 22 of 2007. By the letter dated 27-12-2016, the petitioner merely requested the 4th respondent not to pass an order of adjudication, so that he could go before the Settlement Commission. At least if the petitioner had made an application on 27- 12-2016 before the Settlement Commission claiming ignorance of the order of adjudication dated 24-12-2016, he may be entitled to raise all the legal issues. But even till date the petitioner has not made any application before the Settlement Commission. But admittedly the order of adjudication has been served at least on 18-01-2017 - the petitioner is not even entitled to raise any of the above issues. Petition dismissed - decided against petitioner.
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2017 (5) TMI 97
Natural justice - denial of cross-examination - claim of appellant is that Fraudulent rebate claim made by merchant exporter should not cause prejudice to appellant - Revenue has brought out every detail of subterfuge to it in the show-cause notice. Cause of action arose when investigation revealed that no inputs were received in the factory of appellant. Fake invoices and fake transport documents were used for fabrication of record and avail CENVAT credit fraudulently - Held that: - Appellant is directed to file a paper book as well as copies of evidence gathered under Section 14 of the Central Excise Act, 1944 - Learned DR is directed to provide the details of the merchant exporter whose names in show-cause notice have appeared stating whether they are in appeal before Tribunal - appeal disposed off - matter on remand.
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2017 (5) TMI 96
Maintainability of appeal - non-compliance with the provisions of Section 35F of the Central Excise Act, 1944 - pre-deposit - case of appellant is that dismissing the appeal for non-compliance of Section 35F is not sustainable in law as the same has been passed contrary to the binding judicial precedents - Held that: - this case needs to be remanded back to the Commissioner (A) and hence, I remand the case to Commissioner (A) with a direction to decide the appeal on merits without insisting for the pre-deposit - appeal allowed by way of remand.
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2017 (5) TMI 95
CENVAT credit - eligible input service - office rental and the rental charges paid for car parking space - in or in relation to manufacture of goods - Held that: - reliance was placed in the case of KPMG vs. CCE, New Delhi [2013 (4) TMI 493 - CESTAT NEW DELHI] in which the Hon’ble CESTAT, New Delhi has held that car parking facilities constitute input service and eligible to claim CENVAT credit relying upon the decision of Desert Inn Ltd. vs. CCE, Jaipur [2011 (3) TMI 640 - CESTAT, NEW DELHI] - credit allowed - decided in favor of assessee.
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2017 (5) TMI 94
CENVAT credit - input services - courier service - export of final products from the factory - As per the department's stand, the courier service does not fall in the definition of input service and therefore, the appellant has irregularly availed the CENVAT credit - Held that: - the impugned orders denying the CENVAT credit of service tax paid on courier service is not sustainable in law in view of the decision in the case Radical Instruments vs. CCE [2015 (11) TMI 779 - CESTAT NEW DELHI], where it was held that as availment of Service Tax credit incurred on courier charges for remittance of Service Tax on the assessee s output services of Maintenance or Repair and Erection, Commissioning or Installation Services, for the reasons alike since the courier and Goods Transport Agency Services are input services for rendition of output services, cenvat credit is equally admissible. In the present case, the property in the goods passes when the goods are actually delivered to the customer in the foreign country. Till the goods are delivered to the buyer, the ownership / property in the goods remain with the seller because the goods are sold on CIF basis. - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 93
Entitlement of N/N. 6/2002-CE dated 1.3.2002 - clearance of weighing machines and one conveyor without payment of duty - Whether the appellant is entitled for benefit of exemption N/N. 6/2002-CE dated 1.3.2002 at Serial No.237 read with list no.9 item 21 for supply of weighing machines and conveyors to M/s. Non-Conventional Energy Development Corporation of Andhra Pradesh for setting up a Bio Gas Combustion Co-generation Power Project or not? - Held that: - the Id. Counsel for the appellant categorically asserted that the certificate for exemption issued by the Non-Conventional Energy Development Corporation of Andhra Pradesh Ltd. is for the exemption under Sl.No.16 of the List 9 of the said notification. No claim for exemption is being made under Sl.No.21 as ‘parts’. That being the case, there IS no dispute to be resolved by the Larger Bench as the appellant is claiming/ exemption only under Sl.No.16 - Eligibility of the appellant for exemption under Sl.No.16 has to be examined by the Division Bench considering the scope of the said entry and the nature of the impugned goods for which exemption is claimed - the matter is returned back to the Division Bench, Chandigarh for decision.
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2017 (5) TMI 92
Levy of duty - The aluminium dust which arises as a result of process of metallization of printed plastic film is cleared by the appellant without payment of duty under the cover of proper invoices - case of Revenue is that the appellant had not submitted invoices along with ER-1 return perhaps they were not required to submit the same; however, they have never intimated to the Department that they have cleared aluminium dust/ash without payment of Central Excise duty - Held that: - ER-1 was not produced and prima facie, appellant has suppressed the material facts from the Department. When it is so, then we deem fit, in the interest of justice, to set aside impugned order and remand the same to the adjudicating authority to decide the issue de novo but by providing reasonable opportunity of being heard - appeal allowed by way of remand.
