TMI Tax Updates - e-Newsletter
July 19, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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Income Tax:
Penalty u/s 271(1)(c) - the fact that assessee has furnished inaccurate particulars for the purpose of determining the tax u/s 115JB stands established - penalty confirmed - HC
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Income Tax:
Reopening of assessment u/s 148 - the reopening of assessment on the basis of receipt shown in the TDS certificate is not sustainable in law - HC
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Income Tax:
Jurisdiction of CIT u/s 263 - when the very basis of levy is subject matter of appeal, the CIT could not have invoke the jurisdiction u/s 263 in opining that higher amount should have been considered for levy of interest - AT
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Income Tax:
Carry forward of business loss Assessment u/s 153A - Non filing of return u/s 139(1) - assessee is not supposed to file its return of income u/s 139(1) of the Act because he statutorily required to file return of its income in response to notice u/s. 153A - set off allowed - AT
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Income Tax:
Without recording satisfaction note by the AO initiating proceedings for completion of assessment u/s. 153A of the Act cannot be proceeded u/s. 153C of the Act in the case of such other person not searched - AT
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Income Tax:
The issues raised in additional grounds are the legal issues which go to the root of the matter and for deciding these legal issues no new facts are required to be considered as all the facts are already recorded in the orders - additional evidences admitted - AT
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Income Tax:
AO absolutely closed his eyes for the reasons best known to him and accepted the admitted income at the face of the return which necessitated the CIT to exercise his powers u/s. 263 thus, the order of the CIT is confirmed - AT
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Income Tax:
Levy of penalty u/s 271(1)(c) - the conduct of the assessee is far from bona fide and there was a clear-cut strategy to not only evade taxes, but also to file inaccurate particulars of income even after search operation - AT
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Customs:
Suspension of CHA licence - procedure - it is not open to the appellant/Revenue to take a contra stand in respect of the time limit prescribed under Regulation 22 of CHALR, 2004. - HC
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Service Tax:
As the appellant failed to comply with the conditional order passed by the Tribunal, the Tribunal has, in our considered opinion, rightly dismissed the appeal for non-compliance of the provisions of Section 35-F - HC
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Service Tax:
Refusal to reimbursement of service tax by the recipient of service - mutual contract - action of the respondent-BCCL in issuing the corrigendum/amendment is not arbitrary - HC
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Service Tax:
Extended period of limitation - The Department itself had at one stage conveyed to the assessee that service in question was not taxable service. Though subsequently such letter was withdrawn, the assessee cannot be stated to have, with mala fide intention - HC
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Central Excise:
Denial of CENVAT credit - Revenues allegation as regards non-receipt of inputs cannot be upheld in as much as the appellants could not have manufactured their final product in the absence of the final product. - AT
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VAT:
Levy of tax - There was a transaction of cross transfer of property between the defective compressor and the repaired compressor - the transaction is not taxable - HC
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VAT:
Deduction of tax at source - deemed sale - transfer of right to use -services in the field of information and technology - activity is not taxable - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2014 (7) TMI 673
Restriction on financial expenses - Deductions u/s 80HHC Unit wise working not submitted Held that:- Clause (b) of sub-Section(3) of Section 80HHC provides that where the export out of India is of trading goods, the profits derived from such export shall be the export turnover in respect of such trading goods as reduced by the direct costs and indirect costs attributable to such export -Explanation (e) to sub- Section(3) defines indirect costs to mean costs not being direct costs allocated in ratio of the export turnover in respect of trading goods to the total turnover thus, the order of the Tribunal is upheld Decided against Revenue. Reduction in Prior paid expenses Computation of taxable income u/s 115JA of the Act Held that:- The Tribunal rightly of the view that prior period expenses were reduced for arriving at the book profit which was accepted by the Auditors of the Company and by the company itself in the AGM, then no adjustments other than the adjustment specified in Explanation to section 115JA(2) - The decision in Apollo Tyres Ltd. vs. Commissioner of Income-Tax [2002 (5) TMI 5 - SUPREME Court] followed - Decided against Revenue.
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2014 (7) TMI 647
Penalty u/s 271(1)(c) of the Act Concealment of income and inaccurate particulars furnished - MAT computation u/s 115JB of the Act not reported Held that:- The findings of the Tribunal were correct that in a case of 'nil' return, without complying with the provisions of Section 115 JB of the Income Tax Act, where the assessee is liable to pay MAT and the non-compliance there of results in imposition of penalty in terms of Section 271(1)(c) of the Income Tax Act, is correct - only on account of the AO's endeavour, the MAT liability came to be noticed - there was a clear case of the assessee failing to furnish particulars necessary for the assessment and the case of the department that the assessee has furnished inaccurate particulars for the purpose of determining the tax u/s 115 JB stands established - penalty has to be levied as per the provisions of Section 271(1)(c) of the Act and the AO was justified in imposing penalty thus, no substantial question of law arises for consideration Decided against Assessee.
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2014 (7) TMI 646
Notice u/s 226(3) of the Act Attachment of Bank account - The assessee has failed to pay his income tax dues for AY 1993-94 to1997-98 Held that:- In terms of Section-226(3)(vii) of the Act, it is open to the AO or Tax Recovery Officer to revoke the notice issued u/s 226(3) of the Act - no fault can be found with the withdrawal of notice to Reserve Bank of India - the Income Tax Department has not withdrawn the notice dated 22 August 2006 issued u/s 226(3) of the Act on Bank of Baroda seeking to attach the amount belonging to the assessee lying with Bank of Baroda - Thus, the attachment of the account continues - This cannot be done by filing another petition but application for variation of the order granted in Writ Petition has to be done in proceeding in that petition, if the grounds for variation at all exist - prima facie, it appears that all facts which are being urged would have been considered when the order dated 6 Feb. 2008 was passed as all the facts now urged were in existence even on 6 Feb. 2008 when the order was passed Decided against Assessee.
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2014 (7) TMI 645
Notice u/s 148 of the Act Reopening of assessment beyond 4 years Failure or not to disclose the material facts Principle of consistency - Held that:- The reasons for reopening very categorically state that it is only during the assessment proceeding for AY 2009-10 that various documents including the loan application and sanction letter of HDFC Limited were called for - prima facie it appears that the AO on the basis of the information obtained during the assessment proceeding for AY 2009-10 came to the reasonable belief that income chargeable to tax has escaped assessment - The reasons for reopening indicate prima facie that the interest deduction claimed under the head "income from other sources" could not have been claimed as the loan was obtained for the purpose of residential property and the claim for interest u/s 24 of the Act could not be granted as no property was purchased from the loan taken - it cannot be said at this stage that there was no reason to believe in the mind of the AO that income chargeable to tax has escaped assessment for the purpose of issuing the notice dated 29 February 2012 The decision in CIT vs. Rajesh Jhaveri [2007 (5) TMI 197 - SUPREME Court] followed - Decided against Assessee.
