TMI Tax Updates - e-Newsletter
July 21, 2015
Case Laws in this Newsletter:
Income Tax
Corporate Laws
Service Tax
Central Excise
Highlights / Catch Notes
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Income Tax:
TDS - the assessee’s case has been that, it is not rented any crane/Forklift albeit it engages the services of crane operators/contractors for loading/unloading of goods - payment does not entail deduction of TDS u/s 194I but u/s 194C - AT
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Income Tax:
Levy of interest u/s 201(1A) - failure to deduct TDS - ‘long term capital gain’ referred to in section 115E(a) will only apply to certain transactions as specified under Chapter XIIA and not to a transaction of the nature entered into between present assessee and non resident. - AT
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Income Tax:
Exemption U/s.11A - whether the assessee’s activities were in the nature of “advancement of general public utility” being printing and sale of books, magazines, pictures, calendars, diaries and novelties wherein the second proviso to Section-2(15) of the Act is attracted? - Held No - Exemption allowed - AT
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Income Tax:
Entitlement to claim of exemption u/s.10(23C) (iiiab) - Neither any donor nor the Assessing Officer has lodged any complain before Government authorities for violation of the Act. Assessments of the trust have been completed in the past accepting the exemption u/s.10(23C) - exemption allowed - AT
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Income Tax:
Eligibility for exemption u/s. 54EC - there was no question of denying exemption to the assessee u/s. 54EC on the premise that assessee took a loan from Tallam Textiles and made investments in the Bonds and not out of sale proceeds received on sale of capital asset. - AT
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Income Tax:
Bad debts - provision for bad debts which is not credited to the accounts of the debtors and thus written off cannot be allowed as deduction while computing the income of the assessee - AT
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Income Tax:
Levy of fee u/s 234E - before 01.06.2015, AO could pass a separate order u/s 234E levying fee for delay in filing the statement u/s 200(3) - after 01.06.2015, the AO is well within his limit to levy fee u/s 234E even while processing the statement u/s 200A and making adjustment - AT
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Service Tax:
Busines Auxiliary Service - individuals cannot be subjected to service tax under Business Auxiliary Services upto 1/5/2006 - Post 1/5/2006, liability of the appellant to discharge service tax was expected to be known to appellant as ignorance of law is no excuse - AT
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Service Tax:
Benefit of Notification No. 12/2003-S.T., dated 20-6-2003 - they also buy the magazines and provide it to the customers at actual cost. This is not actually a service but it is actually recovery of cost of materials from the customers - demand set aside - AT
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Service Tax:
Construction of Complex Service Works contract service - after 01.06.2007 also individual flats cannot be considered as service rendered under ‘Works Contract Service' - stat granted - AT
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Service Tax:
Packaging services - Assessee provide packaging service to fertilizer manufactured by other company - appellant being a manufacturer is doing the packaging activity, not liable to service tax - SC confirmed the decision of tribunal
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Central Excise:
Eligibility to CENVAT Credit - a diary recovered from the broker and few statements alone cannot be made the basis for denying CENVAT Credit to the Appellant in the absence of any cross-examination of the third party witnesses given - AT
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Central Excise:
Remission of duty - goods have been destroyed in an accidental fire - The finding recorded by the Tribunal that the appellant has not proved that the insurance claim does not include Excise duty, is perverse and, therefore, could not form the basis for dismissing the appeal - HC
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Central Excise:
MODVAT Credit - Capital goods - Captive consumption - The situation might have been different had the Revenue succeeded in establishing that the electricity generated by the assessee was not used captively but sold outside - credit allowed - HC
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Central Excise:
Textile Goods / others goods Exempt Provided the Inputs are Duty paid and No CENVAT Credit availed - CBEC to issue clarification to avoid unwanted Litigation
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2015 (7) TMI 662
Disallowance of Development expenses - Held that:- It is evident from records that the compound wall was already in existence and there is no permanent structure or building on the land. The Assessing Officer visited the site to have first hand information and found that there is only a compound wall and small tin shed on the land under question. Thus, the claim of ₹ 3,26,500/- for fixing 30 light point, 15 plug point and 4 fan point etc. is not tenable. Even the enquiries made by Assessing Officer from the persons who have allegedly worked on the land does not infuse confidence, therefore, the same were disbelieved. Further, the Assessing Officer observed that most of the parties who had allegedly carried out development work were shown as sundry creditors outstanding as on 31-03-2008. The assessee had allegedly made payments to the said person in assessment years 2009-10, 2010-11 and 2011-12 through cheques drawn on, The Thane Janata Sahakari Bank, Nigadi Branch. The enquiry made by the Assessing Officer revealed that most of the outstanding sundry creditors were paid by bearer cheques and in majority of the cases amount was withdrawn by one Shri Jaganan Thorat who is stated to be a close relative of one of the partners of the assessee firm. Since, the assessee was not able to substantiate the claim, the amount of ₹ 50,02,425/- was offered for tax.In the light of above facts, we do not find any infirmity in the order of Commissioner of Income Tax (Appeals) in confirming disallowance. - Decided against assessee. Levy of penalty u/s. 271(1)(c) - Held that:- In the instant case, admittedly explanation has been offered. Whether it is bonafide or not that has to be seen. The assessee has placed on record the agreements and other documents to show sale transactions of land. The assessee has also placed on record bills to show the expenditure on development of land. Some of the bills/invoices have been rejected by treating them as not genuine by Revenue, however, the persons who have issued the bills have not denied the issuance of bills. The Assessing Officer has rejected the bills on certain presumptions. Thus, in our view, there is no concealment of any information by the assessee. Thus it is not a fit case for levy of penalty for concealment of income or for furnishing inaccurate particulars of income - Decided in favour of assessee.
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2015 (7) TMI 661
Levy of penalty u/s.271(1)(c) - sale outside books of accounts - Held that:- No infirmity in the order of the CIT(A) sustaining the penalty levied by the AO u/s.271(1)(c) of the IT. Act. It is an admitted fact that in the instant case the assessee has sold bagasse outside books of account amounting to ₹ 1,19,32,050/-. Similarly, the assessee was also unable to explain the shortage of molasses stock at ₹ 9,62,150/-. The explanation of the assessee before the CIT(A) that assessee was facing difficulty in running the factory due to short supply of raw materials in our opinion cannot be a ground for making sales outside the books of accounts and non submission of details for shortage of molasses stock. Since the order of the CIT(A) in our opinion is a reasoned one which has been reproduced in the preceding paragraphs, therefore, we find no infirmity in the order of the CIT(A) confirming the levy of penalty u/s.271(1)(c) of the IT. Act. Accordingly, the same is upheld - Decided against assessee.
