TMI Tax Updates - e-Newsletter
August 29, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
TMI SMS
Highlights / Catch Notes
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Income Tax:
Tribunal was right in confirming the set-off of MAT Credit under Section 115JAA brought forward from earlier years against tax on total income including surcharge and education cess instead of adjusting the same from tax on total income before charging such surcharge and education cess - HC
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Income Tax:
Waiver or reduction of interest - Application u/s 220(2A) - It has also to be verified whether the default in payment of the amount was due to the circumstances beyond the control of the assessee and the assessee has cooperated with the enquiry. - CIT to reconsider the matter - HC
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Income Tax:
TDS liability - period of limitation - It is true that the Court cannot legislate the Act, however, the Assessing Officer also cannot be given unfettered powers, which he can exercise even beyond the reasonable period of four years. - HC
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Income Tax:
Mere non filing of return of income does not give jurisdiction to the Assessing Officer to re-open the assessment unless the person concerned has total income which is assessable under the Act exceeding maximum amount which is not chargeable to Income Tax. - HC
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Income Tax:
Depreciation (while claiming deduction u/s.80IA) is optional to the assessee and that once the assessee chooses not to claim it, the AO cannot allow while computing the income. - HC
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Income Tax:
TCS - scrap generated from the mechanical working of the material (breaking of the ship) - The assessee is duty bound to collect the TCS from the buyers in terms of Section 206C of the Act.- AT
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Income Tax:
Taxability of capital gains - even though the assessee is shown as the co-owner of the said property, the source of funds for investment in purchase of the said property is by the assessee’s husband - taxable in the hands of husband not the assessee - AT
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Customs:
Validity of statutory provisions - Imposition of penalty on company and directors - he legislature while in view of such situation has granted discretion to the executive, at the same time, provided for sufficient guidelines and safeguards so that such discretion does not convert into arbitrary or discretionary exercise of powers - HC
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Corporate Law:
Violation of Clause 49 of the Listing Agreement - whole Time Director chaired the Audit Committee Meeting - levy of penalty of ₹ 5 lac cannot be said to unreasonable or excessive - SAT
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Service Tax:
Cenvat Credit - refund - export of services - The registration is not the sole criteria for granting refund, so long the other conditions are satisfied, refund shall be granted - AT
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Service Tax:
CENVAT credit – demo cars – capital goods – input – nothing is demonstrated today that a demo car falls in any of the Chapters dealing with capital goods - credit cannot be allowed - AT
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Central Excise:
Period of limitation - in case duty was required to be paid on the strips, the appellant was entitled to avail credit of duty paid on the granules, which would have neutralized the entire demand on the strips - in this Revenue neutrally background, there could be no malafide on the part of the appellant to evade duty - AT
Articles
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2016 (8) TMI 967
Set-off of MAT Credit under Section 115JAA brought forward from earlier years against tax on total income including surcharge and education cess instead of adjusting the same from tax on total income before charging such surcharge and education cess - Held that:- In determining the liability of the assessee the first step has to be determination of tax payable. The Income Tax Act contemplates self-assessment by the assessee and quarterly payment of tax in advance and the rest with the filing of the return. Interest can be realised only for the amount in default. Interest cannot be charged for an amount which has already been paid or for which the assessee is entitled to a credit. Before any question of realising interest may arise the amount of liability on account of income tax has to be ascertained. In ascertaining the liability, necessarily the amounts of surcharge and cess have to be taken into account. Once that is done the amount of tax payable has been ascertained. Then the question arises for giving credit for the amount of tax already paid in advance or credit which is statutorily available to the assessee. Only thereafter the question of any addition on account of interest might arise. This was explained by Their Lordships. It is not correct to say that the judgement in the case Tulsyan Nec Ltd. [2010 (12) TMI 23 - Supreme Court of India] has no application to the facts and circumstances of this case. Our attention was not drawn nor was it contended that the corrected form is contrary to law. Both the forms, viz. the one which was prevalent at the relevant period of time and which was corrected for the assessment year 2012-13, could not be the correct forms. If the form of 2012-13 was correct, then the form of 2008-09 was wrong, and naturally contrary to law. Decided against the assessee.
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2016 (8) TMI 966
Waiver or reduction of interest - Application under Section 220(2A) rejected - non fulfillment of all the conditions laid down in Section 220 (2A) - Held that:- When the statutory authority has been given the discretion to consider whether any of the conditions specified under Section 220 (2A) has been complied with, it is for the said authority to take into consideration all the necessary materials which had been placed before it in the form of a representation as well as documents and either to allow the same or to reject the same. On the basis of the facts made available, it has to be verified whether the imposition of interest causes genuine hardship to the assessee. It has also to be verified whether the default in payment of the amount was due to the circumstances beyond the control of the assessee and the assessee has cooperated with the enquiry. In Ext.P6, the Commissioner has observed that the petitioner had not complied with any of those conditions but apparently no reasons have been stated. As rightly contended by the learned counsel on behalf of the petitioner, the Hon'ble Supreme Court in B.M.Malani vs. Commissioner of Income Tax and Another [2008 (10) TMI 2 - SUPREME COURT] had clearly indicated that when an application is considered under Section 220(2A) it has to be considered in a judicious manner. The Commissioner in Ext.P6 stated that there is a threat by the assessee and waiver of interest cannot be done by threat. Thus we do not think that the said reason alone would justify denial of the benefit of waiver or reduction of interest. The denial of reduction or waiver of interest has to be considered in the light of the statutory provisions as enumerated in Section 220(2A). Under such circumstances, it is of the view that the matter requires reconsideration by the Commissioner. Ext.P6 is set aside. The first respondent shall reconsider the matter and pass appropriate orders on Ext.P5 within a period of two months from the date of receipt of a copy of this judgment and in the light of the law relied on by the Apex Court as referred above.
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2016 (8) TMI 965
Allowance of non-business expenditure - Whether Learned Tribunal was justified in law to allow the non-business expenditure claimed to have been given to a third party on oral understanding only? - Held that:- The question suggested by the revenue has been indicated above. From the question it appears that the payment was made to a stranger, whereas from the findings recorded both by the CIT(A) and the learned Tribunal it appears that the payment was made to a del credere agent of the assessee for the services rendered by him. Mr.Sinha is unable to improve the situation. He, as a matter of fact, did not advance any submission in support of the question suggested. We, as such, are of the opinion that there is no merit in the appeal. We, therefore, refuse to admit the same. The appeal is, therefore, dismissed.
