TMI Tax Updates - e-Newsletter
July 23, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
TMI SMS
Highlights / Catch Notes
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Income Tax:
T.D.S. liability u/s 194A on interest due on Time Deposit received - assessee is a cooperative society - ll the interest payments have been made only to its members - Not liable to TDS - AT
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Income Tax:
Disallowance u/s 40A(2) - with regard to the transaction between the relatives and associates is concerned, the same shall be treated as bona fide case unless the officer finds it that one of them is trying to evade payment of tax - HC
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Income Tax:
Disallowances u/s.40(a)(i) and u/s.40(a)(ia) - if there is short deduction of TDS then the payment cannot be disallowed as short deduction is different from no deduction of TDS. - AT
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Income Tax:
TDS u/s 194C - The 14 persons supplied the labourers to the assessee issued bills/vouchers in respect of labourers supplied on the basis of man-days and charged separately for skilled labour supply and for un-skilled labour supply - it is a case of contract for supply of labourer and therefore, section 194C was squarely applicable - AT
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Income Tax:
Addition on account of bogus purchases - It was for the assessee to explain as to how the payments are genuine and they were made to the supplier. No such assertions are discernible from the reply of the assesse - AT
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Income Tax:
Addition of expenses as penal in nature - forfeiture of the Bank Guarantee - it was related to the business activities of the assessee and was revenue in nature, expenses allowed - AT
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Income Tax:
Computation of deduction u/s 10A - it would not be possible to say that the suo-motu disallowance of any expenditure (which has already resulted in out go of money) would give rise to receipt of any money, which can be called as income generated out of software development activity - AT
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Service Tax:
Development or construction on one’s own property would not constitute a taxable service prior to 01.07.2010, the date on which the Explanation was introduced in Section 65(105)(zzzh) - stay granted - AT
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Service Tax:
Consulting Engineering services - Payment made for technical know how service - demand based on assumptions and presumptions under the category of Consulting Engineer service cannot be sustained. - AT
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Service Tax:
Service of marketing of product a person who is located outside India has consumed the service outside India - qualifies as export of service as per Rule 3(3)(i) of the Export of Services Rules, 2005 - refund allowed - AT
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Central Excise:
Trade Notice Number 03/2015 withdrawn - earlier, manufactures directed by the commissioner CE to declare stock of the inputs/finished goods and to get registered themselves - Trade Notice
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Central Excise:
Instructions regarding Detailed Scrutiny of Central Excise Returns-reg. - Circular
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Central Excise:
Domestically manufactured goods covered under notifications/entries of 30/2004, 1/2011 and 12/2001 continue to be exempt from excise duty or subject to concessional rate of excise duty. as the case may be as they were prior to 17th July. 2015. - Circular
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2015 (7) TMI 760
T.D.S. liability u/s 194A on interest due on Time Deposit received - assessee is a cooperative society - Held that:- ACIT vs Visakhapatnam Cooperative Bank Ltd. (2011 (8) TMI 319 - ITAT VISAKHAPATNAM) has held that the assessee was not obliged to deduct TDS on the interest paid on time deposits u/s 194A of the Act. Neither sec. 2(19) nor sec. 194A(3) makes any discrimination between the cooperative societies carrying on banking business and other cooperative societies. However, as per sec. 194A(3), the said exemption is available only to the interest payments made to its members or to any other cooperative society. In the instant case, it is the claim of the assessee that all the interest payments have been made only to its members. In that case, the assessee is squarely covered by the exemption provided u/s 194A(3)(v) of the Act - Decided in favour of assessee.
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2015 (7) TMI 746
Penalty proceedings under Section 271(1)(c)- ITAT held that the order of the AO does not spell out the reasons for levying of penalty - Held that:- The Court is not inclined to interfere with the impugned order of the ITAT. The fact that the Assessee company was under liquidation at the time the penalty proceedings was initiated, is not in dispute. It is also noted by the ITAT in the impugned order that the Assessee was not undertaking any business from the AY 1997-98 onwards. In the circumstances, the Court is not persuaded to hold that the impugned order of the ITAT gives rise to any substantial question of law which requires to be examined.
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2015 (7) TMI 745
Entitlement to claim deduction under section 80-IA - AO disallowed the assessees' claim under Section 80IA of the Income Tax Act primarily on the ground that carried forward loss of earlier years should be set off before computing the profit for the current year. - Held that:- All the business undertakings are wind mills and they have claimed the benefit of deduction under Section 80IA of the Income Tax Act for the assessment years in question and for the subsequent years as well. Having exercised their option and their losses have been set off already against other income of the business enterprise, the assessee in this appeal falls within the parameters of Section 80IA of the Income Tax Act. See Velayudhasamy Spinning Mills (2010 (3) TMI 860 - Madras High Court ) - Decided in favour of the assessee
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2015 (7) TMI 744
Penalty imposed under Section 271(1)(c) invoking Section 273B - assessee having incorrectly claimed the benefit of Section 80IB(10)- Tribunal canceling the penalty - Held that:- The grievance of the revenue is that the respondent-assessee is not entitled to claim the benefit of Section 80IB(10) of the Act in respect of project Wings A to D. There is no dispute with regard to the same. It is further submitted that the revised return was filed only after the survey was conducted by the revenue. This is not factually correct as the Tribunal in the impugned order observes that there was nothing on record to indicate what was the finding in survey. In the absence of some positive evidence on the part of the revenue that it is the survey which led the respondent-assessee to file revised return of income and/or withdraw its claim for the benefit of Section 80IB of the Act, it is not open to hold that only because of the survey, the claim for benefit of Section 80IB of the Act was withdrawn. In these circumstances, we find that the view taken by the Tribunal on the facts before it was a very possible view. Decided against revenue.
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2015 (7) TMI 743
Disallowance u/s 40A(2)(b) r.w. S 40A(2)(a) - Tribunal deleting the addition - Held that:- The respondent company as well as the parent company, both are assessed to income tax at the maximum marginal rate and, therefore it cannot be said that the service charge is paid to the respondent company at a unreasonable rate to evade income tax. Even the learned Counsel Mr. Bhatt for the revenue does not dispute this fact. We are in agreement with the observations made by the Tribunal as well as the ratio laid down by the coordinate Bench of this Court in the case of (1) Commissioner of Income Tax-I vs Enviro Control Associated (P) Ltd.,[2014 (1) TMI 760 - GUJARAT HIGH COURT ] (2) Commissioner of Income Tax-III vs Ashok J Patel, [2013 (12) TMI 1480 - GUJARAT HIGH COURT] and (3) Commissioner Of Income Tax vs Indo Saudi Services (Travel) P. Ltd. as reported as (2008 (8) TMI 208 - BOMBAY HIGH COURT). So far as the Circular dated 6.7.1968 is concerned, it makes clear that the provisions under Section 40A (2) and particularly with regard to the transaction between the relatives and associates is concerned, the same shall be treated as bona fide case unless the officer finds it that one of them is trying to evade payment of tax. Considering the overall facts of the case and the ratio laid down by the Hon’ble Apex Court in the case of Commissioner of Income Tax vs Excel Industries Ltd, [2013 (10) TMI 324 - SUPREME COURT] we are of the opinion that the appeals are meritless and the same deserve to be dismissed and accordingly dismissed. - Decided in favour of assessee.
