TMI Tax Updates - e-Newsletter
June 27, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
Highlights / Catch Notes
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Income Tax:
Rectification of mistake - adverse remarks not only against the assessee but against the representative of the assessee - Held that - That must been avoided as it would be a reflection on the working of the Tribunal as a whole. - HC
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Income Tax:
Granting depreciation although not claimed by the assessee - depreciation not claimed for by the assessee, cannot be allowed as a deduction despite the introduction of the concept of block assets. - AT
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Income Tax:
Standby maintenance revenues earned under the Construction and Maintenance Agreement (C&MA) from VSNL - whether taxable in India as ‘Fees for Technical Services’ (‘FTS’) under section 9(1)(vii) - Held No - AT
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Income Tax:
Reopening of assessment - unaccounted cash credit - the notice issued u/s 148 of the Act subsequently on the basis of information received from the Investigation Wing of the Department was on account of change of opinion and as such the reopening u/s 147 of the Act was not valid - AT
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Income Tax:
Rejection of the claim u/s. 80IB(10) - large townships - Permission for construction of shops had been allowed by the local authority in accordance with rules and regulations - the projects essentially remained residential housing projects - deduction allowed - AT
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Income Tax:
Disallowance of remuneration paid to the Directors - The A.O. has not indicated as to how the turnover could be a sound basis for comparison of remuneration - AT
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Income Tax:
Share transaction - The sole reason assigned by AO for coming to the conclusion that the shares were held as stock in trade was that the shares were transferred on the same date on which it was purchased. This finding is completely erroneous on the face of it - AT
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Income Tax:
Unexplained cash deposits in the bank account - The assessee was very selective in giving effective explanation and evidence before the AO despite adequate opportunities - AO to re adjudicate the matter - AT
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Customs:
Confiscation of goods - Enhancement of value of goods - the petitioners declared the price of free import of marble blocks/tiles below the US $ 60 which was not correct - the authority has rightly confiscated the same and therefore, confiscation of the goods is justified - HC
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Customs:
Challenge of detention order - Charges of carrying Fake Indian Currency Notes (FICN) - Prohibition under the Customs Act - . The "imminent possibility" of the petitioner coming out on bail is merely the ipse dixit of the detaining authority unsupported by any material whatsoever. - HC
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Service Tax:
Denial of refund claim - original documents of refund claim not submitted - concerned authority never have them opportunity to produce sample documents - refund claim should not be rejected in the manner it has been done in this case - AT
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Service Tax:
CENVAT Credit - cable operator's services - the same as allowable input service, as the same is utilized in various offices of the appellant for being up-dated with the stock and money market - AT
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Service Tax:
Demand of service tax - Under section 84 of the Act, learned Commissioner revised the show cause notice to change the category of the service provided by the appellant which is not permissible at this stage - demand set aside - AT
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Central Excise:
Manufacture of chimneys - component of the boilers for non-conventional energy system - Exemption - there is very thin distinction between part and device - exemption allowed - AT
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Central Excise:
Cenvat Credit - Show-cause notice is vague as it nowhere gives the breakup of the proposed demand nor it discusses any particular reasons as to why the CENVAT Credit is not allowable in respect of the three services - the whole proceeding is vitiated for want of a valid show-cause notice - AT
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Central Excise:
Penalty for non maintenance of records - manufacturer of cigarettes works under physical control - Applicability of Circular No. 224/37/2005-CX.6, dated 24-12-2008 - as the records are not specified in the central excise rules, no penalty can be levied - AT
Articles
Notifications
News
Case Laws:
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Income Tax
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2015 (6) TMI 812
Rectification of mistake - adverse remarks not only against the assessee but against the representative of the assessee - Held that:- Repeatedly, the Hon'ble Supreme Court cautioned the Presiding Officer of the Courts and Tribunals from adversely commenting and remarking on the conduct of parties or their representatives or pleaders. If these comments and remarks, adversely affecting them are not required for the decision of a case and it could be justly and fairly reached on the basis of material produced and the arguments canvassed, then, the Courts and Tribunals should refrain from passing any adverse remarks or making harsh comments on the conduct of the parties. Sobriety and restraint in judicial conduct is of paramount importance. Even if the Presiding Officer, members of the Tribunal are agitated by prolong arguments and often needless, still they must not lose patience and to a extent as to comment upon the conduct of the Advocates or representatives. That must been avoided as it would be a reflection on the working of the Tribunal as a whole. We delete and expunge all the remarks which have been made against the representative and the parties. Thus, passage or lines from the order particularly para 17 shall stand expunged and deleted. This would also include deletion of the direction to pay costs. The imposition thereof is accordingly set aside. Barring this interference and for the limited purpose and by clarifying that all contentions on merits of the application and of the controversy or subject matter thereof are kept open for being considered in the pending appeals, we dispose of this writ petition.
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2015 (6) TMI 811
Penalty u/s.271(1)(c) - whether claiming speculation loss as business loss deliberately amount to filing of inaccurate particulars and adjusting the same against income from other sources, whereas the clause (d) inserted by the Finance Act, 2005 under sub-section (5) of section 43 is applicable w.e.f 01.04.2006 i.e. from A.Y. 2006-07 conclusively proves that the derivative transactions are in the nature of speculative transactions till A.Y. 2005-06 - ITAT deleted penalty levy - Held that:- While submitting the return of income, the assessee claimed/treated the loss from derivative transactions as normal business loss. However, the AO did not accept the same and treated the same as speculative in nature and therefore, disallowed the same. Therefore, it was a bonafide claim made on behalf of the assessee which was not accepted by the AO. All particulars in respect of the loss were found to be correct. Only point of contention was that the appellant had treated loss from derivative transactions as normal business loss whereas the AO held it to be speculative in nature. It is a case of bonafide claim in respect of an item where the law was not very clear, this is evident from decisions of various tribunals quoted by the appellant which were in its favour. This is a case of difference of opinion and not a case of mala fide claim of wrong deduction. Ratio of decision of Hon'ble Supreme Court in the case of Reliance Petroproducts (P.) Ltd. [2010 (3) TMI 80 - SUPREME COURT] wherein held that mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee is squarely applicable to the facts of the case - Decided in favour of assessee.
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2015 (6) TMI 810
Claim for depreciation - AO disallowed this on the ground that the assessee was unable to demonstrate that the machinery claimed to have been used by it was in fact owned or acquired by assessee for its business - ITAT allowed claim - Held that:- It is a matter of record that for AY 2006-07 and 2007-08, the assessments were completed under Section 143(3) after due enquiries were conducted by the AO. There is nothing on the record to suggest that those were either erroneous or based on premises which did not disclose relevant details. The revenue’s attempt in reopening the assessment of subsequent year 2009-10, by relying upon statement of one of the sub-distributors also failed because the said concern, M/s Best & Company, in fact confirmed the assessee’s contention. Given the factual nature of these findings, the Court is of the opinion that no substantial question of law arises for consideration.