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2014 (7) TMI 644
Reopening of assessment u/s 148 - no option to file return was given Held that:- The CIT(A) has himself accepted that 30 days time as provided in the notice u/s. 148 of the Act to the assessee for submission of the return of income has not been provided to the assessee and the assessment was finalised on 28.1.2012 - the CIT(A) has erred in deciding the issue in favour of the Revenue Decided in favour of Assessee. Income escapement - Whether the discrepancy between the income shown as per the return of income vis-a-vis as per certificate of TDS would necessarily lead to escapement of income for assuming jurisdiction u/s. 148 of the Act Held that:- A variation in these two figures does not necessarily lead to escapement of income - Mere need to verify the discrepancy does not bring the matter within the scope of cases in which reassessment proceedings can be validly initiated - There is subtle, though significant, distinction between reason to believe and reason to suspect - While the former is good enough to hold that income has escaped assessment and initiate suitable remedial measures in respect thereof, the latter can, at best, be the ground to verify and examine the matter further - Mere fact that matter needs to be verified and examined further can never be a reason good enough to believe that income has escaped assessment and to invoke the reassessment proceedings thus, the reopening of assessment on the basis of receipt shown in the TDS certificate is not sustainable in law - the CIT(A) has wrongly held that the AO rightly initiated proceeding u/s. 147 of the Act The decision in RAFEEQ IQBAL Versus INCOME TAX OFFICER [2013 (11) TMI 8 - ITAT HYDERABAD] followed - Decided in favour of Assessee.
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2014 (7) TMI 643
Rectification application u/s 254(2) assessment order was passed u/s 153A - Genuineness of claim of capital gain Amount claimed as income from other sources u/s 68 tribunal in another case of the assessee has taken contrary stand - Held that:- Even if one accepts the observations of the Tribunal in the impugned order dated 18.10.2013 that the order dated 20.10.2010 of the Tribunal in regular assessment proceedings is incapable of being implemented in view of Section 153(2A) of the Act. This by itself would not eradicate the finding of fact by the Tribunal in its order dated 20.10.2010. On merit of its application, the Tribunal may come to finding that in view of certain further facts available in the search and seizure appeal, the findings in order dated 20.10.2010 of the Tribunal may not apply to the present appeal. However, the order of the Tribunal dated 20.10.2010 in regular assessment proceedings cannot be shut out at the threshold. - Tribunal directed to recall its order dated 30.1.2013 Decided in favour of assessee.
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2014 (7) TMI 642
Jurisdiction of CIT u/s 263 of the Act - Levy of interest Held that:- Assessee has advanced funds to the said Satyam Computers Services Ltd. - assessee has not advanced the funds on interest basis and subsequently, it filed recovery of principal amount with interest at 18% by filing a suit in City Civil Court, Hyderabad - the amount of interest can be brought to tax in the year in which the City Civil Court considered and decided the liability to repay the amounts of advance and interest and also rate of interest on which, advance should be repaid - the question of bringing to tax interest on different amounts as directed by the CIT does not arise - when the very basis of levy is subject matter of appeal, the CIT could not have invoke the jurisdiction u/s 263 in opining that higher amount should have been considered for levy of interest - there is no basis for CIT invoking jurisdiction u/s 263 - thus, the order of the CIT is set aside Decided in favour of Assessee.
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2014 (7) TMI 641
Transfer pricing adjustment Selection of comparables Functionally different companies - Avani Cimcon Technologies Limited Held that:- The assessee has been categorised as a software development service provider the company is into product development - As segmental details of operating income of software development services and sale of software products are not available, it could not be ascertained whether the profit ratio of this company can be taken into consideration for comparing with the assessee thus, this company cannot be treated as comparable to the assessee the AO/TPO is directed to exclude the company from the list of comparables the decision in Virtusa (India) (P.) Ltd. Versus Deputy Commissioner of Income-tax [2013 (11) TMI 422 - ITAT HYDERABAD] followed Decided in favour of Assessee. Infosys Technologies Ltd. Enormity in turnover - Held that:- The company cannot be considered as comparable to the assessee due to various factors such as its size, turnover, brand value, scale of operation, diversified activities and owning of intangibles - the turnover of Infosys Technologies Limited isRs.13,149 crores as against ₹ 47 crores of the assessee - considering the enormity of turnover of the company as well as other relevant factors like brand value, scale of operation, size etc. the company cannot be treated as comparable to a purely captive service provider like the assessee in any manner Relying upon CIT Vs. Agnity India Technologies Pvt. Ltd. [ 2013 (7) TMI 696 - DELHI HIGH COURT] - the AO/TPO is directed to exclude the company from the list of comparables Decided in favour of Assessee. Ishir Infotech Ltd. Employee cost filter - Held that:- The decision in Virtusa (India) (P.) Ltd. Versus Deputy Commissioner of Income-tax [2013 (11) TMI 422 - ITAT HYDERABAD] followed Ishir Infotech Limited cannot be treated as comparable as it does not qualify the employee cost filter as well as RPT filter - the AO/TPO is directed to exclude the company from the list of comparables Decided in favour of Assessee. Lucid Software Limited Segmental data not available - Held that:- The decision in Virtusa (India) (P.) Ltd. Versus Deputy Commissioner of Income-tax [2013 (11) TMI 422 - ITAT HYDERABAD] followed it earns revenue both from product development as well as software services for which segmental data is not available - segmental data in respect of sale of products and software services are not available thus, the AO /TPO is directed to consider only the segmental margin of this company for the relevant assessment year for computing ALP - Decided in favour of Assessee. Tata Elxsi Limited Functionally different - Held that:- The decision in Telcordia Technologies India (P.) Ltd. Versus Assistant Commissioner of Income-tax, Cir 3(3), Mumbai [2012 (6) TMI 388 - ITAT MUMBAI] followed Tata Elxsi is engaged in development of niche product and development services, which is entirely different from the assessee company - the nature of product developed and services provided by this company are different from the assessee - Even the segmental details for revenue sales have not been provided by the TPO so as to consider it as a comparable party for comparing the profit ratio from product and services - the company itself in the information provided in response to the notice issued u/s 133(6) of the Act has admitted that it cannot be considered as comparable with other assessees the AO is directed to exclude the company from the list of comparables while determining ALP - Decided in favour of Assessee. Wipro Limited Held that:- The decision in Telcordia Technologies India (P.) Ltd. Versus Assistant Commissioner of Income-tax, Cir 3(3), Mumbai [2012 (6) TMI 388 - ITAT MUMBAI] followed the company is a global IT Company having varieties of service and products and looking to the magnitude of its operations, sales and expenses, the same cannot be taken into consideration for comparability analysis - Moreover, 67% of its sales relates to its product which are sold on premium resulting into higher profitability, therefore, cannot be compared with the assessee company at all - considering the turnover, brand value as well as other dynamics of Wipro Ltd., it comes in the same category as Infosys and certainly cannot be compared with the assessee Decided in favour of Assessee. Rejection of comparables by the TPO Held that:- The assessees contention in respect of Aztecsoft ltd., Birlasoft Technologies ltd. and PSI Data Systems ltd needs to be considered afresh - If the reimbursements are towards expenditure incurred on behalf of the AE and are on cost to cost basis, they have to be excluded for Indium Software India Ltd., exclusion of the company is based on valid reasons, hence, has to be upheld - L & T Infotech was also found to be functionally different as it has products also - not only it has turnover of more than ₹ 600 crores but it has brand value and goodwill - TPO was not in a position to include the above case in the absence of segmental data. So far as VMF Softech Ltd. is concerned, even though this company may be includable on the basis of foreign exchange earnings being 90% of the revenue Relying upon Virtusa (India) (P.) Ltd. Versus Deputy Commissioner of Income-tax [2013 (11) TMI 422 - ITAT HYDERABAD] - the company has been rightly rejected as comparable Decided partly in favour of Assessee. Adjustment for risk differences Held that:- The TPO has elaborately discussed the issue and concluded that risk adjustment need not be given as the single customer risk/political risk of tax payer combined with arithmetic mean price considered in the case of comparable companies qualifies the risk differential if any between the tax payer and comparable Indian enterprise - the assessee has advanced detailed the DRP has simply endorsed the view of the TPO without dwelling upon in detail the issue requires to be examined afresh by the TPO - the issue of risk adjustment is restored to the file of the TPO Decided in favour of Assessee.
