TMI Tax Updates - e-Newsletter
July 22, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
FEMA
Service Tax
Central Excise
TMI SMS
Highlights / Catch Notes
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Income Tax:
TDS - The assessees simply hired the vehicles on payment of hire charges and provided the same to the contractee companies in pursuance of contract agreement - TDS is required to be deducted u/s 194C - AT
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Income Tax:
Conversion of survey under Section 133A into a search under Section 132 - pursuant to the survey and the undisclosed cash and unexplained entries found, steps to convert the survey into a search was rightly taken - HC
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Income Tax:
Amount of excess stock would fall under the definition of income as per Section 14 of the Act and therefore, the assessee would be entitled for the set off under proviso of section 71 of the act - HC
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Income Tax:
TDS - Royalty - transaction is in the nature of the sale of world negative rights on perpetual and permanent basis and the provisions of section 194J are not applicable and there is no liability to deduct tax at source - AT
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Income Tax:
Deduction u/s 80IA - generation of power unit is separate and distinct undertaking for which separate approval was obtained and recognised by the IREDA and it cannot be said that splitting of existing business structure - deduction to be allowed - AT
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Service Tax:
Penalty u/s 78 - the appellant paid the entire amount of service tax before it was detected by the department and the interest was also paid by the appellant as soon as pointed out by the audit - penalty waived - AT
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Service Tax:
CENVAT Credit - input service - the service of private placement of shares for raising capital is an input service and credit on the service is to be allowed - AT
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Service Tax:
When one of senior officer of the department is dropping the demand by adopting a particular interpretation of provision of law, the assessee cannot be held guilty of adopting the same interpretation which is in his favour and availing the credit - AT
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Service Tax:
The proprietary unit and the proprietor are required to be treated as one and the same. In that scenario also if Ashish Bhattacharya is not an architect, his proprietary unit cannot be considered to be an architect - AT
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Central Excise:
Textile goods - manufactures have been directed by the commissioner of central excise to declare the stock of the inputs and finished goods and to get registered themselves
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Central Excise:
Extension of stay order - tribunal has no power to extend stay beyond the period of 365 days - Discretionary power vests with the HC - Article 226 of the Constitution - HC
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Central Excise:
Classification of goods - Classification as shampoo or ayurvedic liquid soap - Deliberate suppression of production and clearance of excisable goods - tribunal has misread the findings recorded in the order in original - demand confirmed - HC
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Central Excise:
Tribunal should have examined the cause given for recalling the order and not the other issues which as a matter of fact are extraneous for examining the application for recalling earlier order. - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2015 (7) TMI 719
Denial of exemption from sec. 194A in respect of payments of interest to Members - assessee is a cooperative bank engaged in the business of banking - Held that:- Considering all the facts in totality in the light of the memorandum explaining the provisions in the Finance Bill 2015 and the clarification by the Board that the Circular has not been withdrawn, makes it ample clear that the impugned provisions relating to the liability of TDS would come with effect from 01/06/2015, we, therefore, set aside the findings of the Ld. CIT(A) and direct the Assessing Officer to delete the impugned additions made in the order u/s. 201(1) & 201(1A) of the Act. - Decided in favour of assessee.
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2015 (7) TMI 718
Reopening of assessment - Unexplained source of cash receipts - Held that:- In the instant case, it is not in dispute that the assessee filed his objections against the issuance of notice u/s 148 of the Act vide his letter dated 11.11.2009 which was received by the office of the Assessing Officer on 16.11.2009. Thereafter, the Assessing Officer passed the impugned re-assessment order on 20.11.2009, disposing off the objections to re-assessment proceedings of the assessee in the order itself. Thus, these facts show that the objections raised by the assessee against the issuance of notice u/s 148 of the Act were not disposed off by the Assessing Officer by passing a speaking order thereon and allowing reasonable time to the assessee after communicating the fate of the objections before proceeding with the re-assessment. Respectfully following the decision of General Motors India P. Ltd. vs. DCIT [2012 (8) TMI 714 - GUJARAT HIGH COURT] we are of the considered view that the impugned order of re-assessment passed by the Assessing Officer without disposing off the objections raised by the assessee against the issuance of notice u/s 148 by a separate order is liable to be quashed. - Decided in favour of assessee.
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2015 (7) TMI 717
Disallowance of bad debts claimed - Held that:- Hon’ble Supreme Court has held in the case of T.R.F. Ltd. Vs. Commissioner of Income Tax [2010 (2) TMI 211 - SUPREME COURT] that in order to obtain a deduction in relation to bad debt it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the debt is written off as irrecoverable in the accounts of the assessee. In the present case, the assessee has written off as irrecoverable bad debt in its accounts this fact is not disputed by the Revenue. Thus disallowance deleted - Decided in favor of assessee. Addition on account of stock of work in progress - Held that:- It is not disputed by Revenue that in A.Y. 2005-06 the assessee was allowed to treat the closing stock of earlier year as opening stock of next year. It is well settled that the closing stock of earlier becomes the opening stock of succeeding year. In this view of matter, and examining all aspects it would be in the interest of justice if the assessing officer is directed to allow the closing stock of last year as the opening stock of current year. We accordingly, hereby direct the assessing officer to allow the closing stock of last year as the opening stock of current year. - Decided in favour of assessee for statistical purpose.
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2015 (7) TMI 700
Disallowance u/s 40(a)(ia) - Non deduction of TDS - payments made by assessee to third parties for supply of vehicles the assessees - Commissioner of Income Tax (Appeals) after holding that the assessees are contractors for supplying vehicles to the contractee companies has held that the assessees entered into sub-contract with third parties/owner of vehicles for supply of vehicles on behalf of the assessees to contractee companies. However, in coming to such a conclusion no document has been brought on record to show that the assessees have passed on the strings of responsibility and liability to vehicle owners from whom vehicles are hired. The Revenue has not brought on record any document to show that the assessees have entered into a sub-contract with the vehicle owners for providing such service. The assessees simply hired the vehicles on payment of hire charges and provided the same to the contractee companies in pursuance of contract agreement. For invoking the provisions of section 194C(2), the essential condition is that there should be a sub-contract for carrying out the whole or any part of the work undertaken by the contractor and the payment should be made for carrying out the whole or any part of such work. It is a well accepted principle of law that the contract can either be oral or written. In the present case, the Revenue has not been able to establish the existence of any contract between the assessees and the individual vehicle owners. Therefore, in the facts of the case we hold that the assessees have not entered into any subcontract with individual vehicle owners for supplying vehicles to the contractee companies. Since, the first question has been answered in negative, the payments made by the assessees to the third parties/individual vehicle owners do not fall within the ambit of section 194C. Thus, we hold that the payments made by the assessees are not subject to TDS provisions. Hence, the assessees have not violated the provisions of section 194C. - Decided in favour of assessee. Disallowance on vehicle expenses - CIT(A)restricted addition - Held that:- Ad-hoc disallowance of ₹ 17,930/- @ 20% of total vehicles expenses. The Commissioner of Income Tax (Appeals) has restricted the same to ₹ 10,000/-. In the absence of any cogent material, we find no reason to disturb this finding of the Commissioner of Income Tax (Appeals)- Decided against revenue. Addition on account of fall in net profit - CIT(A) deleted addition - Held that:- The Assessing Officer has made addition of ₹ 50,453/- merely on ground that there has been fall in net profit in the current assessment year as compared to previous assessment year. The Assessing Officer in an arbitrary manner increased the net profit by 0.25% on gross receipts. The Commissioner of Income Tax (Appeals) correctly deleted the same as AO has made the addition on adhoc basis (increased NP by 0.25%) without going into merits of the case. He has failed to bring any material on record which could warrant increase in NP by 0.25%. AO was not justified in disturbing the book results without assigning any specific defect - Decided against revenue.
