TMI Tax Updates - e-Newsletter
July 28, 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:
Income surrendered during survey - whether is to be taxed u/s 69-A - whether set off losses u/s 70 and 71 is not permissible against such income? - Merely because an assessee carries on certain business, it does not necessarily follow that the amounts surrendered by him are on account of its business transactions. - HC
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Income Tax:
Entitlement to exemption u/s 11 - charitable activities - mere sale of an immovable property of the trust alone, cannot be the sole factor, to arrive at a conclusion that the income earned should be brought under the head, business income - HC
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Income Tax:
Nature of expenditure - revenue or capital - In order to carry on their business, they were in need of herbal coleus plants. they thought of roping the farmers for growing said herbal plant. They provided seedlings, fertiliser and financial assistance to the farmers with an agreement to deduct the expenses out of the cost of the plaint sold by the farmers. But, even the farmers could not grow the said herbal plant - Expenditure allowed as revenue in nature - HC
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Income Tax:
Deduction u/s 54EC - short capital gain arising on sale of depreciable asset - it cannot be said that section 50 converts long-term capital asset into a short-term capital asset - AT
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Income Tax:
There may be an interval between a business which is set up and a business which is commenced and all expenses incurred after the setting up of the business and before the commencement of the business would be permissible deductions/business loss. - AT
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Income Tax:
When the lump sum royalty was separately agreed and paid, then the running royalty, in the facts and circumstances, would only be a revenue expenditure paid for the use of the licence, trade mark and technical information for a particular period - AT
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Customs:
Classification of import of general brand split type air-conditioner - mere assertion without meeting common parlance test and elementary principles of jurisprudence that Generelia specialibus non derogant General things do not derogate for special , appellant fails to succeed since two ton split air-conditioner subscribes to the CTH 8415 83 10 instead of the CTH 8415 10 10. - AT
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Customs:
Jurisdiction of tribunal - Provisional release of goods under Section 110A of the Customs Act, 1962 - the appellant before this Tribunal against the communication dated 29.04.2015 is not maintainable and is thus dismissed - AT
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Customs:
Levy of penalty on courier company - charge of abetment - mis-declaration of goods - Different standards have been followed by the Original Authority in examining the charge of abetment - one for the customs officers the other for courier company and its employee. - Penalty set aside - AT
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Service Tax:
Refund of unutilized cenvat credit - export of services without taking registration - Rule 5 of Cenvat Credit rules 2004 read with Notfn No.5/2006-CE (NT) dt. 14.3.2006 - they are eligible for refund of the unutilized credit which was accumulated prior to registration - AT
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Service Tax:
Service Tax was paid through Cenvat Credit account available on that day - revenue contended that as per Rule 3(4) of Cenvat Credit Rules, 2004. The Cenvat Credit available on the last day of the period for which service tax is due can only be utilized. - no penalty is imposable in the present case. - Demand and penalty set aside - AT
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Central Excise:
Guidelines for issue of summons, visits, search, seizure, arrest and prosecution regarding manufacturers or principal manufacturers of articles of jewellery or parts of articles of jewellery or both- regarding - Circular
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Central Excise:
Guidelines for Excise Audit of Manufacturers / Principal Manufacturers of articles of jewellery or parts of articles of jewellery - Circular
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Central Excise:
Clarification on computation of exemption and eligibility and exemption limits and other related issues for small scale industries [SSI] exemption under Notification No. 8/2003-CE dated 1st March 2003 in respect manufacturer or principal manufacturer of articles of jewellery or parts of articles of jewellery or both - Circular
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Central Excise:
General procedures regarding excise duty on articles of jewellery or parts of articles of jewellery or both falling under heading 7113 - Circular
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Central Excise:
Cenvat Credit - eligible input services - guest house services - charges paid by them for accommodation of their employees at the Guest House at Gurgaon managed by their Head Office - credit allowed - AT
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Central Excise:
Cenvat Credit - Capital goods - Pre-fabricated building materials - as these goods fall within Chapter 94, the credit is not admissible - AT
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Central Excise:
Impact of subsequent decision of Apex Court on the matter already concluded - Cenvat Credit - capital goods used in the mines - the benefit of any subsequent decision of higher forum, cannot be extended inasmuch as the assessee has not kept the proceedings alive during the in between period so as to infuse life into the same - AT
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Central Excise:
Cenvat Credit on returned goods - Rule 16 does not require remanufacturing of goods or that goods should undergo any process after being brought to the factory and before being removed. The goods if brought for being re-made, refined, reconditioned or for any other reason , the rule would apply. - AT
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Central Excise:
Disallowance of credit on input services - whether fabrication services having been availed outside the factory are eligible for credit as they do not qualify as input services? - Held Yes - Credit allowed - AT
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VAT:
Whether the tax which the assessee has paid on the purchase of raw material and packing material which is ultimately used in the manufacture and packing of goods is liable to be adjusted in full from the ultimate tax liability which a dealer may stand faced with or is it liable to be adjusted only to the extent of the taxable turnover. - action of the assessing authority in reducing the set off which was claimed by the revisionist to be unsustainable. - HC
Articles
Notifications
Central Excise-
29/2016 - dated
26-7-2016
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CE
Seeks to amend notification No. 17/2011-Central Excise, dated the 1st March, 2011, so as to exclude handicrafts falling under heading 7113 of the Central Excise Tariff Act, 1985 (5 of 1986), from the purview of excise duty exemption for "handicrafts"
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28/2016 - dated
26-7-2016
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CE
Seeks to amend notification No. 8/2003-Central Excise dated 1st March, 2003, so as to increase the SSI Exemption limit and the SSI Eligibility limit for articles of jewellery or parts of articles of jewellery or both, falling under heading 7113 of the Central Excise Tariff Act, 1985 (5 of 1986)
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27/2016 - dated
26-7-2016
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CE
Seeks to partially exempt Central Excise duty on articles of jewellery falling under heading 7113 of the Central Excise Tariff Act, 1985 (5 of 1986) manufactured by:
(a) re-conversion of jewellery given by the retail customer, or
(b) mounting of precious stone given by the retail customer
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26/2016 - dated
26-7-2016
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CE
Seeks to amend notification No. 12/2012-Central Excise so as to prescribe 1% excise duty (without input and capital goods credit) on parts of articles of jewellery falling under heading 7113 of the Central Excise Tariff Act, 1985 (5 of 1986), and to prescribe a criteria for classification of an articles of jewellery or part of articles of jewellery or both as that of a particular precious metal
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40/2016 - dated
26-7-2016
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CE (NT)
Seeks to amend notification No. 36/2001-Central Excise (N.T.) dated 26th June, 2001, so as to exempt a manufacturer or principal manufacturer of articles of jewellery or parts of articles of jewellery or both, falling under heading 7113 of the Central Excise Tariff Act, 1985 (5 of 1986) from taking central excise registration upto the full exemption limit
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39/2016 - dated
26-7-2016
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CE (NT)
Seeks to amend notification No. 17/2006-Central Excise (N.T) dated the 1st August, 2006 so as to exempt a manufacturer or principal manufacturer of articles of jewellery or parts of articles of jewellery or both, falling under heading 7113 of the Central Excise Tariff Act, 1985 (5 of 1986) from filing of annual return
