TMI Tax Updates - e-Newsletter
July 18, 2014
Case Laws in this Newsletter:
Income Tax
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
Amortization of expenses u/s 35DDA - Amount paid to employees as severance pay there is no justification for denying the deduction to the Assessee Company and granting the same as per the provisions of section 35DDA - HC
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Income Tax:
Reassessment order u/s 147 r.w section 148 of the Act - The assessing officer is not required to consider the objections in detail - HC
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Income Tax:
Section 44BB is applicable only with respect to Royalty and FTS but since consumables were supplied along with P&M given on hire, therefore, the receipts were taxable u/s 44BB - AT
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Income Tax:
Addition u/s 68 of the Act - AO does not have power to examine the source of the source and on the facts of the case, there is no merit in the Revenues grounds at all - AT
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Income Tax:
Revised return of loss/unabsorbed depreciation even if the assessee has not filed revised return, AO is bound to allow carried forward loss or depreciation as per the record - AT
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Service Tax:
Violation of principle of natural justice - Relied upon documents by Revenue in the order-in-original were not provided to appellants - matter remanded back - AT
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Service Tax:
Waiver of Penalty - renting of immovable property service - there was a lot of confusion / litigation on its constitutional validity and the matter has not yet attained finality - penalty waived - AT
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Service Tax:
Reverse charge mechanism - Section 66A of the Finance Act 1994 - services received and consumed outside India - services for obtaining Foreign Currency Term Loan - activity is taxable - AT
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Service Tax:
Suo moto adjustment of excess service tax paid for short paid service tax of subsequent year - Bar of limitation -self adjustment of excess tax allowed - AT
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Service Tax:
Scope of the Banking and Financial services - activity of managing funds on its own account or on behalf of state government - nature of amount reimbursed by the state government - No service tax - AT
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Central Excise:
Duty demand - Shortage of stock - Clandestine removal of goods - information received from the Income tax Department cannot be made the sole basis for confirmation of demand under the Central Excise - AT
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Central Excise:
CENVAT credit - inputs were being sent to job worker - job worker was paying duty on the final product - cenvat credit availed by the assessee cannot be denied - AT
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Central Excise:
Clandestine removal of goods - Goods removed for export did not reach destination - Forging of signature of customs officer surfaced and that was not contradicted by appellant. Such evidence proves malafide of appellant - AT
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Central Excise:
Duty demand on returned goods - goods scrapped after return as rejected goods - show-cause notice simply stated that rejected goods were scrapped which shows that officers did not even verify the records maintained - stay granted - AT
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Central Excise:
Refund claim of unutilized credit - clearances made to advance authorization holders - eemed export versus physical export - prima facie refund to be allowed - AT
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VAT:
Rate of tax (TDS) on works contract - respondents collected tax at source from the monthly work bills due to the petitioner at the rate of 2.8 per cent - respondents are directed to refund the excess amount to the petitioner - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2014 (7) TMI 626
Allowability of depreciation as capital expenses - Entire cost of capital expenditure already allowed as deduction u/s 11 of the Act Revenue was of the view that double deduction is not allowable and exemption is allowed to the assessee in respect of investment in capital assets u/s 11 by holding that the same is application of income for charitable purposes, allowing depreciation on those assets amounts to double deduction - Held that:- The stand of the Revenue is not correct because allowing exemption u/s 11 is not equal to allowing deduction - Allowing exemption means that the income is not liable to tax but the income remains the same and it does not get reduced, although such income is not taxable because of the operation of section 11(1) of the Act - exemption is allowed at the time of acquisition of assets and depreciation is allowed at the time of user of assets, it does not amount to double deduction Relying upon CIT vs. Society of Sisters of St. Anne [1983 (8) TMI 44 - KARNATAKA High Court] - income of the assessee trust has to be computed on commercial principle after allowing all deductions including depreciation thus, there is no reason to interfere in the order of the CIT(A) Decided against Revenue.
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2014 (7) TMI 608
Validity of warrant of authorization of search and seizure Retention of articles u/s 132(9A) of the Act Held that:- Search and seizure carried out in that case was on 16th October, 2001, after the introduction of Chapter XIV-B in respect of block search and seizure with effect from 1st June, 2001 - the limited challenge of the assessee succeeds revenue is directed to return the seized articles as detailed in the Panchanama dated 21st August, 1998 being annexure E to the writ petition to the assessee Decided in favour of Assessee.
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2014 (7) TMI 607
Revision u/s 264(3) of the Act - Adjustment of income u/s 143(1)(a) of the Act Demand of additional tax and interest Held that:- One of the conditions for extending the benefit under the Scheme is that a revision, appeal or proceedings must be pending before the Authorities or Tribunal, created under the Act, or High Court or Supreme Court - that condition stood fulfilled, on account of the pendency of the revision - the extension of benefit is independent of merits, or otherwise of the claims in the appeals, revision or other proceedings - once it emerges that an appeal, revision or other proceedings were pending by the time the application was filed, it hardly makes any difference, if such proceedings are terminated by the concerned authority, unmindful of the pendency of the application - the approach of the revenue is totally untenable, apart from being opposed to the letter and spirit of the Scheme - the mere fact that a revision, which was pending before him was dismissed, cannot constitute the basis to deny the relief under the Scheme Decided in favour of Assessee.
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2014 (7) TMI 606
Amortization of expenses u/s 35DDA of the Act - Amount paid to employees as severance pay Held that:- The Tribunal has rightly held that the Assessee would be entitled to the deduction in relation to severance pay though the assessee would not be entitled to the deduction u/s 37(1) of the Act but u/s 35DDA - the deduction claimed by the Assessee will have to be amortized u/s 35DDA and only 1/5th of the expenditure was allowable in the current AYs and the Assessee would be entitled to deduction of the amount in each of the four subsequent AYs as well - it is only on the ground that the manufacturing activity of the Assessee had ceased that the AO disallowed the deduction - there is no justification for denying the deduction to the Assessee Company and granting the same as per the provisions of section 35DDA of the Act - the order of the Tribunal cannot be faulted on any ground thus, no substantial question of law arises for consideration Decided against Revenue.
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2014 (7) TMI 605
Reassessment order u/s 147 r.w section 148 of the Act - Whether an order passed by the AO on the objections of an assessee can be assailed before the Court under Article 226 of the Constitution of India Held that:- A challenge made to an order passed on the objections of the assessee would in effect is a challenge made to a notice u/s 148 of the Act - Such an order passed by the AO is only at the stage of process of determination and not a determination by itself - revenue cannot have a legal right as there is no legal injury suffered by them at that stage - the jurisdiction vested with High Court under Article 226 of the Constitution of India can be exercised in a given case - the restriction is self-imposed and nothing else - in a case, where no adjudication is required on facts, then certainly jurisdiction of the Court under Article 226 of the Constitution of India can very well be invoked - Therefore, to such a limited extent, we are inclined to hold that the jurisdiction of this Court under Article 226 of the Constitution of India can be exercised. The decision in Commissioner of Income Tax and others Vs. Chhabil Dass Agarwal [2013 (8) TMI 458 - SUPREME COURT] followed - challenge was made to the correctness or otherwise and the notices u/s 148 of the Act, re-assessment orders passed and the consequential demand notices - neither has the assessee described the available alternate remedy under the Act as ineffectual and non-efficacious while invoking the writ jurisdiction of the High Court nor has the High Court ascribed cogent and satisfactory reasons to have exercised its jurisdiction - the Writ Court ought not to have entertained the Writ Petition filed by the assessee, wherein he has only questioned the correctness or otherwise of the notices issued u/s 148 of the Act, the re-assessment orders passed and the consequential demand notices issued - where an adjudicatory process is involved on merits, then the only remedy open to an assessee is to go through the procedure provided under the enactment. If an income chargeable to tax has been under assessed or such income has been assessed at too low a rate or such income has been made the subject of excessive relief under this Act or excessive loss or depreciation allowance or any other allowance under this Act has been computed or where a person is found to have any asset (including financial interest in any entity) located outside India, having deemed to be the cases of escaped assessment, it would come under the purview of Section 147 - Thus, the provision would make it clear that the power of the assessing officer is rather wide. The legislative intent is to allow the AO to go through the process of assessment - Even under Section 147 of the Act, a Court of law cannot presume a lack of jurisdiction, when a fact in issue requires adjudication - It has to be exercised in terms of Sections 139, 143(2) and 143(3) - an order passed on the objections of the assessee over adjudicating facts is not open to challenge by way of filing a writ petition - the order passed on a consideration of the objections raised cannot be termed as the order having civil consequences - The assessing officer is not required to consider the objections in detail - When u/s 147 the AO can even assess any other income chargeable to tax, which has escaped assessment, which comes to his notice subsequently during the course of the proceeding, the power being wide, it cannot be challenged on the ground of improper or inadequate consideration of objections - the order passed on the objections raised by the assessee would not prevent the AO from exercising his power on merits while passing the assessment order Decided against the assessee.