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2015 (7) TMI 660
Liability to deduct tax u/s 1941 - AO has treated assessee in default with regard to non-deduction of tax at source in case of terminal handling charges, container freight station charges, Mumbai Port trust charges and Crane/Forklift charges - CIT(A) deleted liability - Held that:- CIT(A) has recorded a categorical finding of fact that in so far as terminal handling charges are concerned, the same has been paid by the assessee to foreign shipping lines or their agents on behalf and on account of its clients for which reimbursements were claimed. Such a payment does not constitute assessee’s own expenditure. These charges pertains to handling of material at the time of unloading of the cargo, thus, does not fall within the definition of ‘rent’, as set out in Explanation 1 to section 194I. There is no live link and rational nexus with such an expenditure to the use of any land, building or plant. Such charges received by the foreign shipping line are integral part of there Revenue generation from the operations of the ships and accordingly, they are chargeable to tax as profits of the shipping business. The Ld. CIT(A) has further noted that the assessee has noted particulars of payments made to shipping lines and to their agents and has held that they are not in the nature of rent. Finding of the CIT(A) on this score is upheld. Regarding Container Freight Station charges, Bombay Port Trust charges, the Ld. CIT(A) has discussed the relevant provisions of Custom’s Act and their Regulations made therein in connection with the grant of customs clearance. The payment made under these heads are more of a statutory nature under the regulation of Customs Act and the payment is made by the assessee only in the capacity of intermediary as approved by the Custom Department. It does not represent expenditure of the assessee but the expenditure of the clients handled by the assessee and it is only reimbursement of actual expense. Further, the goods, which passed through CFS do not belonged to the assessee and the services provided for handling till the clearance of the custom was not availed or utilized by the assessee but by the owner of the goods. Finding of the CIT(A) on this score is upheld. Regarding payments for grant of Crane/Forklift charges, the assessee’s case has been that, it is not rented any crane/Forklift albeit it engages the services of crane operators/contractors for loading/unloading of goods. The contractors engaged to use local labours to move the goods and use of crane/forklift and also engaged drivers/operators to drive these vehicles. The assessee does not have any right over any forklift/cranes. Thus, the nature of payment falls within the ambit of a contract within the meaning of section 194C for which the assessee has deducted TDS under the said section and the provisions of section 194I will not apply. The Ld. CIT(A) after discussing this issue in detail has held that such a payment does not entail deduction of TDS u/s 194I but u/s 194C. Further, on similar matters, the Tribunal has upheld the same reasoning that any such kind of charges a TDS are not liable to be deducted. Thus, the order of the CIT(A) is upheld and the grounds raised by the revenue are dismissed. - Decided in favour of assessee.
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2015 (7) TMI 659
Addition of opportunity cost of the deficient funds received by the assessee for nonpayment of share premium by the associate enterprise - Transfer pricing adjustment - Held that:- In view of decision of Vodafone India Services Pvt. Ltd. Vs. Union of India [2014 (10) TMI 278 - BOMBAY HIGH COURT] and order of the Tribunal in assessee own case for AY 2009-10 (2015 (4) TMI 89 - ITAT DELHI) we are of the considered view that there is no charging provision to tax capital account transaction in respect of issue of shares at a premium, therefore, transfer pricing adjustment made by the AO and upheld by the DRP amounting to ₹ 21,42,19,918/- does not survive and we direct the AO to delete the same. - Decided in favour of assessee.
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2015 (7) TMI 658
Sale of land - Long Term Capital Gain v/s income from business - Held that:- CIT(A) has followed the order of his predecessor passed in AYs 2006-07 & 2007-08. The matter was traveled upto the stage of Tribunal who was pleased to restore the issue back to the file of ld.CIT(A) for fresh adjudication by observing as during the appellate proceedings assessee filed three compilations. In reply to the query of the Bench, it was stated that all the documents filed in compilations were before AO as well as Ld.CIT(A). To verify the same, assessment records were called for and it was found that certain documents claimed to have been filed before AO were not part of the assessment record. Learned counsel of the assessee was fair enough to concede that the papers which are not part of assessment records may be treated as additional evidence before Ld.CIT(A) and therefore matter may be sent back to the file of Ld.CIT(A) for fresh adjudication after obtaining remand report from the AO on this additional evidence. Ld.DR did not object to this submission of the assessee’s counsel. Therefore, the matter is hereby restored back to the file of Ld.CIT(A) accordingly. Thus we deem it proper that the present appeal be also restored to the file of ld.CIT(A) for fresh adjudication - Decided in favour of revenue for statistical purposes.
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2015 (7) TMI 657
Warranty amount inclusive of the sale amount - whether is an accrued liability or a contingent liability? - Tribunal following the decision of CIT v. Rotork Controls India Ltd. and others, (2007 (2) TMI 200 - MADRAS High Court) came to hold that since the warranty provision made as against the liability had not crystallized against the assessee, the plea of the assessee seeking deduction is unsustainable - Held that:- The decision of this Court in Commissioner of Income Tax v. Rotork Controls India Ltd. [supra] on which heavy reliance was placed by the Tribunal, was reversed by the Supreme Court [2009 (5) TMI 16 - SUPREME COURT OF INDIA] in the aforesaid decision wherein held that if the historical trend indicates that a large number of sophisticated goods were being manufactured in the past and in the past if the facts established show that defects existed in some of the items manufactured and sold then the provision made for warranty in respect of the army of such sophisticated goods would be entitled to deduction from the gross receipts under section 37. The order of the Tribunal stands set aside and the matter is remanded to the Assessing Officer to pass appropriate orders in the light of the decision of the Supreme Court cited supra. - Decided in favour of assessee for statistical purposes.
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2015 (7) TMI 656
Disallowance of legal and professional charges paid in calculating the capital gains - Tribunal allowed claim - Whether the Tribunal was justified in allowing the entire consultancy charges paid for transfer of shares by violating the provisions of Section 48 of the Act? - Held that:- The sale of shares took place on the account of the legal and professional assistance given by MIFL. The agreement entered into between the shareholders and MIFL clearly setout the pro rata of charges chargelable by each of the shareholders depending upon their shareholding. Insofar as the assessee is concerned, he is a major shareholder. Prior to the entering into the agreement the assessee had written a letter agreeing to pay an additional amount in the event MIFL gets him a good price for his shares. The evidence on record shows the assessee got 72% cents extra when compared to other shareholders. Under the letter dated 25.03.2004 entered prior to the agreement he had agreed to bear the extra charges. Therefore, he being the major shareholder and a director of the company who is a person who was actively involved and interested in selling the shares. He wanted additional amount to be paid to his shares and therefore, he has agreed to pay the additional charges also on the basis of such amount which he would get. It is not in dispute that the assessee got a sum of ₹ 2,98,11,303/- more than for his shares than what he would not get at the rate of USD 4.93 that the other shareholders were paid. It is out of the said additional amount he received, he paid a sum of ₹ 2,84,898,000/- to MIFL as their charges. The payment is not in dispute. Therefore, that is the amount which the assessee incurred as expenditure for sale of shares. That is the amount which is wholly and exclusively incurred by the assessee in connection with such transfer. Under these circumstances the order passed by the Tribunal is in accordance with law and does not suffer from any legal infirmity which calls for interference. - Decided in favour of the assessee.