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2015 (7) TMI 699
Payment of ₹ 1 crore to the earlier agreement holders - Whether the payment of ₹ 1 crore paid by the assessee is neither towards expenditure nor development of the property, therefore, it cannot be deductible while computing capital gain u/s 48 of the Act? - Held that:- This Tribunal is of the considered opinion that in the absence of any material with regard to preparation of plan and other development as claimed by the assessee, we may not be able to say that the assessee has incurred any expenditure for development. However, this Tribunal is of the considered opinion that the matter needs to be reconsidered by the Assessing Officer by giving one more opportunity to the assessee to produce necessary material with regard to preparation of plan, obtaining of planning permission and improvement, if any, made in the property. It is also to be verified whether any of the tenants was evicted from the premises by the previous agreement holders. In the absence of any material, this Tribunal is of the considered opinion that the issue of payment of ₹ 1 crore needs to be reconsidered by the Assessing Officer. Accordingly, the orders of the lower authorities are set aside and the issue with regard to claim of payment of ₹ 1 crore to the agreement holders is remitted back to the file of the Assessing Officer. - Decided in favour of assessee for statistical purposes. Disallowance of ₹ 50 lakhs withheld by the purchaser - the assessee claimed that his brother made a claim over the property, therefore, the purchaser withheld a sum of ₹ 50 lakhs on the basis of indemnity bond - Held that:- A reading of clauses 6, 7 and 8 of sale deed dated 26.4.2001 shows that the assessee has received the entire sale consideration of ₹ 3,50,00,000/- on or before the date of execution of the sale deed. Therefore, it is not known how the purchaser was able to withhold the money on the basis of an indemnity bond. The CIT(A) has simply allowed the claim of the assessee on the ground that the payment of ₹ 50 lakhs and investment thereof was properly evidenced. Whether the payment of ₹ 50 lakhs is over and above the sale consideration disclosed in the sale deed or it was a part of the sale consideration disclosed in the sale deed has to be verified. Accordingly, the orders of the lower authorities are set aside and the issue with regard to claim of exemption u/s 54F is remitted back to the file of the Assessing Officer for re-examination. The Assessing Officer shall decide the issue afresh in accordance with law after giving opportunity of hearing to the assessee.- Decided in favour of revenue for statistical purposes. Claim of ₹ 50,000/- towards brokerage - Held that:- As rightly submitted by the ld. DR, the details of the broker and evidence of payment are not available on record. The assessee claims that the Assessing Officer has not called for any details. Though the Revenue claims that the brokerage was to the extent of ₹ 50,000/- in the grounds of appeal, the assessee claims that in fact the brokerage of ₹ 2,50,000/- was paid. Therefore, there was a confusion in respect of the actual amount of brokerage said to be paid by the assessee. In view of the above, this Tribunal is of the considered opinion that the Assessing Officer shall reconsider the matter. It is also open to the assessee to file necessary details with regard to the identity of the broker and the genuineness of the payment. Accordingly, the orders of the lower authorities are set aside and the issue with regard to payment of brokerage is remitted back to the file of the Assessing Officer for reconsideration afresh in accordance with law after giving a reasonable opportunity of hearing to the assessee.- Decided in favour of revenue for statistical purposes. Deposit of ₹ 1,14,00,000/- in capital gains account - Held that:- The issue of deposit of ₹ 1,14,00,000/- is also remitted back to the file of the Assessing Officer to reconsider the issue afresh and pass appropriate order in accordance with law after giving a reasonable opportunity of hearing to the assessee in the light of the judgment of Apex Court in Prakash Nath Khanna vs CIT [2004 (2) TMI 3 - SUPREME Court] - Decided in favour of assessee for statistical purposes
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2015 (7) TMI 698
Rejection of books of accounts - adoption of GP rate of 20% - Since the assessee has already offered GP rate of 13.60% during the year under consideration the balance 6.4% on turnover of which comes to ₹ 55,08,898/- was treated by him as suppressed profit of the impugned assessment year - Held that:- From the comparison of the profit and loss account for A.Y. 2008-09 and A.Y. 2009-10, we find the material consumption was 36.79% during the current year as against 28.89% in the preceding year. Similarly, as against ₹ 3,67,898/- incurred towards royalty charges in the preceding assessment year the assessee has incurred ₹ 23,43,403/- towards royalty charge during the impugned assessment year. The royalty charges has been paid to Government, thus, there is almost an increase of about ₹ 20 lakhs in the royalty payment. Further, we find merit in the submission of the Ld. Counsel for the assessee that the profit from sub-contract work will be less since the main contractor retains a part of the profit. Therefore, as against 17.96% profit from own contract work, the assessee has earned 10.38% from sub contract work and therefore profit from sub contract work cannot be at par with profit from contract work. The Hon'ble Bombay High Court in the case of R.B. Jessaram Fatechand (1969 (7) TMI 10 - BOMBAY High Court ) has held that in the case of cash transaction where delivery of goods is taken against payment, it is hardly necessary for the seller to bother about the name and address of the purchaser. The account books of an assessee cannot therefore be rejected merely on the ground that the particulars of the assessee are not mentioned in the case of cash transactions. The Hon'ble Punjab & Haryana High Court in the case of Om Overseas (2008 (3) TMI 44 - HIGH COURT PUNJAB AND HARYANA a) has held that in absence of any specific defects pointed out in the books of account, the book results cannot be rejected merely on the ground that there is fall in profit ratio. Since in the instant case, we have already held that the defects as pointed out by the Assessing Officer are trivial in nature which do not call for rejection of the book results, therefore, consideration the totality of the facts of the case and in view of our discussion in the foregoing paragraphs, we are of the considered opinion that the rejection of books of account in the instant case is not justified. We therefore hold that the income returned by the assessee has to be accepted. - Decided in favour of assessee.
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2015 (7) TMI 697
Monetary limit to prefer an appeal - Whether, this appeal of revenue, which is below the prescribed limit of tax effect in view of the Board’s Instruction No.5/2014 issued on 10.07.2014 revising the monetary limits for filing of appeals by the Department before ITAT is maintainable or not? - Held that:- On query from the Bench, the Ld. DR could not point out any of the exceptions as provided in the Circular as that this is a loss case having tax effect more than the prescribed limit, which should be taken into account,or that this is a composite order for many assessment years where tax effect will be more than the prescribed limit as per para 5 of above instructions, or that this is a case, where, in the case of revenue, where constitutional validity of the provision of the Act or I.T. Rules 1962 are under challenge,or that Board’s order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or that Revenue Audit Objection in the case has been accepted by the Department and the same is under challenge. The learned Standing Counsel for the Revenue is not disputing the fact that the tax effect in the present case is less than ₹ 4 Lakhs and that the assessee's case does not fall within the exceptions specified in Instruction No.1979, dated 27.3.2000. Thus appeals are dismissed as not maintainable. - Decided against revenue.
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2015 (7) TMI 696
Conversion of survey under Section 133A into a search under Section 132 - Held that:- The contention that the mere fact that cash was found could have been utilized in assessment proceedings and that the same cannot be a ground to convert the survey into a search operation under Section 132 of the Act cannot be accepted. We find that the petitioner's had not brought on record the statement of the Director, who was examined during the course of search but upon perusal of the original record, we find that the Director was repeatedly asked to explain the source of the cash and entries. Since no plausible reply came forward and the Director was unable to explain the entries, which showed that the petitioner was taking cash from various parties and returning the money via cheque to the same parties and vice-versa, the authorities had reasons to believe that the petitioner's would not produce or cause it to produce the books of accounts or documents evidencing true state of affairs, even if summons under Section 131 or notice under Section 142 of the Act was issued. In this regard, we find that the Central Board of Direct Taxes has issued Instructions dated 30th September, 2014 indicating that where cash amounting to more than ₹ 10 lacs is found at the premises during the survey under Section 133A of the Act, the Director of Income Tax (Investigation) having territorial jurisdiction over the survey should be intimated to examine the facts for taking recourse to Section 132(1) of the Act. In the light of this instruction, we have no hesitation in holding that pursuant to the survey and the undisclosed cash and unexplained entries found, steps to convert the survey into a search was rightly taken. We are consequently, of the opinion that in the facts and circumstances of the case, the authorities had information based upon material which led to a valid survey being conducted under Section 133A of the Act. Based on further incriminating evidence that came forward during the course of survey, a satisfactory note was placed before the competent authority, who after considering the material recorded his satisfaction. Such satisfaction recorded was in accordance with the provision of Section 132 of the Act.- Decided against assessee.
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2015 (7) TMI 695
Exemption under Section 10(23C) denied - Held that:- The matter is squarely covered against the Revenue. There is no denying the fact that exemption had already been granted to the petitioner earlier, vide order dated 26.03.2008, for a period of 3 years till the year 2009-10. The application was made on 29.03.2010, for continuation and in pursuance of the same, a show cause notice was issued to the applicant on 13.01.2011 to substantiate its claim. In view of the circular No.7 dated 27.10.2010 (Annexure P8), the petitioner was not required to file an application for extension, as has been held in the case of Sunbeam Academy Educational Society (2014 (5) TMI 821 - ALLAHABAD HIGH COURT ) We are further fortified by the fact that the judgment of a Division Bench of this Court in Pinegrove International Charitable Trust Vs. Union of India (UOI) & others (2010 (1) TMI 49 - HIGH COURT OF PUNJAB AND HARYANA AT ) has been upheld by the Apex Court in Queen's Educational Society Vs. CIT (2015 (3) TMI 619 - SUPREME COURT ) wherein it has been specifically noticed that in view of the 13th Proviso, after giving reasonable opportunity, the earlier approval could be withdrawn if the activities are found not to be genuine and not according to the conditions and the approval could be subject to monitoring. - Decided in favour of assessee.
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2015 (7) TMI 694
Stock of raw material disclosed at the time of survey - Whether can be added both u/s 69B as well as 69C of the Act? - Held that:- It is an undisputed fact that during scrutiny, the assessee himself has disclosed the fact that in his books of account, he had shown less stock to the tune of ₹ 10,06,987/-. It is also an admitted fact that when the physical stock was examined by the authority, the value of the said stock was ₹ 13,33,485/-, however, as per the books of account, the value of stock was to the tune of ₹ 3,26,498/i.e. amount to the tune of ₹ 10,06,987/- was not recorded in the books of account. However, it is admitted by the assessee himself that he has not completely disclosed the stock in the books of account. Now, considering the proviso of Section 69(B) of the act, we are of the opinion that the assessee had not fully disclosed the stocks in the books of account and therefore, the Assessing Officer as well as the CIT (Appeals) have rightly observed that the case of the assessee would fall under the proviso of Section 69(b) of the act. Disallowance of set off of business loss with income from other sources for the same year? - Held that:- We are also of the opinion that the submissions made by the learned advocate is that the case would fall under the proviso of Section 69(c) of the act does not apply to the facts of the present case. It is not the case of the revenue that there is an unexplained expenditure, which would cover under the proviso of this Act and therefore, the assessee would not be entitled for the set off under the proviso of Section 71 of the act. As far as applicability of the case of Commissioner of Income Tax V. Shilpa Dyeing & Printing Mills (P.) Ltd. [2015 (7) TMI 691 - GUJARAT HIGH COURT] is concerned, the same would be applicable since the Court had held that the amount of excess stock would fall under the definition of income as per Section 14 of the Act and therefore, the assessee would be entitled for the set off under proviso of section 71 of the act. Therefore, we are of the opinion that the CIT (Appeals) as well as the ITAT have committed error in refusing giving set off to the assessee under Section 71 of the act - Decided in favour of assessee.