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2014 (7) TMI 604
Relevant facts properly dealt by Tribunal or not Minimal Tax impact - Held that:- The Tribunal might have felt that the discussion undertaken by it, with reference to the appeal preferred by the assessee would hold good for the appeal preferred by the department - If any of the claims are covered by the discussion undertaken or findings recorded in the connected appeal, an indication to that effect ought to have been given - the Tribunal is supposed to deal with the relevant facts - the conclusions arrived at by a judicial forum, may be, the furnishing of reasons in support of its conclusions would make them respectable - the parties to the proceedings would know as to what weighed with that the forum and the appellate forum would be in a position to read the mind of the adjudicating agency. The nature of disposal given by the Tribunal to the appeal preferred by the department was totally unsatisfactory - remand of the matter cannot be paved to the Tribunal since the impact of tax said to be minimal - Decided against Revenue.
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2014 (7) TMI 603
Default in payment of advance tax Waiver of interest u/s 234-A, 234-B and 234-C - Kar Vivad Samadhan Scheme, 1998 (KVSS) Whether the Commissioner had the power to waive interest or whether the petitioners have made out a case for such waiver, is totally outside the purview of the Scheme Held that:- The circumstances, under which the benefits under the Scheme can be extended, were explained by the Honble Supreme Court in DR. MRS. RENUKA DATLA AND OTHERS v. COMMISSIONER OF INOME TAX AND ANOTHER [2002 (12) TMI 6 - SUPREME Court] - the revisions filed by the assessee were pending by the time the Scheme was made operational - reasons mentioned by the revenue in the orders passed by him refusing to extend the benefit under the Scheme are outside the scope of the Scheme thus, the revenue is directed to extend the benefit to the assessee after ensuring due compliance, as to payment of the stipulated amount Decided in favour of Assessee.
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2014 (7) TMI 602
Unexplained stock - Excess stock found during survey Held that:- The claim of the assessee that excess gold and silver found at the time of survey represented the gold and silver received from the customers for remaking/remodelling was not correct - The claim of the assessee is that the goods inventorized at the time of survey also include the goods which were not owned by the assessee but were received by the assessee from its customers for remodeling - AO has not accepted the contention of the assessee on the ground that at the time of the survey, it was stated that the goods received from customers were handed over to the karigars immediately i.e. such goods were not present in the premises of the assessee and consequently not included in the inventory prepared at the time of the survey - copy of the statement which was recorded at the time of the survey was not produced to rebut the contention of the AO - Copy of inventory prepared at the time of survey was also not produced before us by the assessee to point out therefrom that such inventory included the goods received from customers for remaking or remodeling CIT(A) pointed out that in the affidavits of the karigars it is not stated that they carried out work of repairing/remodelling at the premises of the assessee and kept such goods at the premises of the assessee - no material was brought to controvert the point highlighted by the CIT(A) - in absence of any material, there was no reason to interfere with the orders Decided against Revenue. Disallowance of Labour payment Held that:- The assessee has shown receipt for labour charges which was accepted by the AO as income of the assessee - to hold that no labour charge expenses were incurred for earning the labour charges income is not justified without cogent material CIT(A) allowed labour charge expenses at the rate of 50% of the labour charge receipt which is also without any basis - In absence of any specific defect being pointed out in the vouchers of labour charge expenses, the disallowance made by the CIT(A) is unsustainable thus, the disallowance under the head labour charge expenses is set aside Decided in favour of Assessee. Disallowance u/s 40(a)(ia) of the Act - Hallmark checking expenses - Held that:- CIT(A) has found that the aggregate of the payments made to Gujarat Board Centre exceeds ₹ 50,000/- during the year and therefore, the assessee was liable to deduct tax at source from payment made to Gujarat Board Centre - assessee could not controvert the finding of the CIT(A) - no infirmity in the order of the CIT(A) in confirming disallowance paid under the head hallmark checking expenses from out of the total expenditure Decided against Assessee. Deletion of unaccounted income Held that:- The assessee was asked to furnish details of stocks as per books of account - The documents contained therein reveal that the opening stock of gold available assessee sold gold weighing 4081.660 gms from 1/4/2007 up to the date of survey - the stock of gold available with the assessee out of the earlier stock of gold on the date of survey was 12,620.201 gms. - After considering the purchase of gold weighing 6712.337gms the AO has worked out the gold available with the appellant on the date of survey as 15,250.878 gms by taking the stock of gold available with the assessee out of the old gold at 538.541 gms. - Revenue supported the order of the AO whereas the assessee supported the order of the CIT(A) - No material has been brought by the Revenue to rebut the finding of the CIT(A) there was no reason to interfere with the order of the CIT(A) Decided against Revenue.
