TMI Tax Updates - e-Newsletter
July 27, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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Income Tax:
Draft Rules for prescribing the manner of determination of amount received by the company in respect of share - section 115QA of the Income-tax Act, 1961 - Notification
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Income Tax:
Transfer pricing adjustment - application of berry ratio - Plainly, the use of Berry ratio would give unreliable results if the product mix of the comparables is different from the product mix of the Assessee. This would make the task of finding a set of comparables fairly difficult. - HC
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Income Tax:
Stay of demand - attachment orders - Taking coercive proceedings when an application for stay under Section 220(6) of the Act is pending would make the Section redundant. The Revenue is free to take action for recovery only after disposal of the application for stay adverse to the assessee. - HC
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Income Tax:
Transfer pricing adjustment - AMP expenses - the selling expenses directly incurred in connection with sales not leading to brand promotion, should not be brought within the ambit of AMP expenses. - AT
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Income Tax:
Credit card expenses - the said expenditures were incurred wholly and exclusively for the purpose of business of the assessee as they are related to staff training expenses, continuing education programme expenses, expenses on technoforecast (international journals) and recruitment expenses - claim of expenditure allowed - AT
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Income Tax:
Exemption u/s.10B cannot be allowed by adjusting only a portion of unabsorbed depreciation of an earlier year against the income of the export unit and adjusted the balance of unabsorbed depreciation against other business income once again to show ‘Nil’ tax liability. - AT
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Income Tax:
Deduction u/s 80IE - As such, this is the expenditure, which has been booked in excess in earlier year and by this amount the deduction u/s 80IE has been reduced in the said year since the deduction is available for the unit for consecutive 10 years. AO’s action in treating the excess provision written back as income cannot be justified, hence deleted - AT
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Income Tax:
Penalty u/s 271(l)(c) - undisclosed cash deposits - assessee argued that as sufficient surrender has been made by the assessee suo motu, the penalty proceedings initiated against him should be quashed - contention of the assessee rejected - penalty confirmed - AT
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Income Tax:
Deduction of Payment of commission - merely deduction of TDS cannot certify the reasonableness of expenditure. - assessee has been unable to prove the reasonableness and genuineness of the commission expenditure - Expenditure disallowed - AT
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Customs:
Effective Rate of duty - Assessee cannot avail the benefit of budget proposal if not followed with by the enactment - Mere budget proposal does not mean that the same are enactments by the Parliament - The law as enacted is what is contained in the Finance Act. After it is legislated upon by the Parliament and a rate of duty that is prescribed in relation to a particular Tariff Head that constitutes the authoritative expression of the legislative will of Parliament - SC
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Service Tax:
CENVAT Credit - whether circular is binding upon the revenue - service tax on GTA service availed by the appellant for outward transportation of the goods from the factory to the customer - credit allowed - HC
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Service Tax:
Refund - Period of limitation - relevant date - Notification No. 41/2012 ST - The imposition of period of limitation, without statutory amendment, through a notification, therefore, cannot prevail - AT
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Service Tax:
Valuation - transport of passengers embarking in India for international journey by air service - service tax was paid only on the basic air fare and without including various charges - collection of various elements i.e. fees and taxes levied by various authorities are not to be included in the value. - However, Fuel surcharge (YQ), insurance surcharge (YQ) and insurance & fuel surcharge (YR) are not the amounts collected to be reimbursed to any agencies, to be included - AT
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Service Tax:
Availing cenvat credit for some projects and availing the benefit of abatement under Notification No. 1/2006-ST for some other projects - The appellants are free to avail CENVAT Credit in respect of projects on which Notification No. 1/2006-ST has not been availed. - AT
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Central Excise:
Manufacturing activity or not - fabric cut into Dhoties - it will continue to be classifiable as fabric under Chapter 52/54/55 and such a process undertaken by the appellant does not amount to manufacture - SC
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Central Excise:
Cenvat credit on welding rods/electrodes and asbestos sheets - welding electrodes used for repair and maintenance of machineries, in relation to manufacture of the final product, namely sugar, is eligible for Cenvat credit. - HC
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Central Excise:
Cenvat Credit - eligible input services - service tax paid on 'loading charges' for loading the goods from their godown into their customer's vehicles - place of removal - credit allowed - AT
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Central Excise:
Levy of penalty u/s 11AC - malafide intention or not - dispute were related to Classification - Appellant on their own has filed the declaration and had communications with the department - the question of suppression of facts coupled with intention to evade payment of duty does not arise - No penalty - AT
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Central Excise:
Claim of interest on delayed refund - Rate of interest 6% or 12% - Tribunal being a creature of Central Excise Act cannot grant the relief, not prescribed under the said Act. - AT
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Central Excise:
Demand of duty - manufacturing of cement - whether the remaining quantity over and above of 50 kg has been cleared clandestinely without payment of Central Excise duty leviable thereon. - Held No - The variation in the weight of cement to the extent of around 1%, while filling the cement bags of 50 kgs is permissible - AT
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Central Excise:
Cenvat Credit - input services - nexus with manufacturing activity - repair and maintenance service and erection and commissioning services with reference to water pipe line laid by the appellant to obtain water from Sharda OCM Plant situated away from the manufacturing facility of the appellant - credit allowed - AT
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Central Excise:
Cenvat credit - the scope of input services as given under Rule 2 (l) of Cenvat Credit Rules, 2004 is not restricted to the location of the factory premises alone. - credit allowed - AT
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Central Excise:
Cenvat credit - eligible input services - credit of service tax paid on (a) technical inspection and certification service w.r.t. the pipelines for transport of water from dams to the Dariba unit and b) service tax paid on installation service for laying of the said pipelines for transport of water to Dariba unit. - credit allowed - AT
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VAT:
TDS under DVAT - works contract - dominant part of the contract - labour/ service or material - The word “dominant” is not to be found in Section 36A(2) of the DVAT Act. In fact, there is nothing in the said provision which suggests that unless the dominant part of the works contract is labour and service, the lower deduction will not be permissible. - HC
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2016 (7) TMI 1055
Transfer pricing adjustment - application of berry ratio - Held that:- Berry ratio can be used only in very limited circumstances and the limitations that we have listed above are by no means exhaustive. There is also a view expressed that use of Berry ratio as a PLI results in indicating less than fair ALPs in tax jurisdiction where the Assessees have a lower bargaining power. In the aforesaid context, in our view, the TPO had correctly reasoned that Berry ratio could not be used as a PLI in cases of Assessees which were using intangibles. However, we find that there was no cogent material for the TPO to hold that the Assessee had developed supply chain and human resources intangibles. In any event, there was no material to conclude that costs of such intangibles were not captured in the operating expenses. In our prima facie view, the third reason stated by the TPO, that is, the rate of commission paid to the Assessee is based on the value of the goods, would be a valid reason to reject the use of Berry ratio because Berry ratio can only be applied where the value of the goods are not directly linked to the quantum of profits and the profits are mainly dependent on expenses incurred. The fundamental premise being that the operating expenses adequately represent all functions performed and risks undertaken. For this reason Berry ratio is effectively applied only in cases of stripped down distributors; that is, distributors that have no financial exposure and risk in respect of the goods distributed by them. In the present case, the Assessee asserts that its business comprises of two segments, trading segment and indenting segment and the functional risk and the reward in the two segments are different. In the trading segment, the Assessee earns a higher profit margins (calculated on the value of the goods traded) while in the indenting segment its profit margins are lower. Plainly, the use Berry ratio would give unreliable results if the product mix of the comparables is different from the product mix of the Assessee. This would make the task of finding a set of comparables fairly difficult. - Decided in favour of assessee.