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2015 (7) TMI 693
Expenditure towards “granite raising expenses” disallowed - Held that:- The Tribunal has rightly held that when an assessee claims expenditure for business purpose, the onus is on the assessee to prove and it has also found that on facts, assessee had failed to establish this fact. At this juncture itself, it would be appropriate to deal with the contention raised by the learned counsel namely, the assessing Officer not affording opportunity to the assessee to cross examine Sri Nagendra. Records would clearly indicate that copy of the statement recorded by assessing Officer was supplied to the assessee but the assessee did not chose to cross examine Sri Nagendra. Hence, assessee cannot be heard to contend that the order of the assessing Officer smacks of violation of principles of natural justice when the onus of proof is upon the assessee with regard to expenditure incurred and on failure to prove the same, the expenditure could not be allowed as has been done rightly so by the assessing Officer in the instant case. The payments which the assessee claims to have paid to these three persons relates to granite extraction charges. This Court cannot lose sight of the fact that for extraction of granite apart from manual labour, equipments and machineries would be used by the labour contractors and the payments are made on weekly basis to the manual labourers. In the instant case, it has been rightly noticed by the assessing Officer that the payments have been made after a year which would be an additional factor to doubt the transaction. Hence, the burden cast on the assessee to prove the expenditure incurred was genuine, has not been discharged. - Decided against assessee.
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2015 (7) TMI 692
Applicability of section 40A(3) - amount paid in cash by the appellant for purchase of property - Whether the Tribunal justified in holding that the amounts paid towards the acquisition of capital asset and later converted into stock-in-trade would attract the provisions of Section 40A(3)? - Held that:- If the authorities below were to treat the transaction of purchase of land as a stock-in-trade (business purpose) and not as a capital asset, then they ought to have given sufficient opportunity to the assessee to prove her stand because this has not been done even though the genuineness of the transaction has not been disputed by the authorities and even the books of account of the assessee came to be accepted. In our view, the department has also not provided sufficient opportunity to the assessee with regard to her establishing that business exigency required payment in cash, in as much as the department if it was not satisfied by the explanation given by the assessee, ought to have issued a show cause notice to her to explain the same. Thus on account of petitioner not having been afforded adequate opportunity to show cause before a final decision was taken, the matter requires to be remanded back to the assessing officer for deciding the case afresh in accordance with law and after giving an opportunity to the appellant-assessee. Since we are remanding the matter back to the assessing officer, we are not answering the questions which have been framed in this appeal and leave it open to the authorities to decide the matter in accordance with law. Decided in favour of assessee for statistical purposes.
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2015 (7) TMI 691
Set off of business loss - ITAT treating income of ₹ 1,00,98,672/- as income falling under the head 'income from other sources' and not treating as 'deemed income' as provided under the scheme of Section 69 of the Act? - Whether ITAT is justified in deleting an addition of ₹ 1,00,98,672/- by treating the same as business income and thus allowing set off of business loss? - Held that:- Section 71 of the Act permits an assessee to set off loss other than that of capital gains against income from other head. In our opinion, the statutory provisions contained in Section 71 was applicable in the present case. By applying the decision in case of Fakir Mohmed Haji Hasan (2000 (8) TMI 44 - GUJARAT High Court ) as explained in case of Radhe Developers Incia Ltd. (2009 (4) TMI 21 - GUJARAT HIGH COURT ), the same cannot be declined. In the result, no question of law arises. Tax appeal is, therefore, dismissed. - Decided against revenue.
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2015 (7) TMI 690
Reopening of assessment - disallowance of Software Licence Fee in part - Held that:- In the facts of the present case, we find that the petitioner had clearly claimed Software Licence Fee of ₹ 31.69 crores as revenue expenditure. That had been disallowed in part and an amount of ₹ 25.36 crores was capitalized and depreciation was allowed at the rate of 60%. The assessment was done under Section 143 (3) read with Section 144C (13) of the said Act. The draft assessment order had made the aforesaid capitalization, which was disputed by the petitioner and, therefore, the matter went before the Dispute Resolution Panel, which confirmed the draft assessment order and thereafter the final assessment order was passed on 28.10.2010. We have already indicated that insofar as the part disallowance as revenue expenditure is concerned, the petitioner has filed an appeal which is pending before the Income Tax Appellate Tribunal. Insofar as we are concerned, we find that the petitioner had made a full and true disclosure of the material facts and, in any event, there is no allegation in the purported reasons that the petitioner did not make a full and true disclosure of the material facts at the time of the original assessment. That being the position, following the decision in Haryana Acrylic Manufacturing Co. (2008 (11) TMI 2 - DELHI HIGH COURT ) and several other decisions of this Court in the same vein, we find that the invocation of the re-assessment proceedings is not sustainable in law. - Decided in favour of assessee.
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2015 (7) TMI 689
Liability for deduction of TDS under the provisions of Section 194A - whether the chit dividend paid by the assessee to its customer, would not amount to interest as defined under the provisions of Section 2(28A)? - Appellate Authorities deleted TDS liability - Held that:- The Division Bench of the Delhi High Court had an occasion to consider the said issue in the case of CIT v. Sahib Chits (Delhi) (P.). Ltd. [2009 (7) TMI 75 - DELHI HIGH COURT ]. After setting out the statutory provisions viz., Sections 2(28A) and 194A of the Act and the provisions of the Interest Act, 1974 and relying on the various judgments of the Apex Court, held that in the first place the amount paid by way of dividend cannot be construed as interest. It was further held that the dividend/discount cannot be mistaken for interest income in the hands of the subscribers and therefore, there has been no default under the provisions of Section 194A of the Act. Further Section 194A of the Act has no application to such dividends and therefore, it held that there is no obligation on the part of the assessee to make any deductions under Section 194A of the Act before such dividend is paid to its subscribers of the chit. The aforesaid Division Bench decision of the Delhi High Court squarely applies to the facts of the present case. Hence, we do not see any merit in the present appeal. Decided in favour of the assessee.
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2015 (7) TMI 688
Suppression of stock - whether ITAT correct in holding that the asseessee has sufficiently rebutted the finding of the Assessing Officer that the assessee has suppressed its stock worth ₹ 1,51,67,000/- from appearing in his books of account and thereby his income by that much amount? - Held that:- The assessee's case is that the stock declared before the bank of ₹ 169.17 lacs was as on 30.03.2009 and that was for the purpose of raising a loan. The Tribunal also found that the assessee had submitted a stock statement to the bank as on 30.03.2009. The bank officer who was questioned by the Assessing Officer stated that the loan of ₹ 100 lacs was disbursed on 30.03.2009 on the basis of the inventory as on that day. He further stated that the inventory of stock was physically verified. On 31.03.2009, ₹ 166 lacs was booked as sales. The Tribunal has expressly noted that the sales were not doubted by the authorities and in fact had been accepted. As rightly pointed out by the respondents, had it not been so, the respondent's income itself would have reduced to that extent. In the circumstances, we are unable to say that the finding of the Tribunal is perverse or totally unsustainable. - Decided against revenue.
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2015 (7) TMI 687
Abatement and substitution of legal representatives - Held that:- The Court finds that the request made on behalf of the Appellant for further time to file the application for substitution is not justified. It was categorically recorded in the order dated 19th August 2014 that the details of the LRs had already been made available to learned counsel for the Department. If Mr. Sawhney could not after 4th February 2015 get those details for some reason, there was sufficient time for him to have taken steps since then to obtain them. The details, as recorded in the Court's order, were indeed given to the previous counsel Mr. Madan and ought to have been handed over by him to the Department. If there was any difficulty an application could have been filed seeking clarification. However, no steps whatsoever have been taken. The Court finds the approach of the Appellant in the matter to be casual.
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2015 (7) TMI 686
Denial of the benefit of Section 11 - ITAT found no justification in denying the benefit of Section 11 to the Assessee - Held that:- It was, incumbent on the Appellant, in terms of the order passed by this Court on 22nd September 2014, to enclose with its affidavit copies of the relevant documents and in particular the confirmation letters/responses filed by 13 of the donors before the AO in the remand proceedings confirming that they had made donations to the Assessee. The affidavit dated 26th November 2014 of the CIT filed pursuant to the above order has been perused by the Court. The said affidavit does not enclose the relevant response/confirmation letters of the 13 donors filed before the AO and also does not indicate why those letters do not satisfy the requirement of the law. Mr. Kamal Sawhney, learned Senior Standing Counsel for the Appellant, did not dispute that the said relevant documents were not enclosed with the affidavit. He, however, sought some more time for that purpose. Considering that since 22nd September 2014 there have been three adjournments granted to the Appellant to comply with the order, the Court is not prepared to grant any further indulgence.The Appellant has been unable to persuade the Court that impugned order of the ITAT suffers from perversity. - Decided against assessee.