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2015 (7) TMI 742
Penalty under Section 271(1)(c) - Held that:- The only ground urged before this Court by Ms. Suruchi Aggarwal, learned Senior Standing counsel for the Revenue is that the Assessee had deliberately claimed revenue receipt as capital receipt. Since that question was itself in dispute and put in issue in the assessment proceedings involving the Assessee, the Court finds no error whatsoever in the CIT (A) holding that there was no deliberate concealment of income or misrepresentation of the income as a capital receipt by the Assessee. - Decided in favour of assessee.
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2015 (7) TMI 741
Disallowance u/s 14A r.w.r. 8D - Held that:- Relying on the decisions in Maxopp Investments Limited v. Commissioner of Income Tax [2011 (11) TMI 267 - Delhi High Court] and Auchtel Products Limited v. ACIT (2012 (5) TMI 108 - ITAT, MUMBAI) the ITAT came to the conclusion that it was incumbent on the AO to have recorded that he is not satisfied with the correctness of the claim of the Assessee in respect of such expenditure which did not part of the income. It was held that in order to disallow the expenditure under Section 14A there must be a live nexus between expenditure incurred and income not forming part of total income. Consequently, the ITAT came to the conclusion that the disallowance made by the AO was not justified. Learned counsel for the Appellant has sought to rely on the Circular No. 5 of 2014 dated 11th February 2014 whereby the CBDT issued a clarification that for invoking disallowance under Section 14A of the Act it is not material that the Assessee should have earned such exempted income during the financial year under consideration. She candidly admitted that the said circular was not placed before the ITAT in the appeal filed by the Revenue. The Court is not prepared to permit the Appellant to urge a ground that was not raised before the ITAT. - Decided in favour of assessee.
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2015 (7) TMI 740
Excessive depreciation for the UPS and Inverters - Held that:- As it is sought to be urged by the Revenue that under Section 32(1) unless the assessee was able to show that the concerned UPS and computer peripherals have been used for more than 180 days in the previous year, it could not have claimed higher rate of depreciation @ 60%. The Court finds that the above ground urged by the Revenue ought to have been based on the factual determination as to whether with reference to the actual dates of purchase of the concerned UPS and computer peripherals, it could be demonstrated that the assessee could not have used such UPS and computer peripherals for more than 180 days in the relevant previous year. However, no such factual determination appears to have been undertaken either by the Assessing Officer (AO) or, at the instance of Revenue, at any of the subsequent stages. Consequently, the Court finds no merit in the contention of the Appellant as regards the issue of depreciation. - Decided against revenue. Fees and royalties for technical knowhow - whether be treated as revenue/business expenditure? - Held that:- A perusal of the TCA shows that the payment by the Assessee to SMCL is for the technical knowhow given to the Assessee as a Licensee. Although the payment is spread over a period of 10 years, it does not make the Assessee the owner of the technical knowhow. The very nature of the license agreement is that it is not of a permanent nature. The view taken by the CIT (Appeals), and concurred with by the ITAT, cannot in the circumstances be said to be improbable or contrary to the settled legal position. The Court, therefore, concurs with the view of the CIT (A) and the ITAT that the benefit to the Assessee as a result of payment of royalty for technical knowhow was not of an enduring nature, and therefore cannot be construed to be a capital expenditure.
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2015 (7) TMI 739
Penalty levied under Section 271(1)(c) - assessee made a wrong claim of business profits on purchase and sale of land as adventure and income warranting the said penalty - Held that:- In the facts of the present case and in the light of the guidance as provided by the Supreme Court in the case of Reliance Petro (2010 (3) TMI 80 - SUPREME COURT ), merely because the assessee made a claim which is not acceptable ipso facto cannot be said to have made a wrong claim by furnishing inaccurate particulars attracting penalty under Section 271(1)(c) of the Income Tax Act, for the relevant assessment year. - Decided in favour of assessee.
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2015 (7) TMI 738
Deduction u/s.80P(2)(d) - Whether CIT (Appeals) ought to have considered the fact that deduction u/s.80P(2)(d) is allowable only on net receipts after deducting the expenses from the gross receipts of interest and that the Assessing Officer has rightly disallowed the deduction u/s.80P(2)(d) on prorata basis - Held that:- The argument of the ld. Departmental Representative is misconceived. The Departmental Representative cannot raise the issue what was not considered by the Assessing Officer. The issue before the Assessing Officer was whether the gross income or net income to be considered for deduction u/s.80P(2)(d) of the Act. The Commissioner of Income Tax (Appeals) while deciding the issue followed the Co-ordinate Bench decision in the case of M/s. SL(SPL) 151 Karkudalpatty PACCS Ltd vs. ITO [2014 (5) TMI 556 - ITAT CHENNAI ] and allowed the claim of the assessee. So, we are not in a position to reverse the findings of the Commissioner of Income Tax (Appeals) as the decision of Commissioner of Income Tax (Appeals) was based on the orders of Co-ordinate Bench which is binding on this Tribunal. - Decided against revenue.
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2015 (7) TMI 737
Dis allowances u/s.40(a)(i) and u/s.40(a)(ia) - assessee had incurred operation cost towards connectivity services - Held that:- Taking a consistent view, we are inclined to hold that the assessee is liable to deduct TDS for payment made to foreign service provider. However, if there is short deduction of TDS then the payment cannot be disallowed as short deduction is different from no deduction of TDS. Accordingly, the Assessing Officer is directed to segregate the short deduction and no deduction of TDS on the payments made to foreign provider and he has disallowed only payment where there is no deduction of TDS.See Frontier Offshore Exploration (India) Ltd. vs. DCIT [2007 (2) TMI 265 - ITAT MADRAS-A]. Decided partly in favour of assessee for statistical purposes.