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2016 (8) TMI 964
TDS liability - limitation as prescribed as in Section 201 - Held that:- It is true that it is the duty of the assessee to deduct TDS and the question is whether it is likely to cause any loss to the revenue if it is not deducted in time. If TDS is not deducted, it is required to be paid in the first installment of advance tax, which is required to be paid within four months from the date of filing of return. Therefore, even if the contention of Mr.Bhatt is accepted, loss that may be caused to the revenue is only to the tune of interest of four months on delayed payment of tax. Not only that when the declaration about this is made in the return, it comes within the knowledge of the Assessing Officer even if the TDS is not deducted. Therefore, we are of the view that the period of four years is reasonable period and we concur with the view taken by the Delhi High Court in the case of M/s. NHK Japan Broadcasting Corpn. (2008 (4) TMI 182 - DELHI HIGH COURT ) It is true that the Court cannot legislate the Act, however, the Assessing Officer also cannot be given unfettered powers, which he can exercise even beyond the reasonable period of four years. Therefore, in our view, period of four years is just and proper and the Tribunal has not committed any error while passing the impugned order. Therefore, all these appeals are dismissed. The questions posed for our consideration are answered in favour of the assessee and against the revenue.
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2016 (8) TMI 963
Allowance of Broken Period Expenses - Held that:- It is an agreed position between parties that the decision of this Court in American Express International Banking Corporation vs. C.I.T. [2002 (9) TMI 96 - BOMBAY High Court ]covers the issue raised herein. Tribunal was right in law in allowing the Broken Period Expenses. Expenditure incurred for payment to Educational Institutions for reservation of seats to its officers - whether an allowable expenditure u/s. 37(1) - Held that:- We find that the issue raised herein is identical to the one which was subject matter of consideration by this Court in Mahindra and Mahindra Ltd vs. CIT [2003 (1) TMI 71 - BOMBAY High Court ] wherein payments were made to a schools where the children of its employees studied. This payment was allowed as being incurred predominantly for staff welfare and consequently expenditure incurred in running of the business. Therefore allowable as business expenditure Accrual of income - whether the Tribunal was right in law in accepting the plea of the assessee that the interest income on the securities has to be taxed on the due basis only, instead of accrual basis as per the mercantile system of accounting followed by the assessee? - Held that:- As agreed position between parties that the issue arising here in stand concluded against revenue and in favour of the respondent assessee by the decision of this Court in Director of Income Tax (International Taxation) vs. Credit Suisse First Boston (Cyprus) Ltd [2012 (8) TMI 17 - BOMBAY HIGH COURT ] Allowance of loss on revaluation of permanent category investments - Held that:- The issue raised herein stands concluded against revenue and in favour of the respondent assessee by the order of this Court in CIT vs. Union Bank of India [2016 (2) TMI 606 - BOMBAY HIGH COURT]
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2016 (8) TMI 962
Addition on account of unexplained cash - Held that:- As asserted by the learned counsel for the Revenue that the Department has disputed the books of accounts of the Assessee, the passage from the impugned order of the ITAT states to the contrary. There is not a single line in the memorandum of appeal before this Court to that effect. Learned counsel for the Revenue referred to the decision in Anantharam Veerasinghaiah & Co. v. Commissioner of Income Tax, AP (1980 (4) TMI 2 - SUPREME Court ) which spoke of the inference to be drawn when an intangible addition is to be made to the book profits, on the basis that the amount represented by that addition constitutes the undisclosed income. The facts of the present case are not comparable in any manner to the facts of the above case. Here the explanation offered by the Assessee through the cash flow statement, which has found favour with the ITAT has not been doubted by the Revenue. - Decided against revenue
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2016 (8) TMI 961
Penalty levied under section 271(1)(c) - defective notice - Held that:- We find that the issue of validity of the notice wherein the AO has not struck off the irrelevant portion of the notice u/s 274 because of which the reason for levy of penalty is not evident, is covered by the judgment of the jurisdictional High Court in the case of M/s. Manjunatha Cotton and Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT ] wherein held that the Assessing Officer proposes to invoke the first limb being concealment, then the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income. The standard proforma without striking of the relevant clauses will lead to an inference as to non-application of mind. - Decided in favour of assessee
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2016 (8) TMI 960
Assessment for the block period - ITAT held that the assessment for the block period was barred by limitation on the ground that initial notice, wrongly issued under Section 158BC was a valid notice - Held that:- In the present case, the first Notice u/s.158BC of the Act was issued to the assessee on 17.10.1996, which was served upon the assessee on 04.11.1996. Therefore, assessment could have been framed latest by 30.11.1997. However, on 29.08.1997, the Assessing Officer withdrew the Notice issued u/s.158BC of the Act and issued a fresh Notice u/s.158BD of the Act on 29.08.1997. On 17.10.1996 the Notice issued u/s.158BC of the Act was a valid notice. However, the proceedings initiated on the basis of this Notice stood concluded on 29.08.1997, when the A.O. informed the assessee of having withdrawn the Notice u/s.158BC of the Act, meaning thereby, that the proceedings initiated on 17.10.1996 was valid for all intent and purposes but, stood concluded on 29.08.1997. Therefore, there was no question of reviving those proceedings by way of issuing a fresh Notice under any other Section of the Act. On this count also, there could not have been any assessment on 01.12.1997. Thus, the Revenue’s claim that Notice u/s.158BD of the Act issued on 29.08.1997 was a valid Notice and that the consequential assessment framed on 24.12.1997 was within limitation cannot be accepted and is void ab initio being barred by time. Thus, the action of the A.O. of withdrawing the Notice u/s.158BC and issuing fresh Notice u/s.158BD of the Act is illegal and bad in law. There is no provision in the Act for initiating reassessment proceedings for block period, either u/s.147 or 158BC or 158BD of the Act. Therefore, both the actions of the Assessing Officer are illegal and bad in law. Tribunal was completely justified in holding that the block assessment passed u/s.158BD r/w. Section 158BC was barred by time and therefore, void ab initio. Thus, we answer the question in the affirmative, i.e. in favour of the assessee and against the Revenue.
