TMI Tax Updates - e-Newsletter
August 20, 2015

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax

Highlights / Catch Notes

• Income Tax:

  Reassessment - though the amendment u/s 115JA / 115JB was made with retrospective effect, the critical date is the date on which the AO exercises jurisdiction u/s 148 - the subsequent amendment could not have been and is in fact not a ground on which the AO sought to reopen the assessment - HC
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• Income Tax:

  Unexplained cash deposits - Unexplained income - Assessee could not establish that he received agricultural income from carrying on farming activities in the society land. - HC
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• Income Tax:

  Accrual of income - with the Assessee not having claimed the benefit of Section 32AB of the Act, the question of treating lease rental as income on accrual basis did not arise - HC
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• Income Tax:

  TDS liability - payments to retail dealers through Del-credere Agents - the payment would constitute sales promotion expenses and it would not fall under the category of commission falling within the scope of section 194H - AT
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• Income Tax:

  Proportionate disallowance of depreciation on computer and software, based on the number of employees of the assessee - keeping extra computer for meeting any emergent situation of non-functional computer or under repair computer is not an unusual practice - No disallowance - AT
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• Income Tax:

  Reopening of assessment - addition made on account of deemed dividend under S.2(22)(e) - the amount advanced for business transaction between parties, are not such to fall within the definition of ‘deemed dividend’ under S.2(22)(e). - AT
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• Income Tax:

  Disallowance of interest on house property claim u/s. 80C - assessee has paid interest paid to the bank for housing loan and it is supported by bank statement, therefore we allow the same - Deduction allowed - AT
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• Income Tax:

  Revision u/s 263 - issue of applicability of claim of deduction under section 80IC not examined by AO - It is admitted fact that return of income filed by assessee was late - revision u/s 263 sustained - AT
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• Income Tax:

  Unexplained investment under section 69 - assessee could not reconcile the difference between purchases as debited in the trading account and purchases as per TCS certificate - additions confirmed - AT
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• Income Tax:

  Payment for getting the mining rights on the land on which forest was there - Expenditure paid by the assessee as NPV to enable the assessee to carry on its mining business is revenue in nature, which is allowable as business expenditure under section 37(1) - AT
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• Customs:

  Petitioner made various representations, to finalise pending assessment, sadly respondent department has not replied positively to finalise assessment to refund deposit with interest - exemplary costs imposed upon respondent-department for wasting precious time of Court - HC
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• Service Tax:

  Denial of refund claim - Mere pendency of appeal preferred by respondent/department challenging the order passed by Tribunal dated May 7, 2012 was itself no ground to delay the refund - refund to be made with interest @15% - HC
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• Service Tax:

  Credit Card Services - On and from 01-05-2006 credit card services was deleted from BOFS and incorporated into a distinct service - Section 65(33a) is neither intended nor expressed to have a retrospective effect i.e. w.e.f. 16.07.2001. Services enumerated in these sub-clauses are not implicit in the scope of credit card services; - AT
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• Service Tax:

  Credit Card Services - Merchant Establishment Discount (ME discount), by whatever name called, representing amounts retained by an acquiring bank from out of amounts recovered by such bank for settlement of payments to the ME does not amount to consideration received “in relation to” credit card services. - AT
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• Service Tax:

  Denial of refund claim - Export of services - The period of refund was up to March, 2012 and therefore, the invoices raised at later date cannot be considered and accordingly, the learned Commissioner (Appeals) held that the adjudicating authority has correctly rejected the refund claim on this account. - AT
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• Service Tax:

  Refund - Export of services - Appellant's Bank at Mumbai have rightly received the money in Indian rupees as RBI permits payment in rupee from the account of a Bank situated in any foreign country other than a member country of Asian Clearing Union. - the foreign remittance is in order - AT
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• Central Excise:

  Tribunal has the power to extend stay beyond the period of 365 days - decision of the Division Bench in Haldiram India Pvt. Ltd. overruled - HC(FB)
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• Central Excise:

  Power of settlement commission - Settlement Commission is within its powers to impose penalty on each of the Directors in addition to the imposition of penalty upon the Company - HC
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• VAT:

  Submission of Statutory Declaration forms – When there no specific indication in CST Act or PVAT Rules to provide declaration forms in electronic form – Assesse could not be asked to upload declaration forms online in absence of facility for such purpose - HC
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• VAT:

  Rectification of Mistake – AO granted the exemption from sales tax wrongly beyond the prescribed limit - Tribunal and authorities have committed manifest error of law to hold that mistake as sought to be rectified by the revenue, was not mistake apparent on record - HC
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TMI Short Notes

• Income Tax:

  X Ltd., closely held company issues 1,000 shares to Mr. A (resident) whose face value is 10, issue price is 40 and fair market value is 42. What is the taxability of X Ltd.? Would your answer be different if the fair market value is 31 instead of 42?

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• Income Tax:

  X Ltd., closely held company receives shares of A Ltd. (a listed public company) for 10,000 whose fair market value is 5,00,000. What is the taxability of X Ltd.?

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• Income Tax:

  Example: 3) X gets by way of gift a plot of land in Pune from a partnership firm. The partnership firm has only two partners– father of X and Mrs. X. The stamp duty value of the plot of land is 19,00,000.

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• Income Tax:

  Example: 2) X gets a gift of 43,000 from C, who is cousin of his father and he also gets a gift of 20,000 from D, who is elder brother of his grandfather.

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• Income Tax:

  Example: 1) X purchases a house property situated in Nagpur from A on 31st March, 2013. The purchase price is 28,00,000. However, the stamp duty value is 45,00,000. Would your answer be the same if X purchased the above property on 1st April, 2013?

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Articles

• Appeal of Assessee dismissed for low tax demand
• CESTAT has power to extend Stay beyond 365 days where delay in disposal of appeal is not attributable to the assessee
• REGISTRATION OF SECURITISATION/RECONSTRUCTION COMPANIES

Notifications

• Customs

• 44/2015 - dated 18-8-2015 - ADD
  Seeks to rescind notification No, 89/2009- Customs dated 31.8.2009

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• 43/2015 - dated 18-8-2015 - ADD
  Seeks to extend notification No, 82/2011- Customs dated 25th August, 2011 for a further period of one year.

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• 42/2015 - dated 18-8-2015 - ADD
  Seeks to impose anti-dumping duty on the imports of Caustic Soda, originating in or exported from China PR and Korea RP for a period of five years.

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• 80/2015 - dated 18-8-2015 - Cus (NT)
  Appoints the Commissioner of Customs Raigad, Maharashtra

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• 79/2015 - dated 18-8-2015 - Cus (NT)
  Appoints the Commissioner of Customs, Mumbai

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• 78/2015 - dated 18-8-2015 - Cus (NT)
  Appoints the Additional or Joint Commissioner of Customs, Ahmedabad

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• 77/2015 - dated 18-8-2015 - Cus (NT)
  Appoints the Commissioner of Customs, Raigad, Maharashtra

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• 76/2015 - dated 18-8-2015 - Cus (NT)
  Customs Baggage Declaration (Amendment) Regulations

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• Income Tax

• 69/2015 - dated 17-8-2015 - IT
  Amendment in Notification No. S.O. 359, dated 30-3-1988

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• VAT - Delhi

• No.F.7(400)/Policy/VAT/2011/PF/565-79 - dated 17-8-2015 - DVAT
  Authorisation of Andhra Bank and State Bank of Travancore

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News

• Income-Tax Act 1961 Amended Through Finance Act 2015 to Provide Certain Tax Benefits to Notified Backward Areas in Specified States Including State of Bihar to Give These Areas an Opportunity to Grow Faster;21 Districts of Bihar Notified as Backward Areas;

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• RBI Reference Rate for US $

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Case Laws:

• Income Tax

• 2015 (8) TMI 693
  Penalty proceedings u/s. 271D - violation of section 269SS - revision order passed by CIT u/s. 263 - Held that:- Hon’ble Calcutta High Court in the case of CIT vs. Linotype & Machinery Ltd., (1989 (7) TMI 9 - CALCUTTA High Court) held that the failure of the A.O. to initiate proceedings under section 271D for violation of section 269SS could not be considered as an error calling for revision under section 263. We therefore, find merit in the contention of the Ld. Counsel for the assessee that there were no errors in the orders passed by the A.O. which were prejudicial to the interests of the Revenue calling for revision by the Ld. CIT(A) under section 263. - Decided in favour of assessee.

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• 2015 (8) TMI 692
  Entitlement to deduction claimed by assessee under section 80-IB - Held that:- Assessee while filing the e-return had claimed deduction of ₹ 1 lakh only under Chapter-VI A of the Act. Assessee had profit and gains of ₹ 8,62,93,033/-. Along with salaries and income from other sources, the gross total income of assessee was ₹ 8,98,13,395/-. Against the column for showing deduction under Chapter-VI-A, assessee gave the figure of ₹ 1,00,000/-. However, in the column showing the total income ₹ 5,13,62,429/- was shown. A reading of the print out of the e-return of the assessee clearly show that there was an attempt to mislead the Department. Assessee after working out tax dues, showed taxes paid as ₹ 1,38,84,356/- when the total even as per assessee’s figure itself ought have been more. In such a situation, we cannot say that application for rectification filed by the assessee for granting it deduction of ₹ 8,62,93,033/- under section 80-IB was unjustly rejected by the Assessing Officer. Assessee had preferred no such claim in its return at all. This seems to be the right decision taken by the Assessing Officer. On the other hand, CIT(A) had accepted the claim of assessee going into the merits when the rectification was rejected by the A.O. based on the figures given in the e-return filed by the assessee. In any case, CIT(A) on 16.10.12 realizing his mistake, rectified the earlier appellate order, dismissing the appeal filed by the assessee against the rejection of petition by the Assessing Officer. Thus, as matter stands now, there is no order of the CIT(A) dated 03.08.12 in the eyes of law. Hence appeal filled by the Revenue has become infructuous. Since the Cross Objection of the assessee is only to point out the factum of withdrawal of the earlier order by the CIT(A), it is only a clarification, thus needing no specific adjudication. - Decided against assessee.