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2015 (7) TMI 655
Levy of interest u/s 201(1A) - failure to deduct TDS - AO referring to CBDT Circular dated 29/01/07 vide Circular No. 275/201/95-IT(B), dated 29/01/1997 held that charging of interest u/s 201(1A) till the date of payment of taxes by deductee is mandatory - Jurisdiction of AO to levy interst - Held that:- As the present proceeding arises out of the direction of the Tribunal in the earlier round, wherein assessee’s ground on jurisdictional issue was not entertained, assessee cannot again raise the issue before this forum. In the aforesaid facts and circumstances, we decline to entertain assessee’s ground on jurisdiction. Applicability of section 115E to non-resident to whom assessee has made the payment - as submitted by assessee when the long term capital gain is not taxable at the hands of the recipient there is no requirement in law for the assessee to deduct tax on payment made to the non-resident - Held that:- we fail to understand the rationale or logic behind such argument of ld. AR. As could be seen, in course of proceeding before AO assessee took a specific plea that on the assurance of recipient-deductee that he will file his return declaring capital gain and pay tax, assessee did not deduct tax in terms with section 195 of the Act. This statement of the assessee clearly demonstrate, from the very beginning both the assessee as well as the recipient were conscious of the fact that payment made towards sale of property was subject to capital gain tax in India. In fact, keeping with the assurance given to assessee recipient deductee has filed a return of income declaring capital gain and also paid the taxes. When the recipient has not made any claim of exemption, assessee who is only payer of the money cannot assume upon itself the burden of deciding the taxability of payment at the hands of the non-resident recipient. At least, the statutory provision does not permit assessee to do so. Even otherwise also, after careful analysis of the relevant statutory provision we find the submissions of ld. AR unacceptable. On perusal of the definition of ‘long term capital gain’ as provided u/s 115C(d), it is seen that it only refers to foreign exchange assets, meaning thereby, any specified asset purchased with convertible foreign exchange. Therefore, ‘long term capital gain’ referred to in section 115E(a) will only apply to certain transactions as specified under Chapter XIIA and not to a transaction of the nature entered into between present assessee and non resident. Moreover, section 9 of the Act makes it clear that any income arising and received in India is taxable under the Income Tax Act. The nonresident recipient, in our view, having correctly understood the provisions of the Act has filed his return declaring capital gain. In the aforesaid facts and circumstances, assessee’s claim that capital gain is exempt from taxation at the hands of the non-resident recipient, is only a desperate attempt to escape from the rigours of section 201(1A). Whether the contention is correct that, as recipient has paid the entire tax by way of advance tax there is no loss to the revenue, hence, levy of interest u/s 201(1A) cannot be made? - Held that:- This issue to be decided against assessee in view of the ratio laid down in case of Hindustan Coca Cola Beverages Pvt. Ltd. Vs. CIT (2007 (8) TMI 12 - SUPREME COURT OF INDIA) wherein held that liability to pay interest u/s 201(1A) till the date of payment of tax by deductee assessee remains unaltered. No reason to interfere with the order of ld. CIT(A)in sustaining the levy of interest u/s 201(1A). - Decided against assessee.
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2015 (7) TMI 654
Revision u/s 263 by CIT(A) - Held that:- From the para from the order of learned CIT u/s 263 of the Act, it is seen that no categorical finding is given by learned CIT as to what is the error in the assessment order and how the assessment order is prejudicial to the interest of Revenue. He has simply stated that the Assessing Officer has over looked certain facts/expenses/sources of income/transaction of income in bank account which should have been examined properly. Apart from this, we find that for all the points raised by learned CIT in his notice u/s 263, reply has been furnished by the assessee before learned CIT and when we consider the same, we find that the assessment order is neither erroneous nor prejudicial to the interest of Revenue and therefore, we hold that the order passed by learned CIT u/s 263 is not maintainable. We, therefore, quash the order passed by learned CIT. - Decided in favour of assessee.
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2015 (7) TMI 653
Net profit rate of 7.5% on the gross receipts - CIT(A) allowing the relief of ₹ 32,59,715/- out of the additions made on account of disallowance of lorry hire charges, salary to drivers, administrative expenses and lorry fuel Running and maintenance expenses - assessee submission that action of the learned CIT (A) in adopting profit rate of 7.5% of gross receipts is excessive - Held that:- CIT(A) has referred to various Tribunal decisions wherein the Tribunal has approved the adoption of net profit rate of 7% of total turnover in one case, 7.5% in another case and 9.6% in some other case. It has been accepted that facts of each case are different and therefore, direction of CIT(A) to adopt 7.5% in the present case is reasonable in the facts of the present case and also in the light of these Tribunal decisions referred to by learned CIT(A). In this regard, it is also very relevant to notice that it is noted by the learned CIT(A) in Para 8.1 of his order that if the disallowance made by the A.O. is taken into account, the net profit rate of the assessee will go up to 44.77% which is unrealistically higher in the case of a transport contractor. He has also referred to the provisions of section 44AD, which are applicable in case of a transport contractor whose turnover is less than ₹ 40 lac and in those cases, net profit rate of 8% is prescribed. In the present case, the turnover of the assessee exceeds ₹ 2 crore and therefore, adoption of net profit rate of 7.5% in the facts of the present case is reasonable in view of the fact that the assessee is showing a very high amount of outstanding unpaid lorry hire charges, which are paid by way of cash payment in the next year in the month of April and May 2010 and this amount is ₹ 44.14 lac. Thus no infirmity in the order of learned CIT(A). - Decided against revenue and assessee. Addition on unexplained expenses - CIT(A) deleted the addition - Held that:- We fail to understand that how the provision for income tax and audit fees payable can be added by invoking the provisions of section 68 of the Act. In this regard, it is observed by learned CIT(A) in Para 10.2 of his order that the recklessness of the Assessing Officer can be seen that even he has not verified the break-up of sundry creditors which included auditor’s liability and provision for income tax and he has concluded that this shows that no application of mind has been made by the Assessing Officer and addition has been made without any substance. We are of the considered opinion that it is very rightly observed by learned CIT(A) in the facts of the present case that the action of the Assessing Officer is reckless and he has not applied his mind before making this addition. In our considered opinion, when CIT(A) has directed the Assessing Officer to adopt net profit rate of 7.5% and we have approved the same, separate addition made by the Assessing Officer on account of unpaid liability of lorry hire charges is not called for. The remaining two additions u/s 68 of ₹ 13,788/- on account of audit fees payable and ₹ 2,18,787/- on account of provision for income tax is without any basis and therefore, on this entire issue, we do not find any reason to interfere in the order of learned CIT(A).- Decided against revenue. Addition on account of difference between the expenses of salary claimed and actual payment made - CIT(A) deleted the addition - Held that:- This disallowance was made by the Assessing Officer by making ad hoc 20% disallowance out of salary to staff of ₹ 3,81,400/-. The same was deleted by learned CIT(A) on the basis that as he has directed the Assessing Officer to estimate the profit of the assessee by applying 7.5% net profit rate of gross receipts, and hence, separate addition of this nature is not called for. We find no infirmity in the order of CIT(A) on this issue and therefore, this ground is also rejected.- Decided against revenue. Addition in contravention of provisions contained in section 40A(3) - cash payment above ₹ 20.000/- which was in contravention of provisions - CIT(A) deleted the addition - Held that:- CIT(A) has referred to a judgment of CIT vs. Banwari Lal Banshidhar [1997 (5) TMI 37 - ALLAHABAD High Court] wherein it was held that if the income of the assessee is estimated by applying net profit rate, no disallowance can be made with regard to lorry hire charges u/s 40A(3) of the Act. Thus we decline to interfere in the order of CIT(A) on this issue - Decided against revenue.
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2015 (7) TMI 652
Entitlement for exemption U/s.11A - whether the assessee’s activities were in the nature of “advancement of general public utility” being printing and sale of books, magazines, pictures, calendars, diaries and novelties wherein the second proviso to Section-2(15) of the Act is attracted? - Held that:- The objects of the assessee’s trust are only in support of the assessee’s parent trust. Therefore, the scope of the assessee’s trust cannot go outside the ambit of the objects of the parent trust but in parity with the assessee’s parent Trust. Hence all the activities of the assessee’s trust which are associated with the main objects of the assessee’s Parent trust has to be recognized in consonant with the assessee’s Parent Trust “VK” viz., ‘education’, ‘relief to the poor’, ‘medical relief’, ‘preservation of monuments of places or objects of artistic or historical interest’ or ‘advancement of any other general public utility’. The issue is with respect of the sale of books, magazines, pictures, calendars, diaries and novelties etc., containing the preaching’s of swami Vivekananda which is directly attributable to the upkeep of the Sami Vivekananda Rock Memorial because it will bring an awareness to the public at large and influence them to participate in the cause of the parent trust who’s one of the objects is ‘preservation of monuments of places or objects of artistic or historical interest’. Therefore as per our discussions herein above considering the activities of the assessee Trust which is associated with the object of the assessee’s parent trust viz., preservation of monuments of places or objects of artistic or historical interest’, we hereby hold that proviso to Section-2(15) of the Act would not be applicable to the case of the assessee. Therefore, we hereby direct the Ld. Assessing Officer to allow the benefit of Section.11 to the assessee. - Decided in favour of assessee.