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2016 (7) TMI 1054
Stay of demand - attachment orders - Held that:- The petitioner made an application for stay to the Commissioner of Income Tax seeking a Review of the order dated 2nd June, 2016 passed by the Assessing Officer. The Commissioner of Income Tax has not yet disposed of the petitioners' application dated 7th June, 2016 seeking a stay in terms of Section 220(6) of the Act. However, pending disposal of the petitioner's stay application, the Assessing Officer by an order dated 28th June, 2016 passed under Section 226(3) of the Act has attached the petitioners' bank account. We are of the view that when the petitioners' application for stay under Section 220(6) of the Act is pending disposal before the Authorities under the Act, no coercive proceedings should be taken till its disposal. Taking coercive proceedings when an application for stay under Section 220(6) of the Act is pending would make the Section redundant. The Revenue is free to take action for recovery only after disposal of the application for stay adverse to the assessee. In the above view, by way of an interim order, we vacate the attachment Notice dated 28th June, 2016 made by the Assessing Officer upon the petitioners bankers.
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2016 (7) TMI 1053
Transfer pricing adjustment - AMP expenses - selling expenses - Held that:- We are of the considered opinion that it would be in the fitness of things if the impugned order is set aside and the matter is restored to the file of TPO/AO for a fresh determination of the question as to whether there exists an international transaction of AMP expenses. If the existence of such an international transaction is not proved, the matter will end there and then, calling for no transfer pricing addition. If, on the other hand, the international transaction is found to be existing, then the TPO will determine the ALP of such an international transaction in the light of the relevant judgments of the Hon’ble High Court, after allowing a reasonable opportunity of being heard to the assessee. In doing so, the selling expenses directly incurred in connection with sales not leading to brand promotion, should not be brought within the ambit of AMP expenses. See Sony Ericsson Mobile Communications India Pvt. Ltd. (Now known as Sony India Limited) & others Versus Commissioner of Income Tax – III [2015 (3) TMI 580 - DELHI HIGH COURT ]
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2016 (7) TMI 1052
Taxability of interest subsidy received - Held that:- Keeping in view the objects of the West Bengal Incentive Scheme 2000 and various judicial precedents relied upon we hold that the interest subsidy is to be treated as capital receipt. Consequentially the assessee need not reduce the same from the cost of the asset for the purpose of claiming depreciation. Disallowance made towards lease rental payment - CIT(A) deleted the addition - Held that:- In the facts and circumstances of the case, we find that the ld CITA had rightly appreciated the alternative argument of the assessee that the lease rentals (net of interest element) would have to be allowed as deduction. We find no infirmity in the order of the ld CITA in this regard. - Decided against revenue Disallowance made towards credit card expenses - CIT(A) deleted the addition - Held that:- The materials available on record including the paper book filed by the assessee in this regard containing the sample copies of credit card bills and invoices vide pages 26 to 43 of paper book together with the complete details of expenses incurred thereon. From the perusal of the said details and the various arguments advanced by the ld AR, we are convinced that the said expenditures were incurred wholly and exclusively for the purpose of business of the assessee as they are related to staff training expenses, continuing education programme expenses, expenses on technoforecast (international journals) and recruitment expenses - Decided against revenue Disallowance made on account of foreign currency loss - CIT(A) deleted the addition - Held that:- We find that the issue is squarely covered by the decision of the Hon’ble Supreme Court in the case of Woodward Governor of India P Ltd vs CIT reported in (2009 (4) TMI 4 - SUPREME COURT ) in favour of the assessee. The revenue was not able to bring any contrary decision in this regard. Disallowance made on account of software expenses - CIT(A) deleted the addition - Held that:- We find that the ld CIT-A had given categorical findings with regard to each and every disallowance made by the ld AO. We also find from the evidences filed in the paper book, the expenditure incurred are only towards licence fees paid on an annual basis / quarterly basis for specific usage of the software for a certain period of time. Hence we find lot of force in the argument of the ld AR that there is no enduring benefit derived by the assessee in the capital field warranting capitalization of the said expenditure. - Decided against revenue Disallowance of bad debts - CIT(A) deleted the addition - Held that:- We find that the revenue had not disputed the fact that the debts were offered to tax as income in the earlier years and some portion of the same debts were treated as irrecoverable and were written off in the books of accounts of the assessee. We find that the issue is squarely covered by the decision of the Hon’ble Supreme Court in the case of TRF Ltd [2010 (2) TMI 211 - SUPREME COURT ] wherein it was held that post 1.4.1989, the assessee is not required to establish that the debt had indeed become bad and deduction shall be granted on write off of the same subject to fulfillment of condition prescribed in section 36(2) of the Act. - Decided against revenue Disallowance on account of write off of service tax - Held that:- We find that the assessee had not even claimed the write off of service tax in its books of accounts by way of charge to profit and loss account. We find that the ld AO had merely made this addition without understanding the accounting treatment of the assessee vis a vis its income tax return. We find that there is no basis for the ld AO for making this addition as the profit and loss account is not at all hit by the said write off of service tax portion. Hence we hold that the ld CITA had rightly deleted the addition.- Decided against revenue Disallowance on account of recruitment expenses - Held that:- We are in complete agreement with the ld AR that no enduring benefit is obtained by the assessee pursuant to incurrence of recruitment expenses paid to recruitment agency for appointing two members for the senior position in the assessee company. The recruitment is an on-going process and does not bring into existence any capital asset. Under these facts and circumstances we do not find any reason to interfere with the order of the ld CITA in this regard in deleting the addition - Decided against revenue.