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2017 (5) TMI 91
Valuation - cash discount - whether the cash discount realized back by the Appellant through debit notes is chargeable to central excise duty? - Held that: - the issue is squarely covered by the assessee’s own case for the previous period [2016 (6) TMI 1151 - CESTAT NEW DELHI] where the Tribunal has also relied upon the ratio laid down by the Hon’ble Supreme Court in the case of Purolator India Vs. C.C.E., Delhi III, [2015 (8) TMI 1014 - SUPREME COURT] and held that there will be no need to add back the discounts to the assessable value, even if the same are subsequently recovered - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 90
CENVAT credit - scope of input service - laying of the pipelines - whether the service received in relation to laying of the pipelines from Matrikundia Dam to Dariba for water supply to plant at Dariba are covered under the scope of definition of ‘input service’ as provided u/r 2(l) of CCR, 2004? - Held that: - an identical issue has come up for the earlier period in the appellant’s case M/s Hindustan Zinc Ltd. Versus CCE & ST, Udaipur [2016 (7) TMI 1064 - CESTAT NEW DELHI], where it was held that water is essential in the manufacturing process, the pipelines are exclusively used for transport of water for the said purpose, the scope of input services as given under Rule 2 (l) of CCR, 2004 is not restricted to the location of the factory premises alone - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 89
Validity of order passed by Commissioner (A) - case of Revenue is that the original authority has not conducted verification of the documents furnished by the assessee - appellant claims that the Additional Commissioner in compliance with the directions of the Tribunal decided the case on the basis of the statements and the certificates issued by the export houses and those certificates were not being controverted by the Revenue inspite of the opportunities given to them - Held that: - this is the third round of litigation before the Tribunal and the Revenue by filing the present appeal wants to open up the issue once again which has been decided by the Tribunal and the original authority on the directions of the Tribunal has decided the issue - it was found that the Additional Commissioner has conducted reasonable verification and decided the issue - there is no infirmity in the impugned order and the same is upheld - appeal dismissed - decided against Revenue.
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2017 (5) TMI 88
NSEZ - Clandestine removal - diamonds - After manufacturing of the diamond jewellery at the zone, the same were clandestinely removed in domestic area from the zone without payment of applicable duty - Held that: - from the record, it appears that while computing duty, the adjudicating authority has not applied independent mind for the reason that they have not examined on merit the aspect of the benefit pertaining to the Special Additional Duty of Customs (SAD) and Additional Duty of Customs, Countervailing Duty (CVD). The authority has also not examined in detail the Work in Progress (WIP) Register where no deficiency was found as per the statement of the learned counsel for the assessee-Appellants - the matter is remanded for the limited purpose to examine de novo the benefit in computation as well as the amount mentioned in the Work in Progress (WIP) Register pertaining to the assessee-Appellants - appeal allowed by way of remand.
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2017 (5) TMI 87
Penalty - non-payment of Interest on delayed payment of duty - case of appellant is that there was a mistake committed by the appellant and on being pointed out, the appellant paid the duty - case of Revenue is that appellant has suppressed the relevant information from the department with an intention to evade duty, duty was paid but the interest was still not paid till the adjudication by the Commissioner (A) - Held that: - the appellant did not pay interest before the issue of SCN but paid the same much after the decision of the Commissioner (A) - demand upheld - appeal dismissed - decided against appellant.
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2017 (5) TMI 86
Extended period of limitation - whether extended period of limitation can be invoked in September 2008 to demand the duty on clearances made without payment of duty under invoices during the period November 2005 and reflected in the returns filed as part of clearances without payment of duty under due acknowledgment from the department? - Held that: - the appellant cleared the goods under a bona fide belief that the clearances to EPCG licence holders can be made without payment of duty and in the invoices the appellant had mentioned the same and similarly, the appellant had also disclosed this fact in the ER-1 returns filed by him to the Department and the Department did not raise any objection and the Department also did not seek any clarification from them as to why they are clearing goods without payment of duty - Mere omission to give correct information is not a suppression of fact unless it was deliberate to stop the payment of duty - entire demand is time barred - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 85
Clandestine removal - Clearance of goods for job-work - benefit of N/N's. 5/99-CE dated 28.02.1999, 6/2000-CE dated 01.03.2000 and 3/2001-CE dated 01.03.2001 as amended - it was alleged against the assessee that thy cleared the goods to market in the guise of job-work transfer, invoices were bogus and the dispatches were also bogus - Held that: - even though Shri V. Ramakrishnan stated that they had indeed done the job work, that assertion was untrue since only their source of income was a small tea-shop and that at the time of visit of officers, Shri V. Ramakrishnan had informed that the machines had been dismantled in order to sell them for repayment of loan. He could also not able to produce any material evidence during cross examination as to how they made expenses towards wages, power, maintenance etc., in connection with the job work - there is no infirmity in the demand of ₹ 44,22,202/- confirmed by the adjudicating authority being duty on cotton yarn cleared by STL from its factory premises, purportedly for conversion into hank yarn to RR. Reeling Unit-II. Revenue has thus has been able to satisfactorily established that there is no evidence for movement of hank yarn from the job worker’ to the factory of STL and that entries in RG-1 register to the contrary are doctored to cover up their actual modus. Extended period of limitation - Held that: - there has been unaccounted/clandestine removal of cotton yarn y STL subterfuge, suppression and wilful misstatement and collusion with BARU and RR Reeling Unit; with the sole intention of evading legitimate duty payable to the exchequer - invocation of extended period of limitation in the notice under proviso to section 11A of the Central Excise Act and its affirmation in the impugned order is very much in order. Appeal dismissed - decided against appellant.