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2015 (7) TMI 651
Penalty u/s 271(1)(c) - Bogus expenses - Held that:- In the light of the pleadings before the Bench and the arguments advanced the only claim of the assessee which may have some force is that the relief on quantification of the penalty imposed as admittedly the Ld. CIT(A) on facts has not taken into consideration the fact that in the quantum proceedings at the stage of the CIT(A), relief was granted to the extent of ₹ 3 lakh and it has been urged that the said relief has not been varied till date. It is further seen that it has been canvassed that the issue of expenses for bogus share application money was restored by the ITAT to the AO. Both the Ld. Sr. DR and the ld. AR have submitted that the issues also come up in a miscellaneous petition also before the ITAT. Accordingly the issue for considering these issues is restored back to the file of the CIT(A) with the direction to consider the allowability of the said limited claim of the assessee and thereafter passed a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. - Decided partly in favor of assessee for statistical purposes.
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2015 (7) TMI 650
Penalty levied by the AO u/s 271(1)(c) - gift received from relative or on occasion of marriage of the individual or by way of inheritance have no application to HUF as such the exception in case of HUF is restricted to the gift by will or in contemplation to death and the gift of ₹ 10,00,000/- was to be treated as income from other sources as per AO - AO did not accept the contention of the assessee as it was a clear case of tax evasion by furnishing wrong particulars as assessee came forward only when the notice u/s 148 of the Act and further noticed u/s 142(1) of the Act were issued - Held that:- The assessee was under a bonafide belief that the gift received from father of the Karta was exempt under the proviso (a) to section 56(2)(iv) of the Act and even the AO while framing the original assessment u/s 143(3) of the Act on 31.03.2009 did not make any addition and accepted the particulars furnished by the assessee. Therefore, the mistake of the assessee was a bonafide which was rectified by filing the revised return before receiving any notice u/s 142(1) of the Act and before receiving the copy of reasons recorded by the AO for reopening the assessment. There was no question of furnishing of inaccurate particulars of income as the gift was received by the assessee HUF from the father of the Karta and this fact was available to the AO who framed the original assessment u/s 143(3) of the Act on 31.03.2009. Later on, when a notice u/s 148 of the Act was received by the assessee the return of income was revised and the said gift which was earlier considered as exempt under a bonafide belief in view of proviso (a) to section 56(2)(iv) of the Act was offered for taxation and due taxes were paid. Therefore, in view of the ratio laid down in the case of Price Waterhouse Coopers Pvt. Ltd. Vs CIT (2012 (9) TMI 775 - SUPREME COURT) and CIT Vs Escorts Finance Ltd. [2009 (8) TMI 677 - DELHI HIGH COURT], the penalty u/s 271(1)(c) of the Act was not leviable in the peculiar facts of the present case. Decided in favour of assessee.
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2015 (7) TMI 649
Entitlement to claim of exemption u/s.10(23C) (iiiab) - Whether the income of the assessee shall be exempt from tax u/s 10(23C)(iiiab) or under any other exemption provisions under the IT Act, when there are irrefutable evidence that the assessee collected capitation fee in the form of corpus donations, in relation to granting admission to students in its institutions, using its discretion under management quota or other-wise, in an arbitrary and commercial manner? - Held that:- As far as the objective of the appellant is concerned this is not the case of the Revenue that the assessee was not imparting education. As we know the term education means to teach subjects to students for the development of his mind and also to equip students to deal with reality. The training process is either theoretical or practical but student has to be taught the essentials of the selected subjects so as to develop his skill and knowledge for the subjects studied by him. The appellant institute, admittedly, fulfils the requirements of imparting formal education by a systematic teaching and instructions. Since the question about the imparting of education has not been doubted or challenged by the Revenue therefore. In our considered opinion the impugned order passed by the respondent is unsustainable in law. Strange enough there is nothing on record to prove sightlessly that the purpose of imparting of education was not fulfilled by this institute thus the Revenue Department has hopelessly failed to establish that there was any illegal activity or infringement of any law so that to doubt the genuineness of the activities. If it was so then it can be held that the allegations of the Revenue as discussed above, remained unsupported thus deserves our dismissal. From the submission of the assessee we find that out of more than 47000 students the assessee trust has collected donations from only 1217 students out of which only 23 persons had admitted to have given donations for admission. We find out of the above 23 persons only 6 were available for cross examination. We find the relatives or parents of the students have filled up the declaration stating that they have given voluntary donations to the institutions, even some of them claimed deduction u/s.80G also. Nothing has been brought on record that any such amount of donation has not been accounted for in the books of account or has been utilised by any of the trustees or their relatives or has not been utilised for purposes other than education. Therefore, we are of the considered opinion that the assessee trust whose main object is imparting education, cannot be denied the benefit of provisions of section 10(23C)(iiiab) and (iiiac) merely on the basis of contradictory statements of a few donors. Neither any donor nor the Assessing Officer has lodged any complain before Government authorities for violation of the Act. Assessments of the trust have been completed in the past accepting the exemption u/s.10(23C) of the Act. Therefore, we find no reason to deviate in absence of any evidence brought on record for denying the exemption claimed u/s.10(23C) for the year. So far as the decision relied on by Ld. Departmental Representative is concerned, the same in our opinion is not applicable to the facts of the present case which was in context of section 10(23C)(iiiad). In view of our reasons given above we hold that the Ld.CIT(A) is not justified in denying the exemption u/s.10(23C) (iiiab) of the I.T. Act. - Decided in favour of assessee.
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2015 (7) TMI 648
Unexplained cash credits under section 68 - donations received - CIT(A) deleted addition - During the course of hearing, an argument was also raised that if the provisions of section 68 of the Act cannot be invoked, disallowance can be made by invoking the provisions of section 115BBC - Held that:- In the instant case, since the assessee has furnished complete details of the donors along with PAN, the said donation cannot be called to be anonymous donation. Therefore, provisions of section 115BBC of the Act cannot be invoked. Keeping in view the totality of the facts and circumstances of the case, we are of the considered opinion that no disallowance can be made either under section 68 of the Act or under section 115BBC of the Act. Therefore, we find no infirmity in the order of the ld. CIT(A) who has rightly deleted the addition - Decided against revenue.
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2015 (7) TMI 647
Validity of assessment completed under section 153A - search carried out under section 132(1) - addition on share capital and the share premium as well as the disallowance of the expenses - Held that:- In the case of the assessee, the addition has been made in each of the assessment years on account of the share capital and the share premium as well as the disallowance of the expenses. During the course of the search taken place in the case of the assessee, we noted that no incriminating material was found in respect of the additions made by the Assessing Officer in each of the assessment years. The only material which was found was the Bank account which the assessee was having with the banker. The said Bank account was duly disclosed in the income-tax return filed by the assessee. The said Bank account can also not be regarded to be the incriminating material. Even the Assessing Officer has also not made any addition on the basis of said bank account in each of the assessment years. The banker has made the Pay Order in respect of the balance of the Bank account in favour of the Revenue as per the order of ADIT vide letter dated 11.02.2010, only that Pay Order was seized. It is not the case that the Bank account was not disclosed. Except the Bank account, no other assets, documents or material were brought to our knowledge by the ld. D.R., which has been found or seized by the Department, so that it could be regarded to be the incriminating material in respect of the share capital and the share premium as well as the disallowance of the expenses in respect of which the addition has been made in the assessment completed under section 153A. Since there was no incriminating material found in the course of the search and brought to our knowledge by the ld. D.R. in respect of the share capital and share premium, therefore, we are of the view that no addition on this account can be made in the case of the assessee in each of the assessment years. We also noted that recently Hon’ble Bombay High Court has also approved the decision of the Special Bench, Mumbai in the case of All Cargo Global Logistics Limited –vs.- DCIT, ITAT, Rajkot Bench reported in (2015 (5) TMI 656 - BOMBAY HIGH COURT.). - Decided in favour of assessee.