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2014 (7) TMI 601
Royalty u/s 9(1)(vi) and 9(1)(vii) of the Act - Fees for technical services Application of section 44BB of the Act - Invocation of section 44DA of the Act 25% profit attributable to PE against 10% - Held that:- There were different composite contracts entered into between assessee and Indian companies and the assessing officer had bifurcated the contract receipts between service fee, rental income and sale of equipment - all the sections relating to royalty/FTS operate in different fields and that is the reason for insertion of proviso to sections 44BB/44DA/115A - Where the assessee was imparting services which entitled it to royalty or FTS simpliciter then the same continues to be assessed u/s 9(1)(vi)/(vii) read with section 115A but where the assessee is imparting services in relation to oil exploration the Royalty/ FTS would be taxable u/s 44BB - it cannot be held that insertion of section 44DA to proviso to section 44BB is to be considered as only clarificatory in nature and in order to make all the provisions relating to royalty/FTS workable, harmonious construction was to be placed. Relying upon CIT v. Hindustan Bulk Carrier [2002 (12) TMI 10 - SUPREME Court] revenues contention is that section 44DA inserted by the Finance Act, 2010 w.e.f. 1-4-2011 in section 44BB is retrospective and, therefore, royalty and fees for technical service should be taxed u/s 44DA and not u/s 44BB - the amendment cannot be held to be retrospective particularly because it brings substantial change in the taxability of assessee - an amendment to the taxing statute if results in higher tax burden on assessee then it is prospective in nature and not retrospective - the contentions cannot be accepted - income arising from letting out equipment, used in connection with the exploration/ prospecting/ extraction of mineral oil taxed u/s 9(1)(vi) by cannot be accepted in view of explanation (iv-a), the income is to be assessed u/s 44BB Decided in favour of Assessee. Income from sale of goods AO taxed the revenue receipts by applying a presumptive profit rate of 25% in gross revenues - Held that:- The assessee is a Cayman Island company with which there is no DTAA - the provisions of Income-tax Act are applicable and since the consumables were provided in connection with prospecting for extraction or production of mineral oil, it comes within the ambit of providing services, therefore, the receipts were taxable u/s 44BB - section 44BB is applicable only with respect to Royalty and FTS but since consumables were supplied along with P&M given on hire, therefore, the receipts were taxable u/s 44BB Decided in favour of Assessee. Income from offshore sales Held that:- The assessee had not offered any revenue from the contracts entered with Hindustan Oil Exploration Company Ltd. (HOEC) and ONGC - assessee is a Cayman Island company with which India does not have a tax treaty - the taxability of its income is to be determined as per the provisions of the Income-tax Act - if in connection with the contract no operations were carried out in India and the sale concluded outside India then no profit accruing to the non-resident assessee could be taxed in India - the right to property in goods in case of CIF contract passes at a place where the documents are delivered including the bill of lading. The bill of lading as per section 2(4) is a document of title of goods entitling the possession of the documents to transfer or receive goods thereby representative. Under both the contracts with HOEC and ONGC the documents are delivered in India and therefore the right to property in goods has passed in India as the sale got concluded in India - goods were to be supplied in India and thereafter payment was to be made - ONGC had right to rejection of the goods if the goods supplied were not in accordance with the specification and other conditions stated in the order - applying the test of preponderance as laid down in Skoda Export Versus Additional Commissioner Of Income-Tax, AP [1982 (11) TMI 33 - ANDHRA PRADESH High Court] - both the parties intended for transfer of title in goods in India - title to goods passed in India in respect of contracts with HOEC and ONGC and income from sale has accrued or arisen in India - section 44BB deals only with royalty and FTS and not sales - The profit arises out of sales activity of non-residents has to be taxed under normal provisions of income-tax. The next issue is whether entire profits arising out of sales are to be attributed or only to the extent it has nexus with the operations carried out in India in connection with the sale - Section 5(2) which deals with the scope of total income of a non-resident is relevant - the total income of a non-resident includes all income from what-ever source derived which is received or deemed to be received in India in such year by or on behalf of such person or accrues or arises or is deemed to accrue or arise to him in India during such year - receipt of income refers to the first occasion when the recipient got the money under his own control thus, the matter is remitted back to the AO for attributing income out of the two contracts to the extent of operations relating to sales carried out in India Decided partly in favour of Assessee. Levy of interest u/s 234B of the Act Held that:- The AO is directed not to charge interest u/s 234B in respect of all contracts entered into by the assessee with various organizations in India except with respect to the contracts entered into with HOEC and ONGC - as far as income taxable u/s 44BB in respect of various contracts are concerned, the assessee itself has accepted the liability from the very beginning - it cannot be inferred that assessee would have made any representation which would have influenced the deductor companies for not deducting the tax - as far as contract with HOEC and ONGC are concerned, income arose in India thus, Following DIT-I, International Taxation Versus Alcatel Lucent USA, Inc., Alcatel Lucent World Services Inc. [2013 (11) TMI 734 - DELHI HIGH COURT] the interest u/s 234B is leviable Decided partly in favour of Assessee.
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2014 (7) TMI 600
Addition u/s 68 of the Act - Genuineness of investment Held that:- There was no merit in the Revenues grounds it could not be understood as to how the Revenue is contesting the issue, when Shri Chamundeswar Nath confirmed the amount as invested by him and also furnished the evidence with reference to his bank accounts and returns filed by him - all the four investors are assessees on record, and there is no dispute with reference to confirmations filed by them, as far as share application money receipts are concerned - If the AO has any doubt about the loans obtained by Shri Chamundeswar Nath, it is for the AO who is assessing the person to examine the credits AO does not have power to examine the source of the source and on the facts of the case, there is no merit in the Revenues grounds at all Decided against Revenue.
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2014 (7) TMI 599
Mistake in considering the amount by CIT(A) Held that:- There was no reason to interfere with the orders of the CIT(A) - there were two remand reports from the AO which clearly indicates that most of the credits were accepted by the AO - he has used his own discretion only with reference to unexplained credits in ICICI Bank whereas the credits to an extent in the bank account of HDFC were accepted by the AO on the basis of which CIT(A) gave relief - there should not be any grievance on the amounts, which are considered as addition out of the deposits of HDFC Bank. With reference to credits in ICICI Bank, apart from transfer of funds from one account to another, CIT(A) used his discretion only with reference to ₹ 50,000/- credited by way of transfer from assessees brother account and ₹ 2,50,000/- by way of loan obtained from Mr. M. Neeraja Reddy who is an assessee - CIT(A) is justifiable on the facts on record thus, there is no reason to consider the Revenue objections - there seems to be non-application of mind on the part of the authorities in preferring second appeal Decided against Revenue.
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2014 (7) TMI 598
Revised return of loss/unabsorbed depreciation Held that:- The provisions of S.139(5) make it clear that a return can be revised only if such return is furnished u/s 139(1) or in pursuance of a notice u/s 142(1), and the omission warranting the filing of the revised return must be bona fide inadvertence or mistake on the part of the assessee, and such revised return should be filed within one year from the end of the assessment year or before completion of the assessment - the assessee has filed the original return u/s 139(1) and the revised return was filed within one year from the end of the relevant assessment year - the claim of the assessee for set off of unabsorbed depreciation of AY 2007- 08 made in the revised return, omission to make claim in the original return appears to be a bona fide mistake on the part of the assessee, more so, since no material to the contrary has been brought on record by the AO - even if the assessee has not filed revised return, AO is bound to allow carried forward loss or depreciation as per the record - CIT(A) was right in directing the AO to accept the revised return and to allow set off of unabsorbed depreciation of AY 2007-08, after due verification thus, there was no infirmity in the order of the CIT(A) Decided against Revenue. Disallowance of compensation for crop loss Held that:- There were negotiations with the farmers for the amount of compensation to be paid to continue the running of the factory by the assessee, the payment was made on 28.2.2008 - the liability to pay the compensation has crystalised only during the period relevant to the year even though the liability related to the earlier year as well - CIT(A) was justified in directing the AO to allow the entire amount of compensation paid in the year thus, the order of the CIT(A) is upheld Decided against Revenue.
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2014 (7) TMI 597
Order u/s 201(1) and 201(1A) of the Act - Short deduction of TDS on earth work and labour payments Held that:- Prior to the survey operations under S.133A with respect to the TDS deductions that took place on 24.3.2008 - relevant assessment orders placed on record do indicate that AO examined the payments in detail and accepted the additional income offered on these payments - Had the payments been made to sub-contractors, the AO certainly would have invoked provisions of S.40a(ia) and not S.37(1) in the scrutiny proceedings - the payments to labour for earth work were directly made by the assessee and there are no sub-contractors for the labour, and books are maintained to monitor the man hours put in by the labour, it is neither fair nor proper for the Revenue authorities to arrive at a contrary conclusion by imputing the involvement of sub-contractors and thereby invoking the provisions of S.201(1) and S.201(1A), so as to raise demands on account of non-compliance with the TDS provisions in relation to payments thus, the orders of the CIT(A) is set aside and the AO is directed to delete the demands raised u/s 201(1) and S.201(1A) in relation to payments made by the assessee towards labour/earth works Decided in favour of Assessee. CIT(A) observed that there is nothing on record to suggest that the transactions are genuine hire purchase transactions, upheld the view taken by the AO the observation of the CIT(A) is contrary to the claim of the assessee as to the nature of the transactions, being of hire purchase transactions thus, the matter is remitted back to the AO for re-consideration Decided in favour of Assessee.