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2015 (7) TMI 736
Invoking jurisdiction u/s.263 by the Commissioner of Income Tax directing the Assessing Officer to pass fresh assessment order which was completed u/s.153A r.w.s. 143(3) of the Act - Validity of assessment u/s.153A - Held that:- The original assessment order for the assessment year 2006-2007 was already completed u/s.143(3) of the Act. Hence the assessment u/s.153A to be made on the basis of incriminating material, which means books of account, other documents, found in the course of search but not produced in the course of original assessment, and undisclosed income or property discovered in the course of search. It was admitted fact in this case that there was no incriminating material discovered in the course of search action. There was also no allegation that the assessee has failed to produce books of accounts and documents in the course of original documents. It is also a fact that recorded by Commissioner of Income Tax that the Assessing Officer failed to examine the books of accounts produced by him due to paucity of time and the Assessing Officer proposed the Commissioner of Income Tax to review the order u/s.153A of the Act. In our opinion, the Commissioner of Income Tax wanted to do the things indirectly which cannot be done directly. Further, he mentioned in the order that the Assessing Officer examined the statement of affairs for the assessment years 2006-07 and 2007-08 during the course of assessment u/s.143(3) of the Act finalised on 31.12.2009 and he wanted to review the same which is nothing but causing roving inquiry which is not permitted u/s.263 of the Act. In the present case there is no incorrect assumption of facts or an incorrect application of law by the Assessing Officer. The Assessing Officer has applied his mind to the seized material while framing assessment for the year 2006-07 u/s.153A of the Act. The Commissioner of Income Tax cannot expect to correct the assessment order passed u/s.153A of the Act duly considered the seized material and in the present case the Commissioner of Income Tax wanted to consider the statement of affairs filed by the assessee during the course of assessment u/s.153A though it was not part of the seized material and it cannot be considered for framing assessment u/s.153A of the Act as assessment for the assessment year 2006-07 has already been completed u/s.143(3) and re-assessment u/s.153A be made only on the basis of incriminating material found in the course of search but not produced in the course of original assessment. In the present case, the Commissioner of Income Tax categorically observed whatever statements on record were already produced by the assessee both in the course of original assessment u/s.143(3) and also in assessment proceedings u/s.153A of the Act. The Assessing Officer adopted one of the course permissible under law and he has taken one view that the Commissioner of Income Tax does not agree which cannot be treated as error unless the view taken by the Assessing Officer is unsustainable under law. Moreover, while making assessment the Assessing Officer examined the accounts, made enquiries, applied his mind to the facts and circumstances of the case and determined the income, the Commissioner of Income Tax while exercising his power u/s.263 is not permitted to substitute his estimate of income in place of the income estimated by the Assessing Officer. In our opinion, the Assessing Officer exercises quasi-judicial power vested in his hands and if he exercises such power in accordance with law and arrive at a conclusion, such conclusion cannot be termed to be erroneous simply because the Commissioner of Income Tax wanted to do further enquiry as he has not satisfied with the enquiry made by the Assessing Officer. In the present case, the Assessing Officer made enquiry both in the course of original assessment u/s.143(3) for the assessment year 2006-07 and also during the course of assessment u/s.153A of the Act and the assessee has given a detailed explanation to Assessing Officer to consider the same after being satisfied by the explanation given by the assessee, he adopted not to make any addition. Further, as held in the case of Mariam Aysha vs. Commissioner of Agricultural Income Tax [1971 (7) TMI 50 - MADRAS High Court ] that consent cannot give jurisdiction is an essential principle of law. The taxing authority can act only if there is power under the statute to do so. Being so, the contention of the Departmental Representative cannot be accepted that before the Commissioner of Income Tax, the assessee has conceded that the statement of affairs needs to be examined, so that revision of jurisdiction u/s.263 is appropriate. In our opinion this is not a fit case for revision u/s.263 of the Act and we are cancelling the order passed u/s.263 for the year 2006-07. Thus, all the other orders passed u/s.263 by Commissioner of Income Tax are annulled. - Decided in favour of assessee.
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2015 (7) TMI 735
Addition u/s. 69C - CIT(A) deleted addition - Held that:- It is an undisputed fact that the assessee has filed explanation to each and every entry recorded in the alleged pocket diary. The additions made by the AO are mechanical for example on page-10 of the seized diary marked as A-1, there is no transaction of ₹ 52,000/- on 3.8.2006 or otherwise. Thus the addition made by the AO is without any substance. Further, the allegation of the AO that the payments are without any supporting evidence is also not correct, for example payment of ₹ 28,000/- made to Shree Krupa Roadlines is supported by FAPS, which is part of the paper book filed before the Revenue authorities. We have also gone through the remand report of the AO dt. 8.2.2013. We find force in the contention of the Ld. Counsel that the AO has submitted the remand report without any verification. Considering all these facts in totality and also considering the fact that at the time of search, ₹ 10 lakhs were surrendered in the name of the assessee which has been accepted by the Revenue. Restriction of the impugned addition to ₹ 5 lakhs is justified and therefore we decline to interfere. - Decided against revenue. Disallowance of freight expenses - CIT(A) deleted addition - Held that:- A perusal of the chart to consider the ratio analysis in respect of freight income vis-à-vis freight charges clearly shows that the freight charges claimed by the assessee are reasonable. We, therefore decline to interfere with the findings of the Ld. CIT(A)- Decided against revenue.
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2015 (7) TMI 734
Addition u/s 69B unexplained investments - AO disputing and harbouring a belief that the assessees have made investments, over and above, the amount so disclosed in the sale deed is based on the basis of stamp duty valuation which authorizes the valuation authorities to charge stamp duty on registering the transfer of plots - Held that:- Valuation made for the purpose of stamp duty is an estimated opinion. It can be a corroborative evidence for the help of the AO, but, it cannot be conclusive piece of evidence demonstrating the unexplained investment made by the assessee for purchase of land. Solely on the basis of such estimated opinion, the addition cannot be made. From perusal of record, we find that, apart from this estimated opinion, the AO was not possessing any other evidence. As far as reference made under section 50C of the Act is concerned, we are of the view that section 50C is deeming provision, which authorizes the AO to replace the sale consideration with regard to the full value of consideration disclosed by the assessee for the purpose of computing the capital gain. In that situation, the AO would replace the sale consideration disclosed by the assessee by an amount on which stamp duty was paid by the assessee. Therefore, this section is of no help while determining the unexplained investment of the assessee. Thus Revenue authorities have failed to appreciate the facts and circumstances. The assessees have not made any unexplained investment in purchase of plots, and therefore, no additions deserve to be made. - Decided in favour of assessee.
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2015 (7) TMI 733
Disallowance u/s 40(a)(ia) - assessee made the payment for labour charges without deduction of tax at source u/s 194C - assessee in default - Held that:- The 14 persons supplied the labourers to the assessee issued bills/vouchers in respect of labourers supplied on the basis of man-days and charged separately for skilled labour supply and for un-skilled labour supply. Against those bills, payment is made to those 14 persons from time to time and some payment is outstanding which is shown in the balance-sheet of the assessee. From these facts and the bills/vouchers issued by the 14 persons, it is evident that it is a case of contract for supply of labourer and therefore, section 194C was squarely applicable. Since the assessee failed to deduct the tax at source, in our opinion, the Assessing Officer rightly disallowed the labour charges paid to the labour contractors by invoking the provisions of Section 40(a)(ia). Accordingly, the assessee’s appeal is dismissed. - Decided in favour of Revenue.