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38/2016 - dated
26-7-2016
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CE (NT)
Seeks to amend notification No. 35/2001-Central Excise (N.T.) dated the 26th June, 2001
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37/2016 - dated
26-7-2016
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CE (NT)
Seeks to provide a modified format for quarterly return, ER-8, for return of excisable goods cleared at the Central Excise duty rate of 1% [including articles of jewellery or parts of articles of jewellery or both, falling under heading 7113] or 2%
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36/2016 - dated
26-7-2016
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CE (NT)
Seeks to amend the CENVAT Credit Rules, 2004 in relation to articles of jewellery or parts of articles of jewellery or both, falling under heading 7113 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986)
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35/2016 - dated
26-7-2016
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CE (NT)
Seeks to amend the Central Excise Rules, 2002 in relation to articles of jewellery or parts of articles of jewellery or both, falling under heading 7113 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986)
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34/2016 - dated
26-7-2016
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CE (NT)
Seeks to notify the Articles of Jewellery (Collection of Duty) Rules, 2016, applicable to articles of jewellery or parts of articles of jewellery or both falling under heading 7113 of the Central Excise Tariff Act, 1985 (5 of 1986)
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33/2016 - dated
22-7-2016
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CE (NT)
Seeks to notify the tariff values for articles of jewellery or parts of articles of jewellery or both, falling under heading 7113 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986)
Customs-
35/2016 - dated
26-7-2016
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ADD
seeks to amend notification No.67/2011-Customs dated the 26th July, 2011 so as to to extend the levy of anti-dumping duty on imports of certain Rubber Chemicals, namely PX13 and TDQ originating in, or exported from, European Union and MOR originating in, or exported from, People's Republic of China, (imposed vide notification No. 67/2011-Customs, dated 28th July, 2011) for a period of one year i.e. upto and inclusive of the 27th July, 2017
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43/2016 - dated
26-7-2016
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Cus
seeks to further amend notification No. 27/2011-Customs, dated 01.03.2011 so as to provide exemption from export duty to Organic sugar up to 10,000 MT in a year beginning with October and ending with September subject to specified conditions. The exemption for the period ending with 30th September, 2016 shall be restricted to 2500 MT
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2016 (7) TMI 1100
Income surrendered during survey - whether is to be taxed u/s 69-A - whether set off losses u/s 70 and 71 is not permissible against such income? - Held that:- This is not an admission on the appellant’s part that the surrendered amount is from the assessees business income. This observation is in respect of the GP rate of 10.85%. The appellant by this observation accepted that the surrendered amount is from business income. The observation only proceeds on the basis of the assessee’s assertion of the G.P. rate of 10.85% after including the surrendered amount. It is not necessary that the surrendered amount is from business income. It could be on account of any other transaction legal or otherwise. Merely because an assessee carries on certain business, it does not necessarily follow that the amounts surrendered by him are on account of its business transactions. There is no presumption that absent anything else an amount surrendered by an assessee is his business income. It is for the assessee to establish the source of such surrendered amount.
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2016 (7) TMI 1099
Entitlement to exemption u/s 11 - charitable activities - sale proceeds of the lands by assessee trust - Held that:- The assessee has purchased the lands to an extent of 71.89 Acres, in the year 1986-87, for the purpose of setting up a medical college and old age home. According to the assessee, permission could not be obtained from the competent authorities and thus, the lands purchased for the abovesaid purposes, in the year 1986-87, which fell within the ambit of Section 2(15) of the Income-Tax Act, could not be utilised and thus, they were constrained to sell the same. Merely because the lands were sold from 1994 onwards, which fetched a higher value, it cannot be said that it was only for profit motive. Bumber profit, as held by the Assessing Officer, depends upon the value of the land, sold in the year 2009-10. Though the assessee has started selling the bulk land into plots from 1994-95 onwards, it is not the case of the revenue that there was no bona fide on the part of the assessee, as to why, the assessee was constrained to sell the same. Market value of the land purchased in the year 1986-87, cannot be expected to be static. Naturally, when it is sold after many years, it would fetch a higher value. Law also does not prohibit an assessee to sell the lands, less than the market value. Merely because, lands are sold at a higher rate, after a considerable period of time, that alone cannot be the sole criteria to contend that the activity of the assessee was business activity, not incidental to the principal activity of the trust, which is, otherwise charitable in nature. Whether to gain profit by sale and utilise the sale proceeds, for any other purpose or engage in continuous activity of business or trade or commerce, as the case may be, and to divert the gain, for any other purpose or to spend the same for charitable purpose Findings recorded and extracted supra that the amount is utilised for charitable purpose, is indisputed. Activities for a span of considerable period, may reflect business or commercial activity, but the question to be decided, is whether, it is incidental to carry on the main purpose, charitable , which includes, (i) Relief of the poor, (ii) Education, (iii) Medical relief. What emerges from the reading of the provisions and the Circular is that a trust or institution, whose purpose is advancement of any other object of general public utility, and recognised as charitable, under the fourth limb of Section 2(15) of the Income-Tax Act, and predominantly engages in activities in the nature of trade, commerce or business, should not be permitted to escape from taxability, with the mask, charitable . In the case on hand, the glaring omission on the part of the revenue is to consider, as to whether, sale of lands was necessitated Whether it was incidental towards attainment of the objectives of the trust , and more particularly, when the income was wholly utilised only for achieving the objectives of charitable purpose of the trust. Therefore, mere sale of an immovable property of the trust alone, cannot be the sole factor, to arrive at a conclusion that the income earned should be brought under the head, business income . In the case of trust or institution, whose predominant activity is not business, incidental activity of sales, carried out, in furtherance of and to achieve the main objectives of the trust or institution, should not be construed as business activity, solely with an intention to earn profit, and consequently, to bring the income, under the head, business income. Going through the material on record and in the light of the discussion, we are unable to accept the contention of the Revenue that the substantial questions of law, raised by the revenue, deserve to be answered, affirmatively, in favour of the revenue. Both on facts and law, the revenue has failed to substantiate the contentions raised in the instant appeals. - Decided in favour of assessee.
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2016 (7) TMI 1098
Nature of expenditure - revenue or capital - cultivation expenses to be set-off against other business incomes - commercial expediency - Held that:- In the instant case, material on record disclose, the Assessee is in the business of manufacture and export of standardized herbal extracts as well as in the manufacture of fine chemicals. In order to carry on their business, they were in need of herbal coleus plants. they thought of roping the farmers for growing said herbal plant. They provided seedlings, fertiliser and financial assistance to the farmers with an agreement to deduct the expenses out of the cost of the plaint sold by the farmers. But, even the farmers could not grow the said herbal plant. Consequently, they sustained loss and in turn the assessee sustained loss. The said cultivation expenses was ₹ 90.64 Lakhs. Therefore, the assessee claimed the said amount as revenue expenditure as the said expenditure was incurred to facilitate its business and due commercial expediency. As such the loss are primarily attributable to the business which the Assessee is carrying on and the said expenses are wholly and exclusively for the purpose of business. The said cultivation expenses incurred by the Assessee is in the nature of revenue expenditure in the course of business and the Assessee is entitled to deduction of the same as business expenditure. Therefore, the Tribunal is justified in upholding such claim and granting relief to the assessee. - Decided in favour of assessee.