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2015 (7) TMI 685
Disallowance of Provision for warranty obligation - Held that:- As relying on assessee’s own case for assessment years 1998-99 and 1999-2000 [2014 (12) TMI 680 - ITAT PUNE] we find that this issue has been decided in favour of the assessee wherein held that the assessee made a provision on account of provision for warranty with respect to the products sold - Considering the opening balance of provision, the differential amount of provision was debited to the Profit & Loss Account of the year - The provision was made by the assessee on account of the fact that it is under an obligation to provide warranty for a period of one to two years on the products sold by it on account of any manufacturing defect found later - assessee was obliged to replace the product or repair the product free of cost during the period of warranty - thus, the AO is directed to allow the relief – Decided in favour of assessee Amortization of premium paid on leasehold land - Held that:- This issue has been decided against the assessee in assessment years 1998-99 and 1999-2000 by the Tribunal wherein held an accepted position that the issue regarding assessee’s claim for deduction of proportionate premium of leasehold land amortized and charged to the Profit & Loss Account for the year under consideration is liable to be decided in terms of the judgement of the Hon’ble Supreme Court in the case of Govind Sugar Mills Ltd. vs. CIT, (1997 (7) TMI 16 - SUPREME Court ) against the assessee - Decided against assessee. Disallowance of Provision for profit equalizations in terms of AS-7 - Held that:- There has been no change in the facts and circumstances in the present year, nor there is any change in the accounting treatment given by the assessee. We do not find any reason to deviate from the view taken by the Co-ordinate Bench in assessment years 1998-99 and 1999-2000 wherein the Tribunal upheld the allowability of provision for profit equalization while recognizing incomes on application of percentage of completion method in the case of long term contracts in the light of the AS-7 issued by the ICAI. Accordingly, this ground in the appeal of the assessee is accepted.- Decided against revenue. Disallowance of expenditure on computer software - Held that:- A perusal of the order of the Co-ordinate Bench in assessee’s own case for assessment years 1998-99 and 1999-2000 shows that the Tribunal followed the judgement of the Hon’ble Bombay High Court in the case of CIT vs. Raychem Rpg. Ltd. reported as(2011 (7) TMI 953 - Bombay High Court )upheld the order of the Tribunal whereby the expenditure incurred on acquisition of software which did not form part of the profit making apparatus of the assessee was treated as a revenue expenditure. In the said context, it is to be noted that the CIT(A) has given a finding that expenditure of ₹ 22,16,107/- was incurred on acquisition of software connected with the manufacturing operations of the assessee. Such softwares have been identified as Autocad, project management software, designing software, etc.. The assessee is in the business of manufacturing of boilers and heat transfer equipment and therefore the aforesaid softwares form part of its profits making apparatus and thus it is liable to be considered as capital expenditure in view of the judgement of the Hon’ble Bombay High Court in the case of Raychem Rpg. Ltd. (supra). - Decided against assessee. Disallowance of claim of depreciation @ 100% on plant and machinery installed in Plant No.11. - Held that:- The issue was decided by the Tribunal in assessee’s own case for assessment years 1998-99 and 1999-2000 for assessee’s claim for depreciation 100% with respect to the plant & machinery used in the manufacture of air/gas/fluid heating systems having regard to the item (r) read with item (e) of Entry 3(xiii) of the Depreciation Table, the claim of the assessee has been rightly allowed by the CIT(A) and we find no force in the Ground of Appeal raised by the Revenue. With regard to assessee’s claim for allowance of depreciation @ 100% in respect of plant & machinery used in the manufacture of heat pumps is concerned, the same has been appropriately denied by the lower authorities. The CIT(A) has rightly pointed out that machinery & plant used in the manufacture of heat pumps is not eligible for depreciation @ 100% as it does not find a place in any of the items in the Depreciation Table which is entitled for depreciation @ 100%. - Decided against assessee and revenue. Disallowance of expenditure in earning tax free income - Held that:- The issue has been decided against the assessee in earlier assessment years disallowance as confirmed by the CIT(A) has been a subject matter of consideration by the Tribunal in assessment year 1997-98. In view of the aforesaid precedent, the action of the CIT(A) in restricting the disallowance to 2.5% of the gross income is hereby affirmed.- Decided against assessee Addition on account of Lease Rental income - Held that:- The assessee admittedly maintains books of account according to the mercantile system of accounting. However, the assessee in its books of account have not recognized the lease rental income due from (i) Modi Alkalies; (ii) Inertia; (iii) Parasrampuria Industries Ltd.; and, (iv) Parasrampuria International Ltd. on the ground that these companies are in financial distress, therefore, no rental income is recoverable. In our opinion, the correct course of action which the assessee should have followed is to recognize lease rental income from the aforesaid companies in its books and thereafter should have claimed the same as bad debts. The CIT(A) has upheld the findings of the Assessing Officer in principle which in our opinion is the correct proposition. Accordingly, the same is upheld - Decided against assessee Allowability of deduction under section 80-IA - Held that:- This issue was raised by the Revenue in its appeal for assessment year 1998-99 wherein the Co-ordinate Bench affirmed the findings of the Commissioner of Income Tax (Appeals allowing the claim of the assessee for deduction u/s 80-I/80-IA of the Act with respect to the industrial undertakings manufacturing products called Woodpac and Process Integrated Boilers. - Decided against revenue. Computation of deduction under section 80HHC - AO while recomputing the deduction added excise duty and sales-tax collected in total turnover - Held that:- It is a well-settled law that what has been included in export turnover that it has to be included in total turnover as well. In other words, what has been excluded in export turnover cannot be included in total turnover. As far as miscellaneous receipts are concerned, the contention of the assessee is that the same is covered by the order of the Hon’ble Bombay High Court in the case of Pfizer Ltd. (2010 (6) TMI 433 - Bombay High Court ). We, therefore, remit these issues to the file of the Assessing Officer to re-compute the deduction u/s. 80HHC, accordingly. - Decided in favour of assessee for statistical purposes. Deduction under section 35AB allowed in respect of lump-sum fee for technical know-how paid in earlier years - CIT(A) has directed the Assessing Officer to allow deduction u/s 35AB of the Act in respect of know-how fee whose innings u/s 35AB of the Act have began in the past and where the balance eligible period u/s 35AB of the Act was not over - Held that:- The plea of the assessee for deduction of expenditure incurred by way of process know-how fee u/s 37(1) of the Act is liable to be decided against the assessee following the judgement of the Hon’ble Supreme Court in the case of M/s Drilcos (India) Pvt. Ltd. vs. CIT, (2012 (9) TMI 299 - SUPREME COURT ). CIT(A)’s decision to allow determination of deduction u/s 35AB of the Act not only with reference to the amounts actually paid but also with reference to the amounts payable for process know-how is concerned, the same in our view has been appropriately decided by the CIT(A). Notably, the CIT(A) has noticed that assessee is following the mercantile system of accounting and the word “paid” has been defined in section 43(2) of the Act to include the incurrence of liability also. In coming to such conclusion, the CIT(A) has followed the judgement of the Hon’ble Bombay High Court in the case Padamjee Pulp and Paper Mills Ltd. (1993 (10) TMI 16 - BOMBAY High Court ). It was a common point between the parties that the Assessing Officer has been allowing deduction to the assessee to the extent of 1/6th since assessee itself was debiting only 1/6th of process know-how fee in the Profit & Loss Account and what the Assessing Officer was rejecting was the claim of the assessee made in the computation of income that the full amount should be allowed in the first year itself. Infact, it was a common point between the parties that so far as the claim of deduction of 1/6th cost is concerned, the same was allowed by the Assessing Officer in the respective years. In view of the aforesaid factual matrix, the direction of the CIT(A) is quite infructuous and in-fact was not called for. As a consequence, the decision of the CIT(A) on this aspect is set-aside as being infructuous. - Decided in favour of revenue for statistical purposes. Provisions for reimbursement of medical expenses - CIT(A) allowed claim - Held that:- The amount of medical reimbursement are in the nature of incentives given by the assessee to its employees. It is the discretion of the employee either to claim the amount as medical reimbursement or to accumulate and withdraw the amount at the end of particular service. We do not find any infirmity in the findings of the Commissioner of Income Tax (Appeals) on this issue - Decided in favour of assessee. Non-receipt of TDS certificates - assessee write off the value of TDS certificates, not recovered - Held that:- In the instance case, the assessee under similar circumstances has written off the amount of TDS certificates not received. Therefore, in our considered view it has to be allowed as bad debts. We find no infirmity in the order of CIT(A). - Decided in favour of assessee. CIT(A) has rightly directed the Assessing Officer to exclude 90% of the amount of lease rental for computing deduction under section 80HHC. - Decided against revenue.