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2017 (5) TMI 84
Interim stay of order passed by High Court - omitting the delayed payments of duty through CENVAT - Rule 8(3A) - decision in the case of Commissioner of Central Excise, Delhi Versus Vikrant Auto Industries [2016 (9) TMI 322 - DELHI HIGH COURT] contested, where it was held that Rule 8 (3A) itself has been struck down and is no longer in existence - Held that: - There shall be interim stay of the impugned judgment and order passed by the High Court of Delhi [2016 (9) TMI 322 - DELHI HIGH COURT] - petition disposed off.
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CST, VAT & Sales Tax
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2017 (5) TMI 80
Validity of order of seizure and conditional release - goods declared was parchun whereas actual product transported was P.V.C. Granules - the goods were being transported through the State of U.P. - Held that: - declaration made by the transporter in TDF-1 was admittedly incorrect. In the bill and bilty etc., the product was shown as PVC granules but its value has been shown at ₹ 16.50 per Kg. No basis could be disclosed before the Tribunal to support such valuation - According to the department, the goods were to be unloaded in the State of U.P., and that is why false description was given in TDF etc - the conditional deposit of security for release of goods is upheld - decided against assessee.
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2017 (5) TMI 79
Penalties imposed under Section 17A of the Kerala Tax on Luxuries Act, 1976 - whether the facilities availed by the members of the unique, newly developed “Time-share arrangements” can be brought under the definition of “luxuries” and taxed under the LT Act - Held that:- The petitioners are having Resorts where residential accommodation is by way of a business and renting out of rooms is for monetary consideration. The Resorts maintained by the assessee within the State of Kerala, hence, comes within the definition of “Hotel”. “Luxury” is defined as a commodity or service that ministers comfort or pleasure and that provided in a hotel is accommodation for residence or use and other amenities and services provided in a hotel. The right to enjoy a holiday, the members of a timeshare arrangement, by their membership is entitled to, is crystallized in the fundamental facility provided of accommodation in the various Resorts. The enjoyment is relative and what a member gets assured, is the facility of accommodation; which is the luxury as per the definition. The charge is also on any luxury provided in a hotel, meaning the accommodation provided for residence and the rate varies with the charges for such an accommodation. What comes out from the above is that the assessee itself has been treating the membership, resulting in an obligation, continued over the years in which the timeshare arrangement or membership remains valid. The promise to be fulfilled by and the obligation of, the assessee is to provide accommodation to the member who books his holiday in any one of the resorts of the assessee. There can be no confusion in finding the measure. It is also pertinent that the assessee has not offered details of the amounts received from each of the members, to compute the charges for accommodation for the period in which they enjoyed the stay within the State of Kerala. In such circumstances, there can be no fault found in adopting the fixed room rent or tariff per day for the purpose of levying the tax. In this context, it is also to be noticed that the tax applied under the LT Act is one on the person who enjoys the accommodation and the assessee could collect such tax from the members. The mere fact that advance payment was taken as membership fee cannot lead to a conclusion that the accommodation provided/offered to the member is free of cost. The assessee itself, as contended before the IT Appellate Tribunal, splits up the membership fees to the subsequent years to cover the obligation of providing for an accommodation for residence or use. On the penalty imposed this Court found that the turnover having been disclosed and there being a bona fide debatable issue, there could not have been an imposition of penalty. SeeM/s. Chakkiath Brothers Versus The Assistant Commissioner, Commercial Taxes Special Circle-1, Ernakulam [2014 (6) TMI 974 - KERALA HIGH COURT] This Court has answered the issue of coverage under the L T Act against the assessee; but on the imposition of penalty it is answered against the Department
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2017 (5) TMI 78
Payment of tax before the disposal of the appeal - vacation of stay order after prescribed period - case of appellant is that there was no Chairman of the Tribunal at Thiruvananthapuram and hence the matter was not disposed of within 180 days. In any event, it is to be noticed that the third proviso is harsh insofar it prejudices the assessees insofar as they being directed to satisfy the demand, even when the appeal filed by them is pending - Held that: - merely for the reason of the Tribunal having not disposed of the appeal, there can be no automatic recovery proceeded with. With respect to the petitioner's case, it is directed that the recovery shall be kept in abeyance, till the disposal of the appeal before the Tribunal - petition allowed - decided in favor of petitioner.
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