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2016 (7) TMI 1097
Deduction u/s 54EC - short capital gain arising on sale of depreciable asset - Held that:- As decided in ITO V/s ACE Builders [2005 (3) TMI 36 - BOMBAY High Court ] the benefit of section 54E will be available to the assessee irrespective of the fact that the computation of capital gains is done either under sections 48 and 49 or under section 50. The contention of the revenue that by amendment to section 50, the long-term capital asset had been converted into to short-term capital asset was also without any merit. The legal fiction created by the statute is to deem the capital gain as short-term capital gain and not to deem the asset as short- term capital asset. Therefore, it cannot be said that section 50 converts long-term capital asset into a short-term capital asset Therefore, the Tribunal was justified in allowing the benefit of exemption under section 54E to the assessee in respect of the capital gains arising on the transfer of a capital asset on which depreciation had been allowed. - Decided in favour of assessee.
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2016 (7) TMI 1096
Assessment of interest received on compulsory FDR - 'income from other sources' OR 'business activity' - Held that:- Interest earned by the assessee on FDRs has intrinsic and inseggregable nexus with the work undertaken and, therefore, the interest earned by the assessee is capital in nature and shall go towards adjustment against the project expenditure and the same cannot be assessed as income from other sources. SEE CIT vs. Bokaro Steel Ltd. (1998 (12) TMI 4 - SUPREME Court ) and CIT vs. Karnal Co-operative Sugar Mills Ltd.[ 1999 (4) TMI 7 - SUPREME Court ] and CIT vs. Jaypee DSC Ventures Ltd [2011 (3) TMI 309 - Delhi High Court ] - Decided in favour of assessee. Disallowance of loss which includes business expenditure - addition confirmed as no income was earned by the appellant during the relevant previous year - Held that:- The routine expenses incurred by the assessee after setting of the business in our view are allowable as business expenditure. This issue is accordingly decided in favour of the assessee. See CIT Vs. Dhoomketu Builders and Development P. Ltd. [2013 (4) TMI 668 - DELHI HIGH COURT ] wherein held there may be an interval between a business which is set up and a business which is commenced and all expenses incurred after the setting up of the business and before the commencement of the business would be permissible deductions/business loss. - Decided in favour of assessee
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2016 (7) TMI 1095
Payment of royalty to USA company - nature of payment - Revenue expenditure or capital expenditure eligible for depreciation @25% - Held that:- CIT(Appeals) as relying on own order for earlier assessment years was well justified in treating the royalty payments made to M/s Chevron Oronite Company LLC USA as nothing but revenue expenditure, not resulting in any acquisition of intangible assets. The assessee could continue to use the technology even after the expiry of the period of payment of royalty. Therefore, when the lump sum royalty was separately agreed and paid, then the running royalty, in the facts and circumstances, would only be a revenue expenditure paid for the use of the licence, trade mark and technical information for a particular period. - Decided in favour of assessee.
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2016 (7) TMI 1094
Taxability in India - intellectual property rights in trademarks, brands, logos etc. - AAR - whether the receipt arising to the applicant, from the transfer of its right, title and interest in and to the trademarks, Foster's Brand Intellectual Property and grant of exclusive perpetual licence of Foster Brewing Intellectual Property is taxable in India, having regard to the provisions of the Income Tax Act, 1961 and the Double Taxation Avoidance Agreement between India and Australia? - Held that:- The issue of situs of an intangible asset, such as the intellectual property rights in trademarks, brands, logos etc. is indeed a tricky one. Insofar as the tangible assets are concerned, there is absolutely no difficulty. They exist in physical form and their existence is at specific locations. Thus, fixing their situs does not pose any problem. An intangible capital asset, by its very nature, does not have any physical form. Therefore, it does not exist in a physical form at any particular location. The legislature could have, through a deeming fiction, provided for the location of an intangible capital asset, such as intellectual property rights, but, it has not done so insofar as India is concerned. With regard to a share or interest in a company registered/incorporated outside India, Explanation. There is no such provision with regard to intangible assets, such as trademarks, brands, logos, i.e., intellectual property rights. Therefore, the well accepted principle of ‘mobilia sequuntur personam’ would have to be followed. The situs of the owner of an intangible asset would be the closest approximation of the situs of an intangible asset. This is an internationally accepted rule, unless it is altered by local legislation. Since there is no such alteration in the Indian context, we would agree with the submissions made on behalf of the petitioner that the situs of the trademarks and intellectual property rights, which were assigned pursuant to the ISPA, would not be in India. This is so because the owner thereof was not located in India at the time of the transaction. As a consequence of the foregoing discussion, the view taken by the AAR on question (1), which was placed before the AAR, cannot be accepted and the answer to the said question would be that the income accruing to the petitioner from the transfer of its right, title or interest in and to the trademarks in Foster’s brand intellectual property is not taxable in India under the Income Tax Act, 1961. - Decided in favour of assessee.
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2016 (7) TMI 1093
Review petition - Interest amount by way of a term 'debenture' - whether amounts to actual payment of as contemplated by Section 43B - Held that:- Though debentures are securities and are actionable claim the essential fact is that they are instruments of debt, by the company acknowledging its indebtedness to pay the amount specified. Does this amount to “payment” under Section 43-B. This court is of opinion that there is no question of any error in the judgment under review. The clear purport of the statute- i.e. Section 43-B (d) is that any amount payable towards interest liability would qualify for deduction.
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2016 (7) TMI 1092
Enhancement of the Net Profit Rate - Held that:- Once the Revenue, being bound by the circular of the C.B.D.T., New Delhi, has withdrawn its appeal seeking enhancement of the Net Profit Rate, inter se the same parties, it cannot be allowed to reagitate the issue. However, such observation on our part would not preclude the Revenue from moving any application for revival of the aforereferred appeal since the liberty for the same was granted by this Court while permitting the appeal to be withdrawn.