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2015 (7) TMI 684
Addition made as unexplained cash credit u/s 68 - Held that:- A conclusion can be drawn that the assessee was never asked to produce the creditors. If the department had any doubt with regard to the genuineness of the transaction or creditworthiness of the creditors, they should have made proper enquiry and brought positive material on record to establish such fact. More so, when not only the identity of the creditors are available with the department, but their income tax particulars are also submitted by the assessee. The department could have also made enquiry with regard to the source of the money advanced as it was through proper banking channel and could have ascertained whether there is a nexus between the unaccounted income of the assessee and the money advanced. Without any such enquiry, the department cannot be permitted to treat the credit as unexplained income of the assessee on mere presumption and surmises or solely relying upon the entries made in the books of account showing the credit as share application money. In the aforesaid facts and circumstances, the assessee having proved the credits by establishing the identity of the creditors, genuineness of the transaction and creditworthiness of the creditors, through proper documentary evidence, he is not required to prove any further. Therefore, on overall consideration of facts and materials on record, we are of the view that no addition under section 68 of the Act can be made in the present case - Decided in favour of assessee. Unexplained credit under section 68 - Held that:- If the A.O. had any doubt with regard to the creditworthiness, he should have made proper enquiry with the concerned person to find out whether they had the capability to advance the amount to the assessee. The material on record demonstrate that A.O. without making any enquiry has made the addition merely on presumption and surmises. In case of trade credits also assessee has established the identity of the creditors by furnishing confirmation letters containing their name, address, income tax particulars etc. The entire transaction is through proper banking channel, thereby, proving its genuineness. Lastly, all creditors are income tax assessees which prove the source of credits. Therefore, following our detailed reasoning in paragraph Nos.13 to 13.3 in case of share application money, which also equally applies to the trade creditors, we delete the addition of ₹ 6,23,24,518. However, in respect of three creditors viz., Palomi Estates, Zisanuddin and others for a total amount of ₹ 28,69,185, it is a fact on record that assessee has neither furnished any confirmation letters nor any other evidence to establish the identity of the creditors, their creditworthiness and genuineness of the transaction. Therefore, in absence of any evidence submitted by assessee to prove the credits for the aforesaid amount, addition to the extent of ₹ 28,69,185 is sustained. - Decided partly in favour of assessee. Disallowance of interest expenditure claimed - Held that:- The primary contention of the assessee is that the investments made are out of surplus fund and no interest bearing fund has been utilized. In our view, the aforesaid facts require verification since if there is no nexus between the investment made and the borrowed fund, then, no disallowance can be made. As these aspects are not examined by either A.O. or learned CIT(A), we are inclined to remit the matter back to the file of A.O. to verify and take a decision in the matter, after giving due opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes. Disallowance made under section 40(a)(ia) - Held that:- The primary contention of the assessee since the entire interest amount is paid during the relevant previous year and nothing remained payable, no disallowance under section 40(a)(ia) can be made is acceptable. As held by the ITAT, Vizag Special Bench in the case of Merylin Shipping and Transport (2012 (4) TMI 290 - ITAT VISAKHAPATNAM), no disallowance under section 40(a)(ia) can be made if the entire amount was paid during the relevant previous year and nothing remained payable. The Hon’ble Allahabad High Court also in case of CIT vs. Vector Shipping Services P. Ltd., [2013 (7) TMI 622 - ALLAHABAD HIGH COURT] expressed similar view. Therefore, following the aforesaid decisions, we direct the A.O. to verify and allow the deduction claimed, if it is found that the entire amount was paid during the relevant previous year and nothing remained payable. - Decided in favour of assessee for statistical purposes. Disallowance as bad and doubtful debts written off - Held that:- As could be seen the A.O. while completing the assessment, has disallowed assessee’s claim of bad and doubtful debts by observing that the assessee has failed to prove that the debt has become irrecoverable. However, on going through the provision of section 36(1)(vii) read with sub-section (2), it is very much clear that the only condition which are required to be satisfied are, it must have been shown as income in the earlier assessment year and it is actually written off in the books of account. There is no necessity on the part of the assessee to prove that the debt has become irrecoverable. Therefore, keeping in view the clear statutory provision, we direct the A.O. to verify these aspects and allow the deduction claimed by the assessee.- Decided in favour of assessee for statistical purposes. Disallowance of fee paid for increase of share capital - Held that:- Assessee did not challenged the disallowance before the Ld. CIT(A) but has chosen to challenge the same before us through an additional ground. However, on going through the facts and materials on record as well as principle of law on the issue, we agree with the view of the A.O. that the fee paid to ROC for increasing authorized share capital is a capital expenditure, hence, cannot be allowed. - Decided against assessee. Disallowance of employees contribution to ESI and PF - assessee has not remitted the employees contribution to PF and ESI within the prescribed date as mentioned in section 36(1)(va) - It is the contention of the assessee that the employees contribution to ESI and PF though, was not paid within the due date as prescribed under section 36(1)(va) but such dues having been paid before the due date of filing of return of the income as prescribed under section 139(1), the amount is allowable as a deduction as per the provisions of section 43B. We find merit in the aforesaid submissions of the assessee - Held that:- There are a number of judicial precedents on this issue wherein it is held that if the employees contribution to PF and ESI is paid within the due date of filing of return of income under section 139(1), then, the amount is allowable as a deduction in view of the provision of section 43B. In view of the afore said, we delete the addition of ₹ 2,07,209 - Decided in favor of assessee.
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2015 (7) TMI 683
Addition quantifying the excess stock in survey - Held that:- As seen from the statements on record, the excess stock was arrived at on the day of survey based on GP calculations. Be that as it may, the quantity of the gold has tallied but the difference arose only in the context of rate adopted for valuing the excess stock. It was the submission that gold was valued at ₹ 1,150 Per Gram during survey, where as the book value/ market value was at ₹ 870 Per Gram which was adopted by assessee at the end of the year. Accordingly, instead of ₹ 52,03,881/- stock excess including silver ornaments, diamonds and pearls, assessee offered ₹ 34,90,295/- which gave rise to the difference of ₹ 17,13,586/-. This contention of assessee has to be accepted as AO accepted the closing stock valuation as shown in books. Further as seen from the order of assessment passed by the AO, he determines the concealed amount at ₹ 62,13,730/-. There is no justification how this figure was arrived at and in the show cause notice issued only this amount was shown as value of excess stock. The stock as per the statements was only ₹ 52,03,881/-. Thus, there is difference of amount, may be the voluntary disclosed amount of ₹ 10 Lakhs was also included as excess stock. This indicates that AO without any application of mind has simply taken the amounts. Difference of the amount was as a result of valuation of closing stock, including excess stock found on the date of survey. On the basis of principles of valuation of closing stock i.e., cost or market price whichever is less, we do not see any reason to uphold the addition confirmed by the CIT(A) at ₹ 7,13,580/-. - Decided in favour of assessee. Addition on stock pertains to third parties - CIT(A) deleted the addition - Held that:- No merit in Revenue's contentions. First of all, it was admitted that stock valued at ₹ 9,20,000/- belongs to third party customers in the survey itself. In fact in question No.13 extracted by the Ld.CIT(A), in para 5.8 of the order, assessee admitted net of the amount at ₹ 26,59,315/- from Punjagutta Branch after excluding the amount of ₹ 9,20,000/-. This itself indicate that the survey party was satisfied about the contention that stock to that extent does not belong to assessee and belong to third parties. On what basis the present AO brought it to tax as assessee's stock could not be understood. The Ld.CIT(A) has rightly considered the issue and in our opinion, deleted the same based on facts - Decided against revenue. Addition made by AO towards unaccounted dividend - CIT(A) deleted the addition - Held that:- There is no basis for bringing the amount to tax on assumptions and presumptions as was done by the AO. We are unable to understand the Revenue's grounds also. The Revenue's ground says "The CIT(A) should not have accepted the argument of the assessee, the chit dividend has been offered and chit loss has been claimed in the P&L A/c. The CIT(A) should have verified the P&L A/c wherein, no chit dividend has been offered neither the loss has been debited". This ground is not based on the CIT(A)'s order. Even though CIT(A) did mention that assessee submitted that both chit dividend and chit loss in the P&L A/c, further statement shows that they are not taken in to P&L A/c. As facts indicate, the chit has started as early as 28-08-2005 and ended in 30-09-2007. Assessee did maintain the chit account in the Books of Accounts but neither the loss nor dividend was been taken to P&L A/c, the fact of which was admitted by the Revenue as well. In these circumstances, AO has to examine whether at the end of the chit, assessee earned any surplus or loss. Nothing was done except presuming an amount of ₹ 1 Lakh addition without any basis. Assessee has submitted relevant details before CIT(A) who after examination, deleted the amount - Decided against revenue. Addition on account of Members Gold Scheme - CIT(A) deleted the addition - Held that:- We are unable to understand how the AO can make the addition and arrive at a profit of ₹ 1 Lakh minimum in the year per month, when assessee submits that only at the end of the scheme, he will pay ₹ 1,000/- to them in addition to amount deposited. As and when amount was withdrawn or taken by the party, gold was given to the party / member and the same was shown in the gold sales account. Since it is a business proposition and all the transactions having been accounted in the books of account, further addition on assumptions and presumptions does not arise. If AO was of the opinion that assessee is depositing ₹ 1 Lakh per month in the bank either ₹ 1 Lakh should be income but the same was taken for estimation of 12% on ₹ 12 Lakhs at ₹ 1,44,000/-. There is no rhyme or reason for AOs addition. It does not have any justification. First of all, the calculation itself is wrong. Even if one were to presume a rate of 12% of interest on the above amount, AO himself accepts that there will be deposit of ₹ 1 Lakh per month. How 12% interest can be worked out on ₹ 1 Lakh deposited in the last month can only be explained by the AO. The calculation itself is wrong and the basis for such calculation is devoid of any merit. Ld.CIT(A) has done the correct thing in deleting the addition. We are unable to understand how AO can come in appeal on this issue when there is no basis for making the addition itself. - Decided against revenue. Outstanding creditor’s addition made by the AO - CIT(A) deleted the addition - Held that:- Perusing the Paper Book and also the Balance Sheets of earlier year filed at our instance by Ld. Counsel, We do not see any reason to consider the Revenue's contentions. First of all, AO has verified the creditors and got the confirmation letters on his enquiry. The same cannot be rejected simply on the reason that those parties have replied on the same colour of covers and address flags. This cannot be a reason for rejecting the replies received from the parties. Moreover, these are all outstanding balances and without rejecting the purchases or expenditure, the outstanding balances cannot become unaccounted, just because, AO did not accept the confirmations received. It was also explained that these were amounts carried out from earlier year and that the interest payments and TDS on that was also made. These contentions were never considered/rejected by the AO. We are of the opinion that Ld.CIT(A) has rightly deleted the same, as the very basis of the addition is not justifiable. Accordingly, order of CIT(A) is upheld - Decided against revenue.