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2015 (6) TMI 809
Unexplained cash payments reflected in cash book - Held that:- The balance sheet of M/s. Mosaic House furnished along with return of income shows the addition of ₹ 1,50,000/- against the property. Moreover it is not in dispute that assessee is an owner of the property although a personal property. It is also a matter of record that appellant has furnished affidavits of all the eight parties in support of the claim of advance against land. No doubt, appellant has failed to produce the parties before the Assessing Officer during the remand proceedings yet it is a matter of record that one of the persons who was produced admitted to have advanced ₹ 1,50,000/- to the appellant. The affidavits and the statement as recorded have not been placed before us. We therefore accept the contention of the counsel of the appellant that the issue be restored to the file for the Assessing Officer for verification after examination of the persons who have advanced to the appellant. We also notice that appellant has furnished revised cash book during the assessment proceedings explaining the discrepancy in the original cash book furnished during the assessment proceedings. The Assessing Officer has discredited the said cash book without examining the same. We therefore, direct that while conducting fresh examination, the Assessing Officer would look into the explanation tendered and the revised cash book and not merely discredit the same. Accordingly, the issue of addition regarding unexplained deposit in the cash book of the appellant is restored to the file of the Assessing Officer for denova examination and adjudication after granting necessary opportunity to the appellant. - Decided in favour of assessee for statistical purposes. Addition on alleged difference in sundry creditors accounts - Held that:- The appellant could not produce these parties inspite of several opportunities. But for furnishing the bills of these parties, no efforts were made to prove his version. In the rejoinder to the remand report, the assessee contended that complete address, telephone/FAX No. and bank a/c no. was furnished to the AO during the remand proceedings but the AO has not taken any steps to enquire at his own level. We further find that Ld. CIT(A) has observed that it could be seen that the AO made addition in respect of the parties who have denied to have any outstanding amount with the appellant. It is not the case of not receiving any response from the creditors or return of the letters as comeback un-served. Under these circumstances, onus is on the appellant to prove that the liability exists by producing them or furnishing reconciliation statement etc. Instead the assessee has merely given the address etc. of the creditors which was already available with AO. Thus CIT(A) was right in upholding the addition - Decided against assessee. Non deduction of TDS under section 194C - Disallowance on export of goods through agents of freight shipping companies - Held that:- since the payments have been made as reimbursement of expenses to the agents of the appellant, therefore, appellant was not obliged to deduct TDS under section 194C of the Act and as such, no disallowance is warranted u/s 40(a)(ia) of the Act. - Decided in favour of assessee. Addition on difference in the account of Mls Venus Stone, Spain - Held that:- The sales in this case is ₹ 1.08 crores and the ledger account reflects ₹ 1.21 crores. At page 18 of the paper book the assessee furnished a copy of the reconciliation. The opening balance is ₹ 13,21,034/-. All these are export sales and a perusal of this copy of the ledger of M/s Venus Stores, Spain demonstrates that the figures have been reconciles, the discrepancy explained. - Decided in favour of assessee. Addition u/s. 40A(3) - Held that:- The assessee’s counsel failed to lead only evidence and submissions as to how the particular transactions are covered under Rule 6DD. In our considered opinion, Ld. CIT(A) was right in observing that mere statement that the purchasers have no bank account a/c at that very place has no meaning without explaining the circumstances under which the assessee had to issue bearer cheques and as to how the transactions are covered under Rule 6DD. In view of above, Ld. CIT(A) has force in his finding in holding that in the absence of any evidence led by the assessee, the action of the AO in disallowing the amount u/s. 40A(3) was upheld, which does not need any interference on our part - Decided in favour of assessee. Account of notional interest - Held that:- It is well settled law that the Hon’ble Gauhati High Court in the case of Highways Constructions Co. Pvt. Ltd. Vs. Commissioner of Income Tax [1992 (11) TMI 86 - GAUHATI High Court] held that notional interest cannot be charged. 20% disallowances of expenses under various heads - Held that:- CIT(A) has observed that a fact finding has been given by the AO that some of the expenses are unvouched or not properly vouched. The Assessee’s counsel has not contravened these observations of the AO. Therefore, in view of the above factual finding of the AO and Ld. CIT(A), Ld. CIT(A) upheld the disallowance of 20% of the expenses, which does not need any interference on our part - Decided against assessee. Addition under house hold expenses - Held that:- The house hold withdrawals of ₹ 1.00 lakh are quite low in response to which the assessee stated that theirs is an agriculture based family and he has only two school going dependent children and the withdrawals are quite reasonable and justice. Ld. CIT(A) further observed that having regard to the status and life style enjoyed by the family, the AO estimated the expenses at ₹ 10000/- per month and made an addition of ₹ 20,000/-. In our considered opinion, Ld. CIT(A) was quite reasonable in sustaining the estimating addition of ₹ 10,000/-, which does not need any interference on our part, hence, we uphold the order of the Ld. CIT(A) on this issue - Decided against assessee.
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2015 (6) TMI 808
Reopening of assessment - disallowance of assessee's claim of deduction u/s.80IB(10) - Held that:- AO appears to have relied exclusively on an audit objection. There was, hence, a total absence of "tangible material", to justify the conclusion that income had escaped assessment. All the conditions were fulfilled by the appellant for the claim of the deduction under section 80IB(10) and the Ld. AO verified the same during the original assessment which was completed after conducting a survey operation u/s. 133A of the Act. In view of the foregoing the issue of notice u/s. 148 is bad in law and thus cannot be sustained. Site plan of the project was approved by the BMC in respect of Indian Ocean Project on 8-4-2005 was 6555.83 sq.mtrs. of land. The CIT(A) even after applying the reverse calculation with regard to BMC rules FSI of 1.33 found that the plot size was 4929.19 sq.mtrs., which is equivalent to 1.22 acres. Thus, the contention of the AO that plot size of the Indian Ocean project was below 1 acre is incorrect. The CIT(A) has also recorded a categorical finding to the effect that none of the residential unit was more than 1000 sq.ft. This fact was also verified by the revenue authorities during the survey operation carried out at assessee's project site even before original assessment u/s.143(3) wherein assessee's claim u/s.80IB(10) was allowed. We found that AO has worked out the area on the basis of a hillock whose area has been shown to 1873.27 sq.mtr.s on the entire plot of area and not on the area that relates to site of building Atlantic Ocean. Therefore, if the entire plot area is taken into account i.e. 40803.10 sq.mtrs. the area of the hillock is remarkably reduced in proportion the total area of the hillock and nearly comes to 4.59%. Thus, the computation done by the AO in arriving at the plot area is based on wrong figures adopted by him. - Decided in favour of assessee.