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2016 (8) TMI 959
Reopening of assessment - reasons to believe - Held that:- Mere non filing of return of income does not give jurisdiction to the Assessing Officer to re-open the assessment unless the person concerned has total income which is assessable under the Act exceeding maximum amount which is not chargeable to Income Tax. This is provided in Explanation 2 to Section 147 of the Act. This is for the reason that in terms of Section 139(1) of the Act the obligation to file a return of income is only when the total income of a person exceeds the maximum amount not chargeable to tax. So also the obligation to obtain PAN only arises on the income being in excess of the maximum amount not chargeable to tax. Therefore, non filing of return of income and/or not obtaining of PAN does not ipso facto give jurisdiction to reopen an assessment under Section 147/148 of the Act. Prima facie the jurisdiction even in case of non filing of return of income to issue notice of re-opening notice is a reasonable belief of the Assessing Officer that income chargeable to tax has escaped assessment. The condition precedent for issuance of notice under Section 147/148 of the Act is no different in cases where no return of income has been filed. If clause (a) of explanation 2 to Section 147 of the Act is to be applied then it must be established that the income of the person to whom the notice is issued is in excess of the maximum amount not chargeable to tax. This could have been done by collecting information under Section 133B of the Act. In this case the reasons in support do not indicate any reasonable belief that income chargeable to tax has escaped assessment nor does it hold that income of the petitioner is in excess of the maximum amount chargeable to tax. It proceeds on basis that all receipts is income. The re-opening notice has to be tested by the terms recorded for issuing the notice and the order disposing of the objection cannot be the basis for sustaining the impugned notice. No prejudice to the Assessee, as contended by the Revenue, cannot be the basis for acquiring jurisdiction to issue a re-opening notice. - Decided in favour of assessee
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2016 (8) TMI 958
Transaction of shares - business income or capital gain - Held that:- Both the CIT (A) and the ITAT have concurrently concluded on facts that the Assessee has in its books of account been treating separately the shares held as investment and those held as stock-in-trade. The ITAT noted that merely because the Assessee was engaged in trading of stocks, derivatives and features, it did not mean that the Assessee was "precluded from maintaining investment portfolio."The ITAT referred to CBDT Circular No. 4 of 2007 which recognised that an Assessee having two portfolios "may have income under both heads i.e. capital gains as well as business income." The ITAT further referred the decisions of the High Court and the Supreme Court and examined whether the scrips were bought from the borrowed funds, the period for which the shares were held and the frequency of the trading etc. The specific finding of the ITAT is that where the Assessee "from the beginning held the shares under investment portfolio the same is treated as investments in the books of account and where the shares are held for trading purposes the profit arising there on is offered to taxed under the business head." Having heard the submissions of Mr. Manchanda, the Court is not persuaded to re-examine the above concurrent finding on facts by both the CIT (A) and the ITAT. No case has been made out by the Revenue that the above factual findings are perverse warranting interference by the Court. As regards the Explanation to Section 73 of the Act is concerned, apart from the fact that this point does not appear to have been urged by the Revenue before the ITAT and, therefore, not dealt with by it, the Court is not satisfied that the said provision has any application in the facts of the present case. - Decided against revenue
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2016 (8) TMI 957
Addition of unexplained cash credit u/s. 68 - Held that:- The materials on record would suggest that admittedly, the assessee had maintained two bank accounts, not disclosed to the Revenue authorities. In such bank accounts, multiple cash deposits were made by the assessee from different places. The assessee initially explained that such deposits were made by his friends and he, in turn, would withdraw the amounts at Ankleshwar and handover the cash to the friends for a small commission. He, however, refused to supply details of such friends. Before the Tribunal, however, the assessee adopted the entirely novel theory of being engaged in the business of chemical and the deposits being part of his business transaction. First and foremost, this theory of the assessee's of the amounts belonging to his friends would be incongruent. If these amounts were established to be belonging to the friends of the assessee, for whom, he merely deposits the sums and withdraw at their requests for a small commission, the question of applicability of peak credit would not arise. When the assessee failed in his first attempt, he came up with the novel theory of the amounts being for the purpose of his chemical business. This theory probably was pressed in service to enable the assessee to seek the benefit of principle of peak credit. Before the Revenue authorities, this contention was not even raised. No material was produced regarding the same. Considering such circumstances, we do not find any error in the view of the Tribunal. The decision in case of Income Tax Officer, Ward 9(2), Surat vs. Shri Indrajeet Zandusing Tomar [2015 (2) TMI 1174 - ITAT AHMEDABAD ] was rendered by the Tribunal when it was found that the deposits and withdrawals were made in course of his business which the assessee run as a proprietary concern by the name “Rakesh Fashion”. - Decided against assessee
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2016 (8) TMI 956
TDS liability on Co-operative Bank to deduct tax on the interest paid to its members - Held that:- Circular No.9 dated: 11.09.2002, the CBDT has very clearly laid down that co-operative societies carrying on banking business when it pays interest on deposits by its members need not deduct tax at source in view of the provisions of Sec.194A(3)(v) of the Act. Tribunal was correct in holding that Co-operative Bank are not liable to deduct tax on the interest paid to its members on the ground that they are exempt u/s 194A(3)(v) of the IT Act, 1961 - Decided against revenue
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2016 (8) TMI 955
Admissibility of depreciation - claiming deduction u/s.80IA - whether Tribunal was right in law in holding that depreciation though allowable but not claimed in the return for normal computation of income has to be allowed while computing the deductions under Chapter VI A of an industrial undertaking? - Held that:- The controversy raised in these appeals stands settled by a Division Bench judgment of this Court in the case of Sakun Polymers Ltd. v. Joint Commissioner of Incometax [2015 (1) TMI 484 - GUJARAT HIGH COURT ] wherein it has been held that depreciation is optional to the assessee and that once the assessee chooses not to claim it, the Assessing Officer cannot allow while computing the income. Revenue could not controvert the aforesaid submission nor could he point out any distinguishing feature which may warrant a different view - Decided in favour of assessee
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2016 (8) TMI 954
Sale proceeds from sale of flats - capital gain or business income - Held that:- Tribunal after considering the respective case of the assessee has found that the income derived by the assessee from the flat was treated as income from house property. Further the land of the property was retained for the last 15 years. The property was retained, developed by construction of flat and the interest for the loan taken has also been capitalized and not debited as the revenue expenditure. The Tribunal on facts has found that the intention was to earn income from house property and the expenses so incurred for construction, interest of the loan etc., are capitalized and the property at the land, at no point of time was treated as stock-in-trade. Under these circumstances, the Tribunal found that it was not the business income nor it can be said that the assessee had undertaken an organized activity for construction and it can be termed as the capital gain and not the business income. In our view, as such on appreciation of the evidence and material on record, the Tribunal has arrived at a finding on fact that it was a capital gain and not the business income. No substantial question of law - Decided against revenue
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2016 (8) TMI 953
Rectification of mistake - addition u/s.115JB - whether the rectification order was barred by time and was void ab initio? -Held that:- While completing the original assessment, the AO had determined book profit of the assessee at ₹ 40.89 crores, that the assessee had preferred an appeal before the FAA against the order of the AO passed u/s.143 (3) of the Act,that in the appeal it had not agitated the issue of 115 JB of the Act,that it had challenged the additions made by the AO under the normal provisions, that the matter had travelled up to the Tribunal, that neither in the order of the FAA nor in the order of the Tribunal the issue of completion of book profit was deliberated upon. In the circumstances the order passed by the AO on 28/11/2008 could be rectified up to 31/03/2013. The AO had passed the rectification order in the month of January, 2014. Clearly, the order of the AO was barred by limitation. The issue stands decided in favour of the assessee as held by the Hon'ble Supreme Court in case of Vijaya Bank (2010 (4) TMI 46 - SUPREME COURT ). Hence,in our opinion, the order of the FAA does not suffer from any legal infirmity. Confirming his order, we decide the effective ground of appeal against the AO.