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2014 (7) TMI 640
Expenses related to raw material Commencement of Business or not Capital expenses or not Held that:- the performance of any activity of business would lead to commencement of business and the business would be held to be set up - The carrying on the first activity is the integral part to the carrying on the business leads up to setting up of or commencement of business - From the facts of the assessee's case, the main business activity being production of sponge iron, the procurement/purchase of raw material being coal and iron ore is thus very much a business activity. Working capital employment means that the working of the business has started and that means when no doubt that business has commenced its working - the nature of the expenses incurred i.e. interest on working capital, upfront free and insurance and other charges are in the nature of revenue expenditure Decided in favour of Assessee. Carry forward of business loss Assessment u/s 153A - Non filing of return u/s 139(1) Held that:- the assessee is not supposed to file its return of income u/s 139(1) of the Act because he statutorily required to file return of its income in response to notice u/s. 153A of the Act and he has done accordingly and make claim of loss - Neither the AO nor CIT(A) has doubted the genuineness of claim of loss rather on technical issue that it has not claimed the loss in the return of income to be filed u/s. 139(1) of the Act, disallowed the loss - the claim of loss of assessee is allowed decided in favour of Assessee. Reduction of income Already offered to tax Held that:- The assessee rightly stated that three amounts totalling to ₹ 12,37,178/having been already subjected to tax, a sum of ₹ 64,53,786/standing on the debit side of P&L Account under the head 'Pre-commissioning Revenue Expenses' should be increased to ₹ 76,90,964/during the relevant assessment year - the plea of assessee is genuine and accordingly, the matter is remitted back to the AO Decided in favour of Assessee.
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2014 (7) TMI 639
Validity of revised return - Whether Assessee's return filed along with TP report is to be considered or not Held that:- with the original return, assessee failed to include statutorily prescribed TP documentation and Assessee declared the value of international transaction as per its accounts books. Therefore, the other/revised return filed on 29-11-2006 enclosing TP documentation and declaration of higher value of international transaction by making suo-moto adjustment under the provisions of the Act cannot be rejected as the same was a valid return, even though, stated to be filed u/s 139(5) of the Act. - AO directed to consider the revised return as a valid return The decision in M/s Tecumseh Products India Pvt. Ltd. Versus Asst. Commissioner of Income tax [2014 (4) TMI 816 - ITAT HYDERABAD] followed - Decided in favour of Assessee. Validity of AOs adjustment Suo-moto adjustment ignored - Whether adjustment made by the AO ignoring suo-moto adjustment made by the Assessee is correct or not Held that:- The decision in M/s Tecumseh Products India Pvt. Ltd. Versus Asst. Commissioner of Income tax [2014 (4) TMI 816 - ITAT HYDERABAD] followed - the TPO/DRP are not correct in not considering suo-moto adjustments made by Assessee - For arriving at the profit margins realized by the enterprise, suo-moto adjustment has to be taken into account in arriving at the difference to be added so as to make the 'net profit realised' to arrive at the arm's length price in relation to the international transaction as provided under 10B(e)(v) - The AO is directed to consider suo-moto adjustment made by Assessee accordingly Decided in favour of Assessee. Adoption of operating cost - Whether operating cost adopted by TPO is correct or not Held that:- Without considering the objections of Assessee, TPO determined the operating cost based on the proportionate cost on the ratio of sales in various segments - The action of the TPO was not justified at all when Assessee has maintained separate books of account, which was also accepted under the provisions of the Act - The decision in M/s Tecumseh Products India Pvt. Ltd. Versus Asst. Commissioner of Income tax [2014 (4) TMI 816 - ITAT HYDERABAD] followed - Decided in favour of Assessee. Selection of comparables Held that:- The decision in M/s Tecumseh Products India Pvt. Ltd. Versus Asst. Commissioner of Income tax [2014 (4) TMI 816 - ITAT HYDERABAD] followed - There are two sets of objections on the comparables selected by TPO; one being data pertaining to companies which have different accounting period than that of Assessee and the second one being the functional comparability of selected companies, being in business of compressor manufacturing whereas adjustments were done in the segmented results of supply of components (to the compressors) - selection of comparables by TPO suffers from these basic deficiencies, the matter required re-examination thus, the matter is remitted back to the AO for fresh adjudication Decided in favour of Assessee. Invocation of threshold limit - Whether (+)/(-) 5% threshold limit available under the Act can be invoked Held that:- the actual transaction undertaken by Assessee should be the base and not revised transaction reported by making suo-moto adjustment - the Assessee exercised option provided u/s 92C particularly of proviso of (+) or (-) 5% threshold and did not treat the actual sale transaction as ALP no assessee cannot contend that the threshold of (-) or (+) 5% is available again, if TPO action results in further addition The decision in M/s Tecumseh Products India Pvt. Ltd. Versus Asst. Commissioner of Income tax [2014 (4) TMI 816 - ITAT HYDERABAD] followed - Decided against Assessee. Determination of ALP - Addition to CADEM segment Software engineering services Held that:- The comparables companies should be excluded from the computation of PLI - the mean PLI of the rest of the comparables selected by the TPO would come to 18.19% and this is within the margin as arrived at by the assessee, after making adjustments to the working of the TPO - these aspects require examination by the TPO the TPO is directed to consider exclusion of the comparables and to restrict the addition to the AE transactions only - AO/TPO is free to consider whether proportionate cost of Marketing Director salary is to be included in operating cost or not, depending on the nature of his employment and also to examine whether assessee's contention that he was employed at the end of the year has any bearing on issue so the cost should not be included for the working of this year - to the extent of addition made on CADEM segment, the orders of the TPO and DRP are set aside thus, the matter is remitted back to the TPO/AO Decided in favour of Assessee. Expenses on Daughter's Marriage Benefit fund Held that:- The amount is an allowable deduction u/s 37(1) of the Act - assessee is adding back the provision and claiming only the actual amount - Industrial Dispute Act permits this sort of benefit for the employees and assessee has been making matching contribution, allowability of this amount does not attract the provisions of section 40A(9) - both AO and DRP are wrongly disallowed the amount Decided in favour of Assessee. Bonus, Leave Pay and Service Rewards Held that:- AO did not allow the amount on the reason that third party evidences were not furnished it could not be understood as to what sort of third party evidences are required to allow the amounts the AO is directed to examine the vouchers furnished by the assessee and allow the amounts - With reference to service rewards also, it seems to be a gift in kind like fridge - This also requires to be examined by the AO the AO is directed to give opportunity to the assessee and allow the amounts after due examination. Provision of commission Held that:- The commission liability has accrued to the assessee based on sales income booked and was in consistence with accounting Standard-I u/s 145 of IT Act 1961 wherein accrual concept is required to be followed the issue was not examined in detail by the AO the AO is directed to examine the sales made outside India on which provision was made and the amounts paid considering the adjustments made in the computation of income Decided in favour of Assessee.