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2015 (6) TMI 807
Validity of reopening of assessment - Held that:- The undisputed facts are that the reopening is made on the basis of the note enclosed with the return of income by the assessee. The submission of the assessee that the assessee has not added provision for doubtful debt in working of the book profit relying on the judgement of Hon’ble Bombay High Court in the case of CIT vs. Echjay Forgings Pvt.Ltd. reported at [2001 (2) TMI 56 - BOMBAY High Court] is not disputed by the Revenue that the material on the basis of which re-opening of assessment was proposed was already before the assessing officer in the form of note. In view of the judgement of Hon’ble Jurisdictional High Court in the case of Vishwanth Engineers vs. ACIT reported at (2012 (5) TMI 146 - Gujarat High Court ) the AO should not have reopened the assessment. - Decided in favour of assessee. Disallowances of operational and maintenance expenses and excess interest charged to GEB amount debited to P&L account of provision for doubtful debts to book profit u/s.115JB - Held that:- The authorities below have not given any finding that the assessee has not reduced the debtors from the asset side of the balance sheet to the extent to the corresponding amount so that, at the end of the year, the amount of debtors is shown as net of the provision for the impugned bad debt. In the absence of the same therefore, respectfully following the ratio laid down in the case(s) of CIT vs. Yokogawa India Ltd. [2011 (8) TMI 766 - KARNATAKA HIGH COURT ] and CIT vs. Kirloskar Systems Ltd.(2013 (12) TMI 9 - KARNATAKA HIGH COURT) and also following the decision of Coordinate Bench in the case of ACIT vs. Vodafone Essar Gujarat Ltd.(2012 (6) TMI 415 - ITAT, Ahmedabad), we hereby set aside the order of the ld.CIT(A) on this issue and direct the AO to delete the disallowances. Thus, this ground of assessee’s appeal is allowed.- Decided in favour of assessee. Granting depreciation although not claimed by the assessee - Held that:- The issue is now squarely covered in favour of assessee by the judgement of Hon’ble Jurisdictional High Court rendered in the case of DCIT vs. Sun Pharmaceuticals Ind.Ltd. [2015 (1) TMI 704 - GUJARAT HIGH COURT] wherein held that depreciation not claimed for by the assessee, cannot be allowed as a deduction despite the introduction of the concept of block assets. - Decided in favour of assessee. Addition made to the book profit of the assessee u/s.115JB - CIT(A) deleted the addition - Held that:- The ld.counsel for the assessee relied on the decision of Hon’ble Apex Court rendered in the case of CIT vs. HCL Comnet Systems & Services Ltd. reported at (2008 (9) TMI 18 - SUPREME COURT ). We find that the ld.CIT(A) has given a finding on fact. This finding is not controverted by the Revenue by placing any contrary material on record. Therefore, we do not deem fit to interfere with the order of ld.CIT(A), same is hereby affirmed. - Decided in favour of assessee.
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2015 (6) TMI 806
Standby maintenance revenues earned under the Construction and Maintenance Agreement (C&MA) from VSNL - whether taxable in India as ‘Fees for Technical Services’ (‘FTS’) under section 9(1)(vii) - Held that:- It is not in dispute that the standby charges is a fixed annual charge, which is payable not for providing or rendering services albeit for arranging standby maintenance arrangement, which is required for a situation whenever some repair work in under-sea cable or terrestrial cable is actually required to be performed or rendered. It is a facility or infrastructure maintained for ready to use for rendering the technical services or for repairing services, if required. There is no actual rendering of the services qua the standby maintenance charges.Here, it is not the case of AO or CIT(A) that standby maintenance charges is on account of actual repair or maintenance carried out by the assessee. Hence, following the earlier years’ precedence, we hold that the receipt on account of standby maintenance charges is not chargeable as ‘fees for technical services’ within the scope of section 9(1)(vii). - Decided in favour of assessee. Income earned from Restoration activity - liable for tax in India either as ‘Fees for Technical Services’ (‘FTS’) under section 9(1)(vii) or as business income under section 9(1)(i) - Held that:- From the perusal of the restoration agreement and various clauses, it cannot be inferred that there is any actual rendering of technical services by the assessee. Nothing is suggestive of the fact that under the restoration agreement some kind of technical skill, technical services are being provided, except for the kinds of restorations which can be undertaken and terms thereof for the connectivity and payment. Thus on these facts, we hold that revenue received from restoration activities is not taxable as FTS u/s 9(1)(vii). The assessee has provided the chart of the segments on which the restoration activities have been undertaken by way connection to the cable landing station in the territorial waters in India, which was from Fujirah to Mumbai, Miura to Mumbai and Mumbai to Singapore. The assessee has also filed a statement showing the details of restoration charges over the years giving the details of segments on which the restoration has been provided; length of the segment, length of the cable in territorial waters of India and apportionment of revenue to India. In principle, we uphold the method of attribution of revenue as given in the said statement, however the AO is directed to determine the income of the assessee which is to be taxed in India after apportioning the revenue on the basis of length of the cable in the territorial waters in India on the segments on which restoration have been provided. The working given in chart submitted by the assessee shall be verified by the AO, so as to determine the correct business income which is to be taxed in India.- Decided partly in favour of assessee. Liability to pay interest under section 234B - Held that:- As admitted by both the parties, this issue is similar to the issue involved in the appeal for assessment year 1998-99, 1999- 2000 & 2000-01, wherein, the Tribunal after following the decision of DIT vs NGC Network Asia LLc reported in [2009 (1) TMI 174 - BOMBAY HIGH COURT] held that there was no liability to pay interest u/s 234B. - Decided in favour of assessee. Liability to pay interest under section 234D - Held that:- coming to the issue of interest under section 234D, it has been admitted by the ld. Counsel that the levy of interest u/s 234D would be applicable in these years also in view of the decision of Hon’ble Bombay High Court in CIT vs. Indian Oil Corporation Ltd.(2012 (9) TMI 517 - BOMBAY HIGH COURT). - Decided against the assessee.
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2015 (6) TMI 805
Transfer Pricing adjustment - addition made to the value of international transaction entered into by the assessee with its associated enterprise in respect of Provision of Information Technology Enabled Service - selection of comparable - Held that:- Accentia Technologies Ltd. - As during the year under consideration there were extraordinary events that took place in the said concern which warranted exclusion of this company as a comparable. We therefore hold that the said concern cannot be considered as a comparable Coral Hub Ltd.(Earlier known as Vishal Information Technologies Ltd.) - The Tribunal in assessee’s own case for assessment year 2008-09 has given a finding that Coral Hub Ltd. could not be selected as a comparable.The said company was providing IT enabled services and was also engaged in other diversified activities. Further, it has outsourced its services to third party vendor and acted as intermediary between the final customer and the vendor. The assessee on the other hand was engaged in the running of a call centre and was providing technical support to its AEs. Cosmic Global Ltd. needs to be rejected on the ground that it was engaged in BPO and Translation services whereas assessee was an ITES provider, and therefore concern was functionally dissimilar. Crossdomain Solutions Ltd. was not comparable with the assessee as the said concern was engaged in the payroll activity apart from being engaged in KPO services. Also the said concern was identified as a Knowledge Process Outsourcing services provider (KPO) and not a simple business process outsourcing services provider, thus is to be excluded from the final set of comparables.
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2015 (6) TMI 804
Reopening of assessment - unaccounted cash credit - Held that:- AO while framing the original assessment, specifically, asked the assessee to furnish the details of the unsecured loans and the assessee gave the details by disclosing the name of the persons from whom loans were received and also furnished their PAN nos. alongwith the requisite details in the form of affidavit from the Directors of the lending companies, balance sheet & profit & loss A/c of those companies as well as copies of acknowledgment of Income Tax Return etc. to demonstrate the creditworthiness, bonafide and genuineness of the transactions. The assessee also disclosed the names, addresses, PAN, Ward Nos. etc. of all the persons from whom loans exceeding ₹ 20,000/- were obtained and repaid during the year, in the Annexure ‘H’ attached to the Tax Audit Report which was furnished to the AO who after making the proper inquiry and being satisfied did not make any addition in the original assessment. Therefore, the notice issued u/s 148 of the Act subsequently on the basis of information received from the Investigation Wing of the Department was on account of change of opinion and as such the reopening u/s 147 of the Act was not valid, therefore, the subsequent reassessment framed on that basis was invalid. Accordingly, we set aside the impugned order passed by the ld. CIT(A) and the original assessment framed by the AO is restored. - Decided in favour of the assessee.