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2016 (7) TMI 1051
Disallowance u/s 14A r.w.r.8d - plea of the assessee is that Rule-8D(ii) & (iii) is not applicable to the assessee’s case as the assessee is having own funds - Held that:- The assessee is not able to demonstrate what is the own funds available to the assessee to make investments which yielded exempt income. The fund flow filed by the assessee does not show date on which the assessee made investments out of own funds. Being so, the argument of assessee cannot be the good explanation to hold that the assessee is not incurred interest expenditure on funds used for investments, which yield exempt income.Regarding computation of total asset, the CIT(A) wrongly observed that total assets to be taken before the current liabilities are reduced as per the balance sheet. There is o reason for not reducing the current liabilities. However, we make it clear that total fixed assets after depreciation plus net current assets to be considered as the total asset, when the balance sheet is prepared in Straight Line method while applying the formula in Rule -8D(ii). -Decided partly in favour of revenue Treatment of unabsorbed depreciation - priority for deduction u/s.10B of the Act over set off of brought forward unabsorbed depreciation allowance - Held that:- It is held by the Hon’ble Karnataka High Court in the case of CIT Vs. Himatsingka Seide reported in [2006 (8) TMI 125 - KARNATAKA High Court] held that unabsorbed depreciation has to be adjusted against the income for the purpose of exemption u/s.10B of the Act; exemption u/s.10B cannot be allowed by adjusting only a portion of unabsorbed depreciation of an earlier year against the income of the export unit and adjusted the balance of unabsorbed depreciation against other business income once again to show ‘Nil’ tax liability. Against this judgement, the assessee carried the matter to Supreme Court by way of SLP, which was dismissed by the Supreme Court. Hence, we are of the opinion that lower authorities have taken the correct view of the facts of the case - Decided against assessee MTM losses on forward contracts - whether are contingent in nature and a provision created on such notional loss cannot be allowed? - Held that:- The MTM loss on forward contracts is not contingent loss and it is a business loss to set off against the business income of assessee. However, the AO has to consider the transaction equivalent to the export turnover to determine the MTM loss and also if there is any premature cancellation of forward contract of foreign exchange, it shall be excluded to consider the business loss and these transactions are speculative transaction. With this observation, we remit the issue to the file of AO for fresh consideration.
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2016 (7) TMI 1050
Allowing deduction u/s 80IE - technical services receipts treated by assessee itself as income from other sources - Held that:- Undisputedly, there is no dispute that amount relates to manufacturing of eligible article or thing. The revenue has not doubted or placed any material on record suggesting that what the assessee has manufactured is not eligible or the undertaking is not eligible for the benefit of deduction as provided under section 80IE of the Act. The only objection of the revenue is that the assessee itself has taken such receipts as Income from other sources. Since the source of these receipts is manufacturing, the revenue has not placed any material on record to demonstrate that these receipts do not pertain to the manufacturing of the undertaking. In the absence of such specific material, we are of the considered view that the AO was not justified in declining the deduction as available u/s 80IE of the Act. - Decided in favour of assessee Deduction u/s 80IE in respect of foreign currency fluctuation - Held that:- Assessee is a JV concern, which sources its raw materials locally and also imports a substantial part from international market. For imported raw materials, payments are being made in foreign currencies, which are quite volatile, there is no dispute in this regard. The foreign currency gain is the part of raw material there is nothing wrong in this claim. Assessee is entitled for deduction u/s 80IE of the Act, on this also.The revenue has not rebutted these findings by placing any contrary material on record. It is also not the case of the revenue that the raw material as imported by the assessee was not utilized in the manufacturing process. Therefore, we do not see any reason to interfere into the order of ld. CIT (A) in allowing claim - Decided in favour of assessee Addition on account of disallowance of deduction by the income earned by way of excess provision written back - Held that:- The amount written off pertains to sundry creditors. It’s an excess provision made for some expenses, not made in the current year but booked excess in earlier years and once it is reversed i.e. written back, assessee has to offer for taxation. This is perfectly correct as per accountancy principle. As such, this is the expenditure, which has been booked in excess in earlier year and by this amount the deduction u/s 80IE has been reduced in the said year since the deduction is available for the unit for consecutive 10 years. AO’s action in treating the excess provision written back as income cannot be justified, hence deleted.- Decided in favour of assessee
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2016 (7) TMI 1049
Penalty u/s 271(l)(c) - undisclosed cash deposits - assessee argued that as sufficient surrender has been made by the assessee suo motu, the penalty proceedings initiated against him should be quashed - Held that:- The surrender of income in case of the assessee was not voluntary as the offer of surrender was made in lieu of CIB information made available by the Assessing Officer during the assessment proceedings. It is noted that the assessee himself has contradicted his own submissions from the relevant pages relied upon by the Ld. D.R. filed in the compilation. The assessee has not maintained the books of accounts and considered all the transactions as required by the statute. That the assessee surrendered the income as he could not prove the transactions and its cash deposits. Had the intention of the assessee to make full and true disclosure of its income, it would have filed the return declaring the income including omission later during the course of assessment proceedings. Consequently, it is clear that the assessee had no intention to declare its true income. The Assessing Officer has categorically recorded the findings that he was satisfied that the assessee had concealed the true particulars of income and is liable for penalty proceedings u/s 271 read with Section 274 of the Act. Thus no illegality in the department’s initiation of penalty proceedings in the instant case. We, therefore fully agree with the view taken by Ld. CIT(A) and uphold his decision. - Decided against assessee
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2016 (7) TMI 1048
Addition u/s 41(1) towards sundry creditors - Held that:- As out of the total sustained addition of ₹ 11,04,549/- a sum of ₹ 7,64,079/- has been offered to tax in Asst. Year 2010-11 and Asst. Year 2011-12 and the remaining amount at ₹ 3,40,452/- are relating to parties having regular business transactions with them and the impugned amounts are only due to non-reconciliation in the books of both the parties but in none of the impugned sundry creditors any addition u/s 41(1) is called for. We, therefore, delete this addition of ₹ 11,04,549/- made u/s 41(1) of the Act - Decided in favour of assessee Addition of travelling expenses - Held that:- Assessing Officer should not have embarked upon the expenditure just because it is a foreign travel expenditure, as a prudent business man has always to look for better and prosperous market to successfully run its business in the highly competitive market and in this process one has to take up call to find best business opportunity. There may be a situation where a businessman does not have a confirmed source of getting an order business deal but just in order to feel the international market visits are made to explore business opportunities so as to sell the goods in the overseas market or to make purchase, at reduced rates if the domestic rates are higher. In these circumstances and looking to the fact about the turnover and the income offered in and no major defect found in the books of account, no disallowance was called for on the part of the Assessing Officer towards the foreign travel expenditure - Decided in favour of assessee Addition of remuneration expenses to Smt. Urvashi Desai by invoking 40A(2) - Held that:- Expertise of the professional gets perfected and polished day by day out of his/her experience throughout its professional career and the worth of this experience gets appreciated more and more so much so that he/she cannot be put at par with the fresh professional having same degree but no experience. This experience and expertise makes a professional desirable for being paid higher remuneration/fees and the same situation is there in the case of assessee in which higher amount of remuneration is being paid to a B.E. (Chemical), Mrs. Urvashi Desai having experience more than 33 years, and therefore, in absence of any specific working no disallowance was called for by ld. Assessing Officer towards excess remuneration paid at ₹ 12 lacs. We delete the same.- Decided in favour of assessee Payment of commission to Shri Girish Desai by invoking 40A(2)- Held that:- Assessee has himself stated in the statement of facts that Mr. Girish Desai has left his work and staying at home whole day due to his old age and his memory power might have become weak. In such a situation when payment is being made to a person towards commission which is in regard to effecting sales of the assessee which involves booking of orders, regular check to the aspect of delivery of goods to the buyers and regular payment against sales so made and after providing all these services commission is received for effecting such sales. Looking to the facts of the case and the old age of Mr. Girish Desai his illness, we are of the view that assessee has been unable to justify the reasonableness of the commission amount of ₹ 6,42,738/- and it seems that benefit in the form of claiming tax benefit on this payment of expenditure has been sought after by the assessee and merely deduction of TDS cannot certify the reasonableness of expenditure. Therefore, we are of the view that assessee has been unable to prove the reasonableness and genuineness of the commission expenditure of ₹ 6,42,738/- paid to Girish Desai and, therefore, ld. Assessing Officer has rightly made the disallowance - Decided against assessee