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2014 (7) TMI 596
Restriction u/s 14A r.w. Rule 8D of the Rules Held that:- The assessee has made fresh investments in two companies and he has received the dividend from a single company the decision in Maxopp Investment Ltd Vs. CIT [2011 (11) TMI 267 - Delhi High Court] followed - the AO has not examined the claim made by the assessee in proper perspective - the judicial view that is consistently taken by various forum is that the AO can invoke the provisions of sec. 14A only if he, having regard to the accounts of the assessee, is not satisfied with the claim put forth by the assessee - the AO has not shown that he was not satisfied with the claim of the assessee by having regard to the accounts maintained by the assessee - the view taken by CIT(A) is a reasonable one and does not call for any interference Decided against Revenue.
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2014 (7) TMI 595
Rectification of order u/s 154 of the Act Error apparent on record - Receipt from Serum institute taxable in India or not Article 7 Indo-UK DTAA Held that:- The proceedings u/s 154 has been initiated on the application filed by the assessee, pointing out the mistake in the quantum of the receipts taken in the original assessment order - the addition which has been made in the rectification proceedings u/s 154 cannot be sustained - in the quantum proceedings, the CIT(A) has held that no income has been received by the assessee, which is taxable in India and against this order no subsequent appeal has been preferred by the Department in this year - the addition made by the AO in the proceedings u/s 154 is highly debatable and is beyond the scope of rectification u/s 154 - an error which has to be established by a long drawn process of reasoning on points where there may be considerable two opinions, then it can hardly be said to be erroneous apparent on the face of the record thus, there was no merit in the grounds raised by the Revenue. Interest u/s 234B of the Act Held that:- CIT(A) has held that in the quantum order passed u/s 143(3), for the same assessment year, he has already held that levy of interest u/s 234B cannot be levied - this is beyond the scope of the proceedings under section 154, but also the same is covered in DIT v/s NGC Networks Asia LLC, [2009 (1) TMI 174 - BOMBAY HIGH COURT] - thus, there was no merit in the grounds raised by the Revenue Decided against Revenue.
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2014 (7) TMI 594
Audit report obtained u/s 44AB of the Act Wrong information given to AO - Whether the statement of the assessee that it has obtained the tax audit report prior to filing of return is correct or not Held that:- The corporate assessees have to furnish Tax audit report in Form 3CA and Form No.3CD - The non-corporate assessees have to furnish the tax audit report in Form 3CB and Form 3CD - it requires the tax auditor only to furnish the details of audit conducted under the Companies Act - the assessee has filed the return of income under E filing procedure - Part A-O1 of the return of income requires the assessees who are liable for audit under section 44AB of the Act to furnish certain information - The information to be given in Part A-O1 contains the details to be furnished in Form No.3CD - the assessee has duly furnished all the details under Part A-O1 of the return of income, there appears to be some truth in the submission of the assessee that it has obtained the tax audit report before the due date for filing return of income - the audit under the Companies Act and u/s 44AB of the Act was conducted by the very same auditor and he has confirmed the fact by filing an affidavit - the assessee could have obtained the audit report u/s 44AB of the Act before filing the return of income - the assessee could have obtained the tax audit report before the due date for filing return of income, there is no justification for levying penalty u/s 271B of the Act this, the order of the CIT(A) is set aside and the AO is directed to set aside the penalty levied in the hands of the assessee u/s 271B of the Act Decided in favour of Assessee.
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2014 (7) TMI 593
Notice u/s 148 of the Act Reason to believe - Recalculation of deduction u/s 80HHC of the Act Held that:- Where an assessment was already completed u/s 143(3) such assessment cannot be reopened after the expiry of four years from the end of the relevant assessment year - since assessment was completed u/s 143(3) on 31.3.2006 it cannot be reopened after four years from the end of the AY i.e., the assessment cannot be reopened beyond 31.3.2008 unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee in disclosing fully and truly all material facts necessary for completion of assessment for that AY - notice u/s 148 was issued to recompute the disallowance of deduction allowed u/s 80HHC based on the information already available on record which is not permissible in law since there is no failure on the part of the assessee in disclosing fully and truly all material facts necessary for completion of assessment and, therefore, issue of notice u/s. 148 is bad in law Relying upon CIT vs. Purolator India Ltd. [2011 (11) TMI 365 - DELHI HIGH COURT] followed - the return of income and the material placed on the record by the assessee together with the return would make it abundantly clear that the assessee had set forth the basis of its claim and there was no suppression of material facts - the fundamental condition for reopening the assessment beyond a period of four years has not been fulfilled Decided against Revenue.
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2014 (7) TMI 592
Allowability of deduction u/s 80IB of the Act on pro rata basis Held that:- The assessee has fulfilled the conditions relating to minimum area of plot size, the commencing and completion of the project and the maximum built-up area in respect of residential units - The only condition which the assessee has failed to fulfill is with respect to the maximum limit of commercial area in a housing project i.e., 2000 sq. ft.- In housing project under consideration, the area allocated for commercial purpose is 3906 sq. ft. the area marked as commercial area, is in fact a common area to be used as crθche by the residents of the housing project - The area is not for the benefit of general public but for the exclusive use of the flat owners alone the decision in Commissioner of Income Tax Chennai Versus M/s. Arun Excello Foundations Pvt. Ltd [2012 (12) TMI 415 - MADRAS HIGH COURT] followed - where there is a partial compliance, deduction u/s.80IB(10) is allowable on pro-rata basis where both commercial and residential houses have been built thus, the CIT(A) is justified in granting proportionate relief to the assessee - CIT(Appeals) rightly held that the assessee is entitled to deduction u/s 80IB on the entire project except the profit element in respect of area of 1906 sq. ft., which exceeds the maximum statutory limit of 2000 sq. ft., that could be used for commercial purpose u/s.80IB(10) Decided against Revenue.
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2014 (7) TMI 591
Addition made u/s 68 of the Act - Genuineness and creditworthiness of the transaction Assessee contended that the amount received against the sale of shares Held that:- AO has given clear finding that cash of ₹ 2,50,000/- and ₹ 2,34,000/- was deposited in the Saving Bank Accounts of Smiranjeet Kaur and Shri Raghubir Singh respectively on 18.10.2008 when the cheque issued to the assessee company was cleared- onus lies on the assessee to establish the genuineness and creditworthiness of the transaction CIT(A) was of the view that the AO had made efforts to ascertain the correctness of assessees debt and came to the conclusion that both the persons did not have the capacity to give these amounts to the assessee - the transaction was not genuine and represented bogus accommodation entries - The assessee had claimed to have received huge amounts by sale of shares - identity of the purchasers was established but that per se can not take out the transaction from the relm of inquiry about genuineness of transaction and creditworthiness of the purchaser - AO has clearly demonstrated, considering the creditworthiness of purchasers, that the cash was deposited in their accounts which had its source from the assessee as he had benefitted by the deposit of cash and adverse inference has to be drawn against the assessee Decided against Assessee.