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2015 (6) TMI 803
Reopening of assessment - deduction u/s. 80IB(10) denied - contention of the later AO that since assessee has purchased the land as early as 1996, the project was to be deemed to have started then and the same was prior to 01-10-1998. Therefore, the assessee is not eligible for deduction - Held that:- As far as reopening of assessments u/s. 147/148 are concerned, we agree with the Ld.CIT(A) that this is a mere change of opinion. In fact, the AO at the time of completion of assessment has indeed taken pains in examining the eligibility and also deputed his inspector and allowed the deduction after due verification. The project has started after 01-10-1998 and therefore, the contention of the AO that the project started before that date is not factually correct. Moreover, claim of assessee that assessee has entered into joint venture agreement and all the parties have started the project in their individual capacity. As per record, members contributed their land as capital, whereas the project was conceived and constructed by the AOP and the claim was accordingly made in the hands of the AOP. Since these aspects were examined by the AOs at the time of original assessment, the opinion of the subsequent AO that AOP continued the project cannot be accepted. Lastly, with reference to the ‘project completion’ which was one of the reasons for reopening assessments and also for denying the deduction in AY. 2006-07 (which was upheld by the CIT(A)), this was on the basis of subsequent amendment to Sub-Section 10 of Section 80IB(10) w.e.f. 01-04-2005. Furnishing of 'Project Completion Certificate' was not even stipulated in AYs. 2003-04 and 2004-05, therefore, that cannot be the basis for reopening the assessments. Therefore, AO's stand on this regard cannot be accepted. Assessee has completed its project by 31-03-2008 and has requested the local authorities for approving the final project. If the local authorities did not issue the 'Project Completion Certificate' as requested by assessee, it is not possible to furnish the said certificate to the Revenue authorities. All the evidences on record do indicate that assessee has completed the project, therefore, just because assessee could not furnish the 'Project Completion Certificate', the deduction cannot be denied on that basis. the eligible deduction cannot be denied to the assessee. - Decided in favour of assessee
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2015 (6) TMI 802
Disallowance of deduction claimed U/s 80IC - CIT(A) allowed part claim - Held that:- CIT(A) had given detailed findings in his order dated 06/07/2012 and verified the XIII schedule items and held that PVC Pipe do not fall in excise classification 39.09 to 39.15 of Schedule-XIII of Act or under Schedule 14. Further, the auditor had corrected the audit report in column No. 26(A) in form No. 10CCB. Further the ld DR has not controverted the finding given by the ld CIT(A). Therefore, we uphold the order of the ld CIT(A) on this ground. - Decided against revenue. Trading addition - CIT(A) allowed part claim - Held that:- The assessee has shown G.P. rate during the year under consideration @ 27.36% as against 29.95% in immediate preceding year on gross turnover of ₹ 4,62,90,109/- during the year under consideration and ₹ 4,14,49,005/- in immediate preceding year. The assessee’s item produced is under excisable items where excise audit has been done by it. The assessee has produced all the sale/purchase vouchers. There was a difference in account of some of the parties, which has been reconciled by the assessee before the ld CIT(A) and also explained the cash payment U/s 40A(3) of the Act. During the year, the assessee’s sale also has gone up compared to preceding year and there is a marginal decline in the G.P. rate. The ld DR had not controverted the finding given by the ld CIT(A). Therefore, we uphold the order of the ld CIT(A). Accordingly, this ground of revenue is dismissed. - Decided against revenue. Addition U/s 2(24)(x) r.w.s. 36(1)(va) - ESI & PF payments were not made in time as per audit report.CIT(A) deleted addition - Held that:- The ld CIT(A) has considered the various case laws on this issue including the SLP of Hon’ble Apex Court in the case of Vinay Cement Ltd. (2007 (3) TMI 346 - Supreme Court of India) and rejected the appeal after observing that the assessee had paid these payments U/s 43B of the Act on or before due date of return, therefore, SLP was rejected after considering the Hon’ble Delhi High Court decision in the case of said assessee. Therefore, we do not find any reason to intervene in the order of the ld CIT(A). - Decided against revenue.
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2015 (6) TMI 801
Transfer pricing adjustment - adjustment of arm’s length price - selection of comparable - Held that:- Infosys Technologies Ltd.,Wipro Ltd. (Seg.), KALS Information Systems Ltd., (Seg.), Tata Elxsi Ltd., (Seg.), Avani Cimcon Technologies Ltd. and E-Zest Solutions Ltd. are to be excluded from the final list of comparable as functionally dissimilar and different from the software activity of assessee as relying on case of M/s. Invensys Development Centre India (P) Ltd., Hyderabad vs. ACIT, Circle 2(1), Hyderabad [2015 (1) TMI 920 - ITAT HYDERABAD] Exclusion of communication charges from export turnover holding that they are not to be included in the Export turnover - Assessee contested the same stating that data link charges cannot be considered as attributable to export service, however, alternate plea was made that if the same was excluded from the export turnover, the same was also to be excluded from the total turnover while computing deduction under section 10A - Held that:- Following the decision of ITO vs. Saksoft [2009 (3) TMI 243 - ITAT MADRAS-D], DRP should have given a direction to exclude communication charges from the total turnover as well. Since the issue is held in favour of assessee in the case of ITO vs. Sak Soft Limited [supra] and also as approved by Hon’ble Bombay High Court in the case of CIT vs. Gemplus Jewellery Ltd., [2010 (6) TMI 65 - BOMBAY HIGH COURT ], we direct the AO to exclude the communication charges from total turn over as well. - Decided in favour of assessee.
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2015 (6) TMI 800
CIT-I power u/s 264 - ex-parte order - revival of the company - HC while accepted the prayer of the company has stated that, The prayer is accepted to secure the ends of justice, exmanagement of the (Company-in-liquidation) would now appear in the office of the Commissioner of Income Tax - Held that:- In the present case, it appears that the department passed the ex-parte order during the period of liquidation and the ld. CIT-I, Delhi while deciding the petitions of the assessee u/s 264 of the Act for the assessment years 1996-97 to 2001-02 vide separate orders each dated 11.03.2015 set aside the issues to the file of the AO for making assessment de-novo after giving reasonable opportunity of being heard to the assessee. We, therefore, considering the totality of the facts deem it appropriate to remand all the cases under consideration to the file of the AO to be decided expeditiously afresh, in accordance with law after providing due and reasonable opportunity of being heard to the assessee. We also direct the assessee to Co-operate and not seek undue or unwarranted adjournments. - Decided in favour of asssesse for statistical purposes.
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2015 (6) TMI 799
Unexplained deposits in bank account - ex-parte order u/s 144 - Held that:- Since the AO has verified only one account namely ICICI Bank and has passed the assessment order u/s 144 as ex-parte order and also that the assessee has informed about the Vijaya Bank a/c only before the CIT (A), we are of the opinion that the matter should be remitted back to the file of the AO to verify the bank accounts. Since the assessee has provided copy of the bank statements with ICICI Bank and Vijaya Bank and in form No.26AS for the A.Y 2009-10 in the paper book. AO shall verify the same and decide the issue in accordance with law. - Decided in favour of assessee for statistical purposes.