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• 2015 (8) TMI 669
  Entitlement to depreciation - expenses incurred to complete the title/ ownership of the land - whether the payment of ₹ 23.35 lakhs was in the nature of revenue expenditure or capital expenditure? - Held that:- The impugned orders of the authorities have reached a correct finding of fact that the land was not being used for the purposes of the Appellant's business. It was a vacant land to be exploited in the future. The business of the Appellant i.e. of manufacturing of cutting tools continued and the factory land nor its manufacturing activities was affected by the ULCA even remotely. Decision of Empire Jute Co. Ltd. v/s. CIT [1980 (5) TMI 1 - SUPREME Court ] have no application to the present facts as the advantage of enduring benefit was not obtained in the capital field i.e. the payment made merely facilitated the assessee's day to day business while leaving the fixed capital untouched.. The reliance by the Appellant upon the decision of this Court in Brihan Maharashtra Sugar Syndicate (1986 (3) TMI 21 - BOMBAY High Court) is not of any assistance to it. The Appellant therein` held land which it used for sugarcane cultivation so as to carry on its business of manufacturing sugar. This land was being acquired under the Land Ceiling Act. The Appellant therein incurred expenses to protect the land which was used for its sugarcane cultivation from acquisition. Therefore, it was an expenses incurred to protect/maintain its running business and/or business asset. It was in the above background, that the Court held that the expenditure incurred for litigation, was revenue in nature. In the present facts, the excess land was not a business asset i.e. not being used in running a business but was to be exploited in future. Therefore, no occasion to apply the decision of this Court can arise. Thus no reason to disturb the finding of the Tribunal upholding the order of the lower authority that amount of ₹ 23.35 lakhs is an expenditure on revenue account. We have found that the expenditure of ₹ 23.35 lakhs has been incurred so as to complete the title/ ownership of the land. Therefore, the above expenditure cannot be attributed to the construction of the building. The construction of the building mandated by the exemption order under Section 20 of ULCA is only on consequence of the title/ ownership becoming complete. Therefore, we see no reason to interfere on this account as also with the impugned order of the Tribunal negating the plea of the Appellant that the amount of ₹ 23.35 lakhs be added to the cost of constructing the buildings so as to avail of depreciation on the same. - Decided in favour of revenue

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• 2015 (8) TMI 668
  Reopening of assessment - Deduction of depreciation on revalued portion of the assets is only for the purpose of presentation and accretion to reserves did not increase book profit. Therefore, there is no justification in reducing the net profit by the amount of revaluation reserve - Held that:- Identical issue had come up before this Court in Rallis India Ltd. (2010 (3) TMI 164 - BOMBAY HIGH COURT ) wherein a reopening notice was inter alia issued on the ground that the book profits have to be increased in view of the Explanation to Section 115JB of the Act (similar to Section 115JA of the Act) after adding provision made doubtful debts and for diminution in the value of investment. This Court in the above case recorded the fact that Apex Court in HCL Comnet Systems and Services Ltd.(2008 (9) TMI 18 - SUPREME COURT) has held that the provision for doubtful debts is a provision made for diminution in the value of assets and is not a liability. Thus it would not fall under clause (c) of the Explanation to Section 115 JA of the Act. Consequent to the aforesaid decision of the Apex Court, the Parliament has amended Explanation both under Section 115JA as well as 115JB of the Act in 2009 by adding clause (g) and (i) with retrospective effect from 1 April 1998 and 1 April 2001 respectively. This Court held that though the amendment was made with retrospective effect, the critical date is the date on which the Assessing Officer exercises jurisdiction under Section 148 of the Act and the subsequent amendment could not have been and is in fact not a ground on which the Assessing Officer sought to reopen the assessment. Thus the above decision would apply to the facts of the present case. Accordingly on the above ground of absence of reason to believe that income chargeable to tax has escaped assessment, the impugned notice is not sustainable. - Decided in favour of assessee.

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• 2015 (8) TMI 667
  Disallowance of deduction claimed under section 80IA - ITAT allowed claim - Held that:- The business undertaking of the assessee is wind mill power generation/hosiery goods, etc., and it has claimed the benefit of deduction under Section 80IA of the Income Tax Act for the assessment year in question and for the subsequent years as well. Having exercised its option and its losses have been set off already against other income of the business enterprise, the assessee in this appeal falls within the parameters of Section 80IA of the Income Tax Act. There appears to be no distinction on facts in relation to the decision reported in Velayudhaswamy Spinning Mills case (2010 (3) TMI 860 - Madras High Court). - Decided in favour of the assessee

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• 2015 (8) TMI 666
  Non deduction of TDS - payment of annual maintenance charge - as per ITAT Since the CIT(A) has not given any finding on merit, we restore the matter to his file with the direction to adjudicate the issue on merit as to whether the provisions of section 194C are applicable to the present case - Held that:- Tribunal has observed that 'the revenue has challenged the order of CIT(A) on merit also, but no finding was given by the CIT(A) on merit with regard to the nature of payments, therefore, the learned Tribunal set aside the order of CIT(A) and reversed the finding of CIT(A) given following the order of the Special Bench of the Tribunal in the case of Merilyn Shipping & Transports [2012 (4) TMI 290 - ITAT VISAKHAPATNAM]. Since the CIT(A) has not given any finding on merit, the learned Tribunal restored the matter to his file with the direction to adjudicate the issue on merit as to whether the provisions of Section 194C are applicable to the present case. We also do not find any discussion on merit of the case with regard to application under Section 194C of the Income Tax Act. Therefore, we are of the view that no substantial question of law would arise at this stage to consider the applicability of Section 194C of the Act. In so far as, the applicability of Section 40(a)(ia) is concerned. We are of the view that the stage of consideration of this question would arise after determination of the case with regard to applicability of Section 194C of the Act, by the Tribunal. Therefore, we keep open the issue as to whether a dis-allowance was warranted under the provisions of Section 40(a)(ia) of the Act be raised by the Appellant after determination of the applicability of Section 194 C of the Act. - Decided in favour of assessee for statistical purposes.

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• 2015 (8) TMI 665
  Section of AY to capitalize the customs duty levied on import of hospital equipment and claim depreciation - whether the obligation to pay customs duty related back to the actual date of payment of customs duty or the date of import of the equipment and whether the said customs duty paid in the previous year relevant to the AY in question can be capitalized with reference to an earlier year? - Held that:- Following the decision in Funskool (India) Limited (2007 (4) TMI 125 - HIGH COURT , MADRAS) wherein held that even though the sales tax was paid in a subsequent year, the liability to pay sales tax arose in the accounting period relevant to the assessment year in which the machinery was purchased. It was held on the facts of that case that the development rebate had to be claimed in the AY in which the machinery was purchased. We are of the view that in the instant case, the AO erred in disallowing the capitalization of the additional customs duty in the manner claimed by the Assessee and adding the entire customs duty paid in the relevant AY to the income of the Assessee. The impugned order of the ITAT affirming the decision of the CIT (A) that the enhanced cost of equipment should be taken into consideration from AY 2005-06 onwards and that the WDV should be reworked for the AY in question does not call for interference. - Decided against revenue.

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• 2015 (8) TMI 664
  Reopening of assessment - change of opinion - Entitlement to benefit of Section 80IC denied - Held that:- In cases where there is a prima facie satisfaction of jurisdiction to issue reopening notice, the Petitioner can agitate the issue before the authorities under the Act. In the present facts it was in December 2013 that on survey it was found that the activity of the Petitioner was held to be not manufacture under the Central Excise Tariff Act, 1985 as far back as 1993. The revenue had always proceeded on the basis that the making of the said product is manufacture as the order of the CEGAT was never brought to the notice of the Revenue. Therefore this issue was never adverted to, much less examined, during the regular assessment proceedings. Therefore there could be no question of any change of opinion. So far as the other objections are concerned viz. even if no manufacture yet it would be production of the said product would also require factual examination. However, at this stage one must also not lose sight of the fact that the charge under Section 3 of the Central Excise Act, 1944 is on goods produced or manufactured in India. So far as the issue of Schedule XIII to the Act is concerned, the issue whether it is to be read cumulatively or independently is at this stage best left to the authorities under the Act to interpret. Thus, we see no reason to admit this petition. - Decided against revenue.

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• 2015 (8) TMI 663
  Penalty levied u/s 271D - violation of provisions of section 269SS - Tribunal deleted penalty levy - Low tax effect - Held that:- The Central Board for Direct Tax (CBDT) has issued Instruction No.5 of 2014 and in line with its earlier Instruction No.3 of 2011 directing the Revenue not to file appeals to the High Court from the order of the Tribunal when the tax effect is less than ₹ 10 lakhs. This Court in CIT vs. Vijaya V. Kavekar [2013 (2) TMI 451 - Bombay High Court] dismissed the appeal having tax effect of less than ₹ 10 lakhs in terms of Instruction No.3 of 2011. This on the ground that the instructions of CBDT in terms of Section 268A of the Act will ever apply to pending appeals. Thus, following the above decision, we are not inclined to entertain this appeal. Moreover, the Revenue has not been able to point out that the appeal would otherwise stand covered by the exclusion clause of Instruction No.5 of 2014 or would be otherwise covered by the Apex Court decision in CIT vs. Surya Harbal Ltd.[2011 (8) TMI 137 - Supreme Court of India]. The present appeal has a tax effect of only ₹ 4,42,000/-, we see no reason to entertain the proposed questions of law. - Decided against revenue.