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2016 (7) TMI 1047
Deposits with SAIL - whether amounted to loan and/or advance within the meaning of Section 2(7) of the Interest Act as amended with effect from 1st October, 1991? - Held that:- When a definition uses an expression means and that is followed by "interest on loans and advances‟ it should be considered as being exhaustive of the entire definition. However, the legislature has intended to 'include' other two transactions under the definition. Those two transactions do not include interest on deposits. It is not therefore possible to accept the submission of Mr. Manchanda that the expression “interest on loan and advances”, occurring in Section 2(7) of the Act should include „interest on deposits‟ as well notwithstanding that there is no reference to such interest in the definition itself. The Special Bench of the ITAT was conscious of this submission made before it and has rejected it and in view of this Court rightly. What the ITAT appears to have done in the impugned order is to re-characterise the contract entered into between HUDCO and SAIL for the purpose of the former placing deposits with the latter as a loan transaction. There was no occasion for the ITAT to do so only with a view to bringing it within the definition of Section 2(7) of the ITA, when the plain language of the statute does not contemplate interest on deposits as being included. Apart from the above, the Special Bench of the ITAT has answered the question in favour of HUDCO for the AYs 1992-93, 1993-94, 1996-97. The present appeals pertain to AYs 1994-95 and 1995-96. Therefore, applying the rule of consistency, the Court holds that there is no reason why the Revenue should not be asked to follow the judgment rendered by the Special Bench of ITAT which view has been accepted by it and has attained finality. - Decided in favour of the Assessee and against the Revenue
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2016 (7) TMI 1046
Entitlement to claim depreciation on capital assets by assessee trust - Held that:- Tribunal is right in law in holding that assessee is entitled to claim depreciation on capital assets. See COMMISSIONER OF INCOME-TAX vs. VATIKA TOWNSHIP P.LTD.[2014 (9) TMI 576 - SUPREME COURT]
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2016 (7) TMI 1045
Addition of outstanding electricity fuel surcharge which was an ascertained liability - Whether the expenditure on account of arrear fuel surcharges levied by Bihar State Electricity for provisions was made by the appellant in its profit and loss account is an ascertained and known liability but demand of which was made after close of the accounting year is allowable as business expenditure in the relevant assessment year under Section 37 of the Act? - Held that:- It appears that the CIT (Appeal) and the Assessing Officer and also the learned Tribunal laid stress on the fact that the bill was received in April, 1995. When the assessee maintains his books of accounts on mercantile basis, then he has to make provision for the liability already incurred irrespective of whether the bill was received. Nothing turns on the receipt of the bill. Supposing in a case no bill is received, can it be said that the liability has not been incurred ? Therefore, the ground assigned by the Assessing officer, CIT and the Tribunal is altogether untenable. In that view of the matter, the appeal is allowed. Both the questions are answered accordingly in favour of the assessee.
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2016 (7) TMI 1044
Reopening of assessment - Held that:- Having regard to the fact that the assessment under section 143(3) read with section 147 of the Act came to be framed by the very same officer who has recorded the reasons for reopening the assessment, it has been contended by the learned advocate for the petitioner that the concerned officer during the course of assessment proceedings under section 143(3) read with section 147 of the Act, was well aware of the order under section 263 of the Act and hence, this is a case of mere change of opinion on the part of the Assessing Officer and therefore, the reopening of assessment is bad in law. - Decided in favour of assessee.
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2016 (7) TMI 1043
Taxability of royalty income - nature of income - PE in India - DTAA India USA - Held that:- The authorities below have proceeded on the assumption that the assessee company is the same entity which has entered into agreements in 1991 and is continuing whereas the fact of the matter is the assessee company is incorporated only on 15-03-2006 for which certificate of incorporation is placed on record by the assessee company at page 25-27 of paper book containing additional evidences. Thus, the fundamental premise on which the authorities proceeded in the matter has crept with an error which goes to the root of the matter and the orders of the authorities below cannot be sustained under these circumstances. In our considered view and in the interest of justice, the issues’ arising from these appeals needs to be set aside and restored to the file of the A.O. for denovo determination of all the issues on merits . As such, we set aside the matter back to the file of the A.O. with a direction to re-determine the issue de-novo on merits after considering the existing structure of the assessee company and the fresh agreements entered into with various entities in the light of provisions of the Act and DTAA entered into between USA and India . Needless to say that the assessee company be provided with proper and adequate opportunity of being heard by the AO in accordance with the principles of natural justice in accordance with law. The assessee company will be allowed to submit relevant additional evidences , material and explanations in support of its contentions in its defense, which shall be admitted by the AO and adjudicated on merits. - Decided in favour of assessee for statistical purpose.
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2016 (7) TMI 1042
Assessment u/s 153C - Held that:- Order passed u/s 153C are barred by the limitation and the addition has been made without any incriminating material found during the course of search assessment orders and addition therein are not sustainable. Similarly, we also hold for the above appeals for AY 2002-03 to 2005-06 and Cross objections therein that the orders u/s 153C are not sustainable as those are barred by limitation. The additions in those assessments are not sustainable as they are not based on incriminating found during the course of search. - Decided in favour of assessee
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2016 (7) TMI 1041
Disallowance u/s 14A - Held that:- We find that Hon’ble Bombay High Court in the case of Reliance Utilities & Power Ltd. reported at (2009 (1) TMI 4 - BOMBAY HIGH COURT ) has held that if there are funds available, both interest-free and overdraft and / or loan taken, then a presumption would arise that investments would be out of interest-free funds generated or available with the company, if the interest-free funds were sufficient to meet the investments. Before us, ld.Sr.DR has not placed any contrary binding decision in its support. no disallowance of interest u/s 14A of the Act can be made in the present case. As far as the issue of net interest for the purpose of disallowance u/s.14A is concerned, we find that the Coordinate Bench of Tribunal in the case of Safar Reality Pvt.Ltd. vs. ACIT (2013 (11) TMI 1588 - ITAT AHMEDABAD) has approved the theory of netting off of interest income with interest expenditure. Considering the totality of the aforesaid facts, we are of the view that in the present case, no disallowance u/s.14A is called for and thus direct the deletion of addition made by the AO. Thus, the ground(s) of assessee are allowed. As far as the appeal of Revenue for AY 2009-10 is concerned, since in AYs 2008-09 & 2009-10 the ground of assessee is decided in assessee’s favour, the ground raised by Revenue has become academic and, therefore, requires no adjudication and therefore dismissed. - Decided in favour of assessee.