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2014 (7) TMI 638
Validity of proceedings u/s 153C of the Act Assessment of income of any other person - Held that:- The provisions contained u/s. 153C of the Act can only be invoked where there was satisfaction by the AO having jurisdiction over the person searched or requisitioned u/s. 132A during the course of assessment proceedings - the proceedings u/s. 153A of the Act always precede the proceedings u/s. 153C of the Act and without recording satisfaction note by the AO initiating proceedings for completion of assessment u/s. 153A of the Act cannot be proceeded u/s. 153C of the Act in the case of such other person not searched - initiation of proceedings u/s. 153C of the Act in the case of the assessee for these two assessment years is not proper as there is no satisfaction recorded by the AO having jurisdiction over the person searched or requisitioned u/s. 132A of the Act during the course of assessment proceedings of searched party or later before issue of notice u/s. 153C of the Act thus, the assessment framed u/s 153C of the Act is set aside Decided in favour of Assessee.
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2014 (7) TMI 637
Admission of additional grounds - Expenses attributable to agricultural income or not - Claim of weighted deduction u/s 32(2AB) of the Act - Exemption of agricultural income - u/s 10(1) of the Act - Applicability of section 40(a)(ia) of the Act Held that:- The decision in M/s Advanta India Ltd., Versus The Asst. Commissioner of Income-tax, Circle-11(4), Bangalore [2012 (9) TMI 577 - ITAT, BANGALORE] followed - the issues raised in additional grounds are the legal issues which go to the root of the matter and for deciding these legal issues no new facts are required to be considered as all the facts are already recorded in the orders there was no force in the contention of the revenue that the issue was not challenged before the AO, therefore, assessment was correctly made by the AO Relying upon National Thermal Power Co. Ltd. vs. CIT [1996 (12) TMI 7 - SUPREME Court] the additional grounds are admitted. It is appropriate to remit the issue to the file of the AO to see whether the assessee taken land on lease from farmers, engaged the services of farmers for production of hybrid seed, took entire produce from the farmers, reimbursed the entire expenses of cultivation to the farmers and if the farmers are not given for the produce except reimbursement of the entire charges incurred by them and repayment of labour charges then only the assessee could be considered as it has carried on agricultural operations itself so as to treat income of the assessee as agricultural income Decided partly in favour of Assessee.
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2014 (7) TMI 636
Development contract expenses Payment made to subcontractors - Expenses claimed for non-existing company Genuineness of contract allocation not made by CIT(A) Held that:- payment itself established and, secondly it is not the case of the assessing authority that the particulars of the persons to whom the amounts were paid could not be furnished - The claim of payment of subcontract is not disqualified for deduction under the Act - the expenditure is not a capital expenditure since the assessee did not acquire any capital asset - this is not the payment relating to personal benefit of any employees or directors of assessee-company, it is not personal expenditure. Whether the expenditure is incurred wholly and exclusively for the purpose of business Held that:- The decision in Sassoon J. David & Co. Ltd. Vs. CIT [1979 (5) TMI 3 - SUPREME Court] followed - the expression wholly and exclusively used in s. 10(2)(xv) does not mean necessarily - it is for the assessee to decide whether any expenditure should be incurred in the course of his or its business - Such expenditure may be incurred voluntarily without any necessity and it is incurred for promoting the business and to earn profits, the assessee can claim deduction even though there was no compelling necessity to incur such expenditure - The fact somebody other than the assessee is also benefited by the expenditure should not come in the way of an expenditure being allowed by way of deduction under section 10(2)(xv), if it satisfies otherwise the tests laid down by the law the entire payment of subcontract cannot be disallowed as there is evidence for payment. Whether the assessee has established the payment of subcontract by producing the necessary evidence - Held that:- At that time the sub-contractors might have changed their place of business and non-tracing by the AO cannot be a reason to find fault with the assessee and to disallow the expenditure incurred by the assessee - the payment details had been produced by the assessee-company before the AO - The payment details contained full details of the nature of transaction - the details of all transactions in respect of which the subcontract payment had been paid by the assessee-company are duly recorded in the payment vouchers and other evidence. Assessee submitted that the details furnished before the AO contain the nature of works carried on by the subcontractors - genuineness of the payments was established by the assessee - initial onus and burden of proof was on the assessee - such initial onus and burden of proof has been duly discharged by the Assessee Company by producing its audited books of accounts, payment vouchers and other documents giving full details as to the nature of transactions, which necessitated the payment of such subcontract works and that this was an accepted norm and established in this line of business and that without such payment, it was not possible to survive in this line of business, as well as the prevalent trade practice in the line of business carried on by the Assessee Company all along Decided against Revenue.
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2014 (7) TMI 635
Power of CIT u/s 263 - revision of order - Determination of capital gain Examination of sources of deposits Proper examination of facts - Held that:- The value of consideration is attributable to each of the property is to be payable to the corresponding vendor - the basis of consideration of each property is not in accordance with the share of their property - there is error in offering capital gain by the assessee in respect of his share in the property - it is apparent that the AO in the course of assessment proceedings, though all the materials available on record, failed to cause enquiry regarding the share of assessee in the sale consideration - He just collected the data and without examining the same passed the assessment order, which makes the assessment order erroneous - Where there is under assessment of tax it causes prejudice to the interests of revenue. The AO has not at all examined as to whether only one view was possible or two or more views were possible and hence, the question of his adopting or choosing one view in preference to the other does not arise Relying upon Padmasundara Rao v. State of Tamil Nadu [2002 (3) TMI 44 - SUPREME Court] - the AO has been entrusted the role of an investigator, prosecutor as well as adjudicator under the scheme of the Income-tax Act - the orders passed on an incorrect assumption of facts or incorrect application of law or without applying the principles of natural justice or without application of mind or without making requisite inquiries will satisfy the requirement of the order being erroneous and prejudicial to the interest of the revenue within the meaning of Section 263. The CIT having gone through the assessment record, found that the AO has not made proper enquiry and passed the order in a very cryptic manner by accepting the admitted income though the assessment was reopened to bring to tax capital gains without conducting further enquiry where the situation warrants enquiry - The AO having failed to gather necessary information regarding the share of each vendor in the sale consideration so as to bring right amount to tax, the CIT is justified in exercising his power u/s. 263 of the Act - it is incumbent upon the AO to come to an independent conclusion that the share in the sale consideration of each person is offered for taxation - the AO absolutely closed his eyes for the reasons best known to him and accepted the admitted income at the face of the return which necessitated the CIT to exercise his powers u/s. 263 of the Act thus, the order of the CIT is confirmed Decided against Assessee.
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2014 (7) TMI 634
Benefit of Sec.11 of the Act Invocation of Sec. 13(1)(c) of the Act - Held that:- The income of the trust/property of the trust is to be applied for compensating losses if any arising out of defaults of the trading members of the Stock Exchange, to promote, educate and spread awareness among the general public at large about the securities and the trading market and to apply the income of the trust on such other purpose of public utility as it may deem fit - the assessee strongly stated that none of the claimants/beneficiaries/recipients of compensation whose claims were settled by Trust were trading members of NSEIL - the assessee has filed a demonstrative evidence in the form of certificate from the auditors of the assessee trust - the Revenue authorities have alleged that payment of compensation has directed or indirectly benefited to the trading members of NSEIL, nothing has been brought on record in support of the allegation thus, the matter is remitted back to the AO for verification of correctness or otherwise of the facts Decided in favour of Assessee. Exemption u/s. 10(23EA) of the Act - Held that:- The assessee trust has received contribution in terms of SEBI guidelines from NSCIL that should suffice for the claim of exemption there was no merit in the findings of the CIT(A) for declining the exemption there was no prohibition in the act denying the claim of exemption u/s 10 for the Trust who claimed exemption u/s. 11 of the Act - the assessee trust is a notified trust u/s. 10(23)(c)(iv) of the Act vide Notification dt. 15.12.2003 - though this claim was not made before the AO, relying upon CIT Vs Pruthvi Brokers & Share Holders Pvt. Ltd. [2012 (7) TMI 158 - BOMBAY HIGH COURT] the AO is directed to entertain the claim of the assessee Decided in favour of Assessee. Double addition - Capital gain already added and considered Held that:- The issue needs re-verification as it is a question of fact thus, the matter is remitted back to the AO - The assessee is directed to demonstrate how capital gain have been considered twice by bringing cogent material evidence on record Decided in favour of Assessee.