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2015 (7) TMI 646
Suppressed value of closing stock - AO noticed that the GP rate decline 6.55% in comparison to last year - CIT(A) deleted the addition - Held that:- The assessee has worked out the net realizable value of the closing stock as on 31/03/2010 by taking actual realization up to the date of finalization of balance sheet in the month of August 2010 and in respect of that portion of closing stock as on 31/03/2010 which remained unsold in August 2010 (when the balance sheet was prepared), the same was valued at average rate for the preceding period i.e. from 01/04/2010 to the date of finalisation of balance sheet in the month of August, 2010. We also find that as against the actual sale price realized by the assessee during April 2010 to August 2010, the Assessing Officer has adopted the selling price realized by the assessee as on 02/04/2010 instead of average selling price during April 2010 to August 2010 for working out the net realizable value. This goes to show that the assessee has taken advantage of falling prices to reduce the value of closing stock but the A.O. has correctly valued the closing stock on the basis of market price close to 31.03.2010. Hence, in the facts of the present case, this judgment of Hon'ble Apex Court rendered in the case of Chainrup Sampatram vs. CIT (1953 (10) TMI 2 - SUPREME Court) is also not applicable. From this Para of AS – 2, it comes out that only those events occurring after Balance Sheet Date are relevant which confirm the conditions existing at the balance Sheet Date. It means that if for the condition of stock on the balance Sheet Date or other factors existing at the balance Sheet Date, lesser prices has been realized in future, it can be said that such fall in price in future is because of conditions existing at the balance Sheet Date and in that situation, such reduced prices can be adopted as price on balance sheet date but in the present case, this is not a claim of the assessee that there was any defect in the goods at balance sheet date or any other factor was existing at the balance sheet date for which, the prices had fallen after 02.04.2010 and hence, this Para of AS – 2 is also not applicable in the facts of the present case. In fact, this Para supports our observations in Para 7 above. In view of the above discussion, we hold that the order of Cit (A) on this issue is not sustainable. Hence, we reverse the same and restore the order of the A.O. on this issue. - Decided in favour of revenue. Addition on account of Transportation and installation charge - AO observed that the assessee has not debited charges in the profit and loss account - CIT(A) deleted the part addition - Held that:- Addition made by the Assessing Officer was on estimated basis without any evidence on record and the relief allowed by the Assessing Officer is also on estimated basis. This is very relevant to note that that it is claim of the assessee that the supplier of the old plant & machinery has delivered the material to assessee’s site free of cost and therefore, the assessee was not required to pay any transportation cost. In spite of this, learned CIT(A) has confirmed the addition of ₹ 50,000/- on the basis that the assessee could not adduce sufficient evidence in support of its claim that the suppliers of old plant & machinery had delivered the material to the assessee’s site free of cost. Considering all these facts, we are of the considered opinion that no interference is called for in the order of CIT(A) because he has adopted one estimated figure as against the estimate of the A.O. and we feel that the estimate of CIT (A) is reasonable in the facts of the present case - Decided against revenue.
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2015 (7) TMI 645
Eligibility for exemption u/s. 54EC - CIT(A) allowed claim - according to AO the sale proceeds of the capital asset were not invested in REC/NHB Bonds and what was invested was only loan taken from the partnership firm, M/s. Tallam Textiles, the claim of exemption u/s. 54EC was not to be allowed - Held that:- The evidence filed by the assessee before the CIT(A), in our view, clearly demonstrates that there was no loan taken by the assessee from M/s. Tallam Textiles. It was a case where assessee deposited the sale proceeds in his capital account (current account) and withdrew monies therefrom and made investments in the Bonds. Therefore, there was no question of denying exemption to the assessee u/s. 54EC on the premise that assessee took a loan from Tallam Textiles and made investments in the Bonds and not out of sale proceeds received on sale of capital asset. Even assuming that the assessee had taken loan and made investments in REC Bonds, that cannot be a bar to claim exemption u/s. 54EC of the Act. In our view, the decision of the Mumbai Bench of the Tribunal in Bombay Housing Corporation (2001 (2) TMI 1020 - ITAT MUMBAI) clearly supports the claim of the assessee in this regard - Decided in favour of assessee.
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2015 (7) TMI 644
Disallowance under section 40(a)(ia) - late deposit of TDS into the Government account - CIT(A) deleted disallowance by holding that the relevant amendment made to section 40(a)(ia) by Finance Act, 2010 was applicable with retrospective effect - Held that:- The issue involved in this appeal of the Revenue is squarely covered in favour of the assessee by the decision of CIT vs. Virgin Creations (2011 (11) TMI 348 - CALCUTTA HIGH COURT ) as well as the various decisions of the Coordinate Benches of this Tribunal as cited on behalf of the assessee before the Ld. CIT(A) wherein it was held that the relevant amendment made to section 40(a)(ia) by the Finance Act, 2010 being retrospective in nature, no disallowance under section 40(a)(ia) can be made if the corresponding TDS amount is paid by the assessee before the due date of filing of the return of income for the relevant year. In the present case, the TDS amount was duly paid by the assessee into the Government account on 31.05.2007 and 29.10.2007 i.e., before the due date of filing of return of income for the year under consideration and this being the undisputed position, we uphold the impugned order of the Ld. CIT(A) deleting the disallowance made by the A.O. under section 40(a)(ia). - Decided against revenue.
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2015 (7) TMI 643
Unabsorbed depreciation adjustment against Long Term Capital Gain - CIT(A) allowed claim - Held that:- As relying on CIT Vs.Pioneer Asia Packing P. Ltd. [2007 (11) TMI 285 - MADRAS HIGH COURT ] wherein held the Tribunal has rightly come to the conclusion that the assessee is entitled to the unabsorbed depreciation brought forward as on April 1, 1997, and could be set off against the business profits and in order to give effect to that finding, the case was remitted to the file of the Assessing Officer for verification as to how much depreciation was available up to April 1, 1997, that could be included in the income of the assessee. Also see GENERAL MOTORS INDIA PVT. LTD Versus DEPUTY COMMISSIONER OF INCOME-TAX [2012 (8) TMI 714 - GUJARAT HIGH COURT ] -Decided in favour of assessee.
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2015 (7) TMI 642
Disallowance of Excess Depreciation claimed on Wind Mill - CIT(A) deleted the addition - whether generator, transformers, HT lines, miscellaneous civil works will form part of wind mill so as to get 80% depreciation under that category? - Held that:- The above units which are treated by the AO as separate independent Plant & Machinery are integral part of windmill system and has no independent existence as plant and Machinery. The civil works such as foundations can not be treated as buildings so as to consider them as independent assets. We hold that they are part of wind mill and is entitled for depreciation @ 80%. The order of CIT(A) is therefore upheld - Decided in favour of assessee.