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2016 (7) TMI 1091
Disallowance of interest u/s 36(1)(iii) - property were acquired indirectly i.e. in the name of partners - diversion of loan - Held that:- Possession of rights and interest in an asset can be gained in several ways and not merely by the purchase thereof. It can be gained for instance by virtue of or under a lease, licence or on rent. If the legislature intended restricting the ambit of the proviso to capital borrowed for the purchase of an asset, it would have provided so expressly. The legislature has deliberately used a wider expression “acquisition of an asset” to ensure that assessees do not get the benefit of a deduction unless and until they put such assets to use. There is nothing in the plain language of the section or otherwise that persuades us to hold that the legislature intended excluding all modes of acquisition of an asset other than by the purchase thereof. Admittedly, the loan was taken by the appellants for the acquisition of the asset, namely, the said immovable properties. The proviso does not operate only in cases where the assessee acquires the asset directly. The mode of acquisition is irrelevant and the proviso would apply so long as the primary intention of the assessee is to acquire the asset for the purpose of its business. We do not express any opinion where the acquisition of the asset is only incidental to the transaction or arrangement such as in the case of a merger of companies under Sections 391 and 394 of the Companies Act. In the present case, the appellants/assessees allegedly acquired the assets by advancing interest-free loans to their partners to enable the partners to purchase the assets and to make the same available to them for the extension of their existing business. The assessees are in the business, inter alia, of selling footwear. They contend that they required the additional premises or showrooms to sell the same. This was, therefore, in any event, an indirect acquisition of the asset by a particular mode. The sole intention was to acquire the assets. - Decided in favour of the respondents/revenue
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2016 (7) TMI 1090
Violation of principles of natural justice - non providing opportunity to place the submissions by assessee - Held that:- The petitioner cannot be blamed for the delay of nine months during which objections were kept pending before the DRP i.e., from 22.04.2015 to 16.12.2015. Therefore, the DRP while considering the request for adjournment could not have disbelieved the same as it is an admitted fact that entire Chennai was flooded and suburban were sub-merged. Hence, a realistic approach should have been taken on the petitioner's request or request for adjournment should have either refused or granted time. Undoubtedly, the DRP had sufficient time to pass orders till 31.12.2015 i.e. when the period of nine months comes to an end reckoning the starting point of limitation as 30.03.2015 when the Draft Assessment Order was prepared. Therefore, the DRP could have passed an interim order and rejected the request for adjournment which would have enabled the petitioner to work out their remedies available under law. However, it appears that in a hurried manner, the entire proceedings were closed on 17.12.2015 and orders were passed on 23.12.2015. It may be true that in terms of Section 253(d) of the Act, the petitioner is entitled to canvas the correctness of the order of DRP before the Tribunal while challenging the Assessment Order dated 29.01.2016. However, the order passed by the DRP, if it has been passed in violation of the principles of natural justice, the petitioner would be entitled to question the same before this Court invoking the jurisdiction under Article 226 of the Constitution of India. In such circumstances, the availability of alternate remedy is not a bar to approach this Court. In the facts and circumstances of the case, this Court is satisfied that there has been violation of principles of natural justice inasmuch as the opportunity granted to the petitioner was not effective. It may be true that the DRP while considering the materials placed by the petitioner before them had granted certain reliefs to the assessee, but that by itself will not validate the order and to state that the petitioner had been afforded an opportunity by the DRP. The concept of principles of natural justice which has been provided under the scheme of Section 144C of the Act should be an effective opportunity as the direction issued by the DRP binds the Assessing Officer and he would be required to complete the assessment as per the orders of the DRP. Therefore, an opportunity of hearing should be adequate, effective and reasonable. Having gone through the facts elaborately, this Court is fully convinced that the petitioner/Assessee has not been given an effective opportunity to place their submissions. - Decided in favour of assessee.
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2016 (7) TMI 1089
Entitlement to deduction under section 80 IA - Held that:- Velayudhaswamy Spinning Mills Pvt. Ltd.,'s case (2010 (3) TMI 860 - Madras High Court ), held that once the losses and other deductions are set off against the income of the assessee in the previous year, it should not be re-opened again, for the purpose of computation of current year income, under Section 80-I and 80-IA of the Act.
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2016 (7) TMI 1088
Computation of book profit under section 115JB - write back of the provision for diminution in the value of investment - Held that:- Deduction, as we read the section, can only be claimed provided the book profit has actually been increased by the aforesaid sum of ₹ 7,05,73,000/-. Since book profit was never increased, the question of any deduction on account of any credit from the supposed provision does not arise. Therefore, the view taken by the learned Tribunal, according to us, is the correct view. We are unable to accept this submission. The amendment of 2009 did not create any legal fiction. All that it says is that if any amount of book profit has in fact been increased, corresponding deduction may be availed in future. Since there has been no increase, there is no question of any deduction. - Decided against the assessee
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2016 (7) TMI 1087
Profit of sale of share - capital gain or business income - Held that:- In the present case, the peculiar facts are that the investment made was shown as investment and the cost was reflected throughout in the balance sheet and it was never treated as stock-in-trade. Further, if it was to be treated as stock-in-trade and the market value plus cost would have been considered, but such was not treated accordingly by the assessee in the books of accounts. There was also lock-in period for holding of the shares. Under these circumstances, the view taken by CIT (Appeals) and confirmed by the Tribunal, would not call for interference holding that the assessing authority is not right in treating profit derived of ₹ 10,66,425/- on sale of shares under the head business income and not under the head capital gains
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2016 (7) TMI 1086
Undisclosed sale - rejecting the books of accounts - Held that:- The rejection of the books on the basis of the admission of the assessee himself was an order which was wholly backed by evidence and by no stretch of imagination the order rejecting the books of account can be said to be perverse. The contention that the books of account were prepared, though belatedly, on the basis of the documents seized, has failed to impress us because the expenditure shown in the books of account was not backed by evidence. Mr. Khaitan is unable to show us that the expenditure, which, according to the assessee was incurred, was proved by any piece of evidence, to have been actually incurred by the assessee. Unless there is adequate evidence as regards expenditure, the amount of income earned by the assessee can never be assessed by any amount of certainty. In the facts and circumstances, it cannot be said that the revenue acted arbitrarily or the order passed by them is perverse. On the top of it, what we find is that the assessment which was made by the Assessing Officer was subsequently reduced by the CIT(A) and the same has been confirmed by the learned Tribunal. These are pure questions of fact. The ground of challenge is perversity. We have already indicated that the order passed by the Assessing Officer or the CIT(A) or the learned Tribunal and each of them is backed by evidence and the ground of perversity is altogether unmeritorious. - Decided in favour of the revenue.
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2016 (7) TMI 1085
Expenses incurred towards Capacity Builder - revenue or capital expenditure - nature of expenditure - Held that:- As per para-7(1) of the agreement, the main responsibility of capacity builder was to provide a handbook to each MSPC containing various information and also to provide information for readymade mixes. Considering these facts, in our considered opinion, whatever benefit is accruing to the assessee from the capacity builder cannot be considered as a capital asset and therefore, the impugned expenditure cannot be considered as capital expenditure. We find no merit in the impugned order passed by the ld. CIT and we quash the same. - Decided in favour of assessee.