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2016 (8) TMI 952
Application of section 206C applicable on traders of scrap - scrap generated from the mechanical working of the material (breaking of the ship) - Held that:- The only condition of the scrap is that the scrap should be waste and scrap from the manufacturing or mechanical working of material, which is definitely not usable as such on account of breakage, cutting up, wear and other reasons. In our opinion, the provisions of Section 206C of the Act are applicable to the present case as the assessee is a trader and dealing in the scrap generated from the mechanical working of the material (breaking of the ship). Further it is not necessary that such mechanical working (breaking of the ship) should be carried out by the assessee himself. The assessee is, therefore, liable to deduct tax at source U/s 206C of the Act on the sale of scrap. In fact, the admission of the assessee is the best evidence to admit the liability. The assessee himself has admitted that the assessee is dealing in the scrap generated from the breaking of the ship and had purchased the scarp. The contention of the ld AR that since the iron scrap like steel, ingots, iron etc. is being used by the industries without any change, is not correct as the nature of goods shall remain same, therefore, it comes under the definition of the scrap. In our view, the material sold by the assessee cannot be used as such without any modification by the buyer of the said scrap. As the said material/goods come from the breaking of the ship, these goods were sold to the manufacturer/rerolling mills, as scrap therefore, the goods (scrap) sold by the assessee were not usable as such and therefore, the assessee was required to deduct TCS from the buyer. In view thereof, the ground No. 1 of the assessee’s appeal is decided against the assessee. Calculation of the TCS U/s 206 - Held that:- The consequences of failure to file the declaration in the requisite format as mentioned in the Rules should be provided by the IT Act and not by the Rules. The Rules, in our opinion, cannot extend or restrict the provisions of the Parent Act. The Rules are framed by the Legislature by exercising its power under the Act and therefore, if any penalty provision by way of the exclusion of declaration benefit and submission of the declaration belatedly should be provided by the Act and the rules. The provision of sub-Section (1A) of section 206C, in our view, do not provide the consequences of the delayed filing of the declaration. Though, it provides that it is to be filed on or before the 7th day of the next following month in which declaration is furnished to him. Therefore, though there is delay in issuing the declaration by the buyer, the assessee cannot be penalized or deprived from the benefit of the declaration given by the buyer. The only duty cast upon the seller to submit declaration in the following month in which the declaration received. No time limit has been provided by the statute on the buyer to submit the declaration in Form 27. In view thereof, the ground is required to be allowed. In the light of above, we deem it appropriate to remand the matter back to the file of the Assessing Officer with direction to verify whether the declaration has been filed by the assessee in the requisite form and what will the effect of filing of this declaration on the calculation of the TCS U/s 206 of the Act. It is, however, again clarified that the delay in filing the declaration shall not be a ground to the Assessing Officer to deny the benefit of the declaration to the assessee. In view thereof, the ground No. 2 of the appeal is allowed for the statistical purposes only. Charging interest u/s 206C(7) - Held that:- The assessee is duty bound to collect the TCS from the buyers in terms of Section 206C of the Act. However, the collection of TCS and deposit of the TCS is only exempted in respect of the cases where the declaration is being filed by the assessee in view of sub-section (1A) of Section 206C of the Act. In view thereof, the revenue is only entitled to the recovery of the interest on the unpaid tax amount/deposit/short tax deposited by the buyer. If the taxes deposited by the buyer is fair and more than the tax required to be deducted by the assessee then in that eventuality, no interest is payable. However, if the tax deposited by the buyer was found to be less than the amount to be deposited by the assessee then the assessee is liable to pay the interest up to the month in which the returns were been filed by such buyers. Since the declaration is required to be submitted in terms of Rule 37 read with Form 27, therefore, if the tax is not deposited up to the date when the TCS was required to be deducted then the assessee is liable to pay the interest, for example if the TCS is required to be deducted and paid and the due date as per rule 37 was 30th July of the year 2008 and the advance tax was deposited on 01/2/2009, then the assessee is liable to pay interest for the period 01/8/2008 up to the date of deposit of the advance tax. In the light of the above observation, this issue is also remanded back to the file of the Assessing Officer with direction to (i) to verify as to the date when the TCS was due by the seller/assessee, (ii) the date on which the advance tax was paid/deposited by the buyer, (iii) in case the advance tax is deposited prior to the due date of TCS, then no interest shall be charged. However, if the advance paid after the due date then the interest shall be charged for the intermediary period. The ld Assessing Officer is directed to verify all these facts in respect of both the assessment years. In view thereof, this ground of the appeal is also allowed for statistical purposes only.
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2016 (8) TMI 951
Short term capital gain - addition on account of assessing 50% of the STCG on sale of the said property in the assessee’s hands - Held that:- AO after reopening the assessee’s case for A.Y. 2005-06 for the purpose of examining, inter alia, the investment in the said property, has in the order of assessment dated 30.11.2012 not disputed the fact that the assessee has not purchased the said property, but rather that the same was purchased by the assessee’s husband, Shri Arjun Bulchandani, out of his own funds. Revenue has also not been able to controvert the factual finding rendered by the learned CIT(A), after examining documents and copies of bank statements, etc. placed before him, that even though the assessee is shown as the co-owner of the said property, the source of funds for investment in purchase of the said property is by the assessee’s husband and that the property was reflected in his Balance Sheet from the period relevant to A.Y. 2005-06 (i.e. 31.03.2005) till its sale, after which the STCG arising thereon was admittedly disclosed by the assessee’s husband in his return of income. In this factual matrix of the case, we concur with the finding rendered by the learned CIT(A) that the entire STCG arising on sale of the said property is to be assessed in the hands of Sri Arjun Bulchandani, the assessee’s husband and not in the assessee’s hands and consequently uphold his direction to the AO to delete the addition of ₹ 45,38,254/- on account of 50% STCG arising on sale of the said property. - Decided against revenue
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2016 (8) TMI 950
Addition on account of professional consultancy charges and management fees - adjustment in Arm’s Length Price pertaining to the international transaction ‘SAP consultancy charges and other expenses’- MAM - Held that:- The employee of the AE provided on job training to the staff of the assessee and they were also engaged in knowledge sharing with the existing employees during the meetings, minutes of which were furnished by the assessee before the authorities below. The AE charged the actual cost of services rendered by the specific employee and to substantiate the same, the assessee furnished invoices as documentary evidences. In the instant case the TPO placed his reliance on para 7.24 of the OECD Guidelines which states that “to satisfy the arm’s length principal, the allocation method chosen must lead to a result i.e. consistent with what comparable independent enterprises would have been prepared to accept”. In the present case, the TPO was unable to provide any cogent reason for the determination of arm’s length value of professional consultancy at Nil. On the contrary, the assessee explained the benefits received by it on account of the services received from AE. As regards to the application of method for determining the Arm’s Length Price, we are of the view that the method to be used to determine arm’s length price for intra-group services should be in accordance with the guidelines in Chapter-I, II & III of the “OECD Transfer Pricing Guidelines” which provides the various methods to be applied and the CUP method is likely to be a most appropriate method where there is a comparable service provided between independent enterprises in the recipient’s market or by the AEs providing the services to an independent enterprise in comparable circumstances. In the present case, the TPO although applied the CUP method but nothing was brought on record to substantiate that the AE provided the similar services to an independent enterprise in comparable circumstances. He also did not bring on record any instance where comparable services were provided to an independent enterprise in the recipient market. Therefore, in our opinion, in the assessee’s case the CUP method was not the most appropriate method. On the contrary, the assessee rightly applied the TNMM method as most appropriate method because it was difficult to apply the CUP method or the cost plus method. Therefore, the TNMM was the most appropriate method in the absence of a CUP which is applicable where the nature of the activities involved, assets used, and risk assumed are comparable to those undertaken by an independent enterprise. In the present case, the assessee divided its operation in the manufacturing and distribution segment. In the manufacturing segment, the net profit margin (OP/Sales) was disclosed at 9.26%, assessee has selected 5 comparable companies and using three years financial data margin of comparables had been computed at 8.40%. In the distribution segment, the assessee has selected TNMM as most appropriate method and the tested party margin had been computed at 15.21% as compared to average margin of 6 comparables using 3 years financial data at 3.96% and the international transactions were claimed at arm’s length. We, therefore, keeping in view the aforesaid discussion are of the view that the impugned addition made by the AO on account of the adjustment made in the receipt of professional consultancy services and management support services rendered by the employees of the AE, was not justified. In that view of the matter we delete the impugned addition.