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2016 (7) TMI 1040
Disallowance of expenses relatable to earning exempted income by invoking the provisions of Section 14A r.w.r 8D - Held that:- Revenue has not disputed the availability of assessee’s own interest free funds as detailed out by the assessee before the learned CIT (A) and now before us also. Hence, this being the position, the issue in the present appeal is squarely covered by the decision of the Hon’ble Bombay High Court in the case of Reliance Utilities & Power Ltd. (2009 (1) TMI 4 - BOMBAY HIGH COURT ). In view of the above facts, we delete the disallowance in respect to interest. As regards to the disallowance made by the AO and confirmed by the learned CIT (A) in respect to 0.5% of the average value of the investments, we find that none of the authorities below has found fault with the computation made by the assessee in respect to disallowance of 0.5% of average value of the investments. Hence, this being the position and the correctness being not challenged, no further disallowance can be made. - Decided in favour of assessee
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2016 (7) TMI 1039
Eligibility of exemption u/s 54 - whether date of purchase is the date on which agreement for purchase is registered? - Held that:- From the reading of section 54(1), it is clear that section concerns two type of house property, namely (i) original asset and (ii) the new asset. Original asset here means the house property on the transfer whereof the capital gain arises. The new asset refers to the property which has been purchased or constructed within the stipulated period. To avail the exemption, the taxpayer has to deposit the appropriate amount of capital gains in the specified banks by the due date of furnishing of return of income laid down in section 139(1) of the Act. Since, the facts mentioned in the impugned order are not in dispute, therefore, considering the totality of facts we find no infirmity in the conclusion drawn by the Ld. Commissioner of Income Tax (Appeal) allowing exemption u/s 54 holding that the date of purchase is the date on which agreement for purchase is registered - Decided against revenue
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2016 (7) TMI 1038
Penalty under section 271AAA - CIT(A) deleted the penalty levy - Held that:- The Revenue strongly argues that the CIT(A) admitted additional evidence in course of the lower appellate proceedings. No such case is being made out after perusing the lower appellate order. This plea is accordingly rejected. The Revenue’s next argument seeks to revive the impugned section 271AAA penalty by drawing support from penalty order but it however fails to place any material on record rebutting the above extracted finding that assessee’s partner Shri Rajeevbhai Patel had made the disclosing in question on the basis of documents seized, he gave project wise break up in order to account for the above undisclosed income in the form of receivables from customers. This was followed by assessment of the above stated undisclosed income and payment of taxes. It has come on record that the Revenue authorities did not even make a suggestion during search doubting veracity of the assessee’s disclosure. We are of the opinion in these facts and circumstances that the CIT(A) has rightly held the assessee to have satisfied all the three necessary three conditions for claiming section 271AAA(2) immunity i.e. it admitted undisclosed income of ₹ 1.15 crores, specified manner of having derived the same followed by substantiation thereof and paid taxes thereupon - Decided against revenue
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2016 (7) TMI 1037
Disallowance u/s 14A - Held that:- As in CIT vs. Holcim India Pvt. [2014 (9) TMI 434 - DELHI HIGH COURT] holds that the impugned section 14A disallowance does not apply in absence of exempt income since the same is to be made in relation to the latter one. We are of the view that the impugned disallowance is not sustainable on this score alone. It further emanates that the assessee has not made any investment for earning its exempt income in the two impugned assessment years. This is followed by the crucial appellate finding that it had sufficient reserves and surpluses in the corresponding assessment year of investments exceeding the latter sums. The hon’ble jurisdictional high court in CIT vs. Torrent Power Ltd. (2014 (6) TMI 185 - GUJARAT HIGH COURT) negates applicability of section 14A disallowance in such an instance. The Revenue fails to point out any exception thereto in the course of hearing. This former issue is accordingly decided in assessee’s favour Interest disallowance u/s. 36(1)(iii) - Held that:- It has come on record that the assessee had its disposal sufficient interest free funds in excess of the impugned advances to its sister concerns. The CIT(A) observed hereinabove that the assessing authority does not make out a case of diversion of business funds towards the impugned loans hands advances. The Revenue fails to rebut these crucial findings in the course of hearing before us. We do not deem it appropriate to venture much in a detailed factual investigation on this count alone. - Decided against revenue
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Customs
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2016 (7) TMI 1063
Effective Rate of duty - Import of Compound alcoholic preparations of a kind used for the manufacture of beverages - the grievance of the appellant is that the rate which has been prescribed for goods falling under Tariff Sub-Heading 2208.10 is higher than that was authorized in the Budget Proposals during financial years 1993-94 and 1994-95. The appellant took recourse to the provisions of the Right to Information Act in order to procure relevant information from the concerned authorities. According to the appellant, the authorities have not furnished the relevant information. Held that:- Every legislation is done with the object of public good as said by Jeremy Bentham. Taxation is an unilateral decision of the Parliament and it is the exercise of the sovereign power. The financial proposals put forth by the Finance Minister reflects the governmental view for raising revenue to meet the expenditure for the financial year and it is the financial policy of the Central Government. The Finance Minster s speech only highlights the more important proposals of the budget. Those are not the enactments by the Parliament. The law as enacted is what is contained in the Finance Act. After it is legislated upon by the Parliament and a rate of duty that is prescribed in relation to a particular Tariff Head that constitutes the authoritative expression of the legislative will of Parliament. Now in the present facts of the case, as per the finance bill, the legislative will of the Parliament is that for the commodities falling under Tariff Head 2208.10, the tariff is ₹ 300/- per litre or 400% whichever is higher. Even assuming that the amount of tax is excessive, in the matters of taxation laws, the Court permits greater latitude to the discretion of the legislature and it is not amenable to judicial review. According to the appellant, the Central Government has issued notifications under Section 25(1) and he is also entitled to such a notification in respect of the commodities falling under the category 2208.10. When the appellant alleges discriminatory action on the part of the respondents, he has to establish that there is no rational basis for making classification between the goods which are notified and the goods of the appellant which are not notified. It is also a firmly established principle that the legislature understands and appreciates the needs of its people. A Taxing Statute can be held to contravene Article 14 of the Constitution if it purports to impose certain duty on the same class of people differently and leads to obvious inequality. Such a material is not placed before us to come to a just conclusion that the action of the respondents is discriminative. Hence, the same is held against the appellant. Appeal dismissed - Decided against the appellant.
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2016 (7) TMI 1062
Refund - despite the Petitioner having succeeded before the CESTAT, which delivered an order in its favour on 8th March 2016, and despite reminders dated 21th April 2016 and 20th May 2016, the Respondents have not still made the refund - Held that:- The Respondent is directed to decide the applications/representations made by the Petitioner on 21th April 2016 and 20th May 2016 (copies at Annexures P-4 and P-5) not later than four weeks from today. It is made clear that the refund should be given together with any interest that is due, in accordance with law.