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2014 (7) TMI 633
Levy of penalty u/s 271(1)(c) of the Act Actual turnover higher than disclosed in return Held that:- The assessee has maintained two sets of books of account - one set was maintained for Income-tax authorities wherein systematically the assessee had been disclosing to the lower sales and thereby declaring lower income by concealing its income - The other set of documents contains the actual amount of sales - It was in the knowledge of the assessee, but, in fact, is a well planned and executed tax evasion so as to defraud the revenue - the additions cannot be termed as agreed additions because there is nothing that the assessee had agreed to suo moto - the conduct of the assessee has been such that it certainly calls for the levy of penalty. The assessee arranged its financial affairs in such a way as to write duplicate sets of account - portions of the duplicate accounts are seized during search operations - In the return of income filed consequent to the search operations, the assessee does not disclose either its true turnover or the true profit percentage - additions have to be resorted to and the turnover is ultimately confirmed at the stage of first appellate proceedings relying upon CIT vs. HCIL Kalindee ARSSPL [2013 (8) TMI 245 - DELHI HIGH COURT] - the conduct of the assessee is far from bona fide and there was a clear-cut strategy to not only evade taxes, but also to file inaccurate particulars of income even after search operation - the penalty u/s 271(1)(c) of IT Act is confirmed Decided against Assessee.
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2014 (7) TMI 632
Penalty u/s 271(1)(c) - deduction u/s 80IB(10) - project was not completed on/or before 31st March 2008 Held that:- CIT(A) has deleted the penalty after detail discussion on merits - in the quantum proceedings, the Tribunal has set aside the matter to the file of the CIT(A) and the orders of the CIT(A) for all the years under appeal should also to be restored thus, the order of the CIT(A) is set aside and restored for fresh adjudication in accordance with law after deciding the quantum proceedings Decided in favour of Revenue.
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Customs
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2014 (7) TMI 672
Release of consignment - import of television sets - inaction on the part of the respondents / revenue - respondents have not permitted clearance of the goods for want of obtaining of document from Bureau of Indian Standards - Held that:- appellant is ready and willing to appear before the Authorized Officer as the consignment is held up for more than 3 months. - directions issued that, the petitioner shall appear before the Authorized Officer by Friday i.e. 4th July, 2014. The concerned Authorized Officer shall complete the exercise in terms of para2 of the affidavit reproduced above by 11th July, 2014. - exercise as above shall be completed by 11th July, 2014.
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2014 (7) TMI 671
Suspension of CHA licence - procedure - acts of violation and misconduct - Regulation 20(2) of the Customs House Agents Licensing Regulations, 2004 - Held that:- The initial order of suspension under Regulation 20(2) and final order under Regulation 20(3) to continue the order of suspension are to be followed by an enquiry under Section 22 and admittedly, it has not been done so within the time limit prescribed. The orders of suspension passed against the second respondent in these appeals cannot continue and the concerned authority, namely the appellant herein has to take a decision whether to suspend or revoke the licence in terms of Regulation 22 and if he fails to do so, the only result is to set aside the impugned orders of initial suspension and its continuance and in the considered opinion of the Court, the Tribunal has rightly done that exercise by correct appreciation of facts and application of Regulations 20 and 22 of CHALR, 2004. The Hon'ble Supreme Court of India in the decision in Ranadey Micronutrients v. Collector of Central Excise [1996 (9) TMI 124 - SUPREME COURT OF INDIA] has held that the Board circular issued by the Central Board of Excise and Customs is binding on the Revenue and they cannot be challenged on the ground of inconsistency with any statutory provisions. In the light of the legal position, it is not open to the appellant/Revenue to take a contra stand in respect of the time limit prescribed under Regulation 22 of CHALR, 2004. The compliance of procedure under Regulation 20 would not tantamount the compliance of Regulation under 22 and therefore, the substantial questions of law raised in these appeals are answered in negative against the appellant in these appeals. - Decided against the revenue.
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Service Tax
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2014 (7) TMI 670
Waiver of pre deposit - Service received in India or outside India - Whether the Tribunal was justified in not granting waiver of pre-deposit when there is no service received in India so as to attract the provisions of Section 66A of Finance Act, 1994 and Rule 3 of the Taxation of Services (Provided from outside India and Received in India) Rules, 2006 - Held that:- It is the specific case of the appellant that even as per the statement of Revenue, the services in this case was rendered outside India and there is no element of service received in India and therefore Section 66A of Finance Act, 1994 and Rule 3 of the Taxation of Services (Provided from outside India and Received in India) Rules, 2006, do not apply to the facts of the present case. However, the Department also rely upon Section 65(96a) of the Finance Act, 1994, which defines the term "Ship Management service" and those services are taxable once the recipient is located in India and the provider is located outside India and therefore the question of taxable event does not arise in the case of services rendered outside India by an agent outside India. There are two important expressions in Section 35-F. One is undue hardship. This is a matter within the special knowledge of the applicant for waiver and has to be established by him. A mere assertion about undue hardship would not be sufficient. It was noted by this Court in S. Vasudeva v. State of Karnataka, (1993 (3) TMI 350 - SUPREME COURT OF INDIA) that under Indian conditions expression undue hardship is normally related to economic hardship. Undue which means something which is not merited by the conduct of the claimant, or is very much disproportionate to it. Undue hardship is caused when the hardship is not warranted by the circumstances. Order of Tribunal is modified that the Tribunal was not justified in ordering the pre-deposit in the manner stated in its order dated 10.6.2013; however, assessee is directed to make a pre-deposit of ₹ 50,00,000 towards pre-deposit on or before 8.8.2014 and subject to such compliance, as stated in the order of the Tribunal dated 10.6.2013, the pre-deposit of balance amount demanded shall remain waived and its collection shall stand stayed during the pendency of the appeal before the Tribunal - Conditional stay granted.
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2014 (7) TMI 669
Demand of service tax - Non payment of service tax collected from customers - rent-a-cab service - Extension of time of pre deposit order - Held that:- Tribunal has considered the prima facie case and ordered pre-deposit of the entire amount. When the matter was listed for reporting compliance, there was no plea made for extending the time to make pre-deposit, except stating that a writ petition has been filed challenging the conditional order passed by the Tribunal. The Tribunal considering the fact that in the writ petition this Court has not granted any stay of order, dismissed the appeal for non compliance of the conditional order of pre-deposit. The said order passed by the Tribunal is justified, as this Court in the writ petition has not granted any stay of the conditional order passed by the Tribunal. No extension of time is sought for and the order has not been complied. No reason to differ with the view taken by the Tribunal - No substantial question of law arises - Decided against assessee.