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2016 (7) TMI 1084
Deduction u/s 54EC denied - Held that:- It is noted that there is a confusion with regard to the dates, which have neither been properly explained by the assessee before lower authorities nor it has been addressed properly by the lower authorities. Even before us, Ld. Counsel was not able to explain as to how there could be two agreements. How could there be ‘one’ agreement of two dates. There should be only ‘one’ agreement. Even if separate agreement is made for the buyers, the date is supposed to be same. We find that none of the authorities have looked into the aspect of dates properly. As per AO, the date of six months should be reckoned from 06.10.2009 and therefore date of investment being 08.04.2010 shall fall beyond the period of six months, whereas the assessee says that the six months period should be reckoned from the date 10.10.2009 which is actual date of transfer of original asset and if it is so done then the investment made on 08.04.2010 shall fall within the stipulated period of six months. In view of all these facts, ascertaining correct date of transfer becomes crucial. In view of these circumstances, we send this issue back to the file of the AO who shall give adequate opportunity of hearing to the assessee to submit requisite details and documents as may be considered appropriate by the assessee which shall be objectively taken into account by the AO to decide this issue afresh. Further whether the assessee can be allowed the investment in respect of 50 lakhs in one financial year and the second investment in next financial year but within the stipulated period of six months as decided is in favour of the assessee in view of various judgments of the Tribunal. See Shri Aspi Ginwala v. ACIT (2012 (4) TMI 195 - ITAT AHMEDABAD ) and Mrs. Lilavati M. Sayani v. ITO (2015 (10) TMI 1068 - ITAT MUMBAI) - Decided in favour of assessee as directed. Benefit of deduction u/s 54F denied - Flat was under construction and was not acquired within prescribed period of two years - Held that:- Assessee had duly made investment in the Flat which was under construction. The facts in this regard are not under dispute. The completion of construction was not in control of the assessee. Since the construction of flat could not be completed, therefore, corresponding income as stipulated in section 54F was offered in the return for A.Y. 2013-14. Our attention was drawn in this regard and copy of computation sheet filed along with return for A.Y. 2013-14 showing that a sum of ₹ 86 lakhs was shown as long term capital gain on which the tax at the rate of 20% has been paid by the assessee. We find that entire exercise has been done in the bonafide manner and there was no deliberate attempt of any tax evasion. The assessee has filed its return for the impugned year as well as for A.Y. 2013-14, in accordance with law. The lower authorities were not able to controvert or contradict the factum of making investment in the Flat at the time of filing of return for the impugned year in which deduction u/s 54F was claimed in accordance with law. Thus addition has been wrongly made by the lower authorities - Decided in favour of assessee
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2016 (7) TMI 1083
Rectification of mistake - credit for unabsorbed deprecation / loss was wrongly granted and that mistake was required to be corrected - Addition made U/S 115JB - disallowance of brought forward un-absorbed depreciation applying the provisions of section 79 - Held that:- The position that emerges before us is that assessee was entitled to get the credit of unabsorbed depreciation or unabsorbed losses, whichever is less. It is seen on the basis of chart which was attached as Annexure “A” by Ld.CIT(A) to his order that amount of unabsorbed business loss was for ₹ 24,76,40,000 as against amount of unabsorbed deprecation of ₹ 308.89 lakhs. Thus, the amount of unabsorbed depreciation was less and, therefore, assessee was eligible to get the benefit of the same a deduction from the book profits to compute the taxable amount of book profits u/s 115JB. Thus, there was no mistake, much less a mistake apparent on record, and therefore, the Ld.CIT(A) had rightly quashed the order passed u/s 154. No interference is called for in the order of the ld.CIT(A), and therefore, the same is hereby upheld. - Decided against revenue
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2016 (7) TMI 1082
Deduction of expenditure incurred after setting up of the business disallowed - commencement of business - Held that:- The authorities below have not adhered to the directions of the Tribunal to allow the assessee deduction of expenditure incurred after the date of setting up of business as opposed to date of commencement of business, i.e. 15.03.1995. We set aside the impugned orders of the learned CIT(A) dated 09.10.2010 and the AO dated 08.12.2008 on this issue and restore the matter to the file of the AO for de novo examination and adjudication for allowing the assessee deduction of expenditure incurred after the date of setting up of business, after affording the assessee adequate opportunity to bring on record all essential facts so that the date of setting up of business and expenses incurred can be determined. - Decided in favour of assessee for statistical purposes.
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2016 (7) TMI 1081
Undisclosed purchases - whether vendees have paid more amounts in cash to the vendor for purchase of land? - Held that:- No doubt the Revenue was able to collect information for initiating inquiry but failed to bring clinching evidence on record demonstrating the fact that vendees have paid more amounts in cash to the vendor for purchase of land. This fact may be appreciated with the different angle also. The sale deed was executed on 11.8.2008. The assessees have come to know about the dispute of the land. Then, why they will pay rest of ₹ 20,66,500/- in the accounting year relevant to the Asstt.Year 2009-10. The AO has assumed payment of cash at the end of the assessee simply for the reasons that the investment is being made by the vendor, but that cannot be a plausible reason. The AO should have collected concrete evidence demonstrating the fact that the payment of amount in cash, over and above, one stated in the sale deed. Taking into consideration these facts,allow all the appeals of the assessee and delete addition in each hands of the assessees in the Asstt.Year 2008-09 (except from the hand of Manibhai V. Patel, because status of his appeal is not available at this stage) and in the Asstt.Year 2009-10. - Decided in favour of assessee
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Customs
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2016 (7) TMI 1123
Classification of import of general brand split type air-conditioner AOGA 24 FTT AH outdoor unit, ASGA 24 FTTA indoor unit capacity 2.0 ton (R410A gas) - classifiable under 8415 83 10 or under CTH 8415 10 00 - Held that:- when the appellant sought exemption under Notification No.85/2004 dated 31.8.2004 under a trade agreement, it was the burden of the appellant to bring its goods within the four of CTH 8415 10 10 discharging the same since exemption is an exception to the dutiability and to be construed strictly at the stage of determination. When appellant failed in the classification of the goods, it is not entitled to the benefit of exemption notification. It can be irresistibly be concluded that mere assertion without meeting common parlance test and elementary principles of jurisprudence that Generelia specialibus non derogant General things do not derogate for special , appellant fails to succeed since two ton split air-conditioner subscribes to the CTH 8415 83 10 instead of the CTH 8415 10 10. - Decided against the appellant.
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2016 (7) TMI 1122
Jurisdiction of tribunal - Provisional release of goods under Section 110A of the Customs Act, 1962 - Commissioner(Appeals) has dismissed the appeal on the ground that the same is not maintainable since the competent authority i.e. the Commissioner of Customs has conveyed his decision for provisional release of goods under Section 110A of the Customs Act, 1962. Held that:- the decision of the Commissioner of Customs conveyed by the Deputy Commissioner (SIIB) regarding payment of estimated differential duty, execution of bond and furnishing of bank guarantee has tin fact been taken by the Commissioner of Customs in his administrative capacity. Since such decision of the Commissioner of Customs has not been rendered in the capacity of adjudicating authority, I am of the considered view that the appeal against the communication dated 29.04.2015 of the Deputy Commissioner is not maintainable before this Tribunal in terms of Section 129 A of the Customs Act, 1962, which specifically provides that appeal can be filed against the decision or order passed by the Commissioner of Customs "as an Adjudicating Authority". - the appellant before this Tribunal against the communication dated 29.04.2015 is not maintainable and is thus dismissed
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2016 (7) TMI 1121
Rectification of error - typographic mistakes without any impact on merits of the decision in the order [2014 (7) TMI 1208 - CESTAT NEW DELHI] - Held that:- In para 9, in the last sentence for the words "redemption fine" the word "penalty" shall be substituted. In para 10 of the final order for the words "for" appearing in line 2 and line 3 the words "from" shall be substituted. Para 12 shall be deleted.
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2016 (7) TMI 1120
Levy of penalty on courier company - charge of abetment - mis-declaration of goods - Original Authority ordered the confiscation of goods; imposed penalty of ₹ 5 lakhs on the consignee of the parcel; imposed a penalty of ₹ 1 lakh and ₹ 25,000/- on the present appellants; dropped proceedings against two customs officers. - Held that:- the Original Authority recorded that the courier bill of entry is having endorsement of the officer for having examined the consignments. Apparently this has been admitted by the Original Authority irrespective of the fact that the second appellant in his statement given before the officers alleged to have admitted that no examination was done of the consignment. The Original Authority held that in the absence of any positive evidence the charge of abetment cannot be proved against the two customs officers who were also issued with notice for penalty under Section 112. He further held that there is no charge of malafide on the part of officers and also no charge of any pecuniary benefits accruing to the said officers. All these go to show that the officers have discharged their duty and the goods have been cleared after due examination. It is not clear then how the mis-declared item could be detected at the TNT hub of the courier company much away from the custom area. Different standards have been followed by the Original Authority in examining the charge of abetment - one for the customs officers the other for courier company and its employee. On the one hand he held that the officers discharged their duty though it is clear that if the examination has been done before clearance as recorded by the Original Authority, the mis-declaration could not have escaped detection. However, for such mis-declaration the courier company has been found liable for penalty. It is apparent that while appreciating the factual evidence, the Original Authority did not follow consistency and arrived at different conclusions on same set of facts. I find that while the statements given by the officers have been accepted as truth, the statement given by the employee of courier company has been discounted selectively, at least w.r.t. the fact of examination of cargo before clearance. Charge of abetment cannot be sustained against the appellant in the facts and circumstances of the case. - No penalty - decided in favor of appellant.