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Customs
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2016 (8) TMI 971
Validity of statutory provisions - Imposition of penalty on company and directors - section 11(2) of the Foreign Trade (Development and Regulation) Act, 1992 – section 11(3) of the act - Article 14 of the Constitution of India – statutory guidelines – vesting of discretionary power in the executive to impose penalty but with certain safeguards – Held that: - various acts makes detailed provisions for the Central Government to lay down a foreign policy and conditions for import and export. In view of the complex requirements of foreign trade and import export policy, the executive would have to have sufficient powers to control contraventions of essential conditions of import export restrictions. The contravention could be of various kinds and of range of provisions beginning with mere technical breaches of procedural provisions or could be wholly malafide, fraudulent and with intention to evade duty. All such cases cannot be put in the same bracket. Thus, the legislature while in view of such situation has granted discretion to the executive, at the same time, provided for sufficient guidelines and safeguards so that such discretion does not convert into arbitrary or discretionary exercise of powers – petition disposed off – decided against petitioner.
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2016 (8) TMI 970
Provisional Release of consignment – export of consumer items – duty drawback – ownership - An intelligence was received, on the basis of which the second respondent suspected that narcotic drugs are concealed and being exported under this consignment of jewellery and footwear. The consignment, therefore, was held up, opened up for examination once again Held that: - The respondents possess necessary and requisite power in law to probe and investigate even the past transactions and recover such amounts as are permissible in law. We express no opinion also on the outcome of the ongoing investigation. If the petitioner is able to satisfy the authorities with regard to his claim, as narrated and referred above, and complies with all the circulars, so also the requirement of furnishing a bond with such security and conditions, upon this, we have no doubt, that the Competent Authority would take appropriate steps and provisionally release the goods. Needless to state that neither such provisional release would confer or create any right in favour of the petitioner nor such an exercise at this stage affects or prejudices the rights and contentions of the respondents. – petition disposed off – provisional release may be granted if all requirements are complied with.
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2016 (8) TMI 969
Eligibility for exemption - Notification No. 64/88-Cus DATED 1/3/1988 – treatment of poor patients – hospitalization of low income group – limitation of time – Held that: - exemption Notification No. 65/88-Cus dated 1/3/1988 can be considered even if the same was not claimed by the appellant. The goods imported by the appellant is prima facie covered under general exemption Notification No. 65/88-Cus, however eligibility of notification was not considered by the Original Adjudicating authority - matter remanded to the Original Adjudicating authority to consider the eligibility of the Notification No. 65/88-Cus - it is of no significance that appellant had not claimed the said notification at the time of assessment of Bill of Entry. Waiver of penalty – Held that: - in an identical case of Rashtra Sant Tukdoji Cancer Hospital & Regional Cancer Centre 2015 (10) TMI 185 - CESTAT MUMBAI penalty was waived. – matter remanded – opportunity of hearing to be provided before adjudication – appeal disposed off – decided in favor of appellant.
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Corporate Laws
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2016 (8) TMI 968
Violation of Clause 49 of the Listing Agreement - whole Time Director chaired the Audit Committee Meeting - Held that:- When the Listing Agreement specifically provides that the Chairman of the Audit Committee shall be an Independent Director, the Whole Time Director could not have chaired the Audit Committee Meeting held on 07.10.2011 especially when an Independent Director was available on that day to chair the Audit Committee. There is no basis for the alleged bonafide belief entertained by the Whole Time Director and therefore, to chair the Audit Committee by the Whole Time Director on 07.10.2011 was in violation of Clause 49 of the Listing Agreement. Although, penalty imposable for such violation under Section 23H of the SCRA could extend up to ₹ 1 crore, the AO after considering all mitigating factors has deemed it fit to impose penalty of ₹ 5 lac which cannot be said to unreasonable or excessive. Accordingly, imposition of ₹ 5 lac penalty on the appellant cannot be faulted. Turning to the aggregate penalty of ₹ 3 crore imposed on all the appellants, it may be noted that the said penalty is imposed for the following reasons:- a) Penalty of ₹ 1 crore is imposed under Section 15HB of SEBI Act, because the appellants as directors of RDB did not disclose all material information in the offer document that are true and adequate as contemplated under the ICDR Regulations and misutilized the IPO proceeds by giving loan to RDBRIL in violation of the ICDR Regulations. b) Penalty of ₹ 1 crore is imposed under Section 15HA of SEBI Act on ground that apart from violating ICDR Regulations, the appellants are also guilty of violating the PFUTP Regulations. c) Penalty of ₹ 1 crore is imposed under Section 15HA of SEBI Act on ground that the appellants, in violation of PFUTP Regulations have routed IPO proceeds in a circuitous manner so as to provide funds to four trading clients who had traded in the shares of RDB on the first day of listing RDB shares and had incurred huge losses. Violation of ICDR Regulations - Held that:- Argument of the appellants that giving loan by RDB to RDBRIL would amount to placing surplus funds from one pocket to another cannot be accepted, because, RDB and RDBRIL are two separate and distinct legal entities. Moreover, an investor who wants to invest funds in the IPO of RDB may not prefer to invest in the IPO of RDB if informed that IPO funds are being transferred as loan to RDBRIL. In para 24 of the impugned order the AO has recorded a finding that prior to the IPO, RDBRIL had taken ₹ 7.28 crore from RDB as inter corporate loan at an interest rate of 15% per annum and since RDBRIL could not repay the said loan within the stipulated time RDBRIL had sought extension of time in the last week of August 2011 and accordingly RDB had granted 90 days time to RDBRIL for repayment of loan. With these facts on record, it is not open to the appellants to contend that giving loan to RDBRIL amounts to placing IPO funds from one pocket to another. Thus, in the facts of present case, resolution passed on 12.09.2011 to give loan up to ₹ 50 crore to RDBRIL being a resolution relating utilization of IPO proceeds was a material information which ought to have been disclosed. Apart from the above, when statement was made in the offer documents that the IPO proceeds would be