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2015 (7) TMI 732
Addition u/s 69B - unaccounted investment of ₹ 57,85,000/- in purchase of a land measuring 5160 meter situated at survey no. 731 Makarba - CIT(A) deleted the addition - Held that:- The basis condition for applying under section 69B is that it should be found that the assessee has made investment or the assessee found to be owner of the money, bullion and jewellery. In the present case, assessee was found to have made investment for purchase of plots. The next question is whether the assessee has made investment exceeding the amount recorded in the books. This is a crucial question, which demonstrates factual position. It is to be proved with the help of evidence available on record. According to the assesee, he was made investment in purchase of plot equivalent to the one disclosed in the sale deed. It is the Assessing Officer who is disputing and harbouring a belief that the assessee has made investments, over and above, the amount so disclosed in the sale deed. His belief is based on the basis of loan liability discharged by the vendor. This type of evidence possessed by the Assessing Officer is of not such a nature, which empowers him to invoke section 69B of the Act. Assessee failed to make reference of any evidence which demonstrate that assessee has made unexplained investment. The assumption of the Assessing Officer is based on the fact that vendors have discharged their loan liability meaning thereby they would have not sold the property below the liability they have discharged. To our mind, this is a far fetched inference. The Ld. First Appellate Authority has analyzed the bank statement and inferred that loan taken by the vendors was of ₹ 205 lacs, they have mortgaged other properties also. They have paid other amounts also. there is no direct co-relation between the discharge of loan liability vis-à-vis sale of this plot. The only connection between the bank and this property was that it was under mortgage. Vendors have got it released from the bank and it is sold to the assessee. No addition against higher capital gain has been made in the hands of the vendors. It is for the vendors to explain the source of what amount which they have discharged towards their loan liability. It cannot be presumed that it must be taken from the assessee in cash over and above the amounts stated in the sale deed. In our opinion, ld. Commissioner of Income Tax (Appeals) has appreciated the facts and circumstances in right perspective. There is no evidence with the Assessing Officer to suggest that assessee has made unexplained investment in the purchase of the property - Decided in favour of assessee.
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2015 (7) TMI 731
Addition on account of bogus purchases - assessee disallowed 25% of the purchase price - CIT(A) deleted the addition - Held that:- The assessee miserably failed in this year to establish a reconciliation between the payments made by him towards purchases vis-à-vis the ultimate recipient of the amounts being his vendor. As far as the Asstt.Year 2001-02 is concerned, we find that in that year purchases were made from four parties. The assessee has demonstrated that the payments have been received by two parties. The ld. AO has accepted it as a fact. Thus, the assessee has proved on record that who was the ultimate recipient of the money that entity was found to be vendor of the assessee. There could not be any doubt about the purchases. Due to these reasons, the AO did not make any addition. The learned First Appellate Authority has not examined the facts with this angle, no reasoning is discernible in the findings extracted supra. The CIT(A) has observed that the AO has not found any instance whether the cheque issued by the assessee has been encashed on behalf of the assessee. It was for the assessee to establish how the payment was made to the ultimate seller of the goods. The assessee failed to establish this fact. The learned AO has made reference to the case of M/s.A.K.Textile, where the payments were withdrawn by the proprietor named “Aaisha”. These amounts have been doubted by the AO. It was for the assessee to explain as to how the payments are genuine and they were made to the supplier. No such assertions are discernible from the reply of the assessee extracted supra. Therefore, in our opinion, the learned CIT(A) has erred in deleting the addition. We set aside order of the learned CIT(A), and restore that of AO. - Decided in favour of revenue.
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2015 (7) TMI 730
Addition on account of low GP, after rejecting books of accounts - CIT(A) deleted the addition - Held that:- The Assessing Officer, while rejecting the books accounts, has not pointed out that the books of accounts of the assessee is incorrect or incomplete. Similarly, he has no where stated that the assessee did not follow the method of accounting provided u/s 145(1) or accounting standards as prescribed u/s 145(2). Therefore, in our opinion, no adequate reasons have been given by the Assessing Officer for rejection of the books of accounts. Merely because the gross profit is low, it would not be sufficient to reject the books of accounts. The low gross profit can be a reason to probe deep into the accounts so as to ascertain whether the accounts are correct or not. But, that by itself is not sufficient to reject the books of accounts. In fact, the reasons given by the Assessing Officer justify the low gross profit disclosed by the assessee. If the assessee has a meager capital of ₹ 1,25,000/-, she does not have any business premises and she does not have any employees. It only supports the contention of the assessee that she is simply working as an intermediator between the buyer and the seller. She first books the order from the buyer and then arranges for the seller. The goods is supplied directly by the seller to the buyer and the payment to the seller is made after receiving the payment from the buyer. She has also explained that she has kept a very small percentage of margin so as to achieve huge turnover. All the facts narrated by the Assessing Officer for rejection of books of accounts and estimation of profit does not satisfy the conditions prescribed u/s 145(3) for rejection of books of accounts. On the other hand, these facts justified low GP disclosed by the assessee. Moreover, we find that under the identical set of facts, the Assessing Officer in the order passed u/s 143(3) in assessee’s own case for Assessment Year 2010-11, accepted the assessee’s books of accounts wherein the GP rate of 0.13% is disclosed. - Decided in favour of assessee.
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2015 (7) TMI 729
Rejection of application u/s.154 - whether the mistake on the part of the AO in the return so filed can be rectified by invoking the provisions of section 154 of the Act? - Held that:- As per Section 139(1) of the Act, return is required to be filed by every person, (a) being a company (or a firm) or; (b) being a person other than a company (or a firm), if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax. Shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed. As per Section 139(5) of Act, If any person, having furnished a return under sub-section (1), or in pursuance of a notice issued under sub-section (1) of section 142, discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. From the provisions, it is evident that it is not the case that Revenue Authorities have to accept whatever stated in the return and compute the taxable income mechanically. As per provisions of section 143(1) of the Act, the concerned Revenue Authority has to examine whether any claim as made by the assessee is correct or not. In our considered view, this includes under statement and overstatement of the income. If the Revenue Authority failed to take note of any incorrect claim with regard to total income of the assessee, such failure would necessarily mean mistake apparent from the record. we hereby set aside the order of the ld.CIT(A) and direct the AO to allow the application of the assessee made u/s.154 of the Act and grant refund amount of ₹ 1,88,580/-. See Pawan Kumar Aggarwal vs. CIT [2014 (5) TMI 449 - DELHI HIGH COURT] - Decided in favour of assessee.
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2015 (7) TMI 728
Addition of expenses as penal in nature - forfeiture of the Bank Guarantee - CIT(A) deleted the addition - Held that:- In the present case, it appears that the AO himself in his remand report accepted on the basis of evidence furnished by the assessee that the forfeiture of the Bank Guarantee was a sort of compensation for nonfulfillment/ shortfall of certain conditions in export obligations. Therefore, it was related to the business activities of the assessee and was revenue in nature. In that view of the matter, we do not see any infirmity in the order of the ld. CIT(A) on this issue. - Decided in favour of assessee. Addition for provision for House tax, an unascertained liability - CIT(A) deleted the addition - Held that:- Issue is covered in favour of the assessee vide orders for the assessment years 2008-09, 2007-08 & 2006-07 [2012 (4) TMI 570 - ITAT DELHI] and [2010 (5) TMI 794 - ITAT DELHI] wherein held The dispute on property tax is between NDMC and STC. There is no dispute between the NDMC and the assessee. Thus, the liability of the assessee is towards STC and not to NDMC. As raising of demand, by STC and acceptance of liability amounting to ₹ 11,40,958/- by the assessee has not been disputed by the revenue. We are of the considered opinion that the impugned amount has accrued during the year under consideration and such amount was allowable as a deduction in the year under consideration. In this view of the matter, we do not find any infirmity in the order of Ld. CIT(A) on this issue and confirm the same. - Decided against revenue. Addition being amount deducted by the assessee from the sales account of Jaipur Branch - CIT(A) deleted the addition - Held that:- In the present case, the claim of the assessee is that the adjustment had been made on account of fluctuation in foreign exchange which was related to the export sales. However, neither the AO nor the ld. CIT(A) had mentioned in their respective order that the impugned amount relates to the foreign exchange fluctuation. In our opinion this issue requires a fresh examination at the level of the AO. We, therefore, set aside the impugned order and remand this limited issue to the file of the AO for fresh adjudication in accordance with law after providing due and reasonable opportunity of being heard to the assessee. - Decided in favour of revenue for statistical purposes.