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• 2015 (8) TMI 662
  Eligibility for deduction under Section 10A - expenses in foreign exchange and insurance and communication expenses which were not excluded from the export turnover within the meaning of Explanation 2 (iv) to Section 10A - ITAT noticed that since the Assessee had not incurred expenses in foreign exchange for providing technical services outside India, those were not included in the export turnover - Held that:- Explanation 2 (iv) to Section 10A of the Act provides that freight, telecommunication charges or insurance attributable to the delivery of the articles or things or computer software outside India or expenses, if any, incurred in foreign exchange in providing the technical services outside India were not to be included in export turnover. The ITAT was of the coorect view that when the expenses were not included in export turnover, there was no question of exclusion of the same from the export turnover. The ITAT correctly upheld the order of the CIT (A) and dismissed the appeal of the Revenue. Decided against revenue.

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• 2015 (8) TMI 661
  Condonation of delay of delay of 526 days - budgetary constraints leading to delay payment of the differential court fees as a result of the Court Fees Delhi Amendment Act, 2012 which came into force on 1st August 2012 - Held that:- Much prior to the initial filing of the appeal, the Court Fees Act applicable to Delhi stood amended. As regards the second ground, sufficient advance notice had been given to the litigants and Advocates about the filing of soft copies of the paperbooks. Further, the Registry of the Court had made appropriate arrangements for scanning services at the filing counters to facilitate the making of soft copies so that the inconvenience if any caused to the Advocates and the litigants is minimised. The third excuse regarding change of standing counsel is also not justified considering that there is an entire panel of lawyers for the Revenue and its cell in the High Court is managed by a Deputy CIT whose work is overseen by an Assistant CIT. None of the above factors could have entailed a delay of more than a year and five months in re-filing the appeal. The application is accordingly dismissed. Whether on account of AO noticing that some part of the total turnover of the Respondent Assessee, which claims to be a '100 per cent export oriented unit', includes domestic turnover, the deduction under Section 10B should be denied? - Held that:- Admittedly, on facts the Assessee has the required approval of the Board appointed by the Central Government as a '100 per cent export oriented undertaking' thus answering the definition of that expression in Explanation 2 to Section 10B. Secondly, as pointed out by Assessee Section, 10B (4) envisages that some part of the profits derived by 100 per cent export unit could be relatable to 'export turnover', as distinguished from total turnover. Further, it is seen that in Commissioner of Income v. Genpact India (2011 (11) TMI 119 - DELHI HIGH COURT) this Court, while dealing with a similarly worded Section 10A of the Act, noted that such an undertaking would have both export turnover as well as domestic turnover. AO was not justified in denying the deduction under Section 10 B of the Act only on the ground that some part of the turnover of the Assessee included domestic turnover. - Decided in favour of assessee.

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• 2015 (8) TMI 660
  Rejection of books of accounts - ITAT disallowing additions of undisclosed income for the block period which were made on the basis of search on the other hand? - Whether ITAT has erred by holding that no trading addition by estimating the sales of whole of the block period was called for and thereby the additions of undisclosed income were disallowed? - Held that:- The entire basis of making the addition was only in view of the two bills. There were several bills during that period. There was no justification for presuming that in respect of every bill amount(s) had been taken which was not recorded in the books of account. More important is the fact that the Assessing Officer did not doubt the GP rate of 7.4% declared by the assessee/respondent. The books of account were also subject to verification by the Excise Department which did not find any discrepancy. It is not as if the Tribunal did not take into consideration the fact that the books of account had been rejected and that the correctness of the rejection of the books had been upheld finally. - Decided against revenue.

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• 2015 (8) TMI 659
  Deduction under Section 80HHC (2) - amounts realised in convertible foreign exchange after the specified period (i.e. within six months from the end of the previous year) - ITAT allowed claim - Held that:- Notwithstanding that there may not be any time limit as such prescribed for disposal of applications by the CIT in respect of a request made for extension of period within which the export proceeds have to be realised in convertible foreign exchange, on the facts of the present case there appears to be no justification shown by the Revenue for the CIT to have sat on the application of the Assessee for several years after it was made. Consequently, the Court is not inclined to interfere with the conclusion of the CIT (A), which has been affirmed by the ITAT in the impugned order in the impugned order, that the CIT should be deemed to have granted the permission as prayed for by the Assessee. - Decided in favour of the Assessee. Whether in view of Section 80HHC (2), the ITAT could have allowed the benefit thereunder beyond the period of 31.12.1991 when the Assessee himself applied for extension only upto that date? - Held that:- The court finds merit in the submission of Revenue that Assessee itself having sought permission for extension of time to realise the export proceeds in convertible foreign exchange only up to 31st December, 1991, the CIT (A) was not justified in extending the time beyond the 31st December, 1991. Further there appears to be no justification to the CIT (A) to further extend the time to within a period of 10 months from 1st October, 1991 to 31st July, 1992. - Decided in favour of the Revenue. It is held that CIT (A) and ITAT could not have allowed the benefit to the Assessee under Section 80HHC (2) beyond 31st December, 1991. - Decided against assessee.

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• 2015 (8) TMI 658
  Unexplained cash deposits - Unexplained income - ITAT confirmed addition - Held that:- The ITAT has in the impugned order returned a finding of fact that the Assessee could not establish that he received agricultural income from carrying on farming activities in the society land. The Assessee has failed to produce any reliable document to explain the cash in hand. - Decided against assessee.

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• 2015 (8) TMI 657
  Accrual of income - Treatment of the reversing of the lease rentals of the machinery in the books of accounts of the Respondent Assessee - treatment of the unrecovered advance to purchase the machinery - Held that:- The monies advanced to the two entities for the purposes of their purchasing machinery in the name of the Assessee did not fructify in the actual purchase of machinery. The Assessee filed a suit against one of the entities for recovery of the monies. When the Assessee learnt that no machinery was actually purchased, a revised return was filed. It is stated that the lease rental income was reversed and tax of the said amount was paid during the Assessment Year ('AY') 1995-96. For the year 1996-97, the lease rental was credited to the Profit & Loss Account and was treated as income. In 1997-98, the Assessee stopped crediting lease rental and, therefore, did not show it in the accounts. Therefore, in the facts and circumstances, with the Assessee not having claimed the benefit of Section 32AB of the Act, the question of treating lease rental as income on accrual basis did not arise. - Decided against revenue.

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• 2015 (8) TMI 656
  Transfer pricing adjustment - selection of certain comparables in ITeS segment - Held that:- In case of M/s. Capital IQ Information Systems (India) Pvt. Ltd vs. Addl. CIT [2014 (9) TMI 125 - ITAT HYDERABAD] all these companies were found to be incomparable to a pure ITES provider (1) Infosys B P O Ltd because of its big brand value, this company has to be excluded on the grounds of functional dissimilarity on FAR Analysis. (2) Genesys International Ltd because there is vast difference between the functions of the above company and that of assessee. (3) Eclerx Services Ltd. beacause as seen from the Annual Report, the above company is involved in diverse nature of services and there was no segmental data for diversified service port folio. Moreover this company can be considered as KPO and we are of the opinion that this company is not comparable to assessee’s services. We therefore, direct the Assessing Officer/TPO to exclude this company. (4) Cosmic Global Ltd. because total revenue of the Accounts BPO segment of Cosmic Global Limited is very low at ₹ 27.76 lacs. (5) Acropetal Technologies Ltd. (Seg.) company is involved in engineering design services and high end services and has products in its inventory. It is also involved in R&D activity and developing sophisticated delivery system.allocation of expenses between segments is not possible and depreciation was not allocated between the segments. There are extra-ordinary events which impact profit also, as can be seen from the Annual Reports.Therefore, this company cannot be selected as a comparable.(6) Accentia Technologies Limited.company operates in a different business strategy of acquiring companies for inorganic growth as its strategy. In earlier years on the reason of acquisition of various companies, being an extraordinary event which had an impact on the profit, this company was excluded. ALLSEC Technologies Ltd - during the relevant FY, it has acquired a company. Further, it is clear that company has made losses and it is not clear whether loss is on account of acquisition or not - we do not consider it appropriate to accept this company as a comparable. Non aggregating the software services transactions of the assessee for determining the ALP - Held that:- It is apparent from the facts and materials on record, even after merger of Spacelabs with Rapiscan Systems India Ltd, maintenance of accounts is entity specific. Though, it may be a fact that software development services is a very wide term and takes within its ambit, whole software development services, such as medical, security, banking, accountancy etc., but for comparability analysis, verticals of the software development industry have to be looked into. All types of software development services cannot be clubbed together for comparability analysis, as in our view, it will not give an appropriate result. As in assessee’s case also software development services are for two different sectors i.e. security system as well as medical services, we are not able to accept assessee’s contention that operating profit to operating cost of the revenue earned from software development services segment should be considered as a whole for computing the margin of the assessee. Moreover, when assessee has maintained entity specific a/c with segmental details and has also conducted analysis on this basis in its TP study, we do not find any reasons to disturb the order of the TPO and DRP on this issue. Accordingly, having not found any merit in the submissions of the ld AR, we dismiss this ground. As far as Bodh Tree Consulting Ltd, Infosys Ltd, Kals Information Systems Ltd and Tata Elxsi Ltd are concerned, it is seen that they have been rejected as comparables in respect of software development service providers by different Benches of the Tribunal including the Hyderabad Benches, for the very same A.Y i.e. A.Y 2009-10 I-Gate Global Solutions Ltd - As relevant informations required for coming to a definite conclusion are not before us, we are inclined to remit the issue of comparability of this company to AO/TPO for considering afresh. Further, we may observe that in case of Triology E Business (2011 (6) TMI 392 - ITAT BANGALORE ) this company has been excluded on the basis of high turnover. Therefore, this aspect is also required to be examined by AO/TPO while deciding comparability of this company. CG-VAK Software Exports Ltd (Seg.) and Quintegra Solutions Ltd - It is seen from record that while the TPO rejected this company alleging that the foreign exchange revenue earned by the company only 57% of the total revenue earned, assessee’s claim is foreign exchange revenue earned by the company is more than 92% of the total revenue. In this context, the ld. AR has placed reliance on the annual report of the company as submitted in the paper book. Having considered the submissions of the parties, we are of the view that this issue needs to be looked into afresh by the TPO, in view of the assessee’s claim that the foreign exchange earning of the company is more than 92%. TPO must examine assessee’s claim with reference to the facts and materials on record and decide the issue with a reasoned order after giving opportunity of being heard to the assessee. Non consideration of provision for bad and doubtful debts while computing the net margin of comparable companies under TNMM - Held that:- As relying on case of M/s Kenexa Technologies Pvt. Ltd. Vs. DCIT [2014 (11) TMI 587 - ITAT HYDERABAD] we direct A.O./TPO to recompute the margins of the comparable companies by including the provision for bad and doubtful debts as operating expenses. Working capital adjustment - Held that:- We direct A.O./TPO to look in to this issue afresh keeping in view the submissions made by assessee as well as the workings submitted in this regard. The TPO must take a decision on the issue by assigning valid reasons after reasonable opportunity of being heard to assessee. Rejection of resale price method (RPM) selected by the assessee for determining the ALP of the international transactions of purchase of medical equipment for distribution - Held that:- after considering a number of decisions on the very same issue from different Benches of the ITAT, it was held that in case of transactions related to purchase and sale of goods, RPM is the most appropriate method. The principles laid down in Danisco (India) Pvt. Ltd. Versus ACIT Circle 10(1) New Delhi [2014 (11) TMI 132 - ITAT DELHI ] applies to the facts of the present case not only because the assessee is involved purely in trading activity, but also in the TP study assessee has adopted RPM as the most appropriate method. Only because in the preceding assessment year for some reason assessee has not challenged the decision of DRP in upholding application of TNMM, assessee cannot be prevented from objecting to adoption of TNMM in the impugned assessment year. In view of the aforesaid, we remit the matter back to the file of the AO/TPO to examine assessee’s analysis under the RPM and decide the issue accordingly after due opportunity of being heard to the assessee. Exclusion of communication and insurance expenses from total turnover particularly in absence of definition of the term total turnover under the provisions of section 10A/ 10B - Held that:- This issue is no more res integra in view of a number of judgments of different High Court and different Benches of the Tribunal including the Special Bench holding that expenses relating to communication charges & insurance if excluded from export turnover, they have to be excluded from total turnover while computing exemptions u/s 10A/10B of the Act. In this context, a reference can be made to the decision of CIT Vs. Gem Plus Jewellery India Ltd [2010 (6) TMI 65 - BOMBAY HIGH COURT ] and the decision of the ITAT Chennai Special Bench in the case of Income Tax Officer vs. Sak Soft India Ltd (2009 (3) TMI 243 - ITAT MADRAS-D). - Decided against revenue.