invested in high quality interest bearing liquid instruments, utilizing the IPO proceeds by giving loan to RDBRIL amounts to misutilizing the IPO funds in violation of ICDR Regulations. Violation of PFUTP Regulations - Held that:- RDB had taken loan from the Axis Bank and as per the loan agreement it was obligatory on part of RDB to take prior permission of Axis Bank before giving loan to RDBRIL. Admittedly, no such permission was taken from Axis Bank by RDB. Fact that Axis Bank did not deem it fit to take action for the said breach of the contract and the fact that the Axis Bank subsequently enhanced the loan limit and granted extension of time to repay the said loan cannot be a ground for the appellants to contend that no action be taken against RDB and its directors for violating the ICDR Regulations and PFUTP Regulations. In the impugned order, reference is made to the breach of the loan agreement between RDB and Axis Bank only to highlight that in a bid to transfer IPO proceeds by way of loan to RDBRIL, RDB not only suppressed material facts from the investors but also suppressed material facts from the Axis Bank. In these circumstances, decision of the AO that the conduct of RDB and its directors (appellants) in suppressing material information from the investors by resorting to manipulative and deceitful devices was in violation of regulation 3 and 4 of the PFUTP Regulations cannot be faulted. Penalty provisions - Held that:- We uphold the penalty of ₹ 1 crore imposed on appellants under Section 15HB of SEBI Act for violating the ICDR Regulations and penalty of ₹ 1 crore imposed under Section 15HA of SEBI Act for violating PFUTP Regulations. Similarly, penalty of ₹ 5 lac imposed on appellant for violating Clause 49 of the Listing Agreement is also upheld. However, penalty of ₹ 1 crore imposed under Section 15HA of SEBI Act on ground that RDB transferred IPO proceeds in a circuitous manner to four trading clients is deleted. Accordingly, appellant is directed to pay ₹ 5 lac and all appellants are directed to pay ₹ 2 crore jointly and severally to SEBI within a period of four weeks from today. If the appellants fail to pay the aforesaid penalty within the time set out herein above, SEBI would be entitled to recover that amount from the appellants with interest at the rate of 12% per annum from the date of the order passed by the AO of SEBI on 06.08.2014 till payment.
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Service Tax
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2016 (8) TMI 991
Recovery proceedings u/s 87 of the Finance Act, 1994 - Demand of tax with interest and penalty – stay of further coercive measures on payment of demanded amount – Held that: - there will be no further coercive measures against the petitioner under Section 87 of the Finance Act, 1994, till such time the adjudication pursuant to a show cause notice issued to petitioner, it shall not be greater than six weeks – petition dismissed – decided in favor of petitioner.
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2016 (8) TMI 990
Cenvat credit - Rejection of refund claim – export of services - rule 5 – CENVAT credit – CCR availed before Service Tax Registration – Held that: - the issue is no more res-integra and is already decided in the number of cases mPortal India Wireless Solutions P. Ltd Vs. CST Bangalore 2011 (9) TMI 450 - KARNATAKA HIGH COURT. The registration is not the sole criteria for granting refund, so long the other conditions are satisfied, refund shall be granted – refund allowed. Disqualification as input services – no nexus with output service – Held that: - It is observed that adjudicating authority has not carried out certain exercise like issuance of SCN etc., and straight away held in the proceedings of refund matter that the various input services are not admissible. This is completely illegal on the part of adjudicating authority. It was held in the case Coca cola India Pvt Ltd Vs. CCE Pune III 2009 (8) TMI 50 - BOMBAY HIGH COURT that the services used for business activity are admissible input services and credit is allowed on such services – all the services are input services – refund allowed. SEZ – services consumed in SEZ – services provided in relation to authorized operation in SEZ – Held that: - It is option available to the service provider either to pay service tax or provide the service under exemption available to the SEZ Unit. The inputs service were received on payment of service tax. Output services exported – refund allowed. Time-barred – filed after one year from the date of exports – Held that: - refund was sought under Rule 5 which itself provided that refund claim is compulsorily to be filed on quarterly basis. As per this provision appellant is not allowed to file refund before completion of particular quarter, Period of one year therefore should be calculated from the last date of the quarter – appellant filed refund claim within one year from the last day of the quarter – refund allowed. Absence of original documents – Held that: - if the Adjudicating authority has any doubt, he may call for the original documents, in that event appellant should submit original documents as and when required – matter remanded – appellant to be given opportunity of being heard – appeal allowed – decided in favor of appellant.
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2016 (8) TMI 989
Demand of tax, interest and penalty – airlines business - classification - online information and database access or retrieval service – service received from foreign based service provider - computer reservation system – reverse charge mechanism – Section 66A of the Finance Act, 1994 – definition of service - Section 65 (75) of the finance act, 1994 – definition of taxable services - 65 (105)(zh) of the Finance Act, 1994 – Held that: - the activities of CRS Companies would fall under the category of “online information and database access or retrieval service as decided in the case British Airways 2014 (6) TMI 626 - CESTAT NEW DELHI (LB). Revenue neutrality – CENVAT credit - transport of passenger by air and other services – Held that: - the appellant could have availed CENVAT credit of the service tax paid on reverse charge mechanism as they are liable to pay tax on output service hence Revenue neutral situation arises wherein appellant pays the tax and takes the credit. It is trait law that question of Revenue Neutrality is a good ground, more so when the tax liability is being discharged under reverse charge mechanism. This very plea of revenue neutrality in an identical issue was raised in British Airways case and decided in favor of appellant. – appeal disposed off – decided in favor of appellant.
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2016 (8) TMI 988
Valuation – embarkation passenger in International Traffic - fuel surcharge – administrative expenses – passenger service fee – airport tax – Held that: - The issue is already decided in number of identically situated appellant. The case referred is Lufthansa German Airlines vs. CST (Adjn), 2016 (6) TMI 581 - CESTAT NEW DELHI where after considering all the precedent decisions on the point, the orders of the lower authorities were set-aside. The amounts not required to be added – appeal allowed – decided in favor of appellant.