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2015 (7) TMI 727
Liability to deduct tax at source from the payment of such commission under S.194H - assessee in default under S.201(1)/201(1A) - CIT(A) directed the Assessing Officer to examine whether the taxes were already paid by the deductees i.e. distributors and give credit for the same. and also to charge interest under S.201(1A) from the date on which the tax was payable to the date on which the tax was actually paid by the deductees - Held that:- Although the first proviso to S.201(1) has been inserted in the statute with effect from 1.7.2012, the same being clarificatory in nature is applicable with retrospective effect, thereby covering the year under consideration, as rightly held by the learned CIT(A), and the Learned Departmental Representative has not raised any contention to dispute or controvert the position. We, therefore, find no infirmity in the impugned order of the learned CIT(A), giving limited relief to the assessee by relying on the first proviso to S.201(1), which is applicable to the year under consideration, and upholding the same, we dismiss the appeal preferred by the Revenue. - Decided against revenue.
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2015 (7) TMI 726
Undisclosed income of assessee - CIT(A) deleted the addition - Held that:- Assessee has shown ₹ 3,00,000 as the amount received when sale took place and balance ₹ 3,00,000 as development charges. Therefore, in our view, in case of each of the transaction, an exercise has to be undertaken to find out not only the fact whether they appear in the accounts of assessee but also whether there is any variation between the amounts received as per list submitted by assessee and the loose sheets impounded at the time of survey. In our view, ld. CIT(A) should have given opportunity to AO to verify these facts to find out the authenticity of assessee’s claim. Neither allowing opportunity to AO to properly verify the facts nor having himself verified the facts in detail, ld. CIT(A) should not have deleted the addition merely relying upon the submissions of assessee. In the aforesaid view of the matter, we set aside the order of ld. CIT(A) on this issue and remit the matter back to the file of AO for deciding the same after reasonable opportunity of hearing to Assessee to explain its case. AO must verify the documents submitted by assessee and thereafter take a decision in the matter. - Decided in favour of revenue for statistical purposes. Disallowance made u/s 40A(3) - CIT(A) deleted the addition - Held that:- Though, assessee claimed before ld. CIT(A) that payments were made to persons at places where banking facility is not available, but, in our view, assessee’s claim has to be proved through either certain process of enquiry or evidence brought on record. As it appears from the order of ld. CIT(A), he has accepted assessee’s claim on the face value without making any enquiry or referring the matter to AO. Therefore, we set aside the impugned order of ld. CIT(A) on this issue and remit the matter back to the file of AO to verify assessee’s claim that banking facility is not available at places where payments were made to concerned persons, hence it comes within the purview of rule 6DD. AO must afford reasonable opportunity of being heard to assessee before deciding the issue.- Decided in favour of revenue for statistical purposes. Disallowance made u/s 40(a)(ia) - CIT(A) deleted the addition - Held that:- As can be seen, against the payment towards agent commission, assessee has deducted an amount of ₹ 1,38,300 and remitted to the govt. account, hence, AO’s allegation that no tax was deducted is incorrect. As far as the development expenses are concerned, assessee has deducted tax on amount of ₹ 21,27,450 and the balance amount of ₹ 22,52,333, assessee itself disallowed and added back in the computation of income. Therefore, allegation of AO is proved to be wrong. Therefore, we agree with ld. CIT(A) in deleting these two additions. As far as, rent payment and payment towards development charges are concerned, we are of the view that assessee’s contention that TDS provisions do not apply to these payments need to be verified by AO. - Decided partly in favour of revenue for statistical purposes. Disallowance of expenditure - CIT(A) restricting the disallowance - Held that:- As can be seen while AO has disallowed 10% expenditure out of the expenditure claimed by assessee under various heads, ld. CIT(A) has restricted the disallowance to the expenditure claimed towards development expenditure, site visit expenditure, survey charges and preliminary expenses. In our view, the decision of ld. CIT(A) on this issue is just and proper and do not call for any interference. Though, assessee could not produce necessary proof in respect of claim of expenditure before AO, but, ld. CIT(A) has allowed assessee’s claim after considering the fact that expenditure claimed towards directors remuneration, agents commission, development expenses etc. should not be disallowed on adhoc basis as assessee has actually incurred these expenditures. Ld. AR also submitted, assessee itself has disallowed expenditures where there are no supporting evidences, therefore, no further disallowance should be made. In view of the aforesaid, we uphold the order of ld. CIT(A) on this issue by dismissing the ground raised.- Decided against revenue.
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2015 (7) TMI 725
Computation of deduction u/s 10A - Held that:- In the instant case the assessee has not generated any foreign exchange out of the suo-motu disallowance made by it. In fact, the assessee has actually spent money on reimbursements and hence there is no question of generating any income out of suo-motu disallowance of the expenditure incurred. Hence, in the absence of any income, it would not be possible to say that the suo-motu disallowance of any expenditure (which has already resulted in out go of money) would give rise to receipt of any money, which can be called as income generated out of software development activity. Thus, in our view, the ratio of the decision rendered in the case of Agilisys IT services India Pvt Ltd [2015 (7) TMI 110 - ITAT MUMBAI ] can be applied in the facts of the present case also. Even otherwise it is not a case of disallowance that is required to be made under the statutory provisions due to legal fiction. We notice that the Tribunal, while disposing of the identical issue in AY 2006-07, has taken into account the decision rendered by the Bangalore bench of Tribunal in the case of I Gate Global Solutions (2007 (11) TMI 444 - ITAT BANGALORE ). Hence, for the additional reasons discussed supra and also by following the decision rendered by the Tribunal in AY 2006-07 on identical issue, we are of the view that the Ld CIT(A) was justified in confirming the order of the AO in rejecting the claim for deduction u/s 10A of the Act in respect of suo-motu disallowance made by the assessee. - Decided against assessee. Disallowance u/s 14A of the Act - Held that:- We notice that the ld CIT(A) had only set aside the issue to the file of the AO for fresh consideration in the light of decision rendered in the case of Godrej & Boyce mfg. Co. Ltd (2010 (8) TMI 77 - BOMBAY HIGH COURT) by the Hon’ble Bombay High Court. Hence, we do not find any infirmity in the decision of Ld CIT(A) on this issue.- Decided against assessee.