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2014 (7) TMI 590
Expenses treated as non-genuine purchases AO has made disallowance in respect of those parties where there was difference in amount and to whom notices u/s. 133(6) were sent and returned back unserved or no reply of the parties was received - Held that:- While deciding the appeal FAA had not discussed anything about the discrepancies noted and communicated by the AO - time allowed by the AO to the assessee to file details was insufficient, but the FAA had ample time to decide the issue - When the AO had given a categorical finding of fact about the discrepancies in his order, it was the duty of the FAA to deal the issue on merits before allowing the appeal filed by the assessee - it was essential as the assessee had not filed details before the AO thus, the matter is to remitted back to the FAA for fresh adjudication Decided partly in favour of Revenue.
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2014 (7) TMI 589
Penalty u/s 271(1)(c) of the Act Liability to deduct TDS u/s 194J of the Act - Held that:- There is no dispute about the fact that TDS was not deducted on MICR charges - in earlier years also assessee was not deducting TDS on these charges and no penal action was initiated by the AO - it can be said that assessee was under bonafide belief that on payment of MICR charges no TDS was to be deducted by it The decision in Canara Bank Vs. ITO [2008 (2) TMI 515 - ITAT AHMEDABAD-B ] followed - assessee was required to deduct TDS on MICR charges assessee has been regularly deducting tax on payment - assessee was prevented by reasonable cause in not deducting TDS on the payment of MICR charges - the penalty imposed is set aside Decided in favour of Assessee.
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2014 (7) TMI 588
Enhancement of disallowance u/s 14A of the Act Held that:- The phraseology of section 14A(2) of the Act lends credence to the proposition that the empowerment of the AO to invoke rule 8D of the Rules, is subject to fulfillment of the condition that the AO records a satisfaction about the correctness of the claim of the assessee in respect of expenditure incurred in relation to the exempt income, having regard to the accounts of the assessee the decision in GODREJ AND BOYCE MFG. CO. LTD. Versus DEPUTY COMMISSIONER OF INCOME-TAX AND ANOTHER [2010 (8) TMI 77 - BOMBAY HIGH COURT] - invoking of rule 8D of the Rules for the purposes of computing the disallowance u/s 14A of the Act is neither automatic and nor can be triggered merely because assessee has earned an exempt income - the fact situation is covered by the former i.e. sub-section (2) of section 14A of the Act because the assessee has specified a sum as expenditure incurred in relation to income which does not form part of the total income under the Act - the AO was not competent to take recourse to the rule 8D of the Rules unless he records a finding that he was not satisfied with the correctness of the claim of the assessee in respect to the expenditure incurred in relation to earning of the exempt income, having regard to the account of the assessee. The AO was obligated to record a satisfaction with regard to the incorrectness of assessee's claim, having regard to the accounts of the assessee, a requirement which is quite clear from a perusal of section 14A(2) of the Act - the reasoning advanced by the AO is based on mere surmises and conjectures and is not in compliance with the requirements of section 14A(2) of the Act - the AO has not recorded an objective satisfaction in regard to the correctness of the claim of the assessee which is a mandatory requirement of section 14A(2) of the Act and therefore, his action of invoking rule 8D of the Rules in order to compute the disallowance is untenable thus, the order of the CIT(A) is set aside and the AO is directed to retain the disallowance u/s 14A of the Act Decided in favour of Assessee. Computer Software Expenses - Capital expenditure OR Revenue expenditure Held that:- The decision in CIT vs. Raychem RPG Ltd. [2011 (7) TMI 953 - Bombay High Court] followed - where the software acquired by the assessee did not form part of the profit-making apparatus such expenditure was liable to be allowed as revenue expenditure - the amount is to be allowed as a revenue expenditure and the balance of ₹ 1,67,05,040/- be treated as capital expenditure - The AO is directed to re-work the disallowance Decided partly in favour of Assessee. Various expenses incurred u/s 40(a)(ia) of the Act Held that:- The decision in assessees own case for the earlier assessment year has been followed, it has been held that the assessee did not deduct any tax at source on payments Relying upon Bharat Forge Ltd. Versus Addl. Commissioner of Income Tax [2013 (11) TMI 1263 - ITAT PUNE] - no tax was required to be deducted u/s 194J of the Act in relation to the payment of Director Sitting Fees - the phraseology used in Section 40(a)(ia) of the Act clearly removes from its purview cases where tax has been short-deducted - the provisions of Section 40(a)(ia) of the Act are not attracted as this is a case of short-deduction of tax at source under Section 194C of the Act and not a case of non-deduction of tax at source - The disallowance out of Die Repairs and Motor Rewinding Expenses is set-aside thus, no disallowance u/s 40(a)(ia) of the Act is merited with respect to the expenditure incurred in relation to Testing and Inspection, Misc. Hire Charges, Die Repairs and Motor Rewinding Expenses Decided in favour of Assessee.
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2014 (7) TMI 587
Liability to pay FBT u/s 115WB(1) - market support expenditure Internal transport expenses - Expenses incurred for benefit of employee or not Held that:- The provisions of fringe benefit are in respect of payment with regard to the expenditure which has incurred for the benefit of its employees - The expenditure incurred should be in consideration of the employment - The main thrust of FBT tax was to tax those benefits which are enjoyed by the employees and could not be attributable in the case of a single employee - the payment has been made to the customers as per agreement - There is nothing on record to suggest that market support expenditure has been incurred for the benefit of employees of the assessee in any manner it has been paid to the customers on account of reimbursement of advertisement and sales promotions expenses as per agreement - it is not justified to attract the provisions of FBT in respect of payments - This is not applicable to the payment to third party which does not result in any benefit to employees of the assessee, so the same should not be chargeable to fringe benefits tax u/s.115WB. Relying upon T & T Motors Ltd. Vs. Asst. CIT [2012 (1) TMI 96 - DELHI HIGH COURT] - the legislation has excluded from FBT, the expenditure in the form of payments to third parties and fringe benefit tax is to be levied only in the case of expenditure incurred collectively on employees - the payment has been made to the customers of the assessee as per agreement who do not fall in the definition of employees - the provisions of fringe benefit are not applicable to them - So, the employer or employee relationship is must to levy fringe benefit tax - FBT is not levied in respect of gift items given to the travel agent, customer where there is no employer or employee relationship or assessee and recipient - the employer employee relationship for FBT provisions would be applicable only in respect of those expenses which contain an element of personal benefit to employees and not in respect of expenses incurred on non-employees - the expenses incurred by assessee on market support reimbursed to its customers, it is not attracts the provisions of section 115WB. Internal transport expenses Held that:- The assessee has incurred internal transport expenses - The internal transport expenses are on account of shuttle service hired by the assessee for movement of the staff from the office to factory and back - CIT(A) has held that such expenditure is liable to FBT - CBDT vide its circular No.8 of 2005 had clarified that the expenditure on providing free or subsidized transport to the employees for journey of the employees from the residence to office is not liable to FBT, even that event, even the expenditure on travel of the employees from one official place to another official place should not be liable to FBT - this expenses has no personal benefit to the employees and it has incurred during course of assessees business - the lower authorities were not justified to hold that the expenditure on internal transport expenses was deemed fringe benefit u/s.115WB(2)(F) of the Act Decided in favour of Assessee.
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Service Tax
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2014 (7) TMI 631
Valuation - commercial or industrial construction service - irregular availment the benefit under abatement Notification No. 15/2004-ST dated 10.9.2004 - Failure to disclose the value of goods supplied free of cost (by service recipients to the appellant service provider) for incorporation into the commercial or industrial constructions made for the benefit of the recipients - Held that:- Larger Bench of this Tribunal in Bhayana Builders (P) Ltd. Vs. Commissioner of Service Tax. Delhi [2013 (9) TMI 294 - CESTAT NEW DELHI], has interpreted the scope of abatement Notification No. 15/2004-ST and Notification No. 1/2006-ST dated 1.3.2006 to conclude that these notifications authorise availment of the abatement benefits provided therein, without the necessity of having to disclose and offer for tax the value of free supplies made by the service receivers to the service provider, of goods meant for incorporation into works executed for recipients - Decided in favour of assessee.