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Service Tax
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2016 (7) TMI 1127
Refund of unutilized cenvat credit - export of services without taking registration - Rule 5 of Cenvat Credit rules 2004 read with Notfn No.5/2006-CE (NT) dt. 14.3.2006 - Held that:- The contention of the respondent is that under Section 69 of the Finance Act, 1994 read with Rule 4 of Service Tax Rules, 1994, registration under service tax legislation is required only for service providers who are liable to pay service tax and the respondent herein is predominantly engaged in the provision of export of service and therefore they are not liable to pay service tax and consequently not required to register with the department. - Following the decision in the case of mPortal India Wireless Solutions Pvt. Ltd. [2011 (9) TMI 450 - KARNATAKA HIGH COURT], refund allowed as they are eligible for refund of the unutilized credit which was accumulated prior to registration. - Decided against the revenue.
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2016 (7) TMI 1126
Levy of penalty u/s 76 of the Finance Act, 1994 - Service Tax on Renting of Immoveable Property Service was paid through Cenvat Credit account available on that day along with interest vide GAR 7 Challan - the adjudicating authority as well as the appellate authority held that the payment of service tax made from cenvat credit is not proper for the reason that the service tax dues are pertaining to the period 2007-08 to 2009-10 whereas the appellant have paid service tax from cenvat credit which was available on 31.1.2011. It was contended that as per Rule 3(4) of Cenvat Credit Rules, 2004. The Cenvat Credit available on the last day of the period for which service tax is due can only be utilized. Held that:- From the circular dated 28-3-2012, it is very clear that if payment of arrears is made under Section 11A of the Act, then Rule 3(4) of Cenvat Credit Rules, 2014 shall not apply. In the present case the appellant has paid the amount under Section 73 (1)/73 (3) which being pari materia to Section 11A, the Board Circular clearly applies and accordingly there is no restriction to utilize the Cenvat Credit even at later date at the time of payment of service tax. In the present case the service tax along with interest was paid in the months of February 2011 i.e. before 28.5.2012. Accordingly, the condition specified for non-imposition of penalty under Section 76, 77 & 78 has been complied with by the appellant. Therefore no penalty is imposable in the present case. - Demand and penalty set aside - Decided in favor of assessee.
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Central Excise
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2016 (7) TMI 1117
Demand of duty - extended period of limitation - clearances made to Indian Army by the appellant and the hub extension - Held that:- we find on fact that ER-I return for May, 2013 has been submitted on 07-06-2013 and acknowledgement receipt thereof obtained on 10-06-2013. This being so, any notice for alleged infraction of law with respect to the aforesaid invoice should have been issued, and served on the respondent within a period of one year from the date of filing of the said return ie. on or before 06-06-2014. The respondent has produced acknowledgement issue dot them having received the impugned show cause notice dated on 13-06-2014. - Demand is hit by limitation. Valuation - receipt of additional consideration - Held that:- In any case, to qualify as additional amount, over and above the agreed prices should have passed from the buyer to the manufacturer/respondent of which there has been no proof adduced by the department. Further, even in the Tribunal Final Order dated 30-06-2014 relied upon by the appellant/Revenue treated only project management, documentation, and non-recurring expenditure as includible in the assessable value of missiles etc. Demand set aside - Decided in favor of assessee.
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2016 (7) TMI 1116
SSI Exemption - Dummy units - Clubbing of clearance - it has been alleged that both units were managed and controlled by the Proprietor of the appellant - determination of turnover - SSI exemption notification No. 08/2003-CE dated 01.03.2003. - Held that:- Analysing the uncontradicted evidences, we do not harbour any doubt that even though M/s Accurate Engineers, on record, a separate unit, but, its day to day function and management was handled by Shri Asgarali A. Siddiqui, proprietor of M/s Libra Engineering Works and his wife Smt. Halimakatun A. Siddiqui has lent her name as proprietress of the firm. In other words, for all practical purposes, the management/control of the business of manufacture and sale has been handled by Mr. Asgarali A. Siddiqui, proprietor of the Appellant. In these circumstances, we do not find any error in the order of the authorities below in clubbing the clearance value of both the units for the financial year 2005-06 in computing the eligible limit of 100 Lacs for the Appellant Unit prescribed under notification No. 08/2003-CE dated 01.03.2003 and confirmed the duty short paid and penalty imposed. - Demand confirmed - Decided against the assessee.
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2016 (7) TMI 1115
Cenvat Credit - eligible input services - guest house services - charges paid by them for accommodation of their employees at the Guest House at Gurgaon managed by their Head Office - Held that:- The appellants have categorically asserted that their staff and executives associated with Bhiwadi Unit availed the room facilities at Gurgaon. These accommodation facilities are for official stay billed and paid by the appellant and forming part of their business expenditure. These are not for personal use of employees. - Credit allowed. - Decided in favor of assessee.
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2016 (7) TMI 1114
Refund - unjust enrichment - price revision after clearance of goods - their buyer M/S APCPDCL has reduced the basic prices subsequent to their clearances - Held that:- It is a fact that the Commissioner (Appeals) has not addressed the issue of unjust enrichment which the original authority had held as affecting the refund claim. We therefore find ourselves in agreement with the plea put forth by Revenue and remand both the appeals to the original authority for addressing whether the refund claims are hit by unjust enrichment. The revenue appeals are allowed by way of remand.
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2016 (7) TMI 1113
Refund - appellant preferred a refund claim of duty on the ground that for the clearance of BOPP film to M/s Ravi Foods Pvt. Ltd against invalidated DFIA they are not liable to pay any duty in terms of Notification No.44/2001-CE(NT) dated 26-06-2001. - Held that:- the contention of the appellant that even if they are not eligible under Notification No.44/2001 they could be given benefit of 43/2001 is therefore misconceived and unacceptable, since it is not the case of appellant that they had applied for benefit under 43/2001. - Decided against the assessee.
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2016 (7) TMI 1112
Cenvat Credit - assessee was reversing/paying an amount equal to 10% of the value of the exempted goods as provided under Rule 6 (3) (b) of CENVAT Credit Rules. Department was of the view that appellant was using HR plates exclusively for manufacture of exempted goods and therefore contravened Rule 6 (1) of CCR, 2004 by availing credit on HR plates which were used for making exempted goods only. Held that:- The Tribunal held that law provides choice for pay amount as per Rule 6(3) (b) when assessee not able to maintain separate account. - Demand is not sustainable - The same is set aside. The appeal is allowed with consequential reliefs, if any.
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2016 (7) TMI 1111
Cenvat Credit - Capital goods - Pre-fabricated building materials - Held that:- The appellant herein has made manufacturing premises/shed using the 'pre engineered structures/ pre-fabricated building materials". As discussed above, as these goods fall within Chapter 94, in my view, the credit is not admissible - Credit not allowed - Decided against the assessee.