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• 2015 (8) TMI 655
  TDS liability - application of provisions of section 194H by the assessing officer (I.T.O., T.D.S.) to payments effected by appellant to retail dealers through Del-credere Agents, as commission paid to Del-credere Agents also confirmed by CIT(A) - Held that:- the del-credere agents cannot be considered to “Payees” in these transactions as interpreted by Ld CIT(A), since they have acted only as conduits. The payment is actually made to the retail dealers. Accordingly, we are of the view that the payment made by the assessee under such scheme would constitute sales promotion expenses and it would not fall under the category of commission falling within the scope of section 194 H of the Act. In view of above, we set aside the order of the ld CIT(A) on this issue and direct the AO to delete the demand raised in respect of this issue under section 201(1) and 201(1A) of the Act in respect of all the three assessment years under consideration. - Decided of favour of assessee. Short deduction of tax on payments made under the head “Brand fee” - payment of Royalty or not - TDS u/s 194J or 194C - Held that:- Though the Ld A.R tried to contend that the entire payment could not be considered as payment of royalty, yet no material was placed to substantiate the said contentions. If the contention of the Ld A.R that the amount transferred by way of “brand fee” was actually a transfer of business profits is to be accepted, it has to be shown that the property and risk attached with the products remained with the contractee. - there is no infirmity in the action of the tax authorities in treating the payment of ‘brand fee’ as payment of royalty falling within the scope of sec. 194J of the Act. - Decided against assessee. CIT(A) has already set aside the matter relating to demand raised u/s 201(1) of the Act to the file of the AO with the direction to cancel the demand raised, if it is shown that the recipients have declared the same as their respective income. The Ld CIT(A) has also directed the AO to restrict the interest chargeable u/s 201(1A) of the Act till the date of payment of tax by the recipients. The above directions are in accordance with the provisions of the Act and also in accordance with the decision rendered by Hon’ble Supreme Court in the case of Hindustan Coca-cola beverages Ltd (2007 (8) TMI 12 - SUPREME COURT OF INDIA )

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• 2015 (8) TMI 654
  Transfer Pricing adjustment - addition on international transaction pertaining to the transaction of business support services - Held that:- The Transfer Pricing Officer accepted the price charged by the assessee in respect of services provided through sub-agency, but while computing the arm's length price it had ignored the comparable uncontrolled price and took the price charged by the assessee as the arm's length price. Further, the services provided by the assessee on its own were compared with comparable uncontrolled price. Therefore, two separate arm's length price were determined by the Transfer Pricing Officer for the same service provided by the assessee to the associated enterprise. Even if the comparable uncontrolled price is adopted as the most appropriate method, the arm's length price cannot be more than the price received by GESA. Whereas the Transfer Pricing Officer has taken into consideration the price charged by the assessee with 10 per cent. mark-up. Hence, the computation of the arm's length price is otherwise not based on correct uncontrolled price. The international transaction in question should be considered as one and price received by the assessee in total has to be compared with the arm's length price. The assessee received the price for providing the service as per the agency agreement. Therefore, the service provided by the assessee to the associated enterprise are closely interlinked and price of one part is dependent on the price of the other part. Therefore, the entire services provided by the assessee has to be treated as one international transaction for the purpose of determining the arm's length price. Thus we set aside the issue to the record of the Transfer Pricing Officer/ Assessing Officer, to decide the same afresh, by considering in the light of the above observation as well as the decision of this Tribunal in the case of UCB India P. Ltd. v. Asst. CIT (2009 (2) TMI 237 - ITAT BOMBAY-L ) - Decided in favour of assessee for statistical purposes. Rate of depreciation on computer hardware - Held that:- Allowability of depreciation at 60% on the computer accessories and peripherals is no more res integr. We allow the claim of depreciation on printer, scanner, electronic token display system at 60 per cent. See CIT v. BSES Yamuna Powers Ltd [2010 (8) TMI 58 - DELHI HIGH COURT ] and DCIT Versus Datacraft India Ltd.[2010 (7) TMI 642 - ITAT, MUMBAI] - Decided in favour of assessee. Depreciation on software - Held that:- We allow the claim of 60% of depreciation on software as relying on Maruti Udyog Ltd. v. Deputy CIT [2004 (10) TMI 278 - ITAT DELHI-A ] and Hindustan Construction Co. Ltd. v. Deputy CIT [2013 (1) TMI 367 - ITAT MUMBAI] - Decided in favour of assessee. Proportionate disallowance of depreciation on computer and software, based on the number of employees of the assessee - Held that:- It is clear from the directions of the Dispute Resolution Panel that the proportionate disallowance of depreciation was directed only in respect of software cost allocated by associated enterprise and not on any other asset. Therefore, the Assessing Officer has not followed the directions correctly while passing the impugned order whereby he disallowed the proportionate depreciation on the entire computer block of asset. As regards proportionate disallowance based on the number of employees is concerned, we are of the view that the personal computers in any establishment/organisation are not restricted to the number of employees at any given point of time. The strength of the employees may vary depending upon the capacity at which the company is working. Further, keeping extra computer for meeting any emergent situation of non-functional computer or under repair computer is not an unusual practice. Therefore, when the number of computer is not disputed then software installed on the existing computer cannot be treated as excess or not for business use of the assessee. Hence, we do not find any logic or substance in the directions of the Dispute Resolution Panel in restricting the depreciation of software licence to the extent of number of employees working with the assessee. Accordingly, the orders of the authorities below qua this issue are set aside and claim of the assessee is allowed in full.- Decided in favour of assessee. Interest under section 234D - Held that:- As there is a calculation mistake in computing interest under section 234D, we direct the Assessing Officer to verify the alleged working mistake in computation of interest under section 234D.- Decided in favour of assessee for statistical purposes.

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• 2015 (8) TMI 653
  Reassessment under section 148 - accommodation entry of share capital and making additions of amounts - Held that:- As the assessee has produced evidences in support of this claim and as the AO has not conducted any investigation nor collected any evidence to controvert the claim of the assessee in our view the additions are bad in law. See Ranbaxy Laboratories Ltd. v. Commissioner of Income-tax [2011 (6) TMI 4 - DELHI HIGH COURT], CIT v. Living Media India Ltd. [2013 (6) TMI 128 - DELHI HIGH COURT],Jay Bharat Maruti Ltd. v. CIT [2009 (4) TMI 12 - DELHI HIGH COURT], Vipan Khanna v. CIT [2000 (7) TMI 2 - PUNJAB AND HARYANA High Court] and Travancore Cements Ltd vs ACIT [2006 (9) TMI 174 - KERALA HIGH COURT] and CIT vs. Lovely Exports [2008 (1) TMI 575 - SUPREME COURT OF INDIA] .Thus we allow the appeal of the assessee. - Decided in favour of assessee.