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2015 (6) TMI 798
Rejection of the claim u/s. 80IB(10) - assessee failed to satisfy the conditions laid in the Act - Held that:- The issue under consideration is squarely covered by the decision of the Hon’ble jurisdictional High Court in the case of Manan Corporation vs. ACIT [2012 (9) TMI 700 - Gujarat High Court] wherein held Section 80IB(10) originally indicated 100% deduction on the profits derived from housing projects approved by local authority subject to certain conditions set out in the provision. By virtue of the amendment having come into effect from 1.4.2005, deduction is permissible to housing project having residential units with commercial units to the extent permitted therein. There was no criteria for making commercial construction prior to the amendment of the section and the plans were approved as housing projects by the local authority for both the projects of the assessee. Permission for construction of shops had been allowed by the local authority in accordance with rules and regulations, keeping in mind presumably the requirement of large townships. However, the projects essentially remained residential housing projects and that was also quite apparent from the certificates issued by the local authority and, therefore, neither the absence of such provision of commercial shops nor on account of such commercial construction having exceeded the area contemplated in the prospective amendment could the deduction be denied to the assessee whose plans were sanctioned according to the prevalent rules. The assessee was entitled to deduction under section 80-IB (10). We following the above decision are of the view that clause (d) to section 80 IB (10) which has been inserted w.e.f. 1-4-2005 will not be applicable in the instant case where the project was approved on 31-7- 2002. We therefore, set aside the order of the CIT (A) on this issue. As the issue of allowability under section 80 IB (10) has been restored by the CIT (A) to the file of the A.O. with certain direction against which no appeal has been filed by both the parties. Therefore, those directions remained and A.O. is directed to consider the issue in light of the said directions of the CIT (A). - Decided in favour of assessee.
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2015 (6) TMI 797
Disallowance of interest under section 36(1)(iii) - CIT(A) deleted the addition - Held that:- Where the assessee had established availability of funds of its own and also where the investment was made in 100% subsidiary of the assessee, which in turn was engaged in the same line of business and had utilised the funds for its business, the existence of commercial expediency stands proved. In case the connection between the lender and the borrower is of commercial expediency, then in view of the ratio laid down by the Hon'ble Supreme Court in SA Builders Ltd. (2006 (12) TMI 82 - SUPREME COURT), no disallowance is warranted under section 36(1)(iii) of the Act. In view thereof we hold that there is no justification for disallowing interest under section 36(1)(iii) of the Act and uphold the order of the CIT(A) - Decided in favour of assessee. Disallowance of remuneration paid to the Directors - CIT(A) allowed claim - Held that:- A.O. has disallowed the remuneration on the ground that much less remuneration was paid in the case of sister concern. Although, this could be a starting point to suspect that excessive remuneration was paid but for effecting an addition the suspicion has to be grounded on fair market value of services rendered. The A.O. however, did not carry out such exercise. On the other hand the appellant has explained that the appellant is a 35 year old company whereas the subsidiary is only in business for last 4 years. It has also been mentioned that the subsidiary is export oriented unit which is mainly automated and located in single building with less overheads. The A.O. has not indicated as to how the turnover could be a sound basis for comparison of remuneration. Even if it is so, there could be a case for examining the lesser remuneration paid in the case of subsidiary company. The remuneration of around ₹ 25 lakhs paid to three directors who were promoters of the company in 35 year old company does not seem to be excessive and thus the disallowance of ₹ 22,80,000/- is directed to deleted. - Decided in favour of assessee.
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2015 (6) TMI 796
Share transaction - short term capital gain or income from business - whether impugned shares were held by assessee as its investment and were taxable as short term capital gain on its transfer as held by CIT(A) - Held that:- The evidence on record have been relied upon by assessee for establishing that the shares were purchased on 30-08-2007 by M/s TCG Stock Broking Ltd. on assessee’s behalf, has not at all been controverted by the department. It is a simple case of purchase of shares by an individual through broker, who held the shares in its D-mat A/c till the transfer of the shares in D-mat account on the date when the assessee intended to sell the same. The broker was holding shares on behalf of assessee because consideration was paid by assessee through journal entry in the running a/c of assessee with broker. It is a normal share trading transaction in support of which all the ingredients regarding purchase and sales were fully established by the assessee. Merely because the shares were kept in the brokers code from 30-8-2007 till 26-12-2007, on which date the shares were transferred to assessee’s d-mat account with main broker, cannot be the basis for coming to the conclusion that the actual purchase took place on 26-12-2007 by assessee. In the books of account of sub-broker, the purchase was recorded in assessee’s account on 30-8-2007 and the shares were D-mated in assessee’s account by principal broker on 26-12-2007 from the sub-broker’s account clearly demonstrate that the assessee had purchased shares on 30-8-2007, which were held on assessee’s behalf by M/s TCG Stock Broking Ltd. The sole reason assigned by AO for coming to the conclusion that the shares were held as stock in trade was that the shares were transferred on the same date on which it was purchased. This finding is completely erroneous on the face of it in the back drop of evidence brought on record. We accordingly, confirm the order of CIT(A). - Decided against revenue.
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2015 (6) TMI 795
Unexplained cash deposits in the bank account - CIT(A) restricted addition - Held that:- The financial year in question is 2007-08 and the affidavits have been sworn by the debtors during 27-07-11 to 25-07-2011 i.e. after the assessment order, the names of these debtors were not given to the AO. Thus the affidavits are nothing but a make believe evidence and an afterthought. The debtors nowhere specified when the loans were taken and when repaid so as to draw any view about availability of cash for the alleged gift. Thus entire edifice of the order is based on unverified, vague and specious pleas and the relief given by the ld. CIT(A) at ₹ 10.00 lacs is without proper reasonings & justification. Unaccounted gift - Based on the arguments made by the ld. DR, we find that neither the remand report is available on the record not it finds place in the order of the ld. CIT(A). Similarly, the cash flow statement do not appear to have been filed before lower authorities. Therefore, the cash flow statement become a new piece of evidence which is not verified by lower authorities. The gift was made the assessee’s father and surprisingly debtors affidavits are filed. Therefore, it was desirable that father himself was properly examined as to details of years of lending money and receiving back so as to explain the availability of amount at the time of gift. If the rate of interest was 15% to 18%, it is quite likely that father’s income could have been taxable income in earlier years. The assessee was very selective in giving effective explanation and evidence before the AO despite adequate opportunities. In the absence contents of application for additional evidence, the remand report and looking at the vagueness in the affidavits, we are of the view that proper assessment can be framed only by setting aside the appeals back to the file of the AO to decide the same afresh after giving a reasonable opportunity of being heard to the assessee. The assessee shall cooperate and produce all the materials which is asked for by the AO. With these observations, both the appeals are set aside to the file of the AO to decide the same afresh in accordance with law. - Decided in favour of assessee and the Revenue for statistical purposes.
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2015 (6) TMI 794
Disallowance of the 'Provision for Leave Encashment' - Held that:- Issue is liable to be decided against the assessee following the decision of the Pune Bench of the Tribunal in the assessee's own case for earlier assessment years 2002-03 & 2003-04 .As the aforesaid precedents continue to hold the field, we hereby affirm the action of the lower authorities in disallowing assessee's claim for deduction on account of Provision for leave encashment amounting to ₹ 5,36,234/- - Decided against assessee. Disallowance of the 'Expenses claimed on account of the Portfolio Management Services (PMS) fees' - Held that:- Respectfully following the decision of the Tribunal in the case of KRA Holding and Trading Pvt. Ltd. (2013 (9) TMI 1013 - ITAT PUNE) we hold that the 'PMS' fees paid by the assessee is an allowable deduction from the capital gains - Decided against revenue. Computation of deduction available to the assessee u/s 80-IA of the Act with respect to the profits and gains of the Windmill Undertaking - adoption of the 'initial assessment year' - Held that:- Similar issue was considered by the Tribunal in the assessee's own case for assessment years 2004-05 to 2006-07 after following the judgement of the Hon'ble Madras High Court in the case of Velayudhaswamy Spinning Mills (P) Ltd. vs. ACIT, [2010 (3) TMI 860 - Madras High Court] upheld the plea of the assessee. - Decided in favour of assessee.