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2016 (7) TMI 1061
Validity of draft order passed by the Joint Secretary ('JS') Government of India - Order was not singed by the JS who passed the order - Held that:- As far as present case is concerned, the result is that there is no valid order passed on the Petitioner's revision application till date. The draft order dated 20th August 2002 which has no legal status, cannot be held to be a valid order disposing of the Petitioner's revision application. The said application has to be treated as still pending adjudication and disposal. Resultantly, a direction is issued to the incumbent Joint Secretary in the Department of Revenue to adjudicate and finally dispose of the Petitioner's revision application in accordance with law, within a period of eight weeks from today, without in any manner being influenced by the Draft Order earlier passed.
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2016 (7) TMI 1060
Revocation of the Customs House Agent (CHA) license - on examination it was noticed that it was an attempt at showing exports for claiming fraudulent drawback. - Period of limitation - Held that:- The SCN dated 14th October 2011 that was issued to the Appellant is the same SCN that was issued to M/s. S.K. Logistics, M/s. Sunil Dutt and M/s. Entire Logistics Pvt. Ltd. The offence report is the same for all the said noticees. It was received on 19th May 2011. In terms of Regulation 22 (1) of the CHALR 2004 (which corresponds to Regulation 20 (1) of the CBLR 2013), the SCN had to be issued within ninety days from 19th May 2011, i.e. on or before 18th August 2011. Instead the SCN was issued on 14th October 2011. Secondly, in terms of Regulation 22 (5) of the CHALR 2004, the enquiry had to be completed and a report submitted within 90 days of the issuance of the SCN under Regulation 22 (1). In the present case, it is not disputed that the inquiry report was submitted only on 16th January 2015 more than three years after the SCN dated 14th October 2011 was issued. This Court has consistently emphasised the mandatory nature of the aforementioned time limits in several of its decisions. The impugned order dated 10th April 2015 passed by the Commissioner of Customs (General), Delhi revoking the CHA license of the Appellant to be unsustainable in law. - Decided in favor of CHA
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2016 (7) TMI 1059
Tribunal granted Relief to CHA - allegation of abetting duty evasion - Charges under Regulation 13(d), (e), (i) & (n) of CHALR, 2004 - Revokation of CHA licence - held that:- We find that once the respondents were not guilty of aiding and abetting the importers, then, the importers' acts may amount to evasion of customs duty, but those can be proceeded independently. As far as the respondents/Agents are concerned, they have not been held to be guilty and of conniving and that of colluding with these importers. Therefore, all that they were pronounced guilty for is some lack of care or supervision. For that the Tribunal [2016 (3) TMI 217 - CESTAT MUMBAI] has brought down the period of revocation. It has maintained the forfeiture, but to the extent indicated in para 8 of the impugned order. It is not the contention of the Revenue that the Tribunal was not empowered to do so in law. - Once that is not demonstrated to be perverse or vitiated by any error of law apparent on the face of the record, then, the appeal cannot be entertained. It is dismissed. - Decided against the revenue.
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Service Tax
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2016 (7) TMI 1080
CENVAT Credit - whether circular is binding upon the revenue - service tax on GTA service availed by the appellant for outward transportation of the goods from the factory to the customer - any assessee/party may agitate binding effect of the circular but it would not lie in the mouth of the Department-appellant herein to contend that the circular is not binding. Under the circumstances, we do not find that merely because the matter is carried before the Apex Court against the decision of the Calcutta High Court, there would be any case for consideration, on the contrary, no substantial questions of law would arise since the availment of CENVAT credit is expressly made so permissible by the circular issued by the competent authority and the appellate authority having found that all conditions of the circular were satisfied. - Decided against the revenue.
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2016 (7) TMI 1079
Waiver of penalty u/s 80 - the penalties imposed under Section 76,77 & 78 were set aside by the Ld. Commissioner (Appeals). - the respondent has paid the entire amount of service tax along with interest and not contested the same. - the transaction in respect of the services on which the service tax was not paid was also retrieved from the books of accounts of the respondent which shows that the respondent did not try to hide the transaction. - No penalty.
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2016 (7) TMI 1078
Refund - Period of limitation - relevant date - Claim of rebate of service tax paid on specified services used for export of goods under Notification No. 41/2012 ST dated 29.06.2012 - Held that:- the claims submitted by the appellants were scrutinized thoroughly as per the para 3 (g) of Notification No. 41/2012-ST and he has taken the date of let export order issued by the proper officer as the relevant date to come to the conclusion that the refunds are hit by time bar aspect. Held that:- It is seen that in the definition of "relevant date" u/s 11B , there is a mention that if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded leaves India but on the other hand the notification states that the date of export shall be the date on which the LET export order is given. If a limitation period is sought to be imposed in respect of refund claims, it must be introduced by legislation, given the expropriatory consequences of such a limitation period. There is a body of law that essential legislative policy aspects (period of limitation being one such aspect) cannot be formulated or prescribed by subordinate legislation. The parent enactment must clearly impose such obligations. Sub-ordinate legislation cannot prevail or be made in such cases. The imposition of period of limitation, without statutory amendment, through a notification, therefore, cannot prevail. The Jain Irrigation case is inapplicable to the facts of the present case as what was decided in the said case was as to what was the place of removal which is not the case herein. In view of my above discussions, I am of the view that the appellant is correctly and legally entitled for the refund claim. I therefore, allow the appeal of the appellant with consequential relief, if any, in accordance with law. - Refund allowed - Decided in favor of assessee.
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2016 (7) TMI 1077
Valuation - transport of passengers embarking in India for international journey by air service - service tax was paid only on the basic air fare and without including various charges - Extended period of limitation - Validity of show cause notice - Rule 5(1) of Service Tax (Determination of Value) Rules, 2006, was declared ultra vires by Delhi High Court in the case of Intercontinental Consultants & Technocrats Pvt. Ltd. vs. Union of India [2012 (12) TMI 150 - DELHI HIGH COURT]. Held that:- collection of various elements i.e. fees and taxes levied by various authorities are not to be included in the value. - Decided in favor of assessee on this ground. However, Fuel surcharge (YQ), insurance surcharge (YQ) and insurance & fuel surcharge (YR) are not the amounts collected to be reimbursed to any agencies. Section 67 of Finance Act, 1994 provides that assessable value for charging service tax is the gross amount charged by the service provider for such service. Therefore, these charges clearly constitute part of the gross receipt for rendition of services. - Decided against the assessee. Extended period of limitation - Held that:- , it is evident that appellant deliberately dilly dallied in providing the required information in spite of being asked repeatedly as a consequence of which the Revenue could eventually issue the show cause notice based upon whatever information was belatedly provided by the appellant although it did not provide the entire information which was sought. - Decided against the assessee. Validity of show cause notice - The appellant has strenuously contended that the show cause notice was issued to M/s Japan Airlines while the appellant is M/s Japan International Co. Ltd. and therefore, show cause notice was not issued to the appellant and hence no service tax can be demanded on the basis of show cause notice (leading to the impugned order) because there is no provision in the service tax law similar to Section 290 B of the Income Tax Act. - Held that:- the purpose of show cause notice (resulting in impugned order) has been fully and eminently served in this case and the impugned order has been issued in full and complete compliance of the principles of natural justice. In these circumstances, this contention is too flimsy to be of any consequence whatsoever. - Decided against the assessee. Decided partly in favor of assessee.