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2015 (7) TMI 641
Provisions for wage arrears - addition made for the purpose of computing books profits U/s.115JB and also for computing the total income as per the normal provisions of the Act - Held that:- As submitted by the Ld. A.R, if the assessee has made a commitment in the draft wage settlement before the Joint Commissioner of Labour, to that extent it will be an ascertained liability of the assessee company because at least to that extent the assessee company will have to make the payment. However, these aspects can be verified only from the draft wage settlement agreement and the same is not before us for our perusal. Therefore, we remit back the issue to the file of Ld. Assessing Officer to examine the draft wage settlement agreement in the light of the decisions relied upon by the assessee and pass appropriate order as per merit and law. - Decided in favour of assessee for statistical purposes. Disallowance of provision for doubtful debts - Held that:- The decision rendered by the Hon’ble Apex court in the case of M/s.Vijaya Bank (2010 (4) TMI 46 - SUPREME COURT) is not applicable considering the facts of the assessee’s case. In that case, the assessee is a bank who draws its account as per the guidelines provided by the Reserve Bank of India (RBI). There are legal implications for writing off the debts in the accounts of bank by crediting the debtor’s accounts. The system of accounting is also different. Various classifications with respect to debtors are drawn in the books of accounts as per the norms specified by the RBI. In such circumstances, the Hon’ble Apex Court had held that it would suffice to reduce the bad debts in the statement of accounts and actual write off bad debts in the books of accounts would not be necessary. With respect to other assessees, the Hon’ble Apex Court had categorically held in the case TRF Ltd. Vs. DCIT reported in [2010 (2) TMI 211 - SUPREME COURT ] that “it is not necessary for the assessee to establish the debt had become irrecoverable. It is enough if the bad debts are written off as irrecoverable in the books of accounts of the assessee.” For the above reasons, we find that the action of the Revenue is appropriate in the case of the assessee which is not a Bank governed by the rules of RBI and accordingly we hereby hold that the amount of ₹ 1,42,321/- shown as provision for bad debts which is not credited to the accounts of the debtors and thus written off cannot be allowed as deduction while computing the income of the assessee - Decided against assessee. Disallowance 5% of the dividend income U/s.14A as expenses incurred for earning the exempt dividend income CIT (A) deleting the disallowance holding that invoking the provisions of Rule 8D is not in order - Held that:- On this issue we find the finding of the Ld. CIT (A) to be in order because Rule-8D of the Rules has come into effect from 24.03.2008 relevant to the assessment year 2008-09. Therefore, the aforesaid rules will not be applicable to the case of the assessee, since the relevant assessment year is 2007-08. Moreover on this issue, this Bench of the Tribunal has been consistently taking a view that 3% of the exempt income can be treated as the expenditure incurred for earning such income and accordingly such amount has to be disallowed. Therefore in the case of the assessee also, we hereby hold that 3% of the dividend income which is exempt from tax shall be treated as the expenditure incurred for earning such dividend income and the same shall be disallowed as allowable deduction. It is ordered accordingly. - Decided against revenue.
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2015 (7) TMI 640
Levy of fee under Section 234E while processing the statement furnished by the assessees under Section 200A - Held that:- The Parliament welcomes the citizens to come forward and comply with the provisions of the Act by paying the prescribed fee before filing the statement under Section 200(3) of the Act. However, if the assessee fails to pay the fee before filing the statement under Section 200(3) of the Act, the assessing authority is well within his limit in passing a separate order levying such a fee in addition to processing the statement under Section 200A of the Act. In other words, before 01.06.2015, the assessing authority could pass a separate order under Section 234E levying fee for delay in filing the statement under Section 200(3) of the Act. However, after 01.06.2015, the assessing authority is well within his limit to levy fee under Section 234E of the Act even while processing the statement under Section 200A and making adjustment. In view of the above discussion, this Tribunal is of the considered opinion that the Assessing Officer has exceeded his jurisdiction in levying fee under Section 234E while processing the statement and make adjustment under Section 200A of the Act. Therefore, the impugned intimation of the lower authorities levying fee under Section 234E of the Act cannot be sustained in law. However, it is made clear that it is open to the Assessing Officer to pass a separate order under Section 234E of the Act levying fee provided the limitation for such a levy has not expired. Accordingly, the intimation under Section 200A as confirmed by the CIT(Appeals) in sofar as levy of fee under Section 234E is set aside and fee levied is deleted. However, the other adjustment made by the Assessing Officer in the impugned intimation shall stand as such. - Decided in favour of assessee.
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2015 (7) TMI 639
Levy of fee under Section 234E while processing the statement furnished by the assessees under Section 200A - Held that:- The Parliament welcomes the citizens to come forward and comply with the provisions of the Act by paying the prescribed fee before filing the statement under Section 200(3) of the Act. However, if the assessee fails to pay the fee before filing the statement under Section 200(3) of the Act, the assessing authority is well within his limit in passing a separate order levying such a fee in addition to processing the statement under Section 200A of the Act. In other words, before 01.06.2015, the assessing authority could pass a separate order under Section 234E levying fee for delay in filing the statement under Section 200(3) of the Act. However, after 01.06.2015, the assessing authority is well within his limit to levy fee under Section 234E of the Act even while processing the statement under Section 200A and making adjustment. In view of the above discussion, this Tribunal is of the considered opinion that the Assessing Officer has exceeded his jurisdiction in levying fee under Section 234E while processing the statement and make adjustment under Section 200A of the Act. Therefore, the impugned intimation of the lower authorities levying fee under Section 234E of the Act cannot be sustained in law. However, it is made clear that it is open to the Assessing Officer to pass a separate order under Section 234E of the Act levying fee provided the limitation for such a levy has not expired. Accordingly, the intimation under Section 200A as confirmed by the CIT(Appeals) in sofar as levy of fee under Section 234E is set aside and fee levied is deleted. However, the other adjustment made by the Assessing Officer in the impugned intimation shall stand as such. - Decided in favour of assessee.
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2015 (7) TMI 638
Unexplained cash credit - CIT(Appeals) sustained the addition, however, the addition was made as unexplained investment u/s. 69 - Held that:- The assessee has furnished confirmation letters from all the creditors. All the creditors have supported the case of assessee. A perusal of the impugned order show that there is no discussion about the loans and advances taken by the assessee and the repayment of same. Therefore, it would not be fair to treat the entire deposits in various bank accounts of the assessee as unexplained. No merit in the contentions of the assessee with regard to agricultural income. It is an undisputed fact that the assessee has disclosed agriculture income in his return of income as ₹ 1,00,000/-. The assessee in order to justify cash deposits cannot increase agriculture income in an arbitrary manner. The arguments forwarded by the assessee and the documents placed on record to support the submissions does not infuse confidence to accept the assessee’s proposition. Therefore, we reject the contention of the assessee with regard to deposit of agriculture sale proceeds in the bank. CIT(A) has made addition u/s. 69 of the Act as unexplained investment. We do not concur with such findings of CIT(A). The Revenue has not been able to show any investment made by the assessee. The term ‘investment’ is not defined in the Act, the expression has to be understood in the ordinary popular sense used in commercial parlance. Thus, the word investment means placement of a particular sum of money in business venture, property or any other possession acquired for future financial return or benefit. Deposit of money in saving bank account from various quarters cannot par take the character of investment. However, it can become a source of making investment. Thus we are of considered opinion that addition should not be made on entire bank deposits. The addition can be made only on unexplained credits in the bank accounts. Accordingly, we accept the alternate plea of the assessee. The file is remitted back to the Assessing Officer to decide this issue denovo. Decided partly in favour of assessee for statistical purpose.