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2015 (6) TMI 793
Disallowance for unsecured loans under section 68 - CIT(A) restricted the additions to part - Held that:- CIT(A) actually represented loans and advances given by the assessee and that too in the earlier years and not in the year under consideration. He has contended that these amounts representing advances given thus cannot be added under section 68 of the Act. Although the learned D.R. has agreed in principle with this contention of the Learned Counsel for the Assessee, he has contended that this matter requires verification as the fact that the amounts in question represented advances given by the assessee was not specifically brought to the notice of the Assessing Officer by the assessee. Thus remit this issue to the file of the A.O. for deciding the same afresh - Decided in favour of assessee for statistical purposes. Disallowance of interest payment under section 40(a)(ia) - CIT(A) restricted the additions to part - Held that:- The claim of the assessee of having received declarations in Form 15G from all the payees of interest requires verification by the A.O. Since the Learned Counsel for the Assessee has no objection in this regard, we restore this issue to the file of A.O. for deciding the same afresh, after verifying the stand of the assessee in the light of decision of the Tribunal in the case of Vipin B. Mehta (2011 (5) TMI 503 - ITAT MUMBAI ).- Decided in favour of assessee for statistical purposes. Additions made under income from other sources - In the absence of any interest charged by the assessee on the loans and advances allegedly given for non-business purposes, interest attributable to such advances was added to the total income of the assessee as income from other sources - Held that:- Assessee has invited our attention to the details of such loans and advances as well as the details of interest received to point out that interest on loans given to G.Com Systems amounting to ₹ 9,24,273, L C. Ranka HUF amounting to ₹ 3,65,537, Vinod Ranka amounting to ₹ 11,50,414 and Bhanusa.com amounting to ₹ 11,73,192 was duly charged by the assessee and the same was also offered to tax as income. As regards the remaining loans and advances representing small amounts, he has submitted that the same were mainly given to the employees as well as for some other business purposes and therefore, the addition made on account of interest attributable to the said advances is not sustainable. Thus we restore this issue to the file of the A.O. for deciding the same afresh, after verifying the explanation of the assessee offered before the Tribunal. - Decided in favour of assessee for statistical purposes. Unaccounted sales - Held that:- Assessee has submitted that the relevant six debtors as well as one creditor namely Rajesh Chemical Company were belonging to the same group and a journal entry, therefore, was passed in the books of account squaring off the debit balances in the debtors account against the credit balance of Rajesh Chemical Company. As this entry passed by the assessee in the books of accounts squaring off the debit balances/against the credit balance pertaining to the same group was revenue neutral and there was no justification in adding the amount of ₹ 2,54,729 to the total income of the assessee treating the same as sales duly supported by the ledger account extracts of the concerned parties placed at page Nos. 26 to 32 of the paper book, we find that the explanation on this issue as offered by the Learned Counsel for the Assessee before us was not offered specifically in that manner before the A.O. and in the absence of the same, the A.O. had no occasion to verify the same from the books of accounts of the assessee as rightly pointed out by the learned D.R., thus restore this issue to the file of A.O. for deciding the same afresh - Decided in favour of assessee for statistical purposes. Disallowance of expenditure under section 69C - Held that:- As rightly contended by the learned D.R., the nature of expenses claimed by the assessee such as conveyance, petrol, entertainment, telephone etc., is such that the involvement of personal element in the expenses claimed by the assessee cannot be ruled out and some disallowance out of the said expenses for such personal element can justifiably be made. It would be fair and reasonable to disallow the expenses claimed by the assessee to the extent of ₹ 50,000 on account of involvement of personal element. - Decided partly in favour of assessee.
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Customs
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2015 (6) TMI 817
Conviction under Section 21(C) read with Section 23 read with Section 28 of NDPS Act - Held that:- Transferring the powder of all 9 packets into one polythene and then taking out two samples and sending one sample to CRCL causes serious prejudice to the appellant as it cannot be ascertained whether all the 9 packets were containing heroin or not. - appellant was also carrying a paper Ex.PW3/DA containing the details of the consigner and consignee according to which the parcel was to be consigned at USA and name of the consigner was shown as Pinto Deep C-33, Kalkaji, New Delhi-17 India. Admittedly no enquiry regarding Pinto Deep or the consignee was made by the prosecution. Moreover, as per the testimony of PW-3 Arvind Kumar the accused was carrying the photocopy of passport in the name of Pinto Deep and also one invoice in his hand. He had seen invoice wherein the address was mentioned and also the passport which was in the name of Pinto Deep. According to him, accused informed him that Pinto Deep was his boss who was not in Delhi. Admittedly, neither the invoice nor the copy of the passport in the name of Pinto Deep were seized nor placed on the judicial file. Moreover, no enquiry was made by the NCB officials as to who had handed over the cardboard box containing the narcotic drug to the appellant and where the same was to be sent. Burden to prove the case beyond reasonable doubt was upon the prosecution. The provisions of the Act and the punishment prescribed therein being indisputably stringent, the extent of burden to prove the foundational facts on the prosecution i.e., proved beyond reasonable doubt would be very onerous. A heightened scrutiny test would be necessary to be invoked. It is also a settled principle of criminal jurisprudence that more serious the offence, the stricter the degree of proof. - prosecution has failed to establish the case beyond reasonable doubt as such, accused is entitled to benefit of doubt. The impugned judgment cannot be sustained and is set aside - Decided in favour of appellant.
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2015 (6) TMI 816
Confiscation of goods - Enhancement of value of goods - DGFT Notification No. 65(RE-2010)/2009-2014 dated 04.08.2011 - Held that:- DGFT has not resorted to change of categorization of items, i.e. from the category of free export to category of restricted export , but as a sequel to earlier notification No.18, which fixed the floor price of US $ 50 per square meter, the present impugned Notification has been issued. Therefore, I do not find any illegality or irregularity in the impugned notification in order to interfere with the same. The reliance placed upon "M/s.Mira Commodities case and "M/s.Bimal Kumar Modi case" by the learned counsel for the petitioner, cannot be made applicable to the present case inamsuch as in the said decisions, it has been held that the DGFT has resorted to amend the import & export policy, which is not permissible under the provisions of FTDR Act, but in exercise of Section 5 of the FTDR Act, the Central Government is only empowered to formulate and announce the export and import policy. Therefore, when the DGFT Notification dated 04.08.2011 allowed free import of marble blocks/tiles provided the CIF value is US $ 60 and above per sq. mt., the petitioners were expected to declare the same, however, contrary to the same, they have declared below the US $ 60 and thereby, the authority has rightly confiscated the same and therefore, confiscation of the goods is justified. - Decided against Assessee.