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2014 (7) TMI 668
Restoration of appeal - Non compliance of pre deposit order - Extension of time granted by Court - Held that:- Section 35-F of the Central Excise Act makes it amply clear that the whenever any appeal is filed, the person filing the appeal should deposit before the adjudicating authority the duty demanded or the penalty levied, unless the same is dispensed with by the Tribunal. In case such deposit as contemplated under Section 35-F of the Central Excise Act is not deposited, the appeal is liable to be dismissed. - Tribunal, after hearing the learned counsel on either side; perusing the records and keeping in mind the undue hardship that would be caused to the appellant and the interest of the Revenue, had shown sufficient indulgence to the appellant by granting time to deposit a part of the tax demanded. Thereafter, the Tribunal also granted extension of time to comply with the said order, of course with a default clause that the appeal will be dismissed in the event of non-compliance of the conditional order within the stipulated time. As the appellant failed to comply with the conditional order passed by the Tribunal, the Tribunal has, in our considered opinion, rightly dismissed the appeal for non-compliance of the provisions of Section 35-F of the Central Excise Act. - No substantial question of law arises - Decided against assessee.
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2014 (7) TMI 667
Waiver of pre deposit - Demand of service tax - Imposition of penalty and interest - Held that:- if the petitioner is directed to deposit the demand of service tax with interest as pre-deposit and penalty imposed under Sections 75A, 78, 76 of Chapter V of the Act is waived and the appeal is decided and disposed on its own merits, it will meet the ends of justice. We apprehend that if the petitioner deposits the entire amount with penalty imposed under Sections Sections 75A, 78, 76 of Chapter V of the Act, it would cause undue hardship to the petitioner. - However, parties do not invite any further reasoned order if the tribunal is directed to decide the appeal preferred by the petitioner on deposit of the entire demand of service tax with interest as pre-deposit and the penalty imposed under Sections Sections 75A, 78, 76 of Chapter V of the Act is waived. Impugned order passed by the tribunal dated 29/11/2013 dismissing the appeal preferred by the petitioner is hereby quashed and set aside and it is directed that, on deposit of the entire demand of service tax i.e. ₹ 5,53,367/- with interest levied by the original authority while passing the Order in Original as pre-deposit within a period of eight weeks from today, the tribunal is directed to decide and dispose of the appeal preferred by the petitioner in accordance with law and on its own merits. The deposit of penalty imposed under Sections Sections 75A, 78, 76 of Chapter V of the Act is hereby waived - Decided conditionally in favour of assessee.
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2014 (7) TMI 666
Power of Revenue authority to recover tax from the debtors / bank - petitioner says that this notice is illegal as no money is due and payable by the bank to the writ petitioner unless the writ petitioner asks the bank to pay - whether Section 87 of the Finance Act, 1994, empowers the revenue authority to issue impugned notice intending to recover the amount - Held that:- Section 87 is one of the modes of recovery of the dues payable by debtor. The power given appears to be sweeping and wide in nature. Above provision obliges the third party (here Bank) to pay not only when it becomes due and payable to the debtor, even also the same is being held by the third party, however with precondition that the money must be legally due and actually held. In this case when respondent Bank has not come forward to object to the action of Revenue, we do not see any reason fundamentally to stall the operation of the notice. However, as the Revenue has agreed to hear the petitioner as to quantum of the legitimate amount of tax, we permit the petitioner to make a representation to the Revenue Officer who has issued the notice, within fortnight from the date of receipt of the copy of this order, failing which the notice in question shall be operative - Decided conditionally in favour of assessee.
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2014 (7) TMI 665
Reimbursement of service tax from the recipient of service - mutual contract - refusal of reimburse the service tax on the ground that service tax was not paid actually but was paid through cenvat credit - hiring of Heavy Earth-Moving Machinery for removal of Overburden, extraction and transportation of coal - corrigendum/amendment to contract - Held that:- The corrigendum/amendment makes it clear that service tax will be reimbursed only on production of original challan having made cash remittance of such service tax. There is no force in the contention of learned senior counsel for the petitioners that by virtue of corrigendum/amendment to clause in respect of service tax, the contract agreement for different tenders was unilaterally altered - corrigendum/amendment dated 2nd March, 2012 to clause in respect of service tax was issued clarifying that the service tax will be reimbursed only if paid through cash remittance or e-payment. Therefore, the corrigendum/amendment dated March 2, 2012 does not amount to unilateral alteration of the terms and conditions of the contract and is only clarificatory. Payment or non-payment of excise duty by respondent-BCCL on the input material/machinery is a serious disputed question of fact. The respondent-BCCL has taken a stand that the contractor has been submitting bill for reimbursement of service tax including other contracts of other organizations, in which, similar order of transportation contracts are included in the lump-sum CENVAT which the contractor claimed and thus, the respondent-BCCL insisted on furnishing documentary proof of payment of service tax by cash remittance by the contractor. Thus whether the contractor has any CENVAT credit in relation to the present contract agreement with BCCL is also a question of fact which has been seriously disputed by the respondent-BCCL. Since as per terms of the contract, alternative remedy for settling the dispute is available to the parties, and since we have already held that the action of the respondent-BCCL in issuing the corrigendum/amendment is not arbitrary, these writ petitions cannot be entertained and the writ petitions are liable to be dismissed - Decided against the petitioner.
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2014 (7) TMI 664
Waiver of the pre-deposit - cenvat credit - discrepancy in duty paying documents - services by club or association - insurance auxiliary services - Held that:- The Tribunal in this aspect, as it appears from the aforesaid reports, consistently held that if the particulars are contained in the documents as required to be done by proviso to sub-rule (2) of rule 9, this will not deny the CENVAT credit on hyper technicalities. This court must record that the Tribunal must record the reasons either for allowing the waiver or refusal to waiver on the materials as well as the pleadings made before it. Mere quoting the provision does not absolve the Tribunal from its responsibility and obligation to record the reasons on each and every issue that has been raised before it. Since this court finds that the application seeking waiver is disposed of solely on the ground that the availability of CENVAT credit on the basis of the documents not prescribed under sub-rule (1) of rule 9 of the CENVAT Credit Rules 2004 this court, therefore, finds that the said order suffers from illegality and/or infirmity. - matter remanded back for reconsideration - Decided in favour of assessee.
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2014 (7) TMI 663
Waiver of pre-deposit - tribunal directed to make pre-deposit of ₹ 1 crore refusing to grant adjournment - Availment of reduction/abatement of 67% in value of taxable service - Notification Nos. 15/2004-S.T., dated 10-9-2004 and 1/2006-S.T. - payment of service tax at the rate of 2% or 4% on the value of contract under the Works Contract Scheme - Non inclusion of value of material supplied free of cost by the clients - Held that:- Request for early hearing cannot bar the petitioner to request for adjournment on genuinely arisen contingencies. Even if the direction is for deposit of 20% of the total amount emphasized by learned counsel for the Revenue, since the petitioner has not been able to put-forth its case of complete waiver and even otherwise also, this order requires interference on the ground of denial of opportunity of hearing as also for violation of principles of natural justice - Matter remanded back - Decided in favour of assessee.
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2014 (7) TMI 662
Extended period of limitation - Technical Inspection and Certification Service provided - Appellant was informed on 01.08.2006 by the office of the Commissioner of Service Tax that their activities would not fall under the category of services rendered and they would not be covered under the Service Tax - Show cause notice was issued to the appellant on 13.04.2010 for the period October 2004 to March 2006 - Held that:- the period relates to time before the letter of the office of the Commissioner was withdrawn on October 27, 2006. On such basis, the Tribunal was of the opinion that when the Department itself was in doubt regarding the taxability of service in question, larger period could not have been invoked. - The Department itself had at one stage conveyed to the assessee that service in question was not taxable service. Though subsequently such letter was withdrawn, the assessee cannot be stated to have, with mala fide intention or with the purpose of breaching the provisions of the Act or the Rules, made inaccurate or incorrect declaration - Decided against Revenue.