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2016 (7) TMI 1076
Availing cenvat credit for some projects and availing the benefit of abatement under Notification No. 1/2006-ST for some other projects - projects undertaken on turnkey basis - Held that:- it is clear that the appellants can avail Notification No. 1/2006-ST, so long as in respect of such projects, no CENVAT Credit is availed. The appellants are free to avail CENVAT Credit in respect of projects on which Notification No. 1/2006-ST has not been availed. However, the assertion of the appellant that the credit was availed only in respect of project on which Notification No. 1/2006-ST has not availed, needs verification. - Matter remanded back.
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Central Excise
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2016 (7) TMI 1075
Manufacturing activity or not - fabric cut into Dhoties - process like cutting to short length, stitching ends, ironing, folding and packing resulting in enhancement the value of product - Held that:- The Tribunal in the impugned judgment has arrived at a finding that after receiving the product from job worker, at whose end excise duty is duly paid, the assessee simply cuts them into Dhotis and, therefore, in terms of Rule 12(B) read with Circular No. 557/53/2000-CX dated 03.11.2000, it will continue to be classifiable as fabric under Chapter 52/54/55 and such a process undertaken by the appellant does not amount to manufacture. - Order of tribunal held as correct - Decided against the revenue.
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2016 (7) TMI 1074
Lapsing of credit of duty lying unutilised with the manufacturer from a specified date. - Held that:- It appears that in their wisdom, the Central Government sought to balance the rationalisation of duty structure and provide flexibility in the use of credit by lapsing the accumulated credit which was admittedly a product of the earlier duty structure. Viewed from the aforesaid perspective, we are unable to hold that the making of Rule 57F(4A) was so irrational or unreasonable as to fall foul of the Constitution of India. As to how, a fiscal legislation is to be framed is not an area where any interference under Article 226 is warranted. Scope of judicial review in respect of fiscal legislation is limited to the extent of determining whether it is outside the legislative competence of the legislature to enact such legislation and/or whether such enactment is so unreasonable and irrational so as to violate the rights guaranteed under the Constitution. In the present case, we are unable to accept that the legislative policy in aid of which Rule 57F(4A) was made, is irrational or unreasonable. - Decided against the assessee.
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2016 (7) TMI 1073
Cenvat credit on welding rods/electrodes and asbestos sheets - scope of definition of 'inputs', as contemplated by Rule 2(k) of Cenvat Credit Rules, 2004 - Held that:- the term 'inputs', is wide enough to cover all the goods, except the goods specifically mentioned in the definition, inputs used in or in relation to the manufacture of the final product, whether directly or indirectly or whether it contained the final products or not. Judicial pronouncements extracted supra, makes it abundantly clear that welding electrodes used for repair and maintenance of machineries, in relation to manufacture of the final product, namely sugar, is eligible for Cenvat credit. - Decided in favor of assessee.
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2016 (7) TMI 1072
Cenvat Credit - eligible input services - service tax paid on 'loading charges' for loading the goods from their godown into their customer's vehicles - Held that:- based on the definition of place of removal, the premises of C&F agent would be treated as 'place of removal' and hence the goods which are being sold from C&F Agent's premises, would be the 'place of removal'. Therefore, the availment of credit of both loading as well as delivery charges are in order and therefore the impugned order is liable to be set aside. - Decided in favor of assessee.
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2016 (7) TMI 1071
Levy of penalty u/s 11AC - malafide intention or not - dispute were related to Classification - manufacture of car Air-conditioning machine and their parts - manufactured products are cleared along with the bought out items in a kit packing. The bought out items are sold as such without any value addition. - Held that:- the appellants have made suitable declarations at the time of changes made during Budget 2000 and that the change in declaration was also made on 01.07.2000 to the effect that the duty would be deposited by them @ 32% for the clearances made by them. In the present case since the Appellant on their own has filed the declaration and had communications with the department. In these circumstances, the question of suppression of facts coupled with intention to evade payment of duty does not arise and accordingly the imposition of penalty u/s.11AC is unsustainable. - No penalty - Decided in favor of assessee.
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2016 (7) TMI 1070
Suomotu adjustment of the excess duty paid - differential duty was paid every month after self adjusting the excess and short payments - Held that:- We find that the department has taken into account only the duty short paid and not the duty paid in excess - While holding that the order passed by the authorities below is erroneous and are liable to be set aside, we hold that with regard to refund, it is proper for the appellant to approach the office concerned for verification and certificate of excess payment which cannot be verified in this forum. This is the second round of litigation and we find that yet another remand is not appropriate but in the facts of the present case, the appellant is seeking refund of excess payment. While there is no reason to disbelieve their claim, in the interest of fairness and justice, we direct the appellant to approach the department to seek refund of the alleged excess payment. - Matter remanded back.
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2016 (7) TMI 1069
Cenvat credit on purchase of dumper falling under Chapter 87, which was used for shifting, handling and internal transportation of raw material and semi-finished goods inside their factory. - Held that:- Considering the dumpers as capital goods which are used for the purpose of movement of material within the factory the purpose for which the Tribunal has allowed the Modvat/Cenvat credit for similar capital goods I find no justification to take a different view for dumpers. Accordingly, the impugned order is set aside. - Decided in favor of assessee.
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2016 (7) TMI 1068
Claim of interest on delayed refund - Rate of interest 6% or 12% - Held that:- It is seen that both the Hon'ble High Court and the Apex Court have inherent powers to grant interest. Tribunal being a creature of Central Excise Act cannot grant the relief, not prescribed under the said Act. I find that this argument regarding inability of Tribunal to act beyond the powers/relief available under the Central Excise Act was not raised in the Sheela Foam Ltd. (2003 (5) TMI 78 - CEGAT, NEW DELHI) and LML Ltd. (2014 (8) TMI 704 - CESTAT NEW DELHI). The contention that the relief granted by Hon'ble High Court of Kolkata and Hon'ble Apex Court cannot be treated as a precedent has also not been raised before the Tribunal in the case of Sheela Foam Ltd. (2003 (5) TMI 78 - CEGAT, NEW DELHI) and LML Ltd. (2014 (8) TMI 704 - CESTAT NEW DELHI). Following the decision of Tribunal in the case of Bajaj Auto Ltd. [2016 (4) TMI 885 - CESTAT MUMBAI] appeal dismissed - Decided against the assessee.