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2016 (8) TMI 987
CENVAT credit – demo cars – capital goods – input – Held that: - nothing is demonstrated today that a demo car falls in any of the Chapters dealing with capital goods. Therefore, the claim of capital goods fails. Further, plea of input is inconceivable for the reason that this does not aid in providing output service – demo cars neither capital goods nor input – CENVAT credit not available. Construction service – output service – Held that: - Appellant has provided services on repair and renewal of the vehicle and has been taxed under the Finance Act, 1994 as authorized service station. There is also nothing on record to show that the service station can work without a roof and structure. Nothing brought out as to the use of the building for a purpose other than the service centre of the appellant - CENVAT credit not denied. Imposition of penalty – Held that: - interpretation of law involved and it is beyond the reach of a common man to interpret law as the legislature and court interprets – penalty waived. Decided partly in favor of appellant.
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Central Excise
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2016 (8) TMI 986
Recovery of central excise duty – clearance of sabudana – Exemption Notification No.12/2013-CE dated 01.03.2013 - section 11C of the Central Excise Act, 1944 – Held that: - the Government of India by an order dated 15.03.2016, has rejected the petitioner's request for grant of exemption - prayer sought for in the Writ Petitions become infructuous. Issues raised on grounds of merits – issues raised on grounds of limitation – Held that: - these issues may be left open to be adjudicated upon by the petitioner before the appropriate Forum, on merits as well as on law – petition disposed off – decided against petitioner.
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2016 (8) TMI 985
Cenvat credit - testing, Handling & Commission, Telephone, Machine maintenance, Insurance relating to depot, Courier, Mobile van, Tax, Hotel rent, Air Travel, Catering, Banking (distributed by ISD) Services used at the depot/C&F agent premises and in relation to the manufacturing activity of the appellant - Held that:- credit has been taken as distributed by the ISD and pertains to various activities intimately connected with the manufacture and sale of cement through depots, C&F agents etc. Such services have been allowed as input services and are squarely covered by several decisions. Credit on insurance services has been sought to be disallowed on service tax paid for insuring the plant and machinery, mining equipments, store material and company vehicles. The credit cannot be denied on the ground that these services are not used in or in relation to the manufacture of cement since insuring the plant and machinery, building etc. would form part of the normal business activity to make sure that they get compensation in the unfortunate event of fire, theft etc. These services have also been held to be permissible as input services in the various cases. Cenvat credit - R&D Services - incurred towards development of re-active belaite cement which is not the product of the appellant - Held that:- this has been shown to be an R&D activity undertaken by the respondent in pursuance of introduction of new varieties of their final product and hence cannot be denied. Similar issue has been examined by the Tribunal in the case of Cadile Healthcare vs. CCE, Ahmedabad [2009 (8) TMI 172 - CESTAT, AHMEDABAD] where technical testing and analyses services were sought to be denied in respect of medicine which never reached the market. However, it was held that the service will be allowable on the ground that all products taken up by the company for R&D may not reach the customer as a commercial product. We see no reason to take a different view in respect of R&D services of the respondent. - Decided against the Revenue
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2016 (8) TMI 984
SSI exemption Notification No. 8/2003-CE dated 01.03.2003 - eligibility for benefit - appellant failed to reverse the amount as required under Rule 11(2) - Held that:- the condition precedent of the Notification No. 8/2003-CE dated 01.03.2003 read with transitional provision under the Cenvat Credit Rules, 2004 for opting for the notification at the beginning of the financial year, is that the cenvat credit attributable to the inputs, WIP as well as finished products as on 31st March of the previous year will have to be expunged and the balance cenvat credit available should be allowed to lapse. The duty demands have arisen since the appellant have not done so. Having paid the appropriate amounts on this scores subsequently, we have no hesitation to conclude that the appellant will be eligible for the benefit of notification during the disputed period. Consequently, the proposal for denying the benefit of notification and consequent demands will need to be set aside. - Decided in favour of assessee
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2016 (8) TMI 983
Invokation of extended period of limitation - Demand - Job-work - goods were manufactured out of raw materials supplied by M/s S.B.C.H. and have only received job work charges and on manufacture, corrugated boxes were sent to M/s S.B.C.H. without payment of duty - non-fulfillment of conditions laid down in the Notification No. 214/86 dated 25.03.1986 - Held that:- if the provision for invocation of extended period is to be applied in a particular case separately one of the five ingredients such as fraud, collusion, any willful misstatement, suppression of facts or contravention of provisions of Act or Rules made thereunder needs to be established and also intention to evade is also to be established. It is found that in the present show cause notice revenue could not establish any of the above said 5 ingredients. Therefore, on limitation the show cause notice is not sustainable. - Decided in favour of appellant with consequential relief
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2016 (8) TMI 982
Cenvat credit - Cargo Service and Courier service for despatch of finished goods - Held that:- during the hearing, the appellant placed reliance on the judgement of this Tribunal in the case of CCE Vs. Lucas TVS and others reported in [2016 (4) TMI 189 - CESTAT CHENNAI], in which many matters have been remanded to the original authority. This judgment being no different from the issue decided by this Tribunal, this matter is also remanded to the original authority to re-examine the issue in the light of the direction given in the aid judgement. Accordingly, the appeal is remanded to the adjudicating authority to dispose of the matters after taking into account the legal aspects and after affording an opportunity of hearing to prove the appellant’s eligibility of credit. Since these issues are purely interpretative in nature and in the final order referred to by the learned counsel penalty has been set aside, penalty in the instant case is also set aside and the matter is remanded to the original authority to decide the case afresh on the eligibility of cenvat credit. - Appeal allowed by way of remand
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2016 (8) TMI 981
Recovery of interest - non payment/delayed payment of duty - Section 11AB of the Central Excise Act, 1944 - reversed cenvat credit voluntarily on POY lying which were received with out reversal of credit - irregular availment of CENVAT credit and non payment of duty - Held that:- the ld. Commissioner has categorically recorded that all these payments/ reversal of credit by unit 1, Unit 2 and Unit 3 of the Appellant were made after admitting to the contravention of Rule 3(5) of Cenvat Credit Rules, 2004 as the POY cleared by them, was not covered under the purview of job work Notification No. 214/86-CE dated 25.03.1986. Hence, as the appellant has paid the duty/credit amount voluntarily and the same was appropriated in the impugned order then why interest on the same would not be chargeable. In the result, we agree with the Revenue that direction for recovery of interest in the said Para 8(viii) of the impugned order is valid and correct in law. - Appeal disposed of by way of remand
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2016 (8) TMI 980