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2015 (7) TMI 724
Eligibility for deduction under s.80HHC - CIT(A) confirming the order of the AO holding that the deduction under s.80HHC was to be computed at NIL - Held that:- In view of the judgement of Avani Exports [2015 (4) TMI 193 - SUPREME COURT ] has categorically ruled that having seen the twin conditions and since 80HHC benefit is not available after 1.4.05, the cases of exporters having a turnover below and those above 10 crores should be treated similarly, we are of the considered view that the ld.CIT(A) was not justified in confirming the action of the AO. Therefore, we hereby direct the AO to allow the deduction u/s.80HHC of the Act. - Decided in favour of assessee.
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2015 (7) TMI 723
Addition towards unexplained bank deposits - Penalty proceedings u/s.271(1)(c) - CIT(A) deleted penalty levy - Held that:- If any amount is deposited in bank account of the assessee, the assessee has to explain the source from which it was deposited. In the present case, the assessee is not able to explain the deposits. According to the assessee, the assessee is not educated and return subsequent to the search was filed by a Chartered Accountant who obviously has not made out a proper disclosure. The intention of the assessee was to make a proper disclosure, come out clean and pay the taxes. However, it was submitted that it was only the mistake of the Chartered Accountant and not of the assessee in making proper disclosure. Later the assessee accepted for the addition to purchase peace and to avoid prolonged litigation. In our opinion, this contention of the assessee is totally misconceived. It is the duty of the assessee to disclose all income truly and fully while filing the return of income. The assessee cannot shift his responsibility to his Chartered Accountant. Further, the assessee stated it was ill advised by the Chartered Accountant without mentioning the name of the Chartered Accountant. It is not brought on record what advice was given by the Chartered Accountant on this issue. In our opinion, the assessee has concealed particulars of income and also not given any bonafide explanation for this. Hence levy of penalty u/s.271(1)(c) conformed . See Mak Data (Pv) Ltd. vs. CIT [2013 (11) TMI 14 - SUPREME COURT] - Decided against assessee. Addition of E40,00,000/- relating to credits in ICICI bank account - CIT(A) deleted addition - Held that:- In our opinion, how the amount of E40,00,000/- has been considered in the hands of ex-husband is not on record. In our opinion, it is appropriate to remit the issue back to the Commissioner of Income Tax (Appeals) to give reasons on what basis he came to the conclusion that it was shown in the hands of ex-husband. Hence, this issue is remitted back to the file of the Commissioner of Income Tax (Appeals) for fresh consideration. Decided partly in favour of Revenue for statistical purposes.
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2015 (7) TMI 722
Net profit determination - AO has applied 15% of the contract receipts - ld.CIT(A) has restricted the same to 8% - Held that:- The appellant has purchased land during the year and has shown work in progress of ₹ 9,42,319/-. The cost of the land has been shown to be ₹ 98,96,100/-. Since the appellant is constructing the building to its share holders cum members, the profit element on account of land will not be there. However, there would be a profit element in the construction work that has been carried out by the appellant on the land as the appellant is charging for the construction on a lumpsum basis. Therefore, the profit rate should be applied on the W.I.P. of ₹ 9,.42,319/-. The A.O. has applied profit rate of 15% on the receipts shown by the appellant. The rate applied by the A.O. is without any basis or any comparable instance. Normally, the rate of profit in this line of business is adopted @ 8% of the contract receipts. The A.O. is, therefore, directed to estimate the income of the appellant by applying the profit rate of 8% on the W.I.P. of ₹ 9,42,319/-. - Decided against revenue. Penalty u/s.271(1)(c) - penalty has been imposed by the A.O. as the income was assessed by him at ₹ 17,14,395/- as against a loss of ₹ 1,680/- shown in the return of income - Held that:- The appellant had given all the particulars regarding the claim in the return of income and the accounts were also presented before the assessing officer. It was his bonafide belief that the he has not earned any income from the activity. The assessing officer did not accept his claim. The addition made by the assessing officer on the basis of estimate does not make the case fit for imposition of penalty. The appellant did not furnish any inaccurate particulars or misrepresented any fact in his return of income. He furnished the return giving all the facts. Where there is no finding that any details were supplied by the assessee in its return of income found to be incorrect or erroneous or false there was no question of invoking the penalty under section 271(1)(c). Mere making of claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Considering the above facts and circumstances, the penalty imposed by the assessing officer is deleted and the appeal is allowed. See Reliance Petro products Pvt.Ltd. reported in [2010 (3) TMI 80 - SUPREME COURT ] - Decided in favour of assessee.
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2015 (7) TMI 721
Disallowance u/s.43B(b) on account of late payment made to PF & ESI beyound due date - Held that:- Considering the fact that it was the case of employees contribution which was not deposited within the prescribed period under the PF Act and ESI Act, the said question / issue is to be held in favour of revenue and against the assessee in view of the decision of this Court in COMMISSIONER OF INCOME TAX II Versus GUJARAT STATE ROAD TRANSPORT CORPORATION [2014 (1) TMI 502 - GUJARAT HIGH COURT] wherein it has been held that if the assessee has not deposited employees contribution towards PF and ESIC Act, the assessee shall not be entitled to the deductions in the same year. - Decided in favour of the revenue.
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Customs
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2015 (7) TMI 750
Jurisdiction of Court - Court in previous judgment held that This court has no jurisdiction to entertain these appeals - Held that:- The original Article 226 of the Constitution of India came up for consideration before the Supreme Court of India in ELECTION COMMISSION, INDIA vs SAKA VENKATA RAO [1953 (2) TMI 39 - SUPREME COURT]. It was held that the location of the respondent would give territorial jurisdiction to the High Courts under Article 226 of the Constitution of India. The situs of the cause of action was held to be material for this purpose. The Constitution (15th Amendment) Act, 1963, brought clause (1A) to provide that the High Court, within whose jurisdiction the cause of action arises, fully or partly, would, also, have the jurisdiction to entertain an application under Article 226 of the Constitution of India. The result of the amendment is that the accrual of cause of action is made an additional ground to confer jurisdiction to a High Court under the said Article. With the insertion of clause (1A), no new jurisdiction was conferred on the High Court but, it provided an additional ground and extended the jurisdiction beyond the boundaries of the State if the cause of action arose within its territory. The consignments were received by the writ petitioner at Delhi air cargo complex. They were cleared by the authorities at Delhi, after obtaining clarification from the Board of Customs. The consignments were cleared for home consumption upon acceptance of the duties as mentioned in the said notification without any demur. The writ petitioner dispatched those gold dore bars to Uttarakhand. The shipments were refined and the refined gold bars were brought back from Uttarakhand to Bengaluru for sale and manufacture of gold jewellery. - The jurisdiction under Article 226 of the Constitution of India can be invoked if even a fraction of the cause of action arises within the territorial jurisdiction of the High Court. Against the aforesaid background, it is difficult to uphold the view taken by the Hon'ble Judge that this court had no territorial jurisdiction to entertain the writ petition - Decided in favour of appellant.