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Corporate Laws
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2015 (7) TMI 664
Default in collection of margin from Trading members (TMs) - Prohibition on taking new assignment or contract or launch a new scheme for a period of 3 months - Section 19 of the SEBI Act, 1992, read with Regulations 28 (2) of the SEBI (Intermediaries) Regulations, 2008 - Professional responsibilities of stock brokers - Significance of margin money - Held that:- SEBI would always have the authority to inquire and impose punishment in those matters which, in its expert opinion, have not been dealt appropriately by the stock exchange concerned. It is not a question of the punishment being mild or severe, but that of regulating the market at a level far beyond the scope and reach of an individual stock exchange which is concerned primarily with its own members and their respective clients. Clause 8 of the circular dated August 10,2011 particularly states that “SEBI shall examine the implementation of this circular during inspection of the stock exchange”. The insertion of this particular clause removes any doubt which may have crept into our minds in light of the relentless argumentation on part of the appellant's learned lawyers. While issuing this circular, SEBI did not intend to abdicate its responsibility with respect to such a vital capital regulatory measure as the collection of margin money. We would hasten to add that stock exchanges have also been conferred with regulatory powers under the SCRA, 1956 and the rules framed thereunder. However, this per se can never be construed as precluding SEBI from acting in a particular matter which calls for intervention in the facts of a given case. SEBI, in the circular itself, has retained the right to supervise the margining system in the market. It is a stock-broker’s professional responsibility, rather it is his duty, to investigate the financial capability of an investor entering a margin transaction and to inform that investor of the implication of a margin transaction. The form of collection of margin money, its adequacy and deposit, including limit on exposure, are extremely important ingredients of a purposeful and effective margining system in the present day capital market culture. Expeditious and correct reporting of margin also acquires great significance towards this end. Additionally, SEBI has prescribed a model Clearing Member-Trading Member Agreement vide circular dated December 3, 1998. According to clause 5 of this agreement, the CM shall collect margins from the TM as prescribed by the relevant authority from time to time. Not having done the same, the appellant is also in contravention of these provisions. Clauses A(1) (2) and (5) of the Code of Conduct for stock brokers provide that stock brokers shall maintain high standards of integrity, promptitude and fairness in the conduct of all business while acting with due skill, care and diligence; and abiding by all the provisions of the law applicable to stock brokers. Margin money has always played an important role in containing risks which are inherent in the functioning of any capital market. Owing to its non-adherence huge market crashes have been witnessed all over the glove in the recent past. The vital position that the margining system holds as a crucial instrument to maintain market equilibrium can never be undermined. It is, therefore, pertinent for all market players to maintain the sanctity of margining as a risk management tool while dealing in securities, be it in the cash or in the F&O segment. - Decided against the appellant.
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2015 (7) TMI 663
Charges of oppression and mismanagement - Application u/s section 397 and 398 of the Companies Act, 1956 - Notice of EGM not issued to all shareholders - Held that:- I am of the view that the holding of the EGM on 19.08.2004 is invalid and illegal on the ground that the petitioners have not issued notices for convening the meeting to all the shareholders of the company except informing orally to the shareholders who supported the petitioners cause. The petitioners failed to establish that they have issued notices to all the shareholders for the EGM held on 19.08.2004. As held supra that the meeting is invalid and illegal and even as per the articles the petitioners cannot claim to be a Chairman and Managing Director and Governing Director for life as the privilege was given only to late Shri K. Venkatswamy. As per Article 19 of the articles the company shall take a decision to appoint any other person to be the governing or managing director of the company. The respondents admittedly holding majority shares in the paid up share capital of the company issued a notice for convening EOGM of the company and the petitioners convened the meeting on 12.01.2006 and did not participate in the meeting. The petitioner himself filed a suit bearing O.S No.6/2006 before the Civil Judge at Arsikere against the respondents along with an application seeking temporary injunction from conducting the meeting dated 12.01.2006. The Civil Court refused to grant injunction and the suit was dismissed on 12.03.2006. The meeting which was held on 12.01.2006 is legal and valid. - The petitioners have not made out any case either on oppression or on mismanagement and the petition is liable to be dismissed.
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Service Tax
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2015 (7) TMI 676
Busines Auxiliary Service - Invocation of extended period of limitation - Held that:- On chargeability of service tax appellant is not agitating the issue on merits w.e.f. 01/5/2006. For the period before 01/5/2006 it is the case of the appellant that the word any person was mentioned in the definition of Busines Auxiliary Service under Section 65 (105) (zzb) only w.e.f. 01/5/2006. On verification of the case records we find it so and hold that individuals cannot be subjected to service tax under Business Auxiliary Services upto 01/5/2006. Demand for the period prior to 1/5/2006 is, therefore, required to be set aside There was no ambiguity or confusion with respect to interpretation of Business Auxiliary Services after 01/5/2006 and liability of the appellant to discharge service tax was expected to be known to appellant as ignorance of law is no excuse - Demand for the period from 01/5/2006 onwards is payable by the appellant, with interest, as extended period has to be held as applicable for the period 01/5/2006 onwards - Decided partly in favour of assessee.
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2015 (7) TMI 675
Waiver of pre deposit - Construction of complex service - Evasion of service tax - wilful mis-statement/suppression of facts - Held that:- residential complexes were for defence personnel or for the personnel of Gautum Budh University. The contracts for making the residential complexes were awarded to RITES Ltd., NBCC and IRCON International which in turn engaged the appellant for building the said complexes and the payment to the appellant were also made by them (i.e. RITES Ltd., NBCC and IRCON International). Thus the impugned service was provided by the appellant (as sub-contractor) to the said main contractors. It is also seen that the appellant never declared to the department about the rendition of the said service - appellant was engaged by RITES/NBCC/IRCON International (and not directly by the Govt./Gautam Budh University) for the said construction and therefore is not covered under the said exclusion clause and there is hardly any interpretational ambiguity in this regard which prima facie makes the said evasion deliberate. - Partial stay granted.
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2015 (7) TMI 674
Waiver of pre deposit - Penalty u/s 78 - Held that:- Applicant has deposited the entire amount of Service Tax. The applicability of penal provisions whether resulting out of suppression of facts relating to collection of service tax and non-deposit with the Government, would be examined at the time of disposal of the appeal. At this stage, the offer to deposit ₹ 10.00 Lakhs seems to be reasonable. Consequently, the applicant is directed to deposit ₹ 10.00 Lakhs within a period of eight weeks from today and on deposit of the said amount, balance dues adjudged would stand waived and its recovery stayed during the pendency of the appeal. - Stay granted.
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2015 (7) TMI 673
Benefit of Notification No. 12/2003-S.T., dated 20-6-2003 - Valuation - Exemption for the goods which are sold during the course of providing service - Held that:- scrutiny of the sales invoices for the period 2006-07 revealed that appellants had recovered cost of certain materials used during the course of provision of service. If this is not sale of goods, we do not understand what exactly is. If the cost of material is shown separately in the invoice and the amount is worked out on that basis, appellant’s claim for benefit of Notification in our opinion is already proved. The learned counsel also submitted that the claim is only in respect of what is known as photo prints. Appellants are engaged in providing service of sale of space for advertisement and after the advertisement is published, they submit a copy of the relevant materials and the advertisement copy and they also buy the magazines and provide it to the customers at actual cost. This is not actually a service but it is actually recovery of cost of materials from the customers. In our opinion, the documents produced by the appellant is sufficient to find out their eligibility. Since the entire issue is based on a few invoices and that the amount involved is only ₹ 51,000 - Decided in favour of assessee.