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• 2015 (8) TMI 652
  Transfer pricing adjustment - inclusion/exclusion of certain companies in/from the list of comparables - Held that:- Cosmic Global Ltd. (Seg.) - the functional comparability of the Accounts BPO segment of Cosmic Global has been accepted by the ld. AR. In that view of the matter and respectfully following the judgment of the Hon’ble High Court in the case of ChrysCapital Investment Advisors (I) Pvt. Ltd. (2015 (4) TMI 949 - DELHI HIGH COURT), we hold that Cosmic Global Ltd. (Seg.) cannot be excluded from the list of comparables. CG-VAK Software and Exports Ltd. (Seg.) - The quantum of turnover can be no reason for the exclusion of a company which is otherwise comparable. We have noticed above the judgment of the Hon’ble jurisdictional High Court in the case of ChrysCapital Investment Advisors (India) P. Ltd (supra) in which it has been held that high turnover or high profit can be no reason to eliminate an otherwise comparable company. The same applies with full force in the converse manner as well to a low turnover/low profit company. In principle, we direct the inclusion of the relevant segment of this company in the list of comparables. The TPO is directed to include the operating profit/operating costs of the ITES segment of this company in the list of comparables, after due verification of the necessary figures for the purposes of determination of the operating profit margin etc. Accentia Technologies Ltd. - apart from rendering IT enabled services, this company is also having software products and the revenue from both these streams has been merged. As the segmental figures in relation to the business of rendering ITES are not available and the TPO has taken its entity level figures, it ceases to be comparable. The obvious reason for the exclusion of this company is the pooling of income from software products in its overall profitability, which cannot be separated with precision, thereby rendering it incomparable. We, therefore, direct to remove this company from the list of comparables. e- Clerx Services Ltd.is a Knowledge Process Outsourcing (KPO) company providing data analytics and data process solutions to global clients. This company provides end to end support through trade life cycle including trade confirmations and settlements etc. It also provides sales and marketing support services to leading global manufacturing, retail, travel and leisure companies through its pricing and profitability services. From the above narration of the nature of business carried on by e-Clerx Services Ltd., it is manifest that the same being a KPO company, is quite different from the assessee, providing only IT enabled services to its AE. Apart from that, it is further observed that this company has significant intangibles which it uses in rendering KPO services, against which the assessee does not have any intangibles. As such, e-Clerx Services Ltd. cannot be considered as comparable. R. Systems International Ltd. (Seg.) - It is clarified that only if the assessee succeeds in providing the relevant data of this company for the concerned financial year on the basis of the information available from the Annual reports only, the TPO should include this company in the list of comparables by considering its OP/TC on the basis of the financial year ending 31.3.2009. If however, even though its quarterly data is available and can be compiled for the relevant financial year, but the amounts of operating profit or operating cost etc. for the relevant financial year are not directly available without any apportionment or truncation, then this company should not be considered as comparable. Treating foreign exchange difference as non-operating as against the assessee’s treatment of operating cost - Held that:- In the context of transfer pricing, the Bangalore Bench of the Tribunal in SAP Labs India Pvt. Ltd. Vs ACIT (2010 (8) TMI 676 - ITAT, BANGALORE ) has held that foreign exchange fluctuation gain is part of operating profit of the company and should be included in the operating revenue. Similar view has been taken in Trilogy E Business Software India (P) Ltd. Vs DCIT (2011 (6) TMI 392 - ITAT BANGALORE ). Thus we are of the considered opinion that the amount of foreign exchange gain/loss arising out of revenue transactions is required to be considered as an item of operating revenue/cost, both of the assessee as well as comparables. We, therefore, hold that the AO was not justified in considering forex loss as non-operating cost as against the assessee’s claim of operating cost. No separate adjustment was called for under the head interest as interest on receivables was subsumed in the working capital adjustment allowed as directed by DRP - Held that:- TP adjustment on account of interest on delayed realization of invoice value has nothing to do with the closing or opening values. It depends on the period of realization on transaction to transaction basis. To put it differently, suppose an invoice is raised on 1st May; period allowed for realization is two months; and the invoice is actually realized on 31st December. Notwithstanding the fact that interest on such late realization would become chargeable for a period of 6 months (from 1st July to 31st December), but the amount of invoice will not be receivable as at the end of the financial year on 31st March. As such, this receivable would not have an impact on the working capital adjustment in any manner, but would call for addition on account of the late realization of invoice value for a period of six months. We, therefore, reject the reasoning given by the DRP in deleting the addition. However, in view of the fact that all the invoices were realized within the maximum period of 60 days allowed as per the Agreement, we hold that the charging of interest on receivables is not sustainable on the extant facts.

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• 2015 (8) TMI 651
  Unverifiable purchases - CIT(A) deleted part addition - Held that:- The matter has been set aside by the ITAT twice and the assessee was not able to correlate the purchases made from M/s Anmol Ratan and M/s Shruti Gems to the tune of ₹ 57,50,000/- with export bills. The ld CIT(A) partly accepted the correlation between the purchases made from both the parties and export bills but she confirmed that the purchases made from both the parties are bogus and the assessee might have purchased these items from the grey market but the purchase bills were taken from both these parties. The assessee himself has also accepted that it was not able to correlate the purchases made from these two parties partially. Similar line of cases, this Bench has decided in the case of Shri Anuj Kumar Varshney Vs. I.T.O. and other gems and jewellery cases [2015 (4) TMI 533 - ITAT JAIPUR] where on unverifiable/bogus purchases 15% disallowances has been decided and we have also applied the same percentage as net profit on unverifiable purchases of ₹ 57,50,000/-, which comes to ₹ 8,62,500/-. Thus we confirm addition of ₹ 8,62,500/-. The burden lies on the assessee, which has not been discharged rightly that purchases were made are genuine and same has been exported. - Decided partly in favour of assessee. Disallowance of deduction U/s 80HHC - Held that:- AR has not been able established connection between the purchases made from both the parties and export made by it. When the items purchased and items exported could not be correlated, in absence of correlation no deduction U/s 80HHC can be allowed. Decided against assessee.

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• 2015 (8) TMI 650
  Reopening of assessment - addition made on account of deemed dividend under S.2(22)(e) - Held that:- Reasons recorded by the AO that it had come to the notice during the course of survey operations carried out under S.133A of the Act in the case of M/s.Aster Infrastructure Private Limited on 25.1.2011 that the claim of the assessee of having incurred loss in the proprietary concern of M/s. Aster Indsutry was bogus in as much as the staff services claimed to be rendered by the said proprietary concern to M/s. M/s.Aster Private Limited were not actually rendered. In his statement recorded during the course of survey, Shri A.Srinivasa Prasad, CEO of M/s. Aster P. Ltd. only admitted that the proprietary concern, M/s. Aster Industries was not only a name lender, but also surrendered additional income in the hands of M/s. Aster P. Ltd. on account of payment claimed to be made to the proprietary concern, thereby accepting it to be bogus. This entire information had come to the possession of the Assessing Officer as a result of survey carried out on 25.1.2011 in the case of M/s.Aster Private Limited, only after completing the scrutiny assessment in the case of the assessee on 12.11.2009, and since the said assessment was reopened by him on the basis of such information coming to his possession subsequently, we are unable to agree with the contention of the learned counsel for the assessee that the reopening of assessment made by the Assessing Officer was based merely on change of opinion. - Decided against assessee. Deemed dividend under S.2(22)(e) - Held that:- A perusal of the relevant portion of the assessee’s written submissions filed before the learned CIT(A) clearly shows that the business connection between the M/s. Aster P. Ltd. and M/s. Aster Infrastructure P. Ltd. was clearly established by the assessee on the basis of analysis made of the relevant transactions between the said two companies and the nature of business transactions and dealings between the said two companies was also explained by the assessee by pointing out that M/s. Aster P. Ltd. was supplying towers and antennas, which were regularly purchased by M/s. Aster Infrastructure P. Ltd. for the purpose of its business of providing infrastructure services to telecom operators. M/s. Aster P. Ltd. was also providing related services to M/s. Aster Infrastructure P. Ltd. such as installation of towers and antennas, and their operations and maintenance, etc. It was also pointed out by the assessee in the written submissions filed before the learned CIT(A) that the regular fund transfers between the two companies were made with respect to supply of material, towers, shelters, labour, services at various sites etc. All these transactions were duly reflected in the running accounts maintained in the books of account. It appears that the learned CIT(A) however, has not appreciated this explanation in proper perspective and simply brushed aside the same by saying that there was no documentary evidence to support and substantiate it. CIT(A) observation that even if the relevant transactions are in the nature of business transactions, the provisions of S.2(22)(e) are still attracted as rightly contended by assessee, this conclusion drawn by the learned CIT(A) is contrary to the various judicial pronouncements including the judgment of the Hon'ble Delhi High Court cited by him and this position is not disputed by the Learned Departmental Representative. For instance, the Hon'ble Delhi High Court in the case of CIT V/s. Creative Dyeing & Printing Ltd. (2009 (9) TMI 43 - DELHI HIGH COURT) held that the amount advanced to assessee company by another company having common directors not being a loan, but an advance for business transaction which is to be adjusted against the moneys payable by the latter to the assessee in subsequent years, does not fall within the definition of ‘deemed dividend’ under S.2(22)(e). It was held that the amount advanced for business transaction between parties, are not such to fall within the definition of ‘deemed dividend’ under S.2(22)(e). This proposition is reiterated in the case of CIT V/s. Alpex Exports Pvt. Ltd. (2014 (4) TMI 237 - DELHI HIGH COURT) wherein it was held that trade advances which are in the nature of money transacted to give effect to commercial transactions would not fall within the ambit of S.2(22)(e). We are of the view that the relevant transactions between M/s. Aster Infrastructure P. Ltd. and M/s. Aster P. Ltd. being in the nature of business/commercial transactions, are outside the purview of S.2(22)(e) and the addition made by the Assessing Officer and confirmed by the learned CIT(A) on account of ‘deemed dividend’ by treating the said transactions as in the nature of loans and advances is not sustainable. Thus we delete the addition made under S.2(22)(e) - Decided in favour of assessee.