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2014 (7) TMI 630
Condonation of delay in filing an appeal before commissioner (appeals) - Bar of limitation - Held that:- Appellant is not an educated person and is aged about 76 years and therefore they could not engage any educated person to look after this appeal. We find that the appellant has not disputed the delay of filing the appeal. The Honble Supreme Court in the case of Singh Enterprises Vs. CCE (2007 (12) TMI 11 - SUPREME COURT OF INDIA) observed that the Commissioner (Appeals) has no power to condone the delay beyond the stipulated period. In view of that, we do not find any reason to interfere with the order of the Commissioner (Appeals) - Decided against assessee.
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2014 (7) TMI 629
Violation of principle of natural justice - Relied upon documents by Revenue in the order-in-original were not provided to appellants - Demand of service tax - Invocation of extended period of limitation -Held that:- impugned order-in-original relies upon letters dated 28/12/2011 and 29/11/2011 which have been sent by the said M/s KEONICS to the Superintendent of service tax in Bangalore and which have been specifically relied upon in paragraphs 67 and 68 of the order-in-original dated 31/08/2012 and the said documents have been obtained and relied upon, after issue of show cause notice on 19/9/2011 and hence the applicant herein was not aware of the same and not could not submit any defence to the same - matter is required to be remanded to the original adjudicating authority. This is because, the letters obtained after issue of show-cause notice should have been provided to the appellants. Even though the appellant himself has admitted the realization of service tax from KEONICS, ongoing through the records, there is no clarity on this issue. At the same time, it cannot be said that the appellants are not liable to tax and in our opinion, at least an amount of ₹ 2 lakhs is clearly payable by the appellant and it may not be appropriate to remand the matter without putting the appellant into terms. - stay granted partly - matter remanded back.
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2014 (7) TMI 628
Waiver of Penalty - renting of immovable property service - Penalty imposed u/s 77 & 78 - Held that:- There was confusion in the minds of the general public whether service tax was payable on the activities of renting of immovable property Central Board of Excise and Customs finally came forward with a clarification, issued under its Circular No. 157/ 8/ 2012-ST dated 27.04.2012, that services provided by APMC for a separate charge (other than market fee); to either the licensees or farmers or any other person e.g. renting of shops in the market area etc., would be liable to tax under the respective taxable heads. In view of the clarification dt. 27.04.2012 issued by CBEC that when this taxable service was introduced, there was a lot of confusion / litigation on its constitutional validity and the matter has not yet attained finality as the appeal is pending before the Honble Apex Court in the case of Home Solutions Retail (India) Ltd. [2011 (10) TMI 13 - Supreme Court of India] - These circumstances constitute a reasonable cause on the part of the appellant for not paying service tax - Following decision of Euro Ceramics Ltd. Vs. Commissioner of Central Excise, Rajkot [2013 (5) TMI 538 - CESTAT AHMEDABAD], penalty set aside - Decided in favour of assessee.
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2014 (7) TMI 627
Reverse charge mechanism - Section 66A of the Finance Act 1994 - services received and consumed outside India - services for Foreign Currency Term Loan - Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 - Amount of tax paid with interest before issuance of SCN - Held that:- foreign service providers have provided to the appellant taxable service as defined in section 65(105)(zm), which falls under third category of services contained in Rule 3 of the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006. According to these Rules, if the services specified therein are received by a recipient located in India for use in relation to business or commerce, then these services are deemed to have been provided from outside India and received in India. It is further observed that the place of receiving/consuming service is immaterial. Evidently, the appellant (recipient) is located in India and has used the services of foreign service-providers in relation to their business or commerce in India. - the services are taxable - decided against the assessee. Levy of penalty - revenue neutral situation - Held that:- when the situation is revenue neutral and the appellant manufacturer is entitled to CENVAT Credit, it cannot be said that there was an intent to evade duty and extended period can be invoked. - penalty imposed on the appellant cannot be sustained - decision in the case of of M/s Enercon India Ltd. Versus CCE Daman [2012 (7) TMI 196 - CESTAT, AHMEDABAD] followed - appellants case is fully covered by the provisions of Section 73(3) of the Finance Act, 1994 and the Revenue should not have issued show casue notice to the appellant for imposition of penalty. - Decided in favour of assessee.
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2014 (7) TMI 625
Demand of service tax - Suo moto adjustment of excess service tax paid for short paid service tax of subsequent year - Bar of limitation - Whether the adjustment made by the appellant on the excess payments made by them under the provisions of Rule 6 of the Service Tax Rules for payments of service tax, a liability that arose subsequently is sustainable - Held that:- Decision in the case of CCE, New Delhi v. Sentinel Security (P) Ltd. - [2001 (8) TMI 3 - CEGAT, NEW DELHI] and Oriental Insurance Co. Ltd. v. CCE, New Delhi - [2005 (2) TMI 1 - CESTAT (NEW DELHI)] is on the point. - Adjustment of excess service paid allowed. Extended period of limitation - Held that:- Service tax on reverse charge basis came into effect from 18.4.2006. Before this period no service tax on reverse charge can be demanded. Secondly, the unit was registered and department was aware of the nature of services being provided. The period of demand is from 2005 to March 2007 and the show cause notice is issued on 01.12.2008. As appellant was registered with the department and filing returns, extended period cannot be invoked in the present proceedings. The demand is thus also hit by limitation - Decided in favour of assessee.
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2014 (7) TMI 621
Scope of the Banking and Financial services - activity of managing funds on its own account or on behalf of state government - nature of amount reimbursed by the state government - whether taxable - Held that:- The appellant is raising funds by way of loans on issue of Bonds in its own name, which cannot be considered as managing the funds of the State Government. The fact that the State Government guarantees repayment of loans by the appellant (under Bonds issued by it) would not amount to issue of the Bonds by the State Government. The discipline of Article 266 mandates that all loans raised by a State Government shall form one consolidated fund to be called the Consolidated Fund of that State. If that be the reality of the transaction, the expenditure incurred by the appellant would be expenditure incurred for servicing its own activity, of raising funds for its purposes though reimbursed by the State Government, to the extent of the incurred administrative expenses. Such reimbursement, in our view would not amount to payment of consideration for rendition of the tanable service, by the appellant to that Government. - Decided in favor of assessee. However, demand of ₹ 36370/- on Technical Testing and Analysis/ Technical Inspection and Certification Services confirmed with interest - penalty waived u/s 80 - Decided partly in favor of assessee.
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Central Excise
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2014 (7) TMI 618
Waiver of pre deposit - Duty demand - Notification No.22/09-CE (NT) dt. 7.9.2009 - Whether educational cess and secondary higher education cess availed on the inputs received from 100% EOU for the period from April 2009 to August 2009 should be allowed - Held that:- Rule 3(7)(b) allows utilisation of Cenvat credit by all categories of manufacturers or producers of final products or providers of taxable services, including 100% EOU, in respect of AED for payment of AED, NCCD for payment of NCCD, education cess for payment of education cess, etc. Rule 3(7)(b) also opens with the non-obstante clause. Therefore, if the interpretation canvassed by the Revenue is accepted as correct, there would have been no question of utilisation of education cess for payment of education cess if the taking of the credit itself, according to the Revenue, is barred by Rule 3(7)(a), and the provisions of Rule 3(7)(b) would, therefore, be rendered redundant - predeposit of entire amount of duty along with interest and penalty is waived till disposal of appeals - Following decision of Emcure Pharmaceuticals ltd. Vs CCE Pune [2008 (1) TMI 147 - CESTAT, MUMBAI] - Stay granted.