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2015 (7) TMI 682
Concealed income of assessee - what should be the sale consideration deemed to have been received by assessee for the purpose of computation of capital gain? - Held that:- there is no dispute to the fact that while assessee in registered sale deed has shown sale consideration at ₹ 21,65,000, registering authority has valued the property for stamp duty purpose at ₹ 24,07,000. Therefore, the sale consideration as per section 50C, which assessee could be deemed to have received is the value adopted by SRO. In fact, not only AO adopted the said value for computing capital gain, but, ld. CIT(A) has also endorsed the view of AO. However, in spite of having held so, ld. CIT(A) in her own wisdom has chosen to delete the addition of ₹ 2,42,000. Revenue has also not challenged that decision. That being the factual position, we fail to understand how ld. CIT(A) can again direct AO to treat the amount of ₹ 2,42,000 as concealed income of assessee. We are at loss to understand under what provision of law such amount can be treated as income of assessee when the only provision under which the SRO value can be considered as deemed sale consideration received is section 50C of the Act. Therefore, once, ld. CIT(A) deleted the addition made by AO u/s 50C of the Act, under no other provision such amount can be assessed. Accordingly, we hold that the amount of ₹ 2,42,000 cannot be treated as concealed income of assessee. - Decided in favour of assessee. Addition on on account of low withdrawals for household expenses - Held that:- The addition made on account of alleged low drawings for household expenditure is purely on conjectures and surmises. There is no material before AO to show that the monthly expenditure of ₹ 42,070 towards assessee’s household needs is inadequate. While assessee has brought material on record to demonstrate the actual expenditure incurred by assessee towards education of his children and other household activities, AO has no evidence to back his quantification of monthly expenditure of ₹ 70,000. Considering the expenditure incurred by assessee on the education of his children as well as the fact that assessee is staying in his own house, expenditure shown by assessee towards household expenditure, in our view, is just and reasonable. On the other hand, monthly expenditure of ₹ 70,000 adopted by AO, in our view, is high and excessive and has no nexus with the material on record. In view of the aforesaid, we are unable to sustain the addition of ₹ 3,33,151 made by AO. Accordingly, we direct the AO to delete the same.- Decided in favour of assessee. Addition for non production of freight bills - Held that:- As could be seen, assessee during the year has claimed the total expenditure of ₹ 1,58,41,375 on account of freight. Whereas, AO has disallowed only negligible amount of ₹ 26,700 out of the expenditure claimed by alleging that bills and vouchers to that extent was not produced by assessee. In our view, when AO has accepted almost 99.9% of the expenditure claimed by assessee by treating it as genuine, there is hardly any scope to believe that assessee would have inflated the expenditure to the extent of ₹ 26,700 only. Therefore, assessee’s explanation that considering the nature of expenditure and volume of transaction some of the vouchers might have been lost is believable. Accordingly, we delete the addition of ₹ 26,700.- Decided in favour of assessee. Addition on account of cash found during the course of search and seizure operation - Held that:- On perusal of the extract of cash book of M/s Maheswari Brothers, copies of which were submitted before us, it appears that the firm was having closing cash balance of ₹ 69,71,760.33 on 07/09/10. Therefore, assessee’s explanation if considered along with availability of cash balance as per the cash book of M/s Maheswari Brothers and also the confirmation letter submitted by M/s MBG Commodities Pvt. Ltd. appears to be credible. As far as the balance cash of ₹ 3,83,250 is concerned, on perusal of the cash book extract of Shiva Shakti Transport, it is seen that the proprietary concern is also having sufficient cash balance in its books. Therefore, assessee’s explanation cannot be brushed aside lightly. Moreover, as could be seen from the order of ld. CIT(A) in the concluding part of her finding she has observed that managing director of the group company Sri Bijay Kumar Mandhani has stated before the department that assessee has been paid his remuneration in cash. Ld. CIT(A), further observed, the statement of Sri Mandhani corroborates availability of cash at the time of search. That being the case, cash found cannot be treated as unexplained as it is linked to remuneration received in cash. Therefore, there being no positive evidence brought on record by department to controvert the claim of assessee that cash found belong to M/s Maheswari Brothers, whereas, the claim of assessee being backed by evidence, we are of the view that addition of ₹ 43,83,250 representing cash found at the time of search is not justified. Accordingly, we delete the same.- Decided in favour of assessee.
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2015 (7) TMI 681
Non deduction of TDS u/s 194J r.w.s. 9 of IT Act - payments made in the nature of royalty - Held that:- The transactions on account of the agreement between the producers and the assessee appears to be the sale of world negative rights on perpetual and permanent basis and the provisions of section 194J are not applicable and there is no liability to deduct tax at source. The disallowance made by the AO u/s 40(a)(ia) is to be deleted. See ACIT vs. Aishwarya Arts Creations (P) Ltd [2014 (12) TMI 1015 - ITAT HYDERABAD] and Mrs. K. Bhagyalakshmi Versus The Deputy Commissioner of Income Tax [2013 (12) TMI 1215 - MADRAS HIGH COURT ] - Decided in favour of assessee.
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2015 (7) TMI 680
Validity of Reopening of assessment - whether CIT(A) erred in confirming the disallowance of compensation charges of ₹ 11,00,000/- paid to Bhairav metals considering that the same is not an expense of current year and holding that the same could be an advance or debit? - Held that:- The issue regarding debit of ₹ 11.00 lacs to the P&L Account was duly enquired into by the AO vide notice issued to explain several expenses debited to P&L Account. The detailed reply was submitted by the assessee to the AO alongwith documentary evidences to explain that the claim of the assessee regarding ₹ 11.00 lacs was legitimate claim. After considering those evidences the AO did not make any addition. In view of those evidences it can be said that AO had formed the opinion for not making addition of ₹ 11.00 lacs during the course of original assessment proceedings. Subsequently, based on the same evidence, which was produced by the assessee to contend that no addition was called for, re-assessment proceedings were initiated, which is clearly as a result of “change of opinion” and cannot be approved in the light of decision of Hon’ble Bombay High Court in the case of GKN Sinter Metals Ltd. vs. ACIT (2015 (1) TMI 832 - BOMBAY HIGH COURT ). Accordingly, accepting the arguments of Ld. AR that reassessment proceedings were not validly initiated - Decided in favour of assessee.
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2015 (7) TMI 679
Income arising out the sale of share/unit - Capital gain or Business income - conversion of stock-in-trade into investment - Held that:- We have gone through ledger accounts of the assessee for the year under consideration and noticed separate ledger accounts in respect of conversion of stock-in-trade into investment. By converting the stock-n-trade into investment, it does not alter the character, nature and intention of that particular transaction especially in the context of capital gain versus business income. By bringing in stock-in-trade under the head investment the assessee could reduce the tax incidence considerably. The activity of ‘trading in shares’ carried out separately in the AY 2004-05 and again brought forward to be continued in the next AY i.e. 2005-06 under the head ‘investment’ is to be considered as trading activity only. Subsequent conversion and treatment given in the books of accounts do not alter the character of commercial transaction. Accordingly, the profit that has been attributable to this trading activity corresponding to conversion of stock-in- trade into investment is to be treated as ‘business income’ and accordingly to be taxed. In view of the above findings of CIT(A) that the income from investment is to be taken as ‘capital gains’ and conversion of stock-in-trade to investment is to be taken as ‘trading income’, which is based on facts of the case and need no disturbance. Accordingly, we confirm the findings of CIT(A). - Decided against revenue. Disallowance on travelling and conveyance charges - CIT(A) allowed claim - Held that:- As seen from the assessment order except questioning the rationality of the expenditure in the absence of carpet business, the AO has not brought on record any material evidence to dispute the reasonability and purpose of the expenditure incurred. As argued by the assessee, the AO has not disproved expenditure incurred nor proved such expenditure was personal in nature or capital in nature. The books of accounts are audited and auditors have not pointed out any discrepancies in the nature of personal expenses or capital expenditure debited to profit and loss account. During the course of hearing, the Ld. counsel for the assessee clarified that the expenditure incurred on travelling and conveyance was mainly on account of foreign tour to interact with business people and to explore the prospects of export in carpets and garments which is otherwise the main line of business activity of the assessee. Accordingly, we confirm the order of CIT(A).- Decided against revenue. Disallowance u/s 14A and new Rule 8D (2)(iii) - Held that:- Since CIT(A) confirmed the disallowance at 10% made by the AO but we are consistently taking a view that prior to AY 2008-09, disallowance @1% will meet the end of justice, by following the decision of co-ordinate Bench ‘C’ Kolkata cited (2011 (4) TMI 1283 - ITAT KOLKATA). This ground of assessee’s CO is partly allowed.
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2015 (7) TMI 678
Transfer pricing adjustment - Taxing fees received by ABB Inc from ABB Limited and ABB Global Industries & services Limited - Held that:- The law is by now settled so far as the connotations of 'make available' clause in the definition of fees for technical services in the contemporary tax treaties are concerned. It is held to be a condition precedent for invoking this clause that the services should enable the person acquiring the services to apply technology contained therein. Hon'ble Karnataka High Court in the case of CIT v. De Beers India (P.) Ltd. [2012 (5) TMI 191 - KARNATAKA HIGH COURT] approves this school of thought. We, therefore, hold that unless there is a transfer of technology involved in technical services extended by the US based company, the 'make available' clause is not satisfied and, accordingly, the consideration for such services cannot be taxed under Article 12(4)(b) of India US tax treaty. The Assessing Officer has taken pains to hold that the services are technical services in nature but what is really the decisive factor, so far taxability of its consideration in the Indo US tax treaty is concerned, is not the fact of training services per se but the position that training services being of such a nature that it results in transfer of technology. That is not the case here. It is not even suggestion of the Assessing Officer that there was a transfer of technology in this case so as to bring the services within the ambit of services which "make available" technical knowledge, experience, skill and know how etc. In our opinion considering the judgment, if the correct arm's length price is applied and paid then nothing further would be left to be taxed in the hands of the foreign enterprise. As, in the light of the settled legal position as set out above, even if there is a DAPE on the facts of this case, it will have no taxable profits to be taxed in the hands of the assessee in the absence of the finding that the DAPE has been paid a remuneration less than arm's length remuneration. We, therefore, see no need to examine the aspect regarding existence of the DAPE. That aspect of the matter will be wholly academic. We are inclined to uphold the grievances of the assessee and delete the impugned additions in respect of the income of ₹ 11,04,11,826 under article 12(4)(a) as fees for technical services and also in respect of income of ₹ 4,37,161 under article 7(1) of the India US tax treaty. - Decided in favour of assessee.