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2014 (7) TMI 661
Constitutional validity of S. 65(105)(zzzz) and S. 66 of the Finance Act, 1994 as amended by Finance Act, 2010 - levy of service tax on renting of immovable property service - Held that:- Following decision of Home Solutions Retails India Ltd. Versus UOI and Ors. [2011 (10) TMI 13 - Supreme Court of India] - collection of service tax on rental arrangement service until 30th September 2011 is stayed - Validity of S. 65(105)(zzzz) and S. 66 is upheld - Whatever amount is collected and withheld by the Municipality for any period prior to 30th September, 2011 should be paid to the appellants/petitioners. Recovery of arrears in all these cases up to 30th September, 2011 will remain stayed until judgment of the Supreme Court and thereafter based on such judgment. Whoever has paid tax can claim refund, if eligible, after and based on the judgment of the Supreme Court. If service tax is not paid from 1st October, 2011, it can be recovered by coercive steps but will be subject to judgment of the Supreme Court - Decided in favour of assessee.
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Central Excise
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2014 (7) TMI 656
Waiver of pre-deposit of the amount of duty confirmed, interest thereof and penalties imposed - Clandestine removal of goods - Violation of principle of natural justice - Held that:- There is nothing on record to indicate that they had not received show cause notice. In view of this, we hold that appellants herein were non-cooperative with the adjudicating authority. At the same time, there being a claim of violation of principles of natural justice, in the interest of justice, in our view, the appellants should be granted an opportunity for filing reply to the show cause notice and being heard by the adjudicating authority. - stay granted partly - Matter remanded back.
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2014 (7) TMI 655
Modification of stay order - Recall of order - Overruling judgment - Merchant Overtime Tax Charges (MOT) - Held that:- stay order dated 23.10.2013 be recalled in the light of the decision of the Larger Bench of this Tribunal in the case of Reliance Inds. (2013 (10) TMI 675 - CESTAT AHMEDABAD) In the said case, the decision relied upon by this Tribunal in case of Naval Overseas P. Ltd. (2007 (9) TMI 62 - CESTAT, AHMEDABAD) has been over-ruled. Therefore, in these circumstances, the stay order passed by the Tribunal is recalled - Decided in favour of assessee.
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2014 (7) TMI 654
Clandestine manufacture and removal of Ingots without payment of duty - Allegation on the basis of electricity consumption - Revenue contends that manufacturing units are showing more electricity consumption for production per MT of MS ingots - Reliability on the case of R.A. Castings Put Ltd vs CCB reported in [2008 (6) TMI 197 - CESTAT NEW DELHI] - Difference of opinion - Matter referred to larger bench with following questions of law:- (a) Whether in view of the discussion in para 1 to 31 and in view of the decision of the Tribunal in the case of R.A. Castings Pvt Ltd (supra) the impugned orders are to be set aside and the appeal allowed; OR (b) Whether in view of the discussion in para 32A-68 above and in view of the Hon'ble Supreme Court's judgment in the case of Triveni Rubber and Plastics (1993 (3) TMI 124 - SUPREME COURT OF INDIA) and this Tribunal's decision in the case of Rattan Steels Works (2008 (7) TMI 773 - CESTAT,CHENNAI), Nagpal Steel Ltd (1998 (1) TMI 340 - CEGAT, NEW DELHI) and Hans Casting Pvt Ltd (1998 (3) TMI 298 - CEGAT, NEW DELHI), the impugned orders are to be upheld and all the appeals dismissed.
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2014 (7) TMI 653
Exemption notification No. 50/2003 dated 10.6.03 - Reversal of CENVAT Credit - Subsequent refund claim of the credit so reversed under protest - Commissioner allowed refund claim - Held that:- even though the final product may be exempt from payment of excise, the assessee cannot be asked to reverse the Modvat credit already taken by it - as per the law, as it stood during the relevant time, the appellant was neither required to reverse the credit, nor could he utilize the same. The unutilized credit could remain unutilized in their books of account - Following decision of CCE, Chandigarh vs. Saboo Alloys Pvt. Ltd. reported as [2009 (12) TMI 125 - HIGH COURT OF HIMACHAL PRADESH]. Eligibility of the appellant for refund of the amount already reversed by them - Held that:- appellant are indeed entitled to the refund of the said amount of ₹ 9,29,288/-, if otherwise in order. Further, this amount otherwise refundable, is to be refunded only by way of recredit to their Cenvat account as it pertained to the duty paid on the inputs lying in stock or in process or contained in final products lying in stock with the appellant as on 28.11.2003. This amount cannot be refunded to the appellant in cash - Decided against Revenue.
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2014 (7) TMI 652
Denial of rebate claim - Revenue was of the view that the goods exported were in fact, exempted under Notification No.5/2006-CE, dated 01.03.2006 by entry at S.No.22 - unauthorized payment of Excise Duty for encashing Cenvat credit of countervailing duty and SAD paid on raw material - Held that:- Assessee's omission to make submission in the past was a matter of bona fide mistake on account of their expectation that the controversy would get sorted out through the intervention of CBEC. In ,the facts and circumstances of the case we do not want to penalize them at this stage for the default in filing reply and taking part in adjudication proceeding. Therefore, the impugned order is set aside and the matter is remanded back to the adjudicating authority for a de novo consideration of the matter, after giving a reasonable opportunity to the appellant to make their submissions and a hearing in person. The appellant is directed to cooperate with the adjudicating authority to speed up the adjudication process within a reasonable period, considering the amount of Revenue involved - Matter remanded back - Decided in favour of assessee.
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2014 (7) TMI 651
Duty demand - Clandestine removal of goods - clearance of goods under pseudo cover of private challans/bailing slips of assessee's principal manufacturer - Held that:- Admittedly, apart from the bailing slips, which also stand explained by the respondents, there is no independent evidence showing clandestine removal of goods. The appellate authority has relied upon various precedence decisions of the Tribunal in support of the conclusion arrived at by him. Identical dispute on the basis of the bailing slips produced by M/s. J.K. Woollen & Silk Mills was the subject matter of the Tribunal in the case of Shirley Dyers Vs. CCE, Jallandhar [2013 (12) TMI 108 - CESTAT NEW DELHI] and the confirmation of demand was set aside on the ground that there is nothing in bailing slips connecting them to the manufacturer - Decided against Revenue.
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2014 (7) TMI 650
Denial of Refund claim of excess payment of duty - unjust enrichment - Consequent of the Final Order dt 12.08.2010 of Settlement Commission, the assessee filed an application seeking refund of ₹ 6, 36,739/- being the excess paid amount - The Commissioner (Appeals) has observed that in the cost of goods sold the amount of refund claim has also been included and therefore the amount has been included as expenditure - Held that:- the conclusion reached by the Commissioner without examining the records and in view of the fact that the Chartered Accountant did not specifically certify about the burden having been passed on or not, it is in fairness of things that assessee may be given another opportunity to get their records examined by a Chartered Accountant and get a revised certificate and produce it before the original authority who shall examine the same and consider the refund claim afresh and decide in accordance with law. - Matter remanded back - Decided in favour of assessee.