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• 2015 (8) TMI 649
  Addition u/s 68 on account of gift received from NRI relative - Held that:- The assessee is a widow who has received a gift from her late husband's sister, who is an NRI based in Hong Kong. The gift was received on the occasion of her grand daughter's marriage. So far as the transaction of gift is concern, the same is evidenced from the bank statement of the assessee; remittance advice of Dena bank; bank statement of the donor, Smt. Kanakwari Nahata; foreign remittance advice issued by HSBC bank Hong Kong. It has been further brought on record that the money in bank account of the donor had come from M/s Keen Jade Ltd, a family owned concern, wherein the donor was one of the Directors, alongwith her husband and daughter-in-law. From the bank account of M/s Keen Jade Ltd, it is seen that on 5.2.2009 an amount of US$ 100,035. has been debited and has been credited to the bank account of the donor on 5.2.2009, itself. On the same date it has been remitted to the assessee's bank account in India. This fact is evident from the HSBC account of the donor. Thus, the flow of transaction and the financial capacity of the donor stands amply proved. Not only that, the assessee had also filed the Income Tax Return of M/s Keen Jade Ltd., wherein the donor has been shown as a Director of the Company. From all these details and evidence not only the genuineness of the transaction is proved but also the creditworthiness/ financial capacity of the donor. The assessee's primary onus has been discharged. Here, in this case, the donor is a close relative who has given the gift confirmation in a gift deed giving all the particulars of the gift to the assessee. The reasoning given by the ld.CIT(A) is purely based on hypotheses and premises, like the gift always needs to be reciprocal and why would younger sister-inlaw will give gift to elder sister-in-law without any reciprocity. Therefore, the findings of the ld. CIT(A) is reversed and the addition made u/s 68, stands deleted. - Decided in favour of assessee.

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• 2015 (8) TMI 648
  Rejection of book result - estimation of profit at 8% of the gross contract receipts - Held that:- As the assessee has not produced any evidence before the Assessing Officer, therefore Assessing Officer is justified in estimating the profit at 8% and our interference is not required. - Decided against assessee. Disallowance of interest on house property claim u/s. 80C - Held that:- Looking to the facts and circumstances of the case, we find that the assessee has paid interest of ₹ 82,064/-, for which he submitted a bank statement before us. The assessee was claimed interest since so many years. We find that the assessee has paid interest paid to the bank for housing loan and it is supported by bank statement, therefore we allow the same. - Decided in favour of assessee.

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• 2015 (8) TMI 647
  Revision u/s 263 - issue of applicability of claim of deduction under section 80IC not examined by AO - Held that:- The language of Section 80AC is negatively worded in as much as it provides in clear terms that deduction u/s 80IC shall not be allowed if the return of income containing such claim is not furnished by the due date specified in Section 139(1). In the face of such clear language of Section 80AC, there can be no hesitation in holding that the provisions of section 80AC are mandatory in nature and therefore failure to furnish the return of income filed in due date specified in Section 139(1) would disentitle the assessee from the claim of deduction u/s 80IC. It is admitted fact that return of income filed by assessee was late. Therefore, the Assessing Officer should have examined this aspect at the stage of assessment while granting deduction to the assessee. Since the Assessing Officer has not examined this aspect of late return filed by the assessee, therefore, Ld. Commissioner of Income Tax was justified in invoking jurisdiction under section 263 of the Act and was justified in holding that the assessment order is erroneous as wel l as prejudicial to the interest of revenue. The Ld. Commissioner of Income Tax, therefore, rightly directed the Assessing Officer to pass fresh assessment order in accordance with law. The appeal of the Act has no merit and the same is accordingly, dismissed. - Decided against assessee.

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• 2015 (8) TMI 646
  Unexplained investment under section 69 - Held that:- Before us the assessee could not reconcile the difference between purchases as debited in the trading account and purchases as per TCS certificate. Even the assessee could not produce books of account and clearly admitted that the assessee being a trader in Indian made foreign liquor does not maintain books of account. There is clear cut difference in the purchases and unaccounted purchases in both years could not be explained nor accounted for. The CIT (A) has rightly confirmed the addition as the assessee could not explain even now before us or could not reconcile the difference. In term of the above, we confirm the order of the Commissioner of Income-tax (Appeals) in confirming the action of the Assessing Officer in treating the same as undisclosed purchases added under section 69 of the Act. - Decided in favour of revenue.

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• 2015 (8) TMI 645
  Addition on account of capital expenditure - CIT(A) deleted the addition - Held that:- The issue is squarely covered in favour of the assessee by the decision of the Income-tax Appellate Tribunal, Kolkata Bench in the case of group concern of the assessee in the case of Asst. CIT v. Rungta and Sons (P) Ltd. [2014 (1) TMI 1515 - ITAT KOLKATA].The Tribunal had found that the decision of the hon'ble apex court in the case of Bikaner Gypsums Ltd. v. CIT [1990 (10) TMI 2 - SUPREME Court] applied to the case of the assessee and the expenditure cannot be treated as capital expenditure as expenditure paid by the assessee as NPV to enable the assessee to carry on its mining business is revenue in nature, which is allowable as business expenditure under section 37(1) of the Act. - Decided in favour of assessee.

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• 2015 (8) TMI 644
  Disallowance of bad debt - CIT (A) partly confirming disallowance - Held that:- It is an undisputed fact that the matter of recovery of debts from Jitendra and Rekha Gupta was referred to arbitrator. On perusing the arbitration award placed on record, it is seen that as per the consent terms, the award was that Assessee was to be paid ₹ 22,50,000/- in full satisfaction of Assessee’s claim in arbitration no. MCX/Legal/127A/08 and in Reference No. MCX/Legal/126A/08 meaning thereby that Assessee was awarded total amount of ₹ 22,50,000/- as against its claim of ₹ 54,68,105/- and therefore the balance amount of ₹ 32,18,105/- (Rs. 54,68,105 - 22,50,000) in terms of the aforesaid arbitration award was not recoverable and was therefore written off. Before us, no material has been placed on record by Revenue to controvert the findings of ld. A.R nor has demonstrated that the Assessee has received extra than the award amount. In view of the aforesaid facts, we are of the view that the deduction of the amount claimed by the Assessee cannot be disallowed. - Decided in favour of assessee.

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• Customs

• 2015 (8) TMI 697
  Delay in issuance the detention orders – Validity of proceedings under COFEPOSA Act – Petitioner was detained on grounds of possessing 12 gold bars without declaration – All goods were confiscated and detenu was taken into arrest – It was alleged by petitioner that inordinate delay of seven months in issuing detention order was not satisfactorily explained by respondent – Held that:- After considering facts, it was evident that delay in issuing detention order has occurred at every stage – Neither sponsoring authority nor detaining authority were serious enough in issuing detention order expeditiously to prevent detenu in future from indulging into smuggling of goods as well from engaging in transportation and concealing and keeping smuggled goods – As per communication between sponsoring and detaining authority, it proposed that detenu was not found indulged into smuggling / adverse activities – Link between date of incident in question i.e. 11th May, 2014 and detention order dated 16th December, 2014 which came to be executed on 8th January, 2015 was snapped – For said reasons detention order was vitiated on point of delay and therefore, deserves to be quashed and set aside – Decided in favour of Petitioner.

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• 2015 (8) TMI 691
  Condonation of Delay – Admitted that last date to appeal against impugned order was 26th July, 2012 – However appeal came to record of Tribunal on 30th October, 2012 – Whether delay could be condoned – Appellant submitted that his family was facing financial problem as result of which filing of appeal skipped from mind of appellant – Said reason does not appeal to common sense when appellant was aggrieved by impugned order – Appeal dismissed.

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• 2015 (8) TMI 676
  Refund of Deposit – Demurrage, wharffage and stock loss charges – Inclusion in Assessment Value – Vide order dated 20.11.2009, respondent was directed not to include demurrage, wharffage and stock loss charges into assessable value, however, in spite that, second respondent has not finalised assessment of 63 imports already made – Held that:- Respondents have not come forward to offer any explanation for non-implementation of said orders – Petitioner made various representations, to finalise pending assessment, sadly respondent department has not replied positively to finalise assessment to refund deposit with interest – Clear that petitioner was made to fight long battle resulting in physical and mental harassment apart from financial implications –Therefore, exemplary costs imposed upon respondent-department for wasting precious time of Court – Petition allowed – Decided in favour of petitioner.

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• 2015 (8) TMI 675
  Detention orders – Inordinate delay – Petitioner challenges impugned order 2nd respondent directing detenu to be preventively detained with view to prevent him in future from smuggling of goods as well as engaging in transporting and concealing and keeping smuggled goods – Held that:- detention proposal was forwarded to detaining authority on 26th June 2014 and that further generated documents were sent to detaining authority on 14th August 2014 – No explanation in affidavit by sponsoring authority as regards to delay from 26th June 2014 to 14th August 2014, also affidavit was completely silent on effect of ‘further generated documents being forwarded to detaining authority’ – Detaining authority after being subjectively satisfied that there were sufficient reasons to issue detention, finalized same along with grounds of detention on 15th December 2014, about one month apart from earlier delay – There was delay of about 7 months from date of arrest till date of passing of detention order which was not satisfactorily explained – Explanation rendered by respondents was not satisfactory and authorities cannot play with liberty of citizen in such casual manner – As principle of law, unexplained and inordinate delay in passing of detention order would vitiate detention order – Thus, order of detention quashed – Detenu to be released – Decided in favour of petitioner.

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• 2015 (8) TMI 674
  Evasion or Attempted evasion of duty – Bail Application was filed by accused-petitioner in respect of Case filed for offences under Sections 132 and 135 (1) (i) (A) and (B) of Customs Act, 1962 – Whether goods imported on previous occasion without declaration and paying customs duty can be clubbed with present goods which were imported without declaration and without paying customs duty – Held that:- Each petitioner was examined and his statement was recorded by empowered gazetted officer and each of petitioner admitted that on previous several occasions consignments of gold were brought by him into India from place outside India without declaration and without paying customs duty upon them – Words “any goods” used in provision of act includes not only goods which were seized and confiscated by competent authority, but those goods also which escaped from seizure and confiscation – Therefore offence under Section 135 for evasion or attempted evasion of duty must be treated to be continuous offence until customs duty was paid upon goods which were imported without payment – Each of the petitioner should be treated to have attempted evasion of duty not only on present consignment of gold, but also for evasion of duty on import of gold on previous several occasions – As market price of gold imported exceeds one crore of rupees and value of customs duty attempted to be evaded exceeds fifty lakh of rupees, thus offence committed was non-bailable offence and were not entitled to be released on bail – Decided against Applicant.