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2015 (7) TMI 677
Deduction u/s 80IA to assessee on the power generation plant - CIT(A) allowed claim - Held that:- The issue in dispute is squarely covered by the decision of the ITAT in assessee’s own case for preceding AYs 2007-08 to 2009-10 [2012 (2) TMI 483 - ITAT HYDERABAD] wherein observed that the Tribunal while considering the issue of disallowance of assessee’s claim of deduction u/s 80IA by AO on the allegation that the power generation unit is a continuation of the old business and has been set up by splitting up of business in existence, negatived the finding of AO and allowed assessee’s claim of deduction observing that even if the undertaking is established by transfer of building, plant or machinery, it is not formed as a result of such transfer, in our considered view; the assessee could not be denied the benefit. We also find that a new undertaking for manufacture of power with steam as by-product was formed out of fresh funds, in separately identifiable premises, under a separate license with manifold increase in capacity with new machinery and buildings without transfer of any portion of the old buildings or machinery which pre-existed. To constitute reconstruction, there must be transfer of assets of the existing business to the new industrial undertaking. In our opinion, generation of power unit is separate and distinct undertaking for which separate approval was obtained and recognised by the IREDA and it cannot be said that splitting of existing business structure. Therefore, in our considered opinion, the lower authorities are not correct in denying the deduction under section 80IA of the Act. - Decided in favour of assessee. Deduction u/s 80IA claimed by assessee on cost of steam sold to sugar unit - Held that:- Similar issue came up for consideration in AY 2007-08 and 2008- 09 in assessee’s own case wherein held that lower authorities did not dispute that the profit credited to Profit and Loss Account in respect of steam is only ₹ 11.43 Lakhs. Thus, even assuming that steam is not power as held by the Assessing Officer, at best the department could have treated only ₹ 11.43 lakhs as ineligible profits for the purpose of claiming the deduction under section 80IA of the Act. To hold otherwise, would be a gross error as the expenditure debited to the profit and loss account of the power unit is still being retained by the department while making the computation. The CIT [A] also agrees that steam has no value as no price was charged for the same in the earlier year but ignores the fact that in the absence of gross total income in the earlier year no exemption could have been claimed. Therefore, we direct that only ₹ 11.43 lakhs is to be treated as ineligible profits for the purpose of deduction under section 80IA of the Act and for the balance sale amount of steam to sugar division, the assessee company is eligible for deduction under section 80IA of the Act. However, the calculation of value of the steam produced by the power plant has to be determined after considering the cost and production record of respective unit and thereafter quantification of deduction has to be done in accordance with the order of the Tribunal cited supra. This issue is remitted back to the file of the Assessing Officer with a direction to the assessee to furnish necessary records for the purpose of determining the value of the steam produced and transferred to sugar unit. - Decided in favour of assessee. Reduction in power charges - Held that:- This particular issue has also been dealt by the ITAT in assessee’s own case for AY 2007-08, thus following the said decision of the Tribunal, though we uphold the power tariff rate at ₹ 2.69 per unit as adopted by AO instead of ₹ 3.48 per unit as adopted by assessee, but, at the same time, we direct that in the event the tariff rate gets revised either by virtue of judgment of Hon’ble Supreme Court or any other judicial forum, AO should consider the same and decide accordingly. - Decided partly in favour of revenue.
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Customs
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2015 (7) TMI 704
Duty demand - Non issue of Form 2B - Held that:- Considering the comprehensive application filed, and to include the liability raised by Customs (Seaport) and Customs (Air) and in view of the order of this Court passed in previous case, learned counsel for the assessee submits that on receipt of Form 2B, the assessee will comply with the requirements as contained in the said certificate within the statutory period. - order passed by the Customs, Excise and Service Tax Appellate Tribunal does not call for any interference. - Decided against assessee.
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Corporate Laws
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2015 (7) TMI 703
Charges of oppression and mismanagement - Section 397-398 read with Sections 402 to 408 of the Companies Act, 1956 - Application for impleadment - Held that:- it is thus clear that the CLB is competent to implead a party as a Respondent in a petition filed under Section 397/398 of the Act, if it is satisfied that there is a sufficient cause for doing so. This provision, in my opinion, is akin to the provisions contained in Order I Rule 10(2) of the C.P.C. It is well settled proposition of law that a necessary party is one, without whom no order can be made effectually, a proper party In whose absence an effective order cannot be made and whose presence is necessary for a complete and final decision on the question involved in the proceeding. Rule 10 (2) of Order 1 of the CPC also indicates as to who is to be termed as a “necessary” or “proper party”. These provisions, inter alia, empower the Court to add the name of any person, namely (1) who ought to have been joined” and (2) “ whose presence before the court may be necessary in order to enable the court to effectually and completely adjudicate upon and settle all the issues involved in the matter. In light of the above stated proposition of law, I have examined the material available on record and the report of the ROC, Pune filed by it pursuant to the order passed by the CLB dated 18/12/2014. Taking into consideration that the EOGM whereat the applicants are allegedly removed as Directors of the Company is in dispute, I am of the opinion, that the applicants are the necessary parties and their presence is required for effective and complete adjudication of the Company Petition. I, therefore, allow the application for impleadment. The Petitioner is, therefore, directed to implead the Applicants as Respondents in the array of the parties within 3 days and also to carry out consequential amendments, if required. Let the amended copy of the Company Petition be served upon the Respondents including the newly added Respondents who may file their reply(s) before the date fixed. The Respondents may also file their additional reply(s), if any, before the date fixed.
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2015 (7) TMI 702
Request for Interim order / relief - SEBI order to restrain from dealing in securities in the Indian Securities Market (including through Offshore Derivative Instruments) - To restrain from accessing the Indian Securities market directly or indirectly - As SEBI needs off shore assistance, needs 4 to 5 months for completing the investigation - Held that:- There can be no dispute that the appellant has suffered serious prejudice on account of restraint order which is operation for nearly one year. No doubt that under Section 11(4)/11B of SEBI Act, SEBI is empowered to restrain a person from entering the securities market, pending investigation, provided, there is a prima facie evidence to suggest that such person has violated any of the provisions of SEBI Act or the Rules/Regulations made thereunder. In the present case, the prima facie view taken by SEBI that before entering into trades on March 13, 2014, the appellant was privy to UPSI that L&T has fixed the floor price for selling the shares of LTFH at ₹ 70/- per share is based on mere presumption and without any sustainable basis. In these circumstances, continuation of the restraint order is unjustified. However, since the restraint order passed against the appellant has already operated for nearly a year and since SEBI claims that the investigation is at a crucial stage, in the facts of present case, pending further investigation it would be just and proper to pass the following interim order - complete the investigation within a period of two months from today - SEBI deems it fit to proceed further in the matter, then SEBI shall issue show cause notice and pass appropriate order thereon after giving an opportunity of hearing to the appellant, within a period of one month from the date of issuing show cause notice - If SEBI fails to issue show cause notice to the appellant within two months from today and if issued, fails to pass an order as stated above within a period of one month from the date of issuing show cause notice, then and in that event the impugned confirmatory order dated October 16, 2014 continuing the restraint order passed under the exparte ad-interim order dated June 05, 2014 shall come to an end and the appellant would be entitled to access the Indian Securities Market.
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FEMA
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2015 (7) TMI 701
Imposition of penalty - Failure to furnish evidentiary proof of imports regarding foreign exchange in respect of nine remittances in contravention of Sections 8 (3) and 8 (4) of Foreign Exchange Regulation Act, 1973 - Held that:- Documents were in respect of imports that took place pursuant to the remittances made in the years 1994 to 1999. The Customs authorities had in 1995 seized some of the files in respect of imports that had taken place in 1994. The SCN was issued only in May 2002. The firm could not have been expected to retain the proof of all remittances for over six years. The explanation given by it for not being able to immediately furnish the exchange control copies of the BoEs was bonafide. In any event, by the time the Appellants were heard by the AT, the certified copies of the documents to prove import of goods against the remittances at Sl. Nos. 9 to 11 and 12 to 14 were furnished. For some reason, the AT does not appear to have noticed this fact. It has not referred to the documents in its impugned order. The ED has not produced any material to doubt the authenticity of the said documents. It was for the ED, if it doubted the genuineness of the said documents, to have further verified them with the authorities concerned. - very basis for issuance of the SCN to the Appellants does not survive. There is no cause of action for the Appellants to be penalised for contravening Sections 8 (3) and 8 (4) of FERA. - Decided in favour of assessee.
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Service Tax
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2015 (7) TMI 716
Penalty u/s 78 - whether penalty under Section 78 of the Finance Act, 1994 is required to be imposed upon the appellant who has paid the entire differential service tax liability before the same was detected by Revenue - Held that:- Differential service tax amount was paid by the appellant before the date of visit of the audit officers. Only the interest amount was not paid by the appellant, which also was paid by the appellant before issue of snow cause notice - premises of the appellant in that case was searched on 10.03.2008 and the payments were made on 19.03.2008 and 31.03.2008. In the relied upon case law [2010 (6) TMI 200 - CESTAT, AHMEDABAD], the payments were therefore, made after the date of detection by the Revenue whereas, in the present case, the appellant paid the entire amount of service tax before it was detected by the department and the interest was also paid by the appellant as soon as pointed out by the audit. In the instant case no intention to evade payment of service tax can be attributed on the part of the appellant and penalty under Section 78 of the Finance Act, 1994 is not imposable - Decided in favour of assessee.