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2016 (7) TMI 1067
Demand of duty - manufacturing of cement - it was observed that on average basis each time they had filled excess quantity of 'Net Mass of Cement' more than 50 kg in the bags than the declared standard net quantity of 50 kg per bag shown as clearance in their statutory records. Evidently, the assessee has paid Central Excise Duty on the Standard Net Weight, i.e., 50 kg per bag and the remaining quantity over and above of 50 kg has been cleared clandestinely without payment of Central Excise duty leviable thereon. Held that:- keeping in view the nature of the cement, the tolerance limit of 1% stands allowed in terms of the said circular as also in terms of the Provisions of Rule 2 (1) (i) of the Standards of Weight and Measures (Packaged Commodities) Rules, 1977. It is a well settled law that Revenue cannot argue against the circulars issued by the Board. The variation in the weight of cement to the extent of around 1%, while filling the cement bags of 50 kgs is permissible in terms of the standards of weights and measures (Packaged Commodities Rules, 1997) and the duty in respect of excess quantity cannot be sustained. - Decided in favor of assessee.
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2016 (7) TMI 1066
Cenvat Credit - input services - nexus with manufacturing activity - repair and maintenance service and erection and commissioning services with reference to water pipe line laid by the appellant to obtain water from Sharda OCM Plant situated away from the manufacturing facility of the appellant. - Held that:- In this context, it is to be seen that for the appellant, water is one of the main input items used in the manufacture of paper. Admittedly, water is being transported from outside by a pipe line laid and maintained by the appellant. “Input Services” to be eligible for credit is not linked to any location for receipt of such services. - Credit allowed.
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2016 (7) TMI 1065
Principle of res-judicata - lapsing of credit lying unutilized on 16/3/1995 with a manufacturer of tractors falling under Heading No. 87.01 or Motor Vehicles falling under Heading 87.02 and 87.04 or chassis of such tractors or such motor vehicles under Heading 87.06 - Held that:- Apex court in the Eicher Motors case [1999 (1) TMI 34 - SUPREME COURT OF INDIA] had neither dealt with the compound levy scheme formulated under Section 3A nor has it been held that the Rules or Notifications framed under Section 3A were ultravires. The above discussions bring us to the conclusion that the principle of res-judicata cannot be used to apply the Eicher Motors case to the present facts. A straight forward reading of the Notifications 33/1997 and 34/1997-CE (NT) both dated 01/8/1997 and application of the same would result in the Cenvat credit available in the capital goods account of the respondent on 31/7/1997 to lapse. We also note this Tribunal is a creation of the statute and its mandate is to decide disputes arising in the implementation of the statute within its preview. This Tribunal cannot arrogate to itself any of the extra ordinary powers bestowed upon the Hon'ble High Courts and the Supreme Court by the constitution. Consequently we cannot apply the findings of the Apex court in the Eicher case to the present case under the principle of res-judicata. - Decided in favor of revenue.
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2016 (7) TMI 1064
Cenvat credit - eligible input services - credit of service tax paid on (a) technical inspection and certification service w.r.t. the pipelines for transport of water from dams to the Dariba unit and b) service tax paid on installation service for laying of the said pipelines for transport of water to Dariba unit. - Held that:- The admitted facts are that water is essential in the manufacturing process, the pipelines are exclusively used for transport of water for the said purpose. The service tax paid is on services received w.r.t. pipelines. The reasoning given by the lower Authorities regarding these services being not connected with manufacture is not sustainable - the scope of input services as given under Rule 2 (l) of Cenvat Credit Rules, 2004 is not restricted to the location of the factory premises alone. - credit allowed - Decided in favor of assessee.
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CST, VAT & Sales Tax
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2016 (7) TMI 1058
TDS under DVAT - works contract - dominant part of the contract - labour/ service or material - Commissioner, VAT rejected the application filed by the Petitioner under Section 36A(2) of the Delhi Value Added Tax Act, 2004 (“DVAT Act”) for a lower deduction certificate. - The Petitioner is undertaking the execution of works contract in respect of two projects one awarded to it by the National Building Construction Corporation Limited (“NBCC”) for construction of a museum at the existing garage of the President Estate i.e. Rashtrapati Bhawan. Held that:- The order appears to proceed on the misconception that Section 36A(2) of the DVAT Act permits the entertaining of a prayer for lower deduction of tax only where “dominant part of the work is labour and service.” The word “dominant” is not to be found in Section 36A(2) of the DVAT Act. In fact, there is nothing in the said provision which suggests that unless the dominant part of the works contract is labour and service, the lower deduction will not be permissible. Also the Commissioner, VAT does not appear to have examined the estimates placed on record by the Petitioner along with the supporting documents to justify its claim for a lower deduction at 0.87%. The Commissioner, VAT could have, for reasons recorded, either agreed or disagreed with the estimates prepared by the Petitioner or with the calculations of the percentage of deduction based on the documents enclosed with the application. The Commissioner, VAT was obliged to discuss the materials and give reasons for his conclusion. However, the impugned order, as already noticed, is totally bereft of any reasoning. Matter remanded back for fresh decision.
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2016 (7) TMI 1057
Entry tax - products, namely, Mediker and Starch (Revive) - common parlance test - Madhya Pradesh Entry Tax Act, 1976 - Held that:- Mediker which is used for anti-lice treatment is a drug because of its medicinal affect. This position has been accepted by this Court. Once it is a drug, it cannot be a shampoo. As a natural corollary, it will not invite the liability of levy of entry tax. - Decided against the revenue.
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Indian Laws
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2016 (7) TMI 1056
Application under Section 11 of the Arbitration and Conciliation Act, 1996 - HC appointed a former Judge of that Court as the Arbitrator after holding that the appellants had forfeited their right to appoint railway officers as arbitrators in terms of clause 64(3)(a)(ii) of the agreement - Held that:- It did not lie in the mouth of the respondent contractor that the appellants had committed a default and had forfeited their right to appoint arbitrators as per terms of the agreement. The learned Judge failed to read the relevant clause of the agreement properly and therefore wrongly placed reliance upon judgment in the case of Datar Switchgears (supra). In that case this Court had extracted the relevant terms of agreement in paragraph 9 which showed that there was no stipulation of any time limit like that of 60 days in the present case. The terms of the Agreement bind the parties unless they have chosen to repudiate the same. Relevant terms, if provided, will be material for deciding when the right of a party to appoint the arbitrator will suffer forfeiture and when the other party would be entitled to give notice and on failure, move application under Section 11(6) of the Act. Such terms deserve respect of the parties and attention of the Court. In view of aforesaid discussions we find no option but to set aside the impugned order under appeal. We order accordingly. In case the respondent contractor is still desirous of pursuing its claim through arbitration in terms of the agreement, it is given the option to serve a fresh notice for arbitration within a month and on receipt of the same the appellants/railways shall be at liberty to send a panel of requisite number of names to the respondents within 60 days of receipt of the notice so that Arbitral Tribunal is constituted in terms of the Agreement. It goes without saying that if the Railways default in sending the panel within the stipulated time, the contractor will be at liberty to pursue its further remedies as per provisions of the Act and law. Appeal allowed
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