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• 2015 (8) TMI 673
  Importation of Aerobridges - Claim for refund - Exemption from duty - Vide impugned order reported in [2004 (11) TMI 378 - CESTAT, NEW DELHI] tribunal rejected appeal holding that refund claimed by appellant was not maintainable - Supreme court after hearing counsel for parties, observed that pre-conditions for availing import duty exemption were not fulfilled by appellant - Therefore no error was found in impugned final judgment and order passed by CESTAT - The appeal was accordingly, dismissed.

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• 2015 (8) TMI 672
  Classification of imported fabric - Custom tariff Heading 6001.22 - Tribunal in impugned order reported in [2004 (3) TMI 559 - CESTAT, MUMBAI] held that goods were looped pile fabrics which have been sheared, therefore set aside impugned orders and allowed appeal - Supreme court after hearing counsel for parties observed that Tribunal had rightly classified fabric imported by respondent herein under Chapter Heading 6001.22 - Therefore there were no reason to interfere with impugned order - Appeal accordingly dismissed.

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• 2015 (8) TMI 671
  DEPB - Mis-declaration of value - purchase price was less than the DEPB claim - Confiscation, penalty and fine - Tribunal by impugned order reported in [2004 (6) TMI 232 - CESTAT, NEW DELHI] confirmed penalties and redemption fines upon Assesse - Supreme court after hearing counsel for parties at length and going through records held that authorities rightly determined purchase market value (PMV) at same rate at which assesse had made purchase from market - Since PMV was less than price at which DEPB benefit was to be allowed, there was no need for interference in tribunals order.

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• Corporate Laws

• 2015 (8) TMI 670
  Violation to make disclosures of shareholding–SEBI imposed monetary penalty upon appellants for violating Regulation 8 of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 r/w Regulation 30 of SAST Regulations, 2011 – Held that:- Appellant no. 1 made disclosure after delay of ten days, whereas appellant no. 3 after delay of 38 and 5 days during years 2003 and 2005 and appellant no. 1 after delay of 30 days – Penalty imposed cannot be said to be unreasonable on ground of proportionality as this principle was applicable when penalty imposed was rather disproportionate to gravity of loss caused to investors – Appeal dismissed – Decided against Appellant.

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• Service Tax

• 2015 (8) TMI 695
  Denial of CENVAT Credit - manpower recruitment service and outdoor catering service - Held that:- manpower recruitment agency mentioned in the invoice instead of man power recruitment service, input service cannot be denied on this ground. Accordingly, the impugned order is set aside. As per amended statute with effect from 1.4.2011, outdoor catering service has been excluded from the definition of input service. Appellant is not entitled to take input service credit on outdoor catering service of ₹ 78 ,312 /-. Further, Accumulated show cause notice was issued to the appellant in 2012 by invoking the provision of Rule 2(l) of CCR , 2004 prior to 2011. In these circumstances, provision denying input service credit on outdoor catering service came into existence with effect from 1.4.2011. Therefore, penalty is not imposable on the appellant. - input service credit on outdoor catering service along with interest is denied to the appellant - Decided partly in favour of assessee.

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• 2015 (8) TMI 694
  CENVAT CRedit - Whether the respondent is eligible for cenvat credit of service tax paid on services used exclusively for fulfilling various procedures/ requirements for export of goods - high Court admitted the appeal of Revenue on the question Whether the Hon’ble Tribunal was correct in holding that Credit of Service Tax paid on Customs House Agents Services/Post services is admissible to the manufacturer as “input Service Tax credit”, by overlooking the statutory provision of Rule 2(l) of the Cenvat Credit Rules, 2004? The appeal was filed against the decision of Tribunal [2012 (12) TMI 926 - CESTAT AHMEDABAD]; wherein Tribunal held that there are several decisions of the Tribunal taking a view that in the case of FOB exports, the place of removal is the Port and therefore, credit of service tax paid on CHA Services/ Port services are admissible.

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• 2015 (8) TMI 690
  Waiver of Pre deposit - Broadcasting Service - Assessee contends that the appeal should be heard on merits - Held that:- There can be no rule of universal application in such matters and the order has to be passed keeping in view the factual scenario involved. In the facts of the present case, we find that there has been certain payments made after the issuance of show cause notice as against the demand and the Adjudicating Authority has given certain benefits. After taking note of the plea of no service tax liability, we find that the Original Authority has revised the cum tax value. - there appears to be an element of justification in the assessee's plea that the demand of tax liability has to be considered by the Tribunal on merits - force in the plea of the appellant regarding undue hardship and financial difficulty in pursuing the appeal on payment of the pre-deposit as ordered by the Tribunal. Matter remanded back - Partial stay granted.

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• 2015 (8) TMI 689
  Waiver of pre deposit - whether the appellant should be made to comply with the order of the Tribunal by depositing ₹ 1 crore more or not - Held that:- Tribunal had relied upon its earlier order dated 31.12.2014, to come to the conclusion that the balance of convenience was in favour of the revenue. But, the Tribunal has omitted to see that the earlier order dated 31.12.2014 had actually been set aside by this Court by the order dated 26.02.2015. Once the order is set aside and the matter is remanded, the Tribunal was obliged to look into the issue afresh. It is relevant to note that the earlier order dated 31.12.2014 was passed, in the absence of the counsel for the appellant. Therefore, placing reliance upon the earlier order was erroneous. - order of the Tribunal is set aside - Amount of pre deposit reduced - Decided partly in favour of assessee.

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• 2015 (8) TMI 688
  Denial of CENVAT Credit - Tax paid on travels for transportation of their Staff for pick up and drop from residence to factory - Held that:- Order-in-Original came to be passed demanding a sum of ₹ 1,60,116/- (service tax credit of ₹ 92,901/- + ₹ 64,077/-) Edu. Cess (i.e. 1,857/- + 1281). The monetary limit for filing an appeal having been fixed at ₹ 2 Lakhs, even as per the order of the original authority, the demand of tax, interest and penalty being less than ₹ 2 Lakhs, the appeal is not maintainable. - circular issued by the Board is squarely applicable to the facts of the present case and, therefore, this Court is not inclined to entertain this appeal - Decided against Revenue.

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• 2015 (8) TMI 687
  Denial of refund claim - amount deposited during investigation - Stock Broking service - Valuation - Revenue contending that various charges like Misc. charges, turnover charges, Trade Guarantee Fund (TGF), Investor's Protection Fund (IPF), Stamp duty, Stock Exchange charges, Transaction charges, SEBI fees, Custom Protection Fund (CPF) and Demat charges received by stock brokers shall constitute value of taxable service - Demand of service tax set aside by Tribunal [2012 (6) TMI 364 - CESTAT, New Delhi] - Held that:- Department conducted an investigation against petitioner alleging non-payment of service tax on the various charges. During investigation, it revealed that service tax on various amounts totaling Rs. 2,46,85,713/- was not paid. Tax which was allegedly due was worked out at Rs. 16,18,761/-. Immediately, when this fact was pointed out, petitioner deposited an amount of Rs. 15,00,000/- and information in this regard was also transmitted to respondent/department vide letter dated April 29, 2005 but subsequently, after conclusion of the investigation, show cause notice dated March 29, 2006 was issued, which ultimately culminated into the demand as adjudicated by concerned authority vide original order dated August 23, 2006. It is also an undisputed fact that order-in-original dated August 23, 2006 has since been set aside by learned Tribunal vide order dated May 7, 2012. Mere pendency of appeal preferred by respondent/department challenging the order passed by Tribunal dated May 7, 2012 was itself no ground to delay the refund of amount of Rs. 15,00,000/- deposited by the assessee during the course of investigation. Since the amount has been unauthorizedly and without any legal basis, been withheld, the respondent was bound to pay interest especially, in the circumstances that amount of Rs. 15,00,000/- was utilised by respondent/department - department is directed to pay interest @15% per annum from the date it became due after excluding 3 months time from the date of passing of order i.e. from August 07, 2012 till February 12, 2014. - Decided in favour of assessee.

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• 2015 (8) TMI 686
  Credit Card Services - On and from 01-05-2006 credit card services was deleted from BOFS and incorporated into a distinct service - scope of the ‘Banking and Other Financial Services’ (BOFS) as introduced w.e.f 16-07-2001 - Held that:- introduction of a comprehensive definition of “credit card, debit card, charge card or other payment service” in Section 65(33a) read with Section 65(105) (zzzw), by the Finance Act, 2006 is a substantive legislative exertion which enacts levy on the several transactions enumerated in sub-clauses (i) to (vii) specified in the definition set out in Section 65(33a); and all these transactions are neither impliedly covered nor inherently subsumed within the purview of credit card services defined in Section 65(10) or (12) as part of the BOFS; Whether the levy is retrospective - Held that:- Section 65(33a) is neither intended nor expressed to have a retroactive reach i.e. w.e.f. 16.07.2001. Services enumerated in these sub-clauses are not implicit in the scope of credit card services; Scope of the term Customer - merchants/merchant establishments’ (ME) - Held that:- Held that:- a Merchant/ Merchant Establishment is “a customer” in the context of credit card services enumerated in Section 65(72)(zm), subsequently Section 65(105)(zm) and a fortiori an acquiring bank is “a customer” of an issuing bank. Scope of the term “in relation to” - Merchant Establishment Discount - Held that:- ME discount, by whatever name called, representing amounts retained by an acquiring bank from out of amounts recovered by such bank for settlement of payments to the ME does not amount to consideration received “in relation to” credit card services.