Recovery of duty short paid - Job-work - expenditure incurred on behalf of loan licensor towards inspection fees, approval of additional products at FDA etc. - debit notes raised on loan licensor against these expenditures - being loan licensee, discharged excise duty on selling price declared by their loan licensor - Held that:- even though the appellant had argued that once duty is discharged on the basis of selling price declared by the principal manufacturer, that is the Loan Licensors, raising debit notes for expenditures incurred on behalf of their Loan Licensors becomes irrelevant, however, the Appellant could not place sufficient evidences to substantiate the said claim. We also find that this issue has not been properly raised by the appellant before the Ld Commissioner (Appeals) and accordingly not examined by him. In our view, the appellant be allowed a fair chance to raise the issue before the Ld. Commissioner (Appeals) by adducing sufficient evidences. - Appeal allowed by way of remand
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2016 (8) TMI 979
Exemption Notification 8/97 dated 1.3.1997 - eligibility for benefit - imported paper cones used for winding of yarn - Held that:- it is found that the Revenue has no case for more than one reason. Firstly, it is evidenced by the respondent that imported paper cones are packing materials by producing letter No. SEEPZ/Gov/187/96/02-03/305 dated 13.5.2003 that the paper cones are packing materials. When the Ministry of Commerce, another Ministry of Government of India, treats the paper cones as packing material explicitly, it cannot be said that they are raw materials as envisaged in Notification No.8/97. Secondly, as correctly held by the first appellate authority, expression raw materials is a material used in manufacture of goods; in the case in hand wherein cotton yarn is manufactured paper cone cannot be held as raw material as it is undisputed that cotton yarn on completion of manufacture is wound on the paper cones. Thirdly, the respondent as well as a Ministry of the Government of India has understood that paper cones are packing materials, and were permitted to import the same as such without payment of duty. - Decided against Revenue
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2016 (8) TMI 978
Period of limitation - Demand - Woven Fabrics HDPE/PP strips captively consumed - final product was exempted - availed small scale exemption Notification No. 8/98 - Held that:- the appellants availed the benefit of small scale exemption notification with the due knowledge and permission of their Jurisdictional Central Excise Authorities, who are expected to know about the fact that the emergence of HDPE/PP strips is an inevitable fact for the manufacture of HDPE/PP Woven Fabrics from HDPE/PP granules. In spite of that, no objection was ever raised by the appellants Range Authorities. Apart from that it is also noted that in case duty was required to be paid on the strips, the appellant was entitled to avail credit of duty paid on the granules, which would have neutralized the entire demand on the strips. As such inasmuch as in this Revenue neutrally background, we are of the view that there could be no malafide on the part of the appellant to evade duty, if any.Therefore, the demand is hit by bar of limitation and set aside. - Decided in favour of assessee
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2016 (8) TMI 977
Cenvat credit - CVD on strength of CVD foregone by debit in DEPB scrips - allowed only with issue of Notification No. 96/2004-CUS dated 17/09/2004 - Held that:- the issue is no more res-integra and has been decided by Tribunal that the Appellant has not been to show any notification by which the benefit of CENVAT credit has been expressly denied where the payment of customs duty or additional customs duty is made using DEPB scrips issued in terms of the FTP 2002-07. - Decided in favour of appellant
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2016 (8) TMI 976
Cenvat credit - Member subscription Service - paid subscription to Automotive Components Manufacturers Association (ACMA) for getting business support in respect of participation in exhibitions, technology development and automobile market status etc. - Held that:- the case law relied upon by the appellant in the case of BAL Pharma Ltd. Vs. CCE & ST, Bangalore-I [2014 (10) TMI 564 - CESTAT BANGALORE] is squarely applicable to the facts of the present case. Having regard to the nature of service received, amount involved and the definition of input services, the appellant is eligible for the credit of duty paid by them on “Member subscription Service”. - Decided in favour of appellant with consequential relief
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2016 (8) TMI 975
Correct cost of engines - manufacture of automotive IC engine - cost audit report submitted by the appellant was on the basis of CAS-4 and certified by their Cost Accountant - Held that:- no details for arriving at a different cost than the one submitted by the assessee stand given by the authorities below apart from making wide and blanket observations. We have also gone through the illustrations of CAS-2 for taking up the normal production which allows the average of 3 greater production during the last 5 years. However, the appellate authority has observed that this cannot be adopted inasmuch as the CAS-2 does not talk about duty. We are of the view that the cost of engine has to be arrived at afresh in terms of principles of CAS-4 for which purpose, the assessee as also the Revenue would sit together and would give details by arriving at a particular cost to each other. We are also told that there is a system of appointing the Revenue's own Cost Accountant who possibly can also be engaged by adjudicating authority so as to arrive at the correct cost of the engines. - Appeal allowed by way of remand
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2016 (8) TMI 974
Demand - Cess leviable under Automobile Cess Rules, 1984 - manufacture of agriculture tractors - Held that:- contentions raised by the appellant do not stand properly considered by the adjudicating authority and the demand stand confirmed under the Automobile Cess Rules, which according to Hon’ble Himachal Pradesh High Court’s order in the case of Indo Farm Tractors & Motors Ltd. vs. Union of India [2007 (7) TMI 150 - HIGH COURT, HIMACHAL PRADESH ] are not applicable to tractors and subsequently amended notification and the fact that appellants engine are less than 1800 CC has not been considered by the adjudicating authority. - Appeal allowed by way of remand
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2016 (8) TMI 973
Appeal for early hearing - issue is of recurring nature - denial of area based exemption Notification No. 50/2003 and issuance of number of subsequent show cause notices - Held that:- once the Revenue has taken a stand that appellant is not entitled to said notification benefit, it automatically follows that the Revenue would issue the show cause notices for the subsequent period also. We do not find that why for allowing the application, fact of issuance of show cause notices needs verification by the Commissioner, as sought for by the learned DR. Further, the objection raised by the learned DR is also not found favour with inasmuch as we find that the benefit of notification is a continuation issue and the fact that issuance of subsequent show cause notices makes it a recurring issue, leading to unnecessary litigation. To avoid the same, it is necessary that the disputed legal issue is settled so as to allow the lower authorities to decide the issue in accordance with such declaration of law by the Tribunal. - Early hearing allowed
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2016 (8) TMI 972
Cenvat credit - H.R. Alloy steel plates (hardox -400) - used in the factory for repair and maintenance of capital goods - production of Chartered Engineer’s certificate showing area of use of disputed goods in the factory premises - Held that:- H.R. Steel plates (Hudox- 400) is not falling under the excluded category mentioned in definition of input. Further, it is not in dispute that the goods in question have been used by the appellant within its registered factory premises. Since the definition of input is very broad intended to take within its ambit all the goods used in the factory of the manufacturer of final products, hence, the disputed goods shall merit consideration as input, and thus, denial of cenvat benefit on the same is not proper. - Decided in favour of appellant
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