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2015 (7) TMI 715
Waiver of pre deposit - Works Contract service - utilization of CENVAT Credit - Held that:- Commissioner has confirmed the demand on the ground that the appellant could not place before him necessary evidence to establish that the accepted tax liability has been discharged. The appellant, on the other hand, before this forum for the first time, produced certain documents/evidences including payment by utilizing CENVAT Credit, in support of their claim of discharge of the entire service tax liability. Both sides agree that the documents need to be verified to ascertain the payment of admitted service tax liability. At this stage, taking note of the concern of the Revenue that the appellant be put into terms in remanding the case, we direct the appellant to deposit ₹ 1.5 Crores within eight weeks - Matter remanded back - Decided conditionally in favour of assessee.
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2015 (7) TMI 714
Denial of CENVAT Credit - whether the credit of service tax paid on the service of the Private Placement of Shares is admissible as input service credit as per the Cenvat Credit Rules - Held that:- It is the case of the appellant, that they raised capital by private placement of Shares, for the purpose of implementing a new project, the Automotive Wheel Line Project in their factory. The contention of the revenue that such financial services rendered to the appellant for the purpose of raising capital is not related to manufacture directly or indirectly cannot be accepted. The definition of "input service" is not restricted being limited to services which are directly linked to the manufacturing activity. But the definition has a wide ambit and covers services which are relating to business activities of manufacture. In Aditya Birla Nuvo Ltd Vs CCE (2009 (1) TMI 117 - CESTAT AHMEDABAD) it was held that merger charges are covered in the category of services of financing and Cenvat credit is admissible for the same. Therefore I am of the view that the service of private placement of shares for raising capital is an input service and credit on the service is to be allowed. - impugned order is set aside - Decided in favour of assessee.
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2015 (7) TMI 713
Availability of Cenvat credit of Service Tax - various services used for providing the sale of their final product - Held that:- Appeal can be disposed of on the point of limitation itself inasmuch as the show cause notice was issued on 9-5-2007 for the period December, 2003 to March, 2006. Considering the fact that Additional Commissioner has himself interpreted the provisions of Rule 6(3)(c), in favour of the assessee is indicative of the fact that said provisions are capable of two interpretations. When one of senior officer of the department is dropping the demand by adopting a particular interpretation of provision of law, the assessee cannot be held guilty of adopting the same interpretation which is in his favour and availing the credit. In the absence of any other evidence to show that the appellant have availed the full credit with mala fide intention so as to justify the invokation of longer limitation period, we hold in favour of the appellant - Decided in favour of assessee.
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2015 (7) TMI 712
CENVAT Credit - input service - transit insurance - whether the insurance premium has relevancy to the risk covering the goods. - Held that:- it is the coverage of risk and that is attributable to goods in transit is in question. But not the Service Tax paid on transport delivering goods at buyer’s doorstep. While the goods are in transit, the risk cover is made by insurance. Transport service and insurance on goods being distinct, the claim of Cenvat credit is also distinct. - Decided in favour of assessee.
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2015 (7) TMI 711
Demand of service tax - Architecture service - Bar of limitation - whether the appellant has provided any architect services, to its clients, so as to make him liable to pay the Service Tax - Held that:- Admittedly the appellant is neither an architect nor is he registered under the Architects Act. This fact also stands admitted by Commissioner (Appeals) - original adjudicating authority has observed that all evidences produced by the noticee reveal that Shri Ashish Bhattacharya did not have professional competence to provide their service as architect. Any effort made on their part was stopped by the Indian Institute of Architects, MP Chapter, Bhopal. MP Housing Board also cancelled the order placed by them due to lack of professional clarifications. - M/s. Designing Cell is a proprietary unit under the proprietorship of Shri Ashish Bhattacharya. The proprietary unit and the proprietor are required to be treated as one and the same. In that scenario also if Ashish Bhattacharya is not an architect, his proprietary unit cannot be considered to be an architect. Demand is barred by limitation, having been raised beyond the normal period of limitation. In view of the complex nature of the issue, no suppression can be attributed to the appellant so as to invoke the longer period of limitation. Further, the original adjudicating authority has also held in favour of the assessee, which fact shows that the issue is capable of two different interpretations, in which case no mala fide can be attributed to the appellants. Accordingly, we hold that the demand is also barred by limitation.
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Central Excise
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2015 (7) TMI 720
Extension of stay order - Power of tribunal to extend stay beyond the period of 365 days - Held that:- Tribunal is bound by the provision and that the power to extend such interim orders is dependent on the exercise of discretion by the High Court under Article 226 of the Constitution. In these circumstances, the impugned order cannot be sustained - Decision in the case of CIT v. Maruti Suzuki (India) Ltd. [2014 (2) TMI 1037 - DELHI HIGH COURT] followed - Decided in favour of Revenue.
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2015 (7) TMI 710
Classification of goods - Classification as shampoo or ayurvedic liquid soap - Deliberate suppression of production and clearance of excisable goods - evasion of central excise duty - held that:- Bare perusal of Section 11A(1) of the Act clearly shows that the extended period of limitation of five years may be invoked, if the central excise duty has not been levied or has not been paid or short levied or short paid or erroneously refunded by reason of fraud or collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of the Act or Rules made there under with intention to evade payment of duty. - a clear findings of deliberate suppression of fact, clandestine removal of goods and evasion of central excise duty have been recorded. The Tribunal has not set aside those findings. In fact it has misread the findings recorded in the order in original. Under the circumstances the order of the Tribunal suffers from manifest error of law and the finding recorded with respect to the extended period of limitation is bad. It is also relevant to note that on the question of classification the Tribunal itself has found that the stand in regard of department is correct. There remained no dispute that the goods in question were excisable goods and therefore removal of such goods without paying duty was in contravention of the provisions of the Act and Rules applicable and, therefore, the condtions mentioned under Section 11 A(1) of the Act were satisfied. Thus the extended period of limitation under the proviso to Section 11A(1) of the Act was lawfully invoked. The respondent-assessee is liable to interest and penalty in accordance with law. - Decided in favour of Revenue.
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2015 (7) TMI 709
Denial of refund claim - Bar of limitation - Date of receipt of order - Held that:- Order in original was served upon an employee of the appellant on 26th June, 2013 under Section 35-O of the Central Excise Act provides the proceeding for computing the period of limitation prescribed for an appeal and stipulates that the day on which the order was served has to be excluded. Therefore, while counting 60 days, 26th June, 2013 has to be excluded while counting the period of limitation. - appeal was served in the office on 26th August, 2013. The finding of the Tribunal that the appeal was presented on 27th August, 2013 is against the material on record. We are therefore, of the opinion that the appeal was filed within 60 days. - first appellate authority as well as the Tribunal committed a manifest error of law in holding that the appellant had misrepresented the fact that the order was served upon them on 28th June, 2013. - Decided in favour of assessee.
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2015 (7) TMI 708
Extension stay order - Non disposal of appeal - Additional Benches of the tribunal are not being created - Held that:- The fact remains that there are a large number of appeals, which are pending before the Tribunal, which are not being disposed of on account of various reasons. Huge monies is involved. Assessees have been made liable to pay huge sum of money. Wherever a case is made out, the Tribunal passes an interim order and extension of the interim order becomes a necessity when the appeals are not being disposed of. Non-extension of the order under the garb of third proviso to Section 35-C(2A) of the Act will cause loss to the assessee. We find the Tribunals are extending stay orders because of the non-disposal of the appeal. The non-disposal of the appeals before the Tribunal is also on account that the Additional Benches are not being created. - Noticed issued to authorities as to why appeals are not disposed of.
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2015 (7) TMI 707
Confiscation of goods - Penalty under Rule 25 of the Central Excise Rules, 2002 - Held that:- The basic finding of the Commissioner (Appeals) was that the quantum of approximately 581 MT had not been physically weighed and could not have been weighed within six hours. Hence, the conclusion that there was an excess stock, was incorrect since the verification itself suffered from infirmities. On the second aspect, it has been found that a mere suspicion cannot take the place of proof of an intent to clandestinely remove excisable goods. These are pure findings of fact on which no substantial question of law would arise - Decided against Revenue.
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2015 (7) TMI 706
Recalling of order - Cenvat Credit taken twice - CENVAT on yarn was allowed only from 1.4.2003 - whether the Tribunal was right in rejecting the application preferred by the appellant for recalling the order dated 26-6-2013 without examining sufficiency of the cause extended for non appearance of its counsel - Held that:- From perusal of the averments contained in the application for recalling the order dated 26-6-2013, it appears that the representative of the appellant company failed to attend the proceedings before the Tribunal due to his ailment and the surgery availed by him. The Tribunal while rejecting the application aforesaid did not choose to examine correctness of the cause given but dismissed the application for the reason that the appeal was pending from last several years. - Tribunal should have examined the cause given for recalling the order and not the other issues which as a matter of fact are extraneous for examining the application for recalling earlier order. In view of it, the appeal deserves acceptance. - Decided in favour of assessee.
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2015 (7) TMI 705
Marketability of carbon dioxide - Commissioner held gas not marketable as that was not being capable of bought and sold - Held that:- Large number of adjournments had already been granted. It is not denied that counsel for the appellant did not put in appearance on 9-5-2013. The Tribunal, therefore, decided the appeal, on merits, after hearing counsel for the department, reversed the order passed by the Commissioner (Appeals), in favour of the appellant and restored the order passed by the adjudicating authority. While we do not condone the conduct of counsel for the appellant or comment upon the course adopted by the Tribunal, as a Tribunal may always pass an ex parte order the learned Tribunal should have adjourned the appeal by passing a pre-emptory order that in case the appellant or its counsel does not put in appearance on the next date, the appeal shall be heard ex parte. The failure of counsel for the appellant to put in appearance should not visit the appellant with dire consequences. - Decided in favour of assessee.
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