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• 2015 (8) TMI 685
  Denial of refund claim - Export of services - Unutilized CENVAT Credit - whether the service provided from India were used outside India - Held that:- As the reports have been exported and the same have been utilized outside India, and remuneration for the services have been received in convertible foreign exchange, the appellant satisfied both the conditions under Rule 3(2) (a) & 9b) of the Export of Service Rules, 2005. Accordingly, it is export of service. It is immaterial how the foreign client utilizes the reports prepared by the appellant. Whether the appellant have received remittance in convertible foreign exchange - Held that:- Appellant's Bank at Mumbai have rightly received the money in Indian rupees as RBI permits payment in rupee from the account of a Bank situated in any foreign country other than a member country of Asian Clearing Union. Thus, the foreign remittance is in order. - Modus operandi of the Bank is, if a Bank received foreign currency abroad from the buyer of service and thereafter Bank converted it in INR and diverted the said INR to their branch in India. The whole mode of payment is as per the RBI guidelines, the learned Commissioner (Appeals) is in error in concluding that the remittance had not been received in foreign exchange under the Export of Service Rules. - appellant has received the remittance in convertible foreign exchange. Disallowance of input service of life insurance premium and Rent-a-cab services - cost incurred with respect to car hire rental and insurance premium paid for the staff, form part of the cost for which bills have been raised in the quarter and remittance have been received by the appellant assessee, for providing the output service, I hold that these two services in question are eligible input service. Whether refund can be claimed on the basis of services provided during the refund period but the invoices for the same has been raised in the subsequent quarter - In respect of the refund claimed for the period November, 2011 to March, 2012, the refund claim filed on 30.10.2012 based on the invoices dated 9.1.2012, 14.6.2012 and 31.8.2012. The period of refund was up to March, 2012 and therefore, the invoices raised at later date cannot be considered and accordingly, the learned Commissioner (Appeals) held that the adjudicating authority has correctly rejected the refund claim on this account. - Decided partly in favour of assessee.

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• Central Excise

• 2015 (8) TMI 696
  Power of Tribunal to extend stay beyond the period of 365 days - Application of Maruti Suzuki (India) Ltd. [2014 (2) TMI 1037 - DELHI HIGH COURT] delivered in case of Income tax on Section 35C(2A) of Central Excise - Held that:- legislature had by Finance Act, 2008 inserted the words 'even if the delay in disposing of the appeal is not attributable to the assessee' in the third proviso to Section 254 (2A) of the IT Act, but no such amendment or substitution was made in Section 35C (2A) of the CE Act. The ratio and decision in the case of Maruti Suzuki (India) Ltd., therefore, would not be applicable to CEGAT while dealing with an application for stay or their power and jurisdiction to grant stay beyond 365 days, when the assessee is not responsible, under Section 35C (2A) of the CE Act. Powers of the tribunal u/s 254 (2A) of the IT Act and Powers of the tribunal u/s 35C (2A) of the CE Act regarding extension of stay order are not at par. - Moreover the issue of constitutional validity of Section 254(2A) was not considered in Maruti Suzuki (India) Ltd. [2014 (2) TMI 1037 - DELHI HIGH COURT] - This court has struck down the provisions of Section 254(2A) on ground of constitutional validity in the case of PEPSI FOODS PVT. LTD [2015 (5) TMI 655 - DELHI HIGH COURT]. - Means thereby, the tribunal has power to grant extension of stay order. Therefore, we are unable to agree with the reasoning of the Division Bench of this Court in Haldiram India Pvt. Ltd. [2015 (7) TMI 720 - DELHI HIGH COURT] observing that the ratio of the aforesaid decision in Maruti Suzuki (India) Ltd. would apply even to Section 35C(2A) of the CE Act. The decision of the Division Bench in Haldiram India Pvt. Ltd. is hereby overruled. - Decided in favour of assessee.

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• 2015 (8) TMI 682
  Waiver of pre deposit - delayed payment of duty - restriction on utlization of CENVAT Credit - Held that:- Gujarat High Court in the case of Indsur Global Ltd. vs. Union of India, reported in [2014 (12) TMI 585 - GUJARAT HIGH COURT] wherein the Gujarat High Court declared as unconstitutional the condition contained in sub-rule (3A) of Rule 8 for payment of duty without utilizing the CENVAT credit till an assessee pays the outstanding amount including interest. It is also submitted that following the said decision of the Gujarat High Court, this Court has also allowed the writ petitions filed to declare Rule 8 (3A) of Central Excise Rules, 2002 as oppressive, unreasonable and ultra vires Articles 14 and 19 of the Constitution of India, vide its order [2015 (5) TMI 603 - MADRAS HIGH COURT] - assessee has made out a case for waiver of pre-deposit - Decided in favour of assessee.

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• 2015 (8) TMI 681
  Power of settlement commission - whether the Settlement Commission is within its powers to impose penalty on each of the Directors in addition to the imposition of penalty upon the Company - Held that:- The conjoint reading of the different provisions contained in Chapter V of the said Act leaves no doubt that the Settlement Commission can not only impose the penalty and fine in exercise of powers as Central Excise Officers but bestowed with further powers to grant immunity against the same either wholly or in part. - Since the petitioner has already furnished the Bank Guarantee for the differential amount of the duty as assessed by the Settlement Commission, the Department is at liberty to invoke the Bank Guarantee and if any shortfall is still there, the petitioner shall deposit the same within four weeks from date. In addition to the same, the petitioner shall also deposit the penalties so imposed together with the interest to be calculated in terms of the impugned order within the aforesaid period. - Decided against assessee.

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• 2015 (8) TMI 680
  Composite issuance of SCN to two parties - Supreme Court dismissed the appeal filed by the assessee against the decision of Delhi High court [2015 (2) TMI 609 - DELHI HIGH COURT], wherein High Court held that show cause notice was issued in a composite manner to both the parties. However, in our opinion, that ipso facto did not vitiate the proceedings. If at the stage of determination of liability or at the final stage, it was open to the Commissioner to ascribe one figure or the other, to each of the parties, that course ought to have been adopted. To that extent, the submission of the assessee/respondent that no rule or principle authorizes the apportionment of liability based upon the past figures is justified.

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• 2015 (8) TMI 679
  Valuation of goods - Undervaluation - Whether the Commissioner was justified in holding that the Department has failed to prove under-valuation at the instance of the assessees as alleged in the show cause notices - Supreme Court dismissed the appeal filed by the Revenue holding that subject matter stands covered against the appellant/Department in the case of Commissioner of Central Excise, Vapi v. Synfab Sales reported in [2015 (6) TMI 777 - SUPREME COURT] and the judgment in Synfab Sales has been followed by this Bench in [2015 (8) TMI 643 - SUPREME COURT].

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• 2015 (8) TMI 678
  Classification of goods - whether "AA Nozzles" made of ceramic nozzles manufactured by M/s. IVP Ltd. are classifiable under Heading No. 69.01 of the Schedule to the Central Excise Tariff Act or under Heading 85.15 of the Central Excise Tariff - Supreme Court dismissed the appeal due to low tax effect. The appeal was filed by the assessee against the decision of Tribunal [2004 (9) TMI 135 - CESTAT, NEW DELHI]; wherein Tribunal held that ceramics nozzles are classifiable under Heading 69.01.

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• 2015 (8) TMI 677
  Determination of Annual Production Capacity under Section 3A(4) of the Central Excise Act - Held that:- authorities below had rejected the invoices produced by the appellant/petitioner on the ground that they were not the invoices of the manufacturers. In these circumstances, the methodology adopted by the Commissioner in going into the actual parameters/measurements of the furnaces in order to ascertain their capacity cannot be termed as faulty - Decided against assessee.

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• CST, VAT & Sales Tax

• 2015 (8) TMI 684
  Submission of Statutory Declaration forms – Uploading declaration in electronic format – Assesse aggrieved by assessment order passed by competent authority on ground that they have not submitted part of declaration forms as required under law therefore, impugned order proposed to demand differential tax – Whether there was failure on part of Petitioners to submit statutory declaration forms and had violated provision of law – Held that:- Sections 6A and 8(4) of Central Sales Tax Act, 1956 provides that assessee should furnish declaration within prescribed time – There was no provision under Puducherry Value Added Tax Rules to submit declaration forms in electronic mode as has been suggested by Department – Impugned orders was passed on misconception of provisions – When there no specific indication in CST Act or PVAT Rules to provide declaration forms in electronic form – Assesse could not be asked to upload declaration forms online in absence of facility for such purpose – Since it was not in dispute that each of assesse have already submitted their original declaration forms before Assessing Authority, he was bound to take same for completing assessment without insisting on uploading declaration forms in electronic format – Petitions allowed and impugned orders set aside – Decided in favour of Assesse.

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• 2015 (8) TMI 683
  Rectification of Mistake – AO granted the exemption from sales tax wrongly beyond the prescribed limit - Applicant was granted exemption from tax under entry-3 of notification no. 7037 by AO in respect of turnover of blacksmithy itemsfor assessment year 2003-04 and 2004-05 – However, for assessment year 2005-06 ex parte assessment order was passed whereby tax at 10% was imposed on items manufactured by applicant – Whether Tribunal was correct to hold that rectification application was not maintainable as there was no mistake apparent on face of record – Held that:- It was not completely deniable by respondents that as per documents available on record turnover of blacksmithy items was exempted up to specified limit – Assessing officer was bound to grant benefit of exemption if it was available in accordance with law to assessee, so as to determine his liability of tax – Tribunal and authorities have committed manifest error of law to hold that mistake as sought to be rectified by applicant, was not mistake apparent on record – In order to attract section 22, mistake must exist and same must be apparent from record – Power to rectify mistake, however, does not cover cases where revision or review of order was intended – Revision hereby allowed – Decided in favour of Assesse.

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