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2014 (7) TMI 617
Duty demand - Shortage of stock - Clandestine removal of goods - Penalty u/s 11AC - Held that:- Aapart from report of the Income Tax authorities there is nothing on record that the respondents had actually manufactured and removed the goods clandestinely as rightly discussed by the Commissioner (Appeals). The stock verification done by the Income Tax authorities cannot be accepted on its face value in view of the doubts raised by the respondents and in the absence of corroborative evidence, no duty of excise have been confirmed. The Tribunal in the case of Ravi Foods Pvt. Ltd. Vs. CCE, Hyderabad [2010 (12) TMI 290 - CESTAT, BANGALORE] has held that the information received from the Income tax Department cannot be made the sole basis for confirmation of demand under the Central Excise when the Central Excise authorities in their investigations did not find any corroborative evidence of clandestine removal of their final products - Decided against Revenue.
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2014 (7) TMI 616
CENVAT credit - inputs were being sent to job worker - job worker was paying duty on the final product, which was being cleared by them on behalf of the respondents, by raising the invoice on their account - Revenue contends that the respondents were not entitled to the CENVAT credit of duty paid on the inputs, in as much they have not paid the duty themselves on the final product manufactured by the job worker - Commissioner set aside demand - Held that:- as much as the duty on the final product stands paid by the job worker, the respondents are entitled to avail the CENVAT credit of duty paid on the inputs so supplied by them to the job worker. The fact that the assessee himself has not discharged the duty liability would not result in denial of credit. Movement of inputs to the job worker was with the permission of the Commissioner and the said fact of availment of credit was duly reflected by the assessee in their statutory records. In such a scenario, no suppression can be attributed to the respondents and extended period of limitation was not available to the Revenue. If the goods manufactured at the job worker's end were returned to the assessee and then cleared by them on payment of duty, they were admittedly entitled to availment of CENVAT credit duty paid on the inputs. As per the respondents, when the duty was paid by the job worker, the same stands re-imbursed by them. As such, it has to be observed that the duty is deemed to have been paid by the manufacturer, through the job worker and the Revenue has received the entire duty element due to them. In such a case, denial of credit to the respondents would not be justified. - Decided against Revenue.
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2014 (7) TMI 615
Duty demand - Clandestine removal of goods - Goods removed for export did not reach destination - forging of signature of customs officer - Held that:- Material evidence on the records of Assistant Commissioner, Haldia, made clear that there was no shipment of the goods in question under 31 shipping bills. Confessional statements of Smt. Smriti Kana Basu, authorised representative of CHA, Sri Milan Gupta, Authorised representative of CHA corroborated the case of the Revenue as to no shipment of goods stated in the shipping bills. Transporter M/s.Dhanalaxmi Transport also brought out the case in favour of Revenue proving no movement of goods but mere L/Rs were issued. Endorsement on the back of the shipping bills proved forgery of signature of Customs Officials. All bills of lading were also forged. There was no material or cogent evidence on record to show that the ground of appeal have any merit. Except the only plea that the appellant exported the readymade garments under proper invoice recorded in ARE-1 showing termination of the goods at Haldia port there was nothing on record to show manufacture of goods, transportation thereof and actual export. Forging of signature of customs officer surfaced and that was not contradicted by appellant. Such evidence proves malafide of appellant - appeal dismissed - Decided against assessee.
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2014 (7) TMI 614
Denial of refund claim - Unjust enrichment - Issue of credit notes - readymade garments - element of duty in the purchase order - Held that:- Certificate has been filed by the customer of the appellant stating that they have not borne the liability which have been originally passed on to them and that they have not passed on the liability to their customers. - in this case the goods being exempt, the question of the 3rd party claiming refund just does not arise. In this case, a third party or the ultimate customer could not have filed refund claim at all with the Department since the invoices would not show excise duty element at all. The ultimate customer In this case would not know what is the amount of refund to be claimed by him and whether there was any excise duty paid by his supplier at all. The assessee in this case after analyzing there was excess charge made by them indicated in their mail the price at which purchase order was issued actually related to the bigger boxes and there was a mistake on the part of the customer and the actual prices was only ₹ 5.20 per box + taxes and other levies. Apparently, both the sides agreed that there was a mistake in the purchase order and both sides had understood the cost of ₹ 5.20/- as the transaction value and there was mistake in the documentation. Therefore, the Commissioner's observation that the appellant has to show that in the costing of the product element of excise duty has not been taken into account also is not relevant in this case if both the parties had clearly understood that the value of the box would be only ₹ 5.20 and there was a mistake in the purchase order and raising of invoices. In such a case, naturally the costing would not have proceeded on the basis that the cost of the box was higher. - Decided in favour of assessee.
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2014 (7) TMI 613
Duty demand on returned goods - goods scrapped after return as rejected goods - Rule 16 of Central Excise Rules 2002 - revenue contended that since the goods were scrapped totally the CENVAT credit could not have been availed - Held that:- duty cannot be demanded for the second time on the same goods without showing that they have not suffered duty. In this case there is no denial by both the lower authorities that there is no finding that the rejected goods when they were cleared did not suffer any duty and if the duty is demanded again, it would amount to demand of duty twice on the same goods which in my opinion is not proper. No investigation or verification was carried out by the lower authorities and the show-cause notice simply stated that rejected goods were scrapped which shows that officers did not even verify the records maintained and whether any records were maintained at all and if records were maintained what they said. Further, assessee had maintained records and had cleared the rejected goods after accounting them in the RG-1. Such being the case, it is difficult to take a view that there was suppression or mis-declaration. Therefore, on this ground also appellant has a case - Decided in favour of assessee.
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2014 (7) TMI 612
Waiver of pre deposit - valuation - inclusion of value of barrels which were supplied by the customers for packing liquid glucose - Held that:- barrels are supplied by the customers in which liquid glucose is cleared and the barrels are repeatedly used. As the barrels are supplied by the customers, therefore the value of the barrels is not to be included in the assessable value. In the alternative, the contention is that the barrels are durable and returnable packing materials and are repeatedly used, therefore the value is not to be added to the assessable value of the final product - Following decision of Tata Chemicals Ltd. vs. CCE reported in [2006 (3) TMI 55 - SUPREME COURT] - Stay granted.
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2014 (7) TMI 611
Refund claim - clearances made to advance authorization holders - whether consititute export - refund of accumulated credit can be refunded under Rule 5 of CENVAT Credit Rules (CCR), 2004 - deemed export versus physical export - Held that:- apparently case laws relied upon by the revenue are not applicable as distinguishable from the facts of the present case - Revenue has not been able to make out a prima facie case for stay against the sanction of refund to the respondent - there will be no stay on refund.
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2014 (7) TMI 610
CENVAT Credit - Capital goods - Availment of 100% Credit in first financial year - confirmation of interest in respect of excess availment of credit - Held that:- though the credit was availed premature but the same was actually utilised after it became due to the assessee. In such a scenario, the law declared by the Honble High Court of Karnataka in the case of Bill Forge, [2011 (4) TMI 969 - KARNATAKA HIGH COURT] would apply. Confirmation of interest set aside. Penalty under Rule 15(1) of CENVAT Credit Rules, 2004 - In terms of provisions of Rule 15(1) of CENVAT Credit Rules, 2004, which provides for imposition of penalty not exceeding the duty or ₹ 2,000, in cases where the assessee takes CENVAT credit in contravention of any of the provisions of these Rules. It is seen that no mala fide intent condition is pre-requisite for imposition of penalty under the said sub-rule. Admittedly, in the present case, appellants have taken the excess credit though not utilised, in contravention of provisions of sub-rules. As such, I am of the view that the appellant is liable to penalty in terms of the said Rule. However, keeping in view that the excess credit, though taken by the assessee, was not actually utilised by them and as such no undue gain stands availed by them - Penalty of ₹ 20000 imposed on assessee - Decided partly in favour of assessee.