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2015 (7) TMI 749
Validity of detention order - Order under COFEPOSA - Violative of constitution of India - Held that:- The constitutionality of COFEPOSA has been already upheld by a nine Judge Bench of this Court. Its constitutionality is again sought to be assailed by the petitioners in the present matter on the ground that with the change of legal regime by repeal of FERA and enactment of FEMA (the provisions contained in FEMA did not regard its violation a criminal offence) the intent and object behind the enactment of preventive detention in COFEPOSA had ceased to exist and continuation of impugned provision in COFEPOSA was violative of Article 21 read with Articles 14 and 19 of the Constitution. The menace of smuggling and foreign exchange violations has to be curbed. Notwithstanding the many disadvantages of preventive detention, particularly in a country like ours where right to personal liberty has been placed on a very high pedestal, the Constitution has adopted preventive detention to prevent the greater evil of elements imperiling the security, the safety of State and the welfare of the Nation. On the touchstone of constitutional jurisprudence, as reflected by Article 22 read with Articles 14, 19 and 21, we do not think that the impugned provision is rendered unconstitutional. There is no constitutional mandate that preventive detention cannot exist for an act where such act is not a criminal offence and does not provide for punishment. An act may not be declared as an offence under law but still for such an act, which is an illegal activity, the law can provide for preventive detention if such act is prejudicial to the state security. After all, the essential concept of preventive detention is not to punish a person for what he has done but to prevent him from doing an illegal activity prejudicial to the security of the State. The detaining Authority must apply its mind properly before passing order of detention. The Authority is obliged while passing order of detention and taking away liberty of the citizen of this country to exercise due care and caution and ensure that the person detained is so detained on grounds which justify the detention in the interest of the country. Further the proceedings in the matter of detention and the order of detention should show that such care and caution was exercised and reflects sense of responsibility while depriving citizen of his liberty without trial. - there is a bond executed and furnished and which records an undertaking of the detenu that he would not leave India without prior permission of the competent official or the Court. Pertinently, the learned Counsel does not dispute that the passport in the case before us was returned to the detenu. The detenu, thus, was free to utilize the passport. It may be that the passport authority has independent powers and after it was informed of the prejudicial activities of the detenu, it would have prevented departure from India, but that by itself does not mean that the detaining authority in any way is prevented in law from making order of detention. The passport is not surrendered nor is it in custody of the Authority. It is with the detenu. There was, therefore, a definite apprehension that the detenu would use it to smuggle foreign currency out of India. The satisfaction in that behalf is thus based on cogent and reliable material including the past record of the detenu. Thus, there was an application of mind to germane and relevant factors necessary to invoke Section 3(1)(i) of the COFEPOSA. It is a condition on which the bail has been granted. The condition inter alia is that the detenu shall attend the office of the officer or the Court on every day on which the investigation or trial is held and an undertaking is given by the detenu that he will not leave India without prior written permission of the concerned officer or the Court as may be. This is not enough to nullify the subjective satisfaction and which is recorded in the present case. This is not a case where the material or the grounds were not supplied. Rather this is a case where the detenu desired to have better and further particulars about the documents and their contents. The documents speak for themselves. They were supplied and some of them were clearly referred in the representation. The particulars thereof and as sought were not necessary to make a meaningful representation. Apart therefrom, the complaint in that behalf is identical and based on the same plea regarding alleged variance in the subjective satisfaction in the Detention Order and the reasons in support thereof. We have already dealt with and rejected it. Once we have found that the subjective satisfaction and as recorded clearly spells out the distinction in law, then, we are in agreement with Mr.Yagnik that one word or sentence from the detention order cannot be picked up and read in isolation or torn out of context. The subjective satisfaction is based on the detaining authority's opinion that it is necessary to detain the detenu so as to prevent him from indulging in smuggling activities in future. - detenu's rights guaranteed by Article 22 of the Constitution of India are in no way infringed nor is the mandate of the said Article in any way violated. There is ample opportunity given to him and to make an effective and meaningful representation. Even on that count, we do not find that the detention order suffers from any legal infirmity. - decided against the appellant.
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2015 (7) TMI 748
Waiver of pre deposit - Evasion of duty - suppression of FOB value - Penalty u/s 114AA - Held that:- Tribunal has committed no error. Firstly, against the total penalty demand of more than ₹ 10 crores, the Tribunal imposed condition of pre-deposit of merely ₹ 10 lacs which comes to just about one per cent of the amount. Secondly, in the earlier case, the penalty imposed was ₹ 25 lacs against which the Tribunal imposed the condition of pre-deposit of ₹ 1 lac. Merely because the allegations are common, the Tribunal is not bound to adopt the same figure irrespective of the quantum involved in each case. The condition of pre-deposit has some rational relation to the total demand confirmed by the adjudicating authority - Decided against assessee.
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2015 (7) TMI 747
Denial of benefit of Notification No. 93/2004-Cus., dated 10-9-2004 - Held that:- Following the decision of Commr. of S.T., Bangalore v. Scott Wilson Kirkpatrick (I) Pvt. Ltd. reported in [2011 (4) TMI 500 - KARNATAKA HIGH COURT], it is held that the issue is of interpretation of notification, therefore is matter should lie before Apex Court - Appeal not maintainable - Decided against Revenue.
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Service Tax
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2015 (7) TMI 759
Waiver of pre deposit - Construction of commercial complex - whether construction of a complex intended for sale to prospective buyers and where the builder receives any advance, was liable to service tax was the subject matter of regnant litigation - Held that:- Explanation to Section 65(105)(zzzh) is prospective and development/ construction on one’s own property for raising a residential complex even where advances are collected from third party purchasers would not amount to the taxable service of construction of residential complex nor would such advances be liable to tax, under this category. - Prima-facie, inasmuch as the definition of construction of complex in sub-clause (c) to Explanation (ii) to Section 65 (105)(zzzza) borrows this integer from construction of complex, a taxable service defined in Section 65(91a) read with Section 65(105)(zzzh) of the Finance Act, we are of the view that development or construction on one’s own property would not constitute a taxable service prior to 01.07.2010, the date on which the Explanation was introduced in Section 65(105)(zzzh). - Stay granted.
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2015 (7) TMI 758
Waiver of pre deposit - construction of complex service - construction of independent residential units for Rajasthan Housing Board and construction of the corporate office of Ajmer Vidyut Vitaran Nigam Limited - Held that:- Prima-facie, construction of a corporate office for Ajmer Vidyut Vitaran Nigam Limited would not amount to rendition of a taxable service in relation to transmission of electricity, even though construction of the corporate office is in respect of a transmission or distribution agency - no other measure of assessing the extent of this liability since neither the show cause notice nor the impugned order segregate the quantum of consideration received by the appellant from the activity of construction of residential units and construction of the corporate office. - appellant is directed to pre-deposit ₹ 18 lakhs plus the proportionate interest thereon within six weeks - Partial stay granted.