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2016 (7) TMI 1110
Demand of duty - (i) to recover duty on MRP based assessment on goods supplied to CSD canteens and Institutions, (ii) to deny CENVAT credit taken before receipt of goods and (iii) to recover Central Excise duty on certain invoices recovered from the appellant on which there were errors. - Held that:- In so far as serial number (i) of first para is concerned, we find that the issue of applicability of MRP based assessment to institutional sales has been contentious matter and there have been various judgements on either side. In the instant case no evidence has been adduced to show that the appellants were aware of their liability and had deliberately suppressed from the Revenue. In these circumstances no penalty can be imposed. In so far as the serial number (ii) of first para is concerned, the appellant had reversed the said credit on their own and in the first adjudication order no penalty on this issue was imposed. Since the said order has not been challenged by the Revenue, no penalty can now be imposed on the appellant on this count. In fact the first adjudication order finalized the issue. In so far as serial number (iii) of first para is concerned we find that all the invoices produced by the appellant show that they have invoice numbers printed by computer. In some of the invoices the serial number has also been printed by franking machine and in some others the same has been pre-printed. In all the invoices, whether pre-printed or machine printed there is computer generated identical numbers on the invoices. Furthermore, all the invoices clearly shows the duty has been paid in respect of those invoices. We find that the statements of the Director (Finance & Administration) and the Director (Operations) of the appellant do not contain any admission of clandestine clearance. The show-cause notice does not contain any allegation or evidence of clandestine clearance. In these circumstances, we cannot sustain the charge of clandestine clearance. Decided partly in favor of assessee.
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2016 (7) TMI 1109
Impact of subsequent decision of Apex Court on the matter already concluded - Cenvat Credit - capital goods used in the mines - Held that:- it was held by the Hon’ble Supreme Court that after the proceedings had attained finality and have not been challenged before the higher authorities, the benefit cannot be extended to that particular assessee in view of a subsequent decision by the Supreme Court. Otherwise also we find that the issue is no more res integra. In the absence of fact of filing the appeal against Commissioner’s order denying the credit, it has to be held that the Commissioner’s order attained the finality. In such circumstances, the benefit of any subsequent decision of higher forum, cannot be extended inasmuch as the assessee has not kept the proceedings alive during the in between period so as to infuse life into the same. The proceedings having become dead, cannot be made alive subsequently. - Decided in favor of revenue.
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2016 (7) TMI 1108
Central Excise duty demand - penalties imposed - duty has been worked out on the basis of clearances computed on the basis of entries in various documents recovered during the investigation - Held that:- The statement of the Director of the appellant assessee was never retracted and is indeed supported by the documentary evidences collected during the investigation. In the case of K.I. Pavuney vs Astt. Collector Cochin [1997 (2) TMI 97 - SUPREME COURT OF INDIA] held that confessional statement, if found voluntary can form the sole bases for conviction. Needless to say that for conviction the level of evidence required is to meet the yardstick of proof beyond reasonable doubt while in quasi judicial proceedings it is to meet the yardstick of “preponderance of probability” only. However, there is force in the contention of the appellant that during the period when evasion took place Section 11AC ibid had not been enacted and therefore, penalty under Section 11AC cannot be imposed. We find that Section 11AC came in force on 28.09.1996 while period involved in this case falls within 1994-1995. Therefore, penlaty under Section 11AC of the Central Excise Act, 1944 is not attracted in this case.
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2016 (7) TMI 1107
Removal of goods as such - Demand of duty under Rule 3 (5) and Rule 3(5A) of Cenvat Credit Rules, 2004 - Held that:- The provisions of rule 3 (5A) read with Rule 3 (5) are not applicable in view of the categorical assertion of the appellant that no Cenvat credit was availed, which fact is further corroborated by the memorandum of purchase of 1997. Also hold that the extended period of limitation is not invokable as no case of any suppression or misconduct is made out on the part of the appellant. Thus, the appeal is allowed with consequential benefits in accordance with law.
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2016 (7) TMI 1106
Cenvat Credit on returned goods - activity of bringing the cement from Mattampally unit to the appellant unit - claim denied on the goods as not inputs but finished goods - Held that:- Manufacturer can take credit of duty paid on the goods by treating them as inputs. It is seen from the above rule that if goods are brought for any other reason also, the manufacturer is entitled to take credit as if the goods are inputs. The learned counsel for appellant submitted that the appellant unit had railway sliding tracks and this is the reason that the cement was brought from Mattampally unit to the appellant unit and marked with ISI mark and dispatched to the buyer. The contention of Revenue is that the goods being cement/finished product, the credit is not admissible. Rule 16 does not require remanufacturing of goods or that goods should undergo any process after being brought to the factory and before being removed. The goods if brought for being re-made, refined, reconditioned or for any other reason , the rule would apply. Thus, do not find that there is contravention of any of the provisions of Cenvat Credit Rule, 2004. The activity falls within the ambit of Rule 16 of Central Excise Rules, 2002. On such score, the demand of interest and imposition of penalty is unsustainable - Decided in favour of assessee.
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2016 (7) TMI 1105
Wrongful use of Cenvat credit - voluntary payment of interest - Refund of the amount encashed through bank guarantee - Held that:- As find that the orders of Settlement Commission has not been challenged by the Revenue and therefore, has become final. The Settlement Commission in its second order has clearly ordered that the interest of ₹ 1,46,827/- payable against the wrongful credit of ₹ 17,31,711/- to be adjusted against the excess duty paid by the appellant to ₹ 2,13,678/-. In these circumstances, the revenue has not the authority to encash the bank guarantee. However, it is seen that the amount of ₹ 44,443/- was paid against the earlier order of the Settlement Commission in which there was no such direction. Encashment of bank guarantee by the Revenue is contrary to the orders of the Settlement Commission dated 09/07/2008 and needs to be refunded to the appellant.
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2016 (7) TMI 1104
Deemed production of Gutkha - whether the deemed production of Gutkha, in respect of the period March, 2012, is to be determined on the basis of the number of operating packing machines in the factory of the appellant, or on the basis of the speed of the machines declared by the appellant? - Held that:- Rule 5 of the said Rules fixes the deemed quantity manufactured, by use of one packing machine, with retail sale price printed on the pouch. The above provisions read with the C.B.E.C. Circular dated 24.01.2004 makes the position clear that the relevant factor to be considered for determination of production, is the number of operating machines installed in the factory during the month and the retail sale price printed on the pouches and not on the basis of actual production. It is clear from the above Circular of C.B.E.C. that number of packing machines, operating during the month, is the only relevant factor which forms the basis for determination of deemed production and the duty liability, in terms of Rule 5 of the Capacity Determination Rules, 2008; and not any other factor such as, speed of the machines etc. The impugned orders, adopting the declared speed of the machines as the basis and consequently determination of the deemed quantity of production, are not correct and hence not sustainable under the law.