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2014 (7) TMI 609
Waiver of predeposit of duty - Manufacture of Motor Vehicle parts and seat parts - Default in payment of duty beyond 30 days contravention of Rule 8 (1) and 8 (3) of the Central Excise Rules, 2002 - Held that:- Following decision of Crest Cam CNC Systems Vs. CCE, Bangalore - [2011 (8) TMI 984 - CESTAT BANGALORE]. The Ld. Advocate submits that they have already deposited a sum of ₹ 4,83,277/-. In view of that, I direct the appellant to make a predeposit of an amount of ₹ 5,00,000/- lakhs within six weeks. Upon such deposit, predeposit of balance amount of duty along with interest and penalty would be waived and its recovery thereof stayed till the disposal of the appeal - Conditional stay granted.
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CST, VAT & Sales Tax
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2014 (7) TMI 624
Detention of goods - interstate movement - demand of cash security of 10 lakhs for release of goods - consignor and consignee both are registered dealers - supply of Horizontal Automatic Vacuum Assisted Dry Priming Mine De-watering Heavy Duty Bare Pump, which is a specialised pump for suction of water from deep mines. - Held that:- There is every likelihood that in case penal proceedings are drawn against the applicant, there are fair chances that the applicant may succeed in proving that the seized good is not meant for sale in U.P. These were relevant factors which ought to have been considered by the Assistant Commissioner, while deciding the statutory representation under the proviso to sub-section (7) of section 48 of the Act, as it confers a reserve of discretion in him to release the goods without security or on depositing lesser amount or furnishing security other than cash or indemnity bond, as he may deem fit. The discretion has to be exercised judiciously and is not based on ipse dixit of the authority. While it should be left open to the authorities to initiate penalty proceedings against the appellant, but at the same time, the order for release on furnishing cash security of ₹ 10 lakhs cannot be sustained. Interest of justice would be met in directing the applicant to furnish bank guarantee for the said amount of ₹ 10 lakhs. - in case, the penalty proceedings are not initiated within 15 days, the bank guarantee will cease to be valid thereafter. - Decided partly in favour of assessee.
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2014 (7) TMI 622
Rate of tax (TDS) on works contract - respondents collected tax at source from the monthly work bills due to the petitioner at the rate of 2.8 per cent instead of 0.36 per cent - estimated value came into existence after the tenderers submitting their respective tenders. In other words, there was no way tenderers knowing the estimated value and the components of the estimated value prior to opening of the tenders - Held that:- Petitioner's case squarely fall under section 22(3) of the A.P. VAT Act and the excess amounts deducted by the second respondent is contrary to the scheme of the Act and unauthorised and hence required to be returned to the petitioner. As a matter of fact, the unauthorised deduction and retention of the monies without making it over to the Tax Department is contrary under section 57(1) of the A.P. VAT Act. Therefore, the respondents are directed to refund the excess amount to the petitioner within four weeks from the date of receipt of this order. - Decided in favour of petitioner.
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2014 (7) TMI 620
Rejection of application for benefit under the Sales Tax Incentive Scheme, 1989 - manufacturing of "vanaspati ghee" - from March 27, 1995 benefit of scheme was curtailed - assessee claimed that they have started production on March 26,1995 and made huge investment - initially State Level Screening Committee, Jaipur (SLSC) rejected the application for benefit of scheme - However in a remand proceedings, as directed by the board to reconsider the case, SLSC allowed the benefit of scheme - Held that:- This application dated March 25, 1995 has a great bearing on the facts of the instant case, in as such as the SLSC has alleged that the dates were manipulated on the part of the unit to show the production and submission of the application with a view to take advantage of the benefit under the Sales Tax Incentive Scheme as it is claimed that the application was filed at Alwar on March 25, 1995 when the competent authority was SLSC, Jaipur, the production is shown to have started on March 26, 1995 and the budget speech is on March 27, 1995, i.e., the time gap is so little that the SLSC even doubted about the manipulation of the dates particularly in view of the fact that there was no occasion for the respondents to file an application at DIC, Alwar, when as per counsel for the petitioner-assessing officer, the application was widely known to have been submitted to the SLSC, Jaipur, to avail of benefits as per scheme. It is true that the benefit arising as per the Incentive Scheme for the benefit to the assessees at large and being beneficial, should be granted but in the instant case, the facts have not been clearly stated on record and something more is required to be placed on record by the respondent assessee as both the material facts, which the court wanted to peruse, were not available with either side of the parties - Matter remanded back - Decided partly in favour of Revenue.
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2014 (7) TMI 619
Condonation of delay - Inordinate delay of 210 days - Held that:- though like any other litigant, the State authorities are also equally bound by the law of limitation, recognizing certain elements of public interest and the impersonal and slow moving machinery of the Government, the courts have moulded their approach, while considering request of the State for condoning the delay, in the present case, as already noticed, explanation in the form of administrative clearances and consumption of time in the office of the Government Pleader in preferring the appeals are pressed in service for explaining the delay. Further, the duty amount involved in the appeal is also substantially large. Considering these aspects of the matter, delay is condoned by awarding cost - Following decision of Special Tehsildar, Land Acquisition, Kerala v. K.V. Ayisumma [1996 (7) TMI 551 - SUPREME COURT] - Delay condoned.
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Indian Laws
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2014 (7) TMI 623
Right against discrimination - discrimination by the respondent Railways between the wait-listed passengers who have purchased e-tickets through the internet and the wait-listed passengers who have purchased tickets in the physical form from the Reservation Counters - wait-listed passengers holding e-tickets are prohibited from boarding the train whereas wait-listed passengers holding tickets in the physical form are entitled to board the train and take a chance of occupying any seats / berths available owing to no-show of the passengers in whose name the confirmed booking exists - Held that:- counsel for the petitioner was unable to show to us any Rule / Regulation or provision which entitles a wait-listed passenger holding ticket in the physical form to so board the train. Section 155 of The Railways Act, 1989 prohibits any passenger from entering a compartment wherein no berth or seat has been reserved for his use and provides for his removal and punishment for the same. The same does not make any distinction between a passenger holding e-ticket and a passenger holding ticket in the physical form - Therefore, question of the wait-listed passenger holding e-ticket being discriminated, owing to the prohibition contained in the impugned Circular from boarding the train, does not arise. Automatic cancellation of waiting e-tickets - Held that:- During the hearing we were also informed from the data collected by the petitioner through the medium of Right to Information Act, 2005 that no refund is obtained of a large number of wait-listed tickets issued in the physical form. Therefrom it is sought to be pointed out that the number of wait-listed passengers holding tickets in the physical form so boarding the train and travelling is large - Therefore, railway is directed to within a period of six months from today, consider the matter in the perspective discussed above and to devise ways and means for preventing the practise, if any in vogue of the touts / unscrupulous elements for their own gain blocking the seats / berths by making reservation therefor in bogus names and then making such seats / berths available to bona fide passengers willing to pay premium, by allowing them to board the train on the basis of wait-listed tickets in physical form and occupy the seats / berths of the bogus reservation - Decided partly in favour of Petitioner.
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