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2015 (6) TMI 815
Challenge of detention order - Charges of carrying Fake Indian Currency Notes (FICN) - Prohibition under the Customs Act - Confiscation under Section 111 of the Customs Act - Unexplained delay in passing of detention order - Held that:- Firstly, we find merit in the submission of learned counsel for the petitioner that there was unexplained delay in passing of the detention order. The alleged seizure of FICN from the possession and custody of the petitioner took place on 20.05.2012. The apprehension of the respondent that the currency seized was counterfeit stood confirmed on 05.07.2012. A perusal of the GoD shows that investigation was completed on or before 21.08.2012 and the chargesheet was filed by the CBI. There is also merit in the petitioner's submission that there was no justification for passing the detention order on 12.12.2012 since the petitioner was already in custody in the CBI case; his two bail applications - one filed before the filing of the chargesheet and one thereafter, had been rejected and; no fresh bail application had been moved by the petitioner before the learned ACMM. Since the petitioner was already in JC, the respondent could not have arrived at its subjective satisfaction when the petitioner was likely to be released on bail, or that there was a possibility of the petitioner absconding and interfering in the investigation being conducted into the activities of the other members of the smuggling syndicate. The bail applications moved by the petitioner had been rejected by the Courts, and there was no material whatsoever to apprehend that he was likely to move a bail application or that there was imminent possibility of the prayer for bail being granted. The "imminent possibility" of the petitioner coming out on bail is merely the ipse dixit of the detaining authority unsupported by any material whatsoever. There was no cogent material before the detaining authority on the basis of which the detaining authority could be satisfied that the detenue was likely to be released on bail. The inference has to be drawn from the available material on record. In the absence of such material on record the mere ipse dixit of the detaining authority is not sufficient to sustain the order of detention. - Decided in favour of appellant.
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Corporate Laws
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2015 (6) TMI 814
Prohibition from taking new assignment or contract or launch a new scheme for six months - Cross examination of the person whose statement is recorded by SEBI - Violation of principal of natural justice - Held that:- Where a noticee seeks cross-examination of a person whose statement is recorded by SEBI, then, passing an order on the basis of the statement of that person without giving the noticee an opportunity to cross-examine that person, would be in violation of the principles of natural justice. In the present case, even if there was any doubt on part of SEBI as to whether the Appellant had in fact sought cross-examination of Mr. Devi Dutt, in our opinion, in view of the fact that the Appellant had sought cross-examination of all persons whose statements were taken on record including the statement of Branch Manager of BHOB, Ahmedabad Branch, it is evident that Appellant had sought cross-examination of Mr. Devi Dutt. Since statement of Mr. Devi Dutt played a dominant role in passing the impugned order, it would not be proper to proceed with hearing of the Appeal on merits without permitting the Appellant to cross-examine Mr. Devi Dutt. - Order of SEBI dated 14/3/2014 is quashed and set aside and the matter is restored to the file of SEBI for passing fresh order on merits after giving an opportunity to the Appellant to cross-examine.
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2015 (6) TMI 813
Voluntarily winding up - Application by official liquidator u/s 543(1) of the Companies Act, 1956 - Prayer for examination in the conduct of ex-directors of the company - Direction to handover the movable & immovable properties along with books of account - Held that:- Reference in this connection may be made to the judgment of the Supreme Court in Official Liquidator v. Raghawa Desikachar [1974 (8) TMI 73 - SUPREME COURT OF INDIA]. The Supreme Court in this case held that the application filed for the purpose should contain the detailed narration of the specific acts of commission and omission on the part of each director quantifying the loss to the company arising therefrom. The burden of proving misfeasance or non-misfeasance rests on the official liquidator. In P.K. Nedungadi v. Malayalee Bank Ltd. (in liquidation) [1971 (2) TMI 74 - SUPREME COURT OF INDIA][AIR 1971 SC 829 also it was held by the Supreme Court that if the money or the property of the company has been misapplied or there has been misfeasance or breach of trust in relation to the company by a director, the court after examining the matter, can compel an officer or other persons mentioned in section 543 to repay or restore the property with interest at such rate as the court may think fit or to contribute such sums to the assets of the company by way of compensation in respect of the misapplication, retainer, misfeasance or breach of trust, as it thinks fit. The allegation of misfeasance and misapplication has to be specifically pleaded with material particulars against each of the directors/erstwhile directors of the company. It is necessary that specific acts of commission or omission and/or negligence on the part of each director are pointed out and it is shown that the loss suffered by the company was result of such omission, commission or negligence. It is only then that the loss can possibly be quantified as the order of recovery of such loss shall have to be directed against such or any of the directors. In the circumstances, therefore, the petitioner cannot be said to have proved the ingredients of section 543 of the Companies Act, necessary for holding the respondents-erstwhile directors of the company guilty of misfeasance, misapplication, breach of trust or retention of the money of the company. - Application dismissed.
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Service Tax
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2015 (6) TMI 829
Waiver of pre deposit - Sale purchase of SIM cards - Held that:- Decisions in the case of Daya Shankar Kailash Chand vs. CCE & ST, Lucknow reported in [2013 (6) TMI 340 - CESTAT NEW DELHI], CCE, Meerut vs. Moradabad Gas Service reported in [2014 (1) TMI 199 - CESTAT NEW DELHI], M/s Anand Sales Corporation and others vs. CCE, Kanpur, Allahabad and Lucknow reported in [2014 (2) TMI 621-CESTAT NEW DELHI] and Swastik Traders vs. CST, Lucknow reported in [2013 (12) TMI 849 CESTAT NEW DELHI] followed - Decided in favour of assessee.
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2015 (6) TMI 828
Denial of refund claim - original documents of refund claim not submitted - concerned authority never have them opportunity to produce sample documents - Held that:- refund claim should not be rejected in the manner it has been done in this case - Matter remanded back with the directions that appellant to produce original documents for a period any two months for the period in dispute. - Authorities to process refund subject to direction given to assessee.
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2015 (6) TMI 827
Refund under Notification No. 41/07-ST or No. 17/09-ST - Certain services notified on the date of claiming of refund and not on the date of export - Procedural infractions in respect of export documents - Held that:- This Tribunal in the case of East India Minerals Ltd. [2012 (8) TMI 22 - CESTAT, KOLKATA ] under somewhat identical circumstances, allowed refund for export related service under Notification no. 41/07-ST, since on the date of claim, the service was duly notified for this purpose,irrespective of the period of export. As regards refund of Terminal Handling charges (THC) on the ground that invoice was raised by shipping line instead of port operator and the service provider being registered under a different service category or no proof regarding authorization from port authorities, I find that these issues stand concluded in favour of the appellant vide Board Circular dt. 12.3.09 as well as various case laws as referred to and relied upon by the Appellant, especially in the case of Riddhi Siddhi Gluco Biols Ltd. [2011 (8) TMI 187 - CESTAT, AHMEDABAD] and Fibre Bond Industries [2014 (3) TMI 372 - CESTAT MUMBAI]. As such, I hold that appellant is entitled to refund claim on THC services. As regards refund claim on GTA services, It is rightly submitted by the Ld. Counsel for the Appellant, that it is almost impossible to mention export invoice details on incoming transportation documents, since export despatch is yet to take place, and this is only inward movement of containers to be used for exports, I find that container number mentioned on LR/transport documents tallies with export documents (running page 48 of appeal paper book) thereby proper co-relation stands established. Thus, the refund claim for FTA service is held to be allowable. I further find that in terms of Board Circular No. 112/6/2009-ST dt. 12.3.09, procedural infractions in respect of export documents require to be ignored while granting refund. Once it is not in dispute that Services stand qualified for refund purpose, on the date of claim, and Service Tax was actually paid on specified service pertaining to export activity, in terms of the broad scheme of refund under Notification No. 41/07-ST, refund must be allowed and paid to the exporter. - Decided in favour of appellant.