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2016 (7) TMI 1103
Mis-classification of unglazed ceramic tiles under Chapter Heading 6906 10 00 - Held that:- It is found that there is no case in respect of Revenue's stand as it have not been able to counter the report of Chemical Examine, Madras, which has supported that item in question is unglazed tile deserving classification under Heading 6905 00. It has also been noted in the Order-in-Original itself that Department had written to Accountant General and this objection was settled between the Department and the Office of the Accountant General. Consequently, there are no substantial reasons to classify the item in question viz., unglazed ceramic tiles in any other Chapter Heading other than 6905 00. Consequently, Department’s stand that classification for the item has to be under Chapter Heading 6906 of Central Excise Tariff Act does not stand any merit. - Decided in favour of assessee.
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2016 (7) TMI 1102
Disallowance of credit on input services - whether fabrication services having been availed outside the factory are not eligible for credit as they do not qualify as input services? - Held that:- By bringing in the amendment vide Notification No.10/2008 dt. 01/03/2008 to the definition of input services w.e.f. 01/04/2008 a radical change was introduced expanding the clearances of final products upto the place of removal. Further in the case of Endurance Technology (P) Ltd. (2015 (6) TMI 82 - BOMBAY HIGH COURT ), the Hon’ble High Court of Bombay has categorically held that no such restriction is imposed. The arguments advanced by Revenue regarding fabrication services are untenable. All the other services for which the credit has been denied have been held to be eligible input services in a catena of judgments cited supra as these services would get covered under the activities relating to business. Denial of credit is unjustifiable - Decided in favour of assessee.
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2016 (7) TMI 1101
Cenvat credit - M.S. Angle, M.S. Channels, CTD Bars, Joists, Flats, Plates, HR Coils, Fish Plates, Aluminium Sheets in coils, oxygen gas, welding electrodes etc. used for fabrication of supporting structure of the capital goods - Held that:- Appellant is entitled to avail Cenvat Credit on the disputed inputs viz.,M.S. Angle, MS Channels, CTD Bars, Joists, Flats, Plates, HR Coils, Fish Plates, Aluminium Sheets in Coils, etc. for fabrication of components and accessories viz., Klin, Cooler or Material Handling Systems within the factory premises as capital goods/components/accessories of capital goods for the manufacture of Sponge Iron in the Appellants manufactory in as much as the test of usage and utility as envisaged in the aforesaid decisions would be the only relevant factory for determining the admissibility of Cenvat credit. Since the Appellant have demonstrated the use of disputed inputs for fabricating the aforesaid capital goods to aid the process of manufacture of Sponge Iron for the purpose of availment of Cenvat Credit, the Order impugned passed by the lower authority is clearly not sustainable on merits. With regard to oxygen gas and welding electrode, the ld. Commissioner (Appeals) has allowed the Cenvat credit to the respondent by placing reliance on the judgment of Hon'ble Rajasthan High Court in the case of Hindustan Zinc Ltd. -Vs.- Union of India, (2008 (7) TMI 55 - HIGH COURT RAJASTHAN) and the decision of Mangalore Refinery & Petrochem Ltd., (2007 (7) TMI 166 - CESTAT, BANGALORE). - Decided in favour of assessee.
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CST, VAT & Sales Tax
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2016 (7) TMI 1125
Input tax credit - whether the tax which the assessee has paid on the purchase of raw material and packing material which is ultimately used in the manufacture and packing of goods is liable to be adjusted in full from the ultimate tax liability which a dealer may stand faced with or is it liable to be adjusted only to the extent of the taxable turnover. - Held that:- Applying the ratio of Bharat Petroleum [1992 (2) TMI 250 - SUPREME COURT OF INDIA] to the facts of the present case and the language of section 4BB, this Court finds the clear absence of a "quantitative correlation" to the total tax paid on the raw or packing material and their utilisation in the manufacture of taxable goods. Secondly this Court notes that the tax free sales effected by the revisionist was not of its own accord. These were sales effected in favor of units which had been granted exemption from payment of tax under section 4B. Surely the benefit of tax already paid by the revisionist could not be denied adjustment based upon the liability or otherwise of another dealer. Thirdly, the Court notes that the revisionist has effected a sale of goods to entities within the State. However since these enjoyed exemption under Section 4-B, no tax was collected on these sales. The mere fact that tax has not been collected, does not detract from the position that a sale of goods took place. Lastly, the Court notes that the section itself provided a facility of set off of tax already paid by a dealer in respect of input goods. It was therefore in the nature of a beneficial provision. It must, therefore, be accorded an interpretation which is in favour of the assessee. For the aforesaid reasons, this Court finds the action of the assessing authority in reducing the set off which was claimed by the revisionist to be unsustainable. The answer is thus entered in favour of the assessee and against the Department.
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2016 (7) TMI 1124
Classification - rubberised coir product - purchase of used polyurethane foam - Suppression of taxable turnover - Held that:- Agreeing with the finding of fact, rendered by the Appellate Assistant Commissioner (CT) that merely because, the latex gum was used, in the process of binding the coir fibre, the end product cannot be termed as foam rubber product and following the decision of this Court in State of Tamil Nadu v. Duroflex Coir Industries Private Ltd., [1997 (8) TMI 479 - MADRAS HIGH COURT] and Notification in G.O.P.303, dated 16.03.1981, applicable to rubberised coir, the Tamil Nadu Sales Tax Appellate Tribunal has dismissed the appeal filed by the revenue. First of all, samples have been perused and the Appellate Assistant Commissioner has recorded a categorical finding that the product is only made of rubberised coir, taxable at 5%, which fact has been concurred by the Tribunal - No demand - decided against the revenue.
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Indian Laws
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2016 (7) TMI 1119
Arbitration and Conciliation - appointment of a sole arbitrator for adjudication of disputes that have arisen between the parties in relation to ‘Buyers Agreement’ dated 18.10.2012 executed between them - Held that:- As is evident from the averments in the petition, disputes have actually arisen between the parties in relation to the agreement and in view of clause 14 such disputes could be resolved only by way of arbitration. Whether the respondent is bound to pay Euro 393916.95 alongwith interest at the rate of 24% per annum; whether the respondent has committed breach of Clause 2.2 of the agreement in cancelling the orders; whether the respondent is liable to compensate for cancelling the orders and reimburse the cost and damages incurred by the petitioner; whether the respondent acted in violation of Clause 4.1 of ‘Buyers Agreement’ dated 18.10.2012 by diverting the orders to another agency and, if so, whether the respondent is liable to compensate the petitioner and such other incidental questions can be examined only by the arbitrator. When an arbitration agreement exists between the parties, the present petition under Section 11 (5) read with Section 11 (9) of the Arbitration and Conciliation Act, 1996, shall have to be allowed with appropriate directions. In the result, we allow this petition and appoint Mr. Justice Kailash Gambhir, a Former Judge, Delhi High Court as a Sole Arbitrator for adjudication of the disputes that have arisen between the parties in relation to the ‘Buyers Agreement’ dated 18.10.2012 executed between them. We leave it open for the parties to make their claims and counter claims in relation to the agreement aforementioned before the Arbitrator.
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2016 (7) TMI 1118
Dishonor of cheque - Complaint under Section 138 Negotiable Instruments Act - Held that:- In the present case, the petitioner seeks appreciation of defence evidence by this Court by pointing out the change in the ink, that the cheque book was issued in the year 2008 and it was an old cheque. I am afraid that this piecemeal appreciation of evidence cannot be done by the High Court in exercise of its jurisdiction under Section 482 Cr.P.C. The arguments raised by the petitioner will have to be considered by the learned Trial Court after he has cross-examined the complainant/witnesses and/or led defence evidence.
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