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2014 (7) TMI 649
Denial of CENVAT Credit - credit taken on steel items like MS Angles, MS Channels, MS Plates, MS Sheets etc., classifying them as capital goods - Held that:- items at S. No.(f), (g), (h), (i), (j), (k) in the reply to the SCN are prima facie cases of fabrication of parts of plant and machinery. So we see merit in the argument of appellant that the matter needs re-examination. Therefore, the impugned order is set aside and the matter is remanded with a direction that a detailed finding with reference to use of the items in respect of capital goods as specified by the appellant should be ascertained with reference to records and if necessary by physical inspection of the plant and machineries involved and a finding given thereafter. - Decided in favour of assessee.
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2014 (7) TMI 648
Denial of CENVAT credit - proof of receipt of inputs - address of transporter were not verified - In one case, the statement of the owner was recorded, wherein he deposed that the goods were not transported by him to the appellants' premises - no sufficient evidence to show that the inputs have not been received by the appellants, who have recorded the same entry in RG 23A-I register and have used the same in the manufacture of the final product. - Held that:- payment of all the inputs were made by the appellants through cheques and there is neither any allegation nor any evidence on record that the money corresponding to the cheque amount stands flown back to the assessee - Admittedly, the appellants have shown the utilisation of the inputs in the manufacture of their final product, which has to be cleared on payment of duty. As such, admittedly, the appellants required inputs for the manufacture of the final product. Revenue has neither made any allegation nor produced on record any evidence to show that the said requisite inputs were obtained by the appellants from any other alternate source. In this scenario, the Revenues allegation as regards non-receipt of inputs cannot be upheld in as much as the appellants could not have manufactured their final product in the absence of the final product. It may not be out of place to mention here that the appellants major supply of the final products are mostly to the public sector undertakings like, HMT, PPL, etc - Decided in favour of assessee.
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CST, VAT & Sales Tax
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2014 (7) TMI 660
Levy of tax on gross turnover - replacement of old / defective parts - Barter transactions - Respondent claimed that there was no sale of old repaired compressors but an exchange of the same for the defective compressors at the option of the customer - Held that:- The section 2(28) clearly stipulates that a sale means a sale of goods within the State for cash or deferred payment or other valuable consideration. Therefore, in order to constitute a sale, it is necessary that there should be an agreement between the parties for the purpose of transferring title to the goods which pre-supposes the capacity to contract; supported by monetary consideration; and the title in the property actually passes in the goods. Unless all these elements are present, there can be no sale. - A defective compressor is brought by the customer of the Respondent to its Sales and Service Office. Thereafter, the customer is informed about the normal time of repairs which is approximately 60 days. At that time, on payment of the repair charges, the customer is given an option either to wait for 60 days or to take another repaired compressor off the shelf of the Respondent. If the customer opts for the latter, then a delivery note cum debit advice as well as a repaired compressor is handed over to the customer. It is therefore evident that there is no sale of the repaired compressor. All that is done is that on payment of repair charges, the customer is given an option not to wait for 60 days and instead take another second hand repaired compressor immediately in lieu of the defective compressor. There was a transaction of cross transfer of property between the defective compressor and the repaired compressor and therefore, there was no consensual agreement of sale supported by price or other montetary consideration. We are in full agreement with the findings of the MSTT on this aspect. What is paid is only the repair charges and not the price for purchasing the repaired compressor. This is clear from the fact that even if the customer opted not to take a repaired compressor off the shelf of the Respondent, it would still have to pay the same repair charges for repairing its own compressor and wait for 60 days to receive the same from the Respondent, after repairs. This puts it beyond the realm of doubt that what is charged to the customer by the Respondent is only repair charges and not a price for the sale of the repaired compressor. - order of the MSTT rejecting the reference application of the Applicant does not suffer from any error whatsoever. The matter does not raise any substantive question of law. - Decided against Revenue.
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2014 (7) TMI 659
Deduction of tax at source - deemed sale - transfer of right to use - whether under the project, the petitioners are simply service provider or they are making project for sale of their equipments under the works contract - services in the field of information and technology - to provide data connectivity, voice and video services - Held that:- sub-clause (d) of clause (29A) of article 366 of the Constitution provides transfer of right to use any goods for any purposes is inclusive in the expression "tax on sale or purchase of goods" but in the present case, since the personnel of the petitioners-company have not handed over their possession and control over the equipments for providing services to MSWAN as such said sub-clause cannot be said to have been attracted. Action taken by respondents No. 1 to 5 regarding tax deduction at source under Meghalaya Value Added Tax Act, 2003 against the petitioners who are service providers and who have not transferred the equipments to the respondents, is illegal and it is made clear that the petitioners are not liable to make payment of sales tax on the equipments unless the same are transferred under the agreement executed between the petitioners and respondent No. 4. It is apparent to mention here as per the terms and agreement, that the petitioners are still in possession and control of the equipments by which the service MSWAN is being provided to the State of Meghalaya. - Decided in favour of assessee.
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2014 (7) TMI 658
Penalty imposed under section 78(5) - Whether, in the facts and circumstances of the case, the submission of ST-18A declaration form filled in, in the ink, at the time of checking is mandatory under rule 53 of the Rajasthan Sales Tax Rules, read with section 78(2) of the RST Act, 1994 and whether incomplete submission of ST-18A declaration form attracts penalty on the price of the goods under section 78(4) of the RST Act, 1994 - Held that:- the law with regard to section 78(5) of the Act cannot be clearly spelt out during the period in which these appellate authorities passed their orders in favour of the assessee while these issues have been decided by the honourable apex court in favour of the Revenue now. However the fact remains that the principles of natural justice are yet to be complied with, may be, notices were sent but now needs reconsideration in the light of the apex court's judgment. On the other hand, the honourable apex court has left it open for the assessing authority to meet such compliance with the principles of natural justice. Therefore, this court is of the opinion that the assessee deserves to be granted fresh opportunity of hearing and specific show-cause notice with the nature of defect(s) and deficiencies in compliance with the provisions of section 78(2) of the Act - Following decision of Guljag Industries [2007 (8) TMI 344 - SUPREME Court] - Decided in favour of Revenue.
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2014 (7) TMI 657
Imposition of penalty - non acceptance of C form - Transaction of transport of kerosene - Authorities doubted the transaction as clandestine removal since no purchaser was present - Purchaser mentioned in invoices did not exist - Whether the said purchaser who got him duly registered was carrying on the business of trading in kerosene which was purchased from the assessee - Held that:- The assessee has not produced to this date any document to show that the said goods crossed the frontiers of Karnataka and entered the adjoining State. Similarly, no material is produced to show that the purchaser dealt with the kerosene purchased by the purchaser in any manner. No material is produced to show the amount received by the assessee from the purchaser towards the sales made, no bank statements are produced. Unfortunately, though the assessing authority refused to act on these documents, the appellate authority in the assessment proceedings proceeded on the assumption that the C form issued is a genuine document and extended the benefit to the assessee. Now, that order is sought to be pressed into service to show that the concurrent findings recorded by these three authorities on proper appreciation of the material on record is erroneous. When the check-post officer refused to act on these documents and made known to the assessee that it is not a genuine transaction and the purchaser is not a genuine person to dispel that case, material to be produced should be anterior to the said date. Material on record states that the order passed by the appellate authority in the assessment proceedings in Appeal No. CST AP 10/05-06 passed on November 28, 2005 requires re-consideration and therefore it is a fit case for the Additional Commissioner or Commissioner of Sales Tax to exercise their power under section 22A of the of the Central Sales Tax Act to revise the said order - Decided against assessee.
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