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2015 (6) TMI 826
CENVAT Credit - Insurance Services, Residential Telephone Connections and Cable Operator Services - Held that:- First show-cause notice is time barred in part, for the period prior to 30.9.2007, as the return for half year ended 30.9.2007 was still not due. - So far insurance service availed for insuring business risk (insurance to safeguard tax for infidelity and forging of securities), I hold the same to be allowable input service. - So far input service - Telephone connection is concerned, at residence of senior officials, the same is held to be essential input for the appellant. The appellant corporation have huge business risk, and have to be vigilant at all times. - As regards the cable operator's services, I hold the same as allowable input service, as the same is utilized in various offices of the appellant for being up-dated with the stock and money market. - Decided in favour of assessee.
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2015 (6) TMI 825
Waiver of pre deposit - Construction of Complex Services - Circular 108/2/2009-ST dated 29.01.2009 - Held that:- construction and sale of individual residential flat with undivided share of land at a time or under separate agreements for equitable share of land or for construction of flat would not be covered by the service of Construction of Residential Complex prior to 01.07.2010. Moreover the Board Circulars issued during the relevant time as submitted by the appellants are also in favour of the appellants. Besides the above we also take note of the fact that appellant has paid an amount of ₹ 47,73,858/- before issue of show-cause notice and if the calculation adopted by the appellant is accepted according to the appellant entire amount has been paid. In view of the fact that appellants appear to have a prima facie case in their favour and also in view of the decisions of this Tribunal considered by us above, we consider that appellant has made a prima facie case for complete waiver. Accordingly the requirement of pre-deposit is waived and stay against recovery is granted. - Stay granted.
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2015 (6) TMI 824
Demand of service tax - Construction services vs Repair and maintenance service - Whether department can be travel beyond the show cause notice - Held that:- We find that the initially the show cause notice was issued to the appellant to demand service tax under the category of construction services which was demanded and demand of service tax was confirmed under the said category against the appellant which appellant has not disputed. Under section 84 of the Act, learned Commissioner revised the show cause notice to change the category of the service provided by the appellant which is not permissible at this stage. Same view has been held by this Tribunal in the case of Brij Mohan Surinder Kumar [2011 (6) TMI 566 - CESTAT, NEW DELHI]. We hold that learned Commissioner has travelled beyond the scope of show cause notice by revising show cause notice which is not permissible in law. Same view has been taken by Apex Court in the case of CC, Mumbai vs. Toyo Engineering India Ltd. [2006 (8) TMI 184 - SUPREME COURT OF INDIA]. - Decided in favour of assessee.
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Central Excise
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2015 (6) TMI 823
Manufacture of chimneys - component of the boilers for non-conventional energy system - Exemption under Notification No.6/2002-CE dated 01.03.2002 - Held that:- Sl.No.237 of the table to the Notification 6/2002-CE covers "non-conventional energy devices / systems specified in list 9." Sl.No.16 of the list 9 covers "agricultural, forestry, agro industrial, industrial, municipal and urban waste conversion devise producing energy". There is no dispute that the chimneys manufactured by the appellant are meant for biomass burning boilers being manufactured by M/s. ISGEC John Thompson who in turn, supply such broilers to the end-users for production of energy from waste. The Commissioner (Appeals)'s view is that since what is covered by Sl.No.237 of Notification No.6/2002-CE is the non-conventional energy devices/ systems and since there is very thin distinction between part and device, as the device is thing made for a particular purpose and since chimney being an integral part of the biomass fired broiler can be treated as a device for non-conventional energy devices/systems, the exemption under this Notification would be available to the chimneys. - device is a thing made for a particular purpose and as such the chimney meant for biomass fired boiler has to be treated as non-conventional energy device. - No merit in appeal - Decided against Revenue.
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2015 (6) TMI 822
Waiver of pre deposit - Restoration of appeal - Appeal dismissed for non prosecution - Held that:- During the period prior to amendment of the tariff in 2007 in terms of the Apex Court judgement in the case of Metelex India Pvt. Ltd vs. CCE Noida (2004 (2) TMI 387 - SUPREME COURT OF INDIA), the process undertaken by the appellant did not amount to manufacture. If this is so, clearance of laminated polyster fills would amount to clearances of the cenvat credit availed inputs as such, which is permitted in terms of the cenvat credit Rule 2002/2004 provided an amount equal to the cenvat credit involved is paid, while in this case there is no dispute that the amount paid by the appellant on the clearances on laminated polyster Films is much more than the cenvat credit availed. In view of this and also following the judgements of the Tribunal mentioned above, we hold that the impugned order is not sustainable and as such the appellant have strong prima facie case in their favour. The requirement of pre-deposit of the cenvat credit demand, interest thereon and penalty is therefore waived of for hearing of the appeal and its recovery is stayed. - Stay granted.
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2015 (6) TMI 821
Denial of CENVAT Credit - impugned goods were used in immovable structures such as furnace - Held that:- When the plates, sheets etc. are used in maintenance and repair work, the normal conclusion is that sheets, plates etc. are cut into correct size and fitted into the furnace etc. and therefore it can be said that they have attained the character of components, parts etc. - impugned goods were used in conjunction with certain capital goods/machinery, they become a part of the machinery as they were used for upkeep of the machinery. Therefore I agree with this view that CENVAT credit is admissible - Decided against Revenue.
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2015 (6) TMI 820
Denial of CENVAT Credit - contravention of Rule 2(l) of Cenvat Credit Rules - Inputs used in manufacturing activity - Held that:- Show-cause notice is vague as it nowhere gives the breakup of the proposed demand nor it discusses any particular reasons as to why the CENVAT Credit is not allowable in respect of the three services. The break up of each is nowhere given. Thus, I find that of the whole proceeding is vitiated for want of a valid show-cause notice. The service of a valid show-cause notice, containing the, exact case and/or gist of the allegation, the appellant has to meet, is a sin qua non for the adjudicating authority to assume jurisdiction for adjudication. Thus, in the facts and circumstances, I hold that the whole proceedings is vitiated for want of a valid show-cause notice, and I set aside the impugned order - Decided in favour of assessee.
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2015 (6) TMI 819
Penalty for non maintenance of records - manufacturer of cigarettes works under physical control - Applicability of Circular No. 224/37/2005-CX.6, dated 24-12-2008 - Held that:- Appellants are required to file monthly returns as specified by the notification but no notification has been issued to maintain the records as desired by the lower authorities in the impugned order. Moreover, I have gone through the earlier Rules also i.e. Central Excise Rules, 1944. As per these Rules, Rule 94 requires that appellants are required to maintain such records but there is no provision of maintaining such records as cited by the lower authorities in the impugned order under new Rules. Therefore I hold that penalties are not imposable on the appellants and impugned orders are set aside - Decided in favour of assessee.
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2015 (6) TMI 818
Waiver of pre deposit - manufacturing of RCC pipes at construction site or not - Benefit of Notification No.1/2011-CE(NT) dated 17.2.2011 - Held that:- pipes in question were manufactured by the appellant in their factory and not at the construction site, in which case, the benefit of notification would not be available to them. We are of the prima facie of the view that inasmuch as the pipes are mainly manufactured in the factory the decision of the Delhi High Court relied upon by the appellant would not be applicable - letter instead of helping the appellant acts adverse to their interest. This letter clearly shows that manufacturing activity was not being done at the construction site but at a separate khata Number and separate site was taken for such fabrication which has nothing but appellant factory site. Such approval granted by the appellant's customer to the appellant will not change the scenario vis-a-vis their excise liability - prima facie case is against the assessee - Amount to be deposited as directed by the tribunal is not unreasonable.
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