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2015 (7) TMI 672
Waiver of pre deposit - Construction of Complex Service Works contract service - Held that:- Construction of individual residential houses is not covered by the service of Construction of Residential Complex. It was also held that after 01.06.2007 it cannot be covered under Works Contract Service also. However it was specifically mentioned that the observations regarding Works Contract Service need not be taken into account. In the case of Krishna Homes Vs. CCE, Bhopal [2014 (3) TMI 694 - CESTAT AHMEDABAD], the Tribunal has already taken a view that after 01.06.2007 also individual flats cannot be considered as service rendered under ‘Works Contract Service'. In any case the definition of service remained the same till 01.07.2010 and prior to that there was no levy of service tax on individual residential construction. Only when a residential complex was constructed as a service, levy was applicable. Therefore we find that the decision of this Tribunal in the case of Macro Marvel Projects [2008 (9) TMI 80 - CESTAT, CHENNAI] upheld by the Hon'ble Supreme Court prima facie is applicable to the facts of this case also. In view of the above, we consider that the amount deposited by the appellant is sufficient to hear the appeal and accordingly the requirement of pre-deposit is waived and stay against recovery is granted during the pendency of appeal. - Stay granted.
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2015 (7) TMI 671
Data processing services - Refund claim - Refund of accumulated CENVAT Credit - amount shown in the ST-3 return does not tally with the claim of refund - Held that:- Services are pertains to the business of export service hence, these services qualifies as “input services” as per Rule 2(l) of the Cenvat Credit Rules, 2004 as held by the Hon’ble High Court of Bombay in the case of Ultratech Cement (2010 (10) TMI 13 - BOMBAY HIGH COURT). Therefore, I hold that the appellant is entitled for refund claim for the month of May, 2009 and from July, 2009 to September, 2009. With regard to the denial of refund claim for variance of figures of the amount claimed as refund and ST-3 return, I find that these figures are to be examined by the adjudicating authority. Therefore, the matter is remanded back to the adjudicating authority to ascertain the fact of payment of Service Tax as per challans produced by the appellant and thereafter to ascertain the amount of actual Service Tax paid and the actual amount of refund claimed by the appellant. Therefore, the impugned order is set aside - Decided in favour of assessee.
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2015 (7) TMI 670
Packaging services - Assessee provide packaging service to fertilizer manufactured by other company - Supreme Court after hearing the parties did not find any good reason to interfere with the judgment and order passed by the Customs, Excise and Service Tax Appellate Tribunal [2014 (11) TMI 277 - CESTAT MUMBAI], wherein Tribunal held that, appellant being a manufacturer is doing the packaging activity and does not fall under packaging activity defined in section 65(76b) of the Finance Act, 1994
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Central Excise
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2015 (7) TMI 669
Eligibility to CENVAT Credit - whether main Appellant is eligible to CENVAT Credit on the basis of proper CENVAT taking documents when the First Appellate Authority has held that only documents were obtained by the main Appellant and no inputs were accompanied by these documents - Held that:- Entire emphasis is on the statements of third parties to establish the case. Appellant was requesting the Adjudicating authority for cross-examination of all these persons whose statements are relied upon. Three of five ship breaking units denied to have followed the practice suggested by investigation. When statements were the only establishing factors then cross-examination was the only way to assist the Revenue and the arguments of the Appellant also could have been made blunt. - a diary recovered from the broker and few statements alone cannot be made the basis for denying CENVAT Credit to the Appellant in the absence of any cross-examination of the third party witnesses given. Further, there is no evidence of alternative purchase of raw material by the Appellant for manufacture of goods cleared on payment of duty during the relevant period - case cannot be made only on the basis of note books maintained by the workers unless supported by corroborative evidence with regard to purchase of material, seizure of goods, money flow back etc. No cash has been seized any where when huge cash transactions are alleged to have been made. - Decided in favour of assessee.
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2015 (7) TMI 668
Condonation of delay - Delay of 340 days - Held that:- there was definitely material in the form of medical reports and records pertaining to the Petitioners and his immediate family members. The Tribunal proceeded on the footing as if the Petitioner failed to produce any evidence. That was definitely on record and its scrutiny would have enabled the Tribunal to exercise its powers to condone the delay and condone it if the cause was found to be reasonable and bona fide. Having noted the contents of both applications, namely, for condonation of delay and restoration, we are of the view that the delay of 340 days was capable of being condoned. The cause shown does not suffer from utter negligence or lack of bona fides. In these circumstances and when the reasons assigned for the delay were genuine, the initial application should have been allowed and the Petitioner given an opportunity to proceed with the Appeal on merits. - impugned order is quashed and set aside - Delay condoned.
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2015 (7) TMI 667
Remission of duty - plant, machinery, stock, goods in process of manufacturing and manufactured goods have been destroyed in an accidental fire - Held that:- A perusal of the Tribunal's order reveals a consideration which is neither logical nor founded in law as insurance companies do not provide insurance against payment of taxes much less payment of Excise duty. The finding recorded by the Tribunal that the appellant has not proved that the insurance claim does not include Excise duty, is in our considered opinion perverse and, therefore, could not form the basis for dismissing the appeal. The appellant having placed the letter issued by the insurance company before the Tribunal and having filed relevant documents before this Court, it would be appropriate and in the interest of justice to allow the appeal, set-aside the order passed by the Tribunal and remit the matter to the Tribunal for adjudication afresh and in accordance with law. - Decided in favour of assessee.
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2015 (7) TMI 666
Condonation of delay - Delay of 1298 days - Bonafide belief that appeal has been withdrawn - Held that:- explanation given for the delay is absolutely vague. Secondly, it does not inspire any confidence simply because the judgment of the Hon’ble Supreme Court was delivered in February 2011. That a statutory or a public body was unaware of the legal position, which has been summarized in the order of the Hon’ble Supreme Court [2011 (2) TMI 3 - Supreme Court], for more than 3½ years, cannot be a ground to condone the delay. That is, therefore, a general explanation and stated to be peculiar to public bodies which is consisting and comprising of officials who do not have any personal interest but are indifferent and negligent in discharge of the duties. For this very reason the Hon’ble Supreme Court has held that the Government cannot be treated as a special litigant. It has no right in seeking condonation of delay by putting forward such grounds or reasons. The delay in this case is enormous. None has come forward to own the responsibility and to pin point any lapse and specifically on their part, far from setting out the period during which such lapse of inaction occurred. Nothing of this nature has not been set out. No explanation is forthcoming as to where and with whom the files were pending and it was whole responsibility to take a decision to institute these proceedings. For all these reasons, the explanation for the delay cannot be termed as reasonable and bona-fide. - Condonation denied.
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2015 (7) TMI 665
MODVAT Credit - Capital goods - Captive consumption - Held that:- Quite apart from the decision of the Chennai Bench in case of Kothari Sugars & Chemicals Ltd. (2005 (11) TMI 124 - CESTAT, CHENNAI), we are informed, is carried in appeal before the Madras High Court and is pending, we notice that the Supreme Court in case of Collector of Central Excise v. Solaris Chemtech Limited reported in [2007 (7) TMI 2 - SUPREME COURT OF INDIA] has occasion to deal with a substantially similar issue. It was held that when inputs are used to generate electricity which are captively consumed for manufacture of final product, the assessee would be entitled to Modvat Credit in view of the expression “used in relation to the manufacture” used in the statute. - The situation might have been different had the Revenue succeeded in establishing that the electricity generated by the assessee was not used captively but sold outside - Decided against Revenue.
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