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2015 (7) TMI 757
Demand of service tax - Consulting Engineering services - Payment made for technical know how service - Held that:- customer had certified that the payment was made for the purpose of technical know-how. The Revenue has not disputed the authenticity of the certificate at any point of time. No enquiry was conducted by the Department in respect of this certificate. Hence, there is no reason to dis-believe this certificate. The Tribunal in the case of Indo Nippon Chemicals Co. Ltd Vs CCE Vadodara - [2009 (4) TMI 140 - CESTAT AHMEDABAD] held that the demand based on assumptions and presumptions under the category of Consulting Engineer service cannot be sustained. It is observed by the Tribunal that the Appellant produced the certificate that they received the amount of technical know-how. In the present case, there is no material available that the Appellant rendered Consulting Engineer Service - impugned order is set aside - Decided in favour of assessee.
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2015 (7) TMI 756
Disallowance of Cenvat credit - Respondent did not clear the goods in terms of the invoice which was later on cancelled - Held that:- there is no one to one relation of input and output to be established to claim Cenvat credit. The moment input reaches the factory and those are used for manufacture, law permits the manufacturer to avail input credit. Therefore, one to one relationship is immaterial to law and disallowance of Cenvat credit of the amount of ₹ 1,07,207/- is uncalled for. Following the principle of law laid down by Hon’ble Supreme Court of India, in the case of C.C.E., Pune v. Dai Ichi Karkaria Ltd. [1999 (8) TMI 920 - SUPREME COURT OF INDIA] and by the High Court of Himachal Pradesh in the case of Ranbaxy Laboratories Ltd v. C.C.E., Chandigarh [2012 (4) TMI 369 - HIMACHAL PRADESH HIGH COURT], appeal is dismissed and respondent shall be eligible to get Cenvat credit. Service tax paid to avail Pandal and Shamiana service by respondent was to preserve raw material i.e. coal from rain - Held that:- Once there was pleading of securing of the raw material from rain by Pandal and Shamiana and such service availed was to protect coal from rain, the department should have carried out an enquiry from the provider of service as to the nature of the service provided and genuinity of the claim. But Authority proceeded by the conception that the similar services was not availed in subsequent year for no reason. Assertion of the Authority could have been proved had there been enquiry to ascertain genuinity of the claim. But nothing on record is in that regard. - in absence of justification by an independent enquiry, mere suspicion or assumption shall not come to rescue of Revenue - Decided against Revenue.
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2015 (7) TMI 755
Denial of refund claim - Business Auxiliary Service - reverse charge mechanism - Commissioner (Appeals) who allowed partly the refund claim on the premise that they have made payment twice - On merits, he rejected the claim holding that the service of the appellant does not fall under the Export of Services Rules - Held that:- in case of marketing of product of their foreign counterpart in India but the service of marketing of product a person who is located outside India has consumed the service outside India. In these circumstances, it is held that the case of the appellant qualifies as export of service as per Rule 3(3)(i) of the Export of Services Rules, 2005. The same view was taken by this Tribunal in Blue Star v. CCE[2014 (12) TMI 25 - CESTAT MUMBAI] Although payment has been received in Indian currency on behalf of the service recipient located in India from the service provider and in that case it was held that it is a case of export of service. Therefore, following decision in National Engineering Industries Ltd. (2011 (9) TMI 759 - CESTAT, NEW DELHI) I hold that the appellant complied with the condition of the Export of Service Rules, 2005. Therefore, the appellants are entitled for refund claim. No infirmity in the impugned order in allowing the refund claim in respect of the excess amount paid by them. Therefore, the learned Commissioner (Appeals) has rightly allowed the refund claim - it is the case of Export of Service as per Rules, 2005 therefore, the appellant is entitled to refund claim and the Cross Objections filed by Revenue have no merits - Decided in favour of Revenue.
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2015 (7) TMI 754
Denial of CENVAT Credit - Various services - Services availed should have relevancy thereof to the business of the appellant and the claim falls under Rule 2(l) of Cenvat Credit Rules, 2004. Service Tax paid on courier service availed was as per evidence at page 66 to 69. So also the evidence supported the “cargo handling” services availed by the appellant. Revenue at no point of time has brought out irrelevancy of the claim of the appellant. There was integral relationship of the claim with business. Therefore, credit on account of telephone expenses, courier charges and cargo handling charges should be allowed. So far as credit on account expenses incurred on travelling and hiring of car is concerned, that does not disclose whether that was incurred for manufacture or in relation to manufacture or business. In absence of any such integral connection, credit on that count is inadmissible to the appellant - Decided partly in favour of assessee
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Central Excise
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2015 (7) TMI 753
Extension of stay order - Power of Tribunal to extend stay beyond the period of 365 days - Held that:- The decision in Pepsi Foods [2015 (5) TMI 655 - DELHI HIGH COURT] was delivered two weeks after the decision of the coordinate Division Bench of this Court in CCE v. Haldiram India Pvt. Ltd. In terms of the judgment in Pepsi Foods the CESTAT would, even in terms of the third proviso to Section 35 C (2A) of the Act, not be denuded of the power to extend the stay beyond 365 days in deserving cases. This is however, contrary to the judgment of the coordinate Division Bench in CCE v. Haldiram India Pvt. Ltd [2015 (7) TMI 720 - DELHI HIGH COURT]. This Court, being a coordinate Bench of equal strength is therefore constrained to refer to a larger Bench the question of correctness of the decision (Commissioner of Central Excise v. Haldiram India Pvt. Ltd.) - Matter placed before Chief Justice for constitution of a larger Bench to consider the subject question - Appeal dispose of.
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2015 (7) TMI 752
Condonation of delay in filing revision application - Applicability of Section 14 of the limitation Act - exclusion of period sped before tribunal - Held that:- Ratio in M/s. Sonia Overseas Pvt. Ltd.’s case (2014 (9) TMI 975 - PUNJAB AND HARYANA HIGH COURT) applies to the present case and, therefore, before dismissing the petition as barred by time, the revisional authority was required to consider the applicability of Section 14 of the Limitation Act and consequently, the period spent before the Tribunal. - Impugned order is set aside - Decided in favour of assessee.
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2015 (7) TMI 751
Validity of order of settlement commission - a plea that the report was not furnished well in advance for perusal was not taken into account - Held that:- Respondent No.2 has processed the application submitted by the petitioner, to a substantial stage. Not only the matter was discussed at length with reference to the relevant material, but also the report was called for, through a Commissioner attached to it. On a perusal of the record before it, as well as the report submitted by the Commissioner, respondent No.2 took the view that there are some more aspects that were not revealed by the writ petitioner. - The relief to be granted by the Settlement Commission is in the form of immunity from prosecution. That, however, is a reward for the assessee being truthful. The relevant procedure mandates that it is only when the disclosure is complete and truthful in all respects, without any reservation, that the Settlement Commission can be expected to grant relief. If it finds that any information or fact that has bearing upon the assessment has been withheld from it, it can simply refrain from proceeding further, and drop the proceedings at that. - Matter remanded back - Decided in favour of assessee.
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