TMI Tax Updates - e-Newsletter
September 1, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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Income Tax:
Taxation of income from dividents and capital gains under the Indo-Mauritius Double Tax Avoidance Convention - the capital gains that arose on account of the sale of the shares of SKR BPO by Blackstone Mauritius and Barclays are derived by a resident of a Contracting State from the alienation of property other than property mentioned in paragraphs 1, 2 and 3 of the Article 13 and are, therefore, taxable only in ‘that State’ i.e. Mauritius. - HC
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Income Tax:
Seized jewellery - Applicability of Section 69A - addition on the basis of the statement made on oath under Section 132(4) - These statements of oath has not been withdrawn and/or retracted - there is no occasion for the authorities to come to the conclusion that the undisclosed jewellery belongs to the father or late mother - HC
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Income Tax:
Penalty levied u/s 271D and 271E - cash loans taken by the assessee in contravention of 261SS - There is no law that every receipt from a partner or a sister concern cannot, in all circumstances, be treated as a loan or deposit. - levy of penalty confirmed - HC
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Income Tax:
Dis-allowance of insurance claim written off - This amount was written off in the year 1993-94 - in the assessment year 1993-94 no theft was committed, but, it was in the year 1989 and, therefore, rightly A.O. as well as CIT(A) have dis-allowed the insurance claim written off - HC
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Income Tax:
Unexplained investment in stock - assessee has merely given statement of monthly stock on the basis of a rough estimate by incorporating monthly purchases and sales and, therefore, that statement cannot be made the basis of addition - AT
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Income Tax:
Revision u/s 263 - allowing the claim of the assessee without examining the payments made to non-resident agents towards sales commission and applicability of provisions of section 40(a)(i) read with section 9(1)(vii) of the Act is certainly an order passed erroneously and prejudicial to the interests of the Revenue - AT
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Income Tax:
Disallowance u/s. 43B on account of Service tax payable - the amount has not been paid before the due date of filing the return - dis-allowance confirmed - AT
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Income Tax:
Claim of exemption under section 54 denied - such amount shall be charged under section 45 as income of the previous year, in which the period of three years from the date of the transfer of the original asset expires - AT
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Income Tax:
Addition on commission paid to the Managing Director of the assessee company, u/s 36(1)(ii)- The directors are not only shareholders of the company. Therefore, it cannot be said that if the commission was not paid, such sum would have been paid to the employees as profit or dividend - the exception provided in section 36(1)(ii) do not apply - AT
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Income Tax:
Principle of mutuality - Co-operative Society - Any income generated from facilities, amenities, privileges provided to the members in accordance with the bye-laws and regulations of the society is exempt on the principle of mutuality - AT
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Income Tax:
Additions u/s 41(1) on account of cessation of liability - the case of the Revenue that even after passing of further 5 years from the date of assessment, the assessee could not trace his creditors - additions confirmed - AT
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Income Tax:
The master plate of one movie cannot be used for another and for every movie a new and different master plate is required; indicating that the master plate is nothing more than raw material - expenditure is in the nature of revenue and allowed - AT
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Income Tax:
Penalty under section 272B - not quoting PAN in the appeal filed before the CIT(A) - the default on the part of the assessee was because of her ignorance and not because of any mala fide intention, and therefore, we delete the penalty levied under section 272B of the Act - AT
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Customs:
Imposition of redemption fine when goods not available – redemption fine is concept which arises in event goods are available and are to be redeemed – If goods are not available there is no question of redemption of goods - HC
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Customs:
Illegal Seizure of Goods – It is apparent that authorities have wrongly invoked provisions, Court cannot be mute spectator and still relegate parties to authorities to take decision and determine dispute - HC
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Service Tax:
Renting of Immovable Property Service - Valuation - Inclusion of notional interest - t the security deposit is very huge and the rent fixed is reduced to a nominal amount in regard to the property leased - prima facie case is against the assessee - AT
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Service Tax:
Denial of refund claim - Export of service - merely because the goods supplied were ultimately used in India, cannot be a reason to hold that there was no export of the output service - AT
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Service Tax:
Collection of amount in the name of service tax - Amount received from several purchasers of flats - during the relevant period, there was no clarity regarding law of service tax - appellants had taken such indemnity letters - demand set aside - AT
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Central Excise:
Duty demand - Valuation of goods - Related person - deduction of these trade discounts offered to dealer being a group company selling entire production of the assessee - cannot be treated as related person - demand set aside - AT
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Central Excise:
Denial of CENVAT Credit - agricultural tractors - switching over from Rule 6(3)(b) to Rule 6(2) - There is nothing in Cenvat Credit Rules or any other provision in the law that before switching over to Rule 6(2) above, a manufacturer is required to reverse the credit of inputs available in its stores, work in progress and in the finished goods on that date - AT
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Central Excise:
Classification of Flexible Intermediate Bulk Containers (FIBC) - that both the drawback schedule and ITC Code issued by DGFT and CETH are aligned with HSN, the classification issued by the Board assumes vital importance and Revenue cannot change the classification - FIBC is classifiable under 6305 3200 and not under 39232990 - AT
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VAT:
It is not open to 1st respondent to undertake any inspection in guise of demonstration to make assessment – When petitioner has admittedly submitting assessments only to 2nd respondent, 1st respondent cannot embark upon fresh demonstration of the petitioner premises with the aid of the central excise department and the electricity board officials - HC
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VAT:
Penalty u/s 78(5) - Evasion of duty - Mens rea - once there is a clear cut admission by the assessee himself that the bill was prepared later on, it was a clear cut case of evasion of tax and the penalty - HC
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VAT:
Bank liability to pay VAT – sale of goods to recover loan was part of banking business – No reason to exclude bank from definition of “dealer” under OVAT even in absence of express inclusion of bank in said definition - HC
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VAT:
Petitioner seeking declaration that rule 11B(2)(c) of Central Sales Tax (Kerala) Rules,1957 as invalid and ultra vires being in consistent with Central Sales Tax (Registration and Turnover) Rules framed by Central Government and beyond power conferred on State Government - rule 11B(2)(c) was invalid and ultra vires - HC
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2015 (8) TMI 1219
Taxation of income from dividents and capital gains under the Indo-Mauritius Double Tax Avoidance Convention - Application for advance ruling - Whether the capital gains arising in the hands of Blackstone GPV Capital Partners Mauritius V-B Ltd. (‘Blackstone Mauritius’) and Barclays (H&B) Mauritius Limited (‘Barclays Mauritius’) (Collectively referred to as the ‘Sellers’) on account of the sale of shares of SKR BPO Services Private Limited is not chargeable to tax having regard Article 13(4) of the Agreement for the Double Taxation and Prevention of Fiscal Evasion with Mauritius (‘India Mauritius DTAA’) read with Section 90(2)? - Held that:- Capital gains arising from the sale of the said shares can only be brought to tax in Mauritius. This is also clear from Article 13. Clause-4 of Article 13 provides that the gains derived by a resident of a contracting State (Blackstone Mauritius and Barclays are residents of Mauritius a contracting State), from the alienation of any property other than those mentioned in paragraphs (1) (2) and (3) thereof (the shares of SKR BOP sold by Blackstone Mauritius and Barclays do not fall within paragraphs (1), (2) and (3) of Article 13 shall be taxable only in that State i.e. Mauritius. The gains derived from the alienation of any property would include the gains derived on account of the sale of shares. The words ‘any property’ are wide enough to cover shares in a company incorporated under the Companies Act, 1956. The gains from the sale of shares are taxable under the Income Tax Act, 1961. Article 2 of the DTAC, which stipulates the existing taxes to which the convention applies in the case of India, includes income tax including any surcharge thereon imposed under the Income Tax Act, 1961. The words ‘contracting States’ obviously refers to Mauritius. This is obvious as the reference in first part of paragraph-4 of Article 13 is to the ‘Contracting State’. The concluding words therein viz. ‘that State’ therefore refer to the Contracting State. Thus the capital gains that arose on account of the sale of the shares of SKR BPO by Blackstone Mauritius and Barclays are derived by a resident of a Contracting State from the alienation of property other than property mentioned in paragraphs 1, 2 and 3 of the Article 13 and are, therefore, taxable only in ‘that State’ i.e. Mauritius. It is declared that no capital gain tax was payable by Barclays (H&B) Mauritius Limited. and Blackstone GPV Capital Partners (Mauritius) V-B Ltd. in respect of the sale of the shares of SKR BPO by them to the petitioner. The petitioner was, therefore, not liable to withhold the tax in respect thereof under the Act. - Decided in favour of assessee.
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2015 (8) TMI 1218
Agricultural income - assessee has shown income of ₹ 12,12,220/- being income from agriculture activities but A.O. has considered income of ₹ 7,50,000/- to be as business income - Tribunal reversing the well reasoned order of C.I.T. (Appeals) and in sending the matter back to the Assessing Officer - Held that:- No basis has been spelled out by the A.O. to arrive at the conclusion that out of total income declared by assessee, part of income was business income. We also find that no enquiry was made by the A.O. either by himself or through the Inspector to verify and examine the land holding of the assessee, the nature of crops cultivated on the land, whether the land was irrigated or what were the facilities available for irrigating the land, the yield of the land during the relevant period. We also find that no enquiry with Sarpanch or Patwari or any other revenue authority was made either by A.O. or CIT(A) nor the revenue records were called for to ascertain yield of crops and the factual position. We find that learned CIT(A) has considered the claim of the assessee of having agriculture income in view of the agriculture land shown at ₹ 1.25 Crore in the balance sheet. During the course of hearing the ld. A.R. Has asked specific question about the total land holding of the assessee, the type of crops grown and what were the irrigation facilities available to which neither the ld. A.R. or ld. D.R. Could furnish any reply. We are therefore of the view that the details like the land holding under agriculture, nature of irrigation facility on the land, the crops gown on the land in the relevant period, record of crops grown in revenue records needs to be verified and therefore, the matter is restored to the file of A.O. for him to examine the aforesaid facts and thereafter decide the issue as per law. When now the matter is remitted to the file of learned A.O. to examine the aforesaid issue afresh in accordance with law, we see no reason to interfere with the same. No error has been committed by the learned tribunal in remitting the issue to the file of learned A.O.
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2015 (8) TMI 1217
Reopening of assessment - Eligibility of the income derived from rendering technical services abroad to be eligible for deduction under Section 10-A or not - Held that:- As from the original assessment records that the claim of the assessee under Section 10A of the Act was thoroughly scrutinized, the assessing Officer had examined the claim of expenditure incurred in foreign currency for providing technical services by allocating the sum of ₹ 38,51,45,781/- between the five STP units in the ratio of the export sales. In fact, the assessing Officer had raised certain queries during assessment proceedings and detailed reply given by the assessee, which is extracted herein above, would leave no doubt in our mind that the said issue was thoroughly addressed to by the assessing Officer, considered and the plea of the assessee came to be accepted. In that view of the matter, it cannot be construed that there was either non disclosure by the assessee or the assessing Officer had obtained material subsequent to the framing of the assessment order on 27.03.2006 so as to arrive at a conclusion that there was escapement of income from tax. For the reasons aforestated, we are of the considered view that the Tribunal was fully justified in arriving at a conclusion that the re-opening of assessment was by change of opinion and the issue regarding eligibility of the income derived from rendering technical services abroad to be eligible for deduction under Section 10A or not had already been considered by the assessing Officer in the assessment concluded under Section 143(3) of the Act on 27.03.2006. - Decided in favour of assessee.
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2015 (8) TMI 1216
Seized jewellery - unaccounted income of the appellant - documentary evidence found at the time of search to show that part of it belonged to the appellants father, late mother and the minor children who were wealth-tax and income-tax assessees in the earlier years - Held that:- It is not disputed that the valuation report indicates the name of the father and mother as being the persons who claim to be the owner of the jewellery. The mother of the appellant passed away far back as 1990. In the normal course of human conduct the jewellery of the mother would have been distributed amongst her children soon after her death. This is also corroborated by the statement made on 12 October 1996 wherein it is stated that the jewellery belonging to their late mother has been distributed amongst the lady members of the family. So far as the valuation report indicates that some jewellery belongs to the father and it is in their possession, it would have been so stated at the time when the excess jewellery was found in their possession. The valuation reports are dumb documents and by itself do not indicate in the absence of any other corroborative evidence that the jewellery belongs to the father and the late mother and/or the minor children of the appellants. In the above view, we find that the impugned order of the Tribunal calls for no intereference. Applicability of Section 69A of the Act is not required to be considered, as we find that the authorities have proceeded on the basis of the statement made on oath under Section 132(4) of the Act declaring that the undisclosed jewellery belonged to them. These statements of oath has not been withdrawn and/or retracted by appellant at any point of time till date. Therefore, there is no occasion for the authorities to come to the conclusion that the undisclosed jewellery belongs to the father or late mother. Consequently issuing a notice under Section 158BD of the Act to the father and to the legal heirs of the late mother does not airse. - Tribunal was right in holding that the seized jewellery represented unaccounted income of the appellant Decided against the appellants/assessees and in favour of the revenue. Undisclosed interest income - interest amount earned on the loan was chargeable to tax in the block assessment period as undisclosed income - Tribunal rejecting/ignoring the cash method of accounting followed by the appellants/assessees - Held that:- The appellants have not established before the authorities that they were following the cash system of accounting. In fact at no stage was it brought to the notice of the authorities in the return of income filed that loans have been advanced to the extent of ₹ 16 lacs and ₹ 34 lacs to Mr. and Mrs. Bajaj as a part of their assets in the balance sheet to be filed alongwith the return of income by the two appellants. In fact as the assessee was not following any method of accounting, non disclosure of giving of loan to Mr. and Mrs. Bajaj and the interest received in fact or in accrual method has not been disclosed to the authorities. In fact, the best evidence which could be produced by the appellants/assessees was the evidence of Mr. and Mrs. Bajaj to point out that they have not paid any interest during the period under consideration for the loan of ₹ 15 lacs and ₹ 34 lacs. However the appellant did not choose to produce Mr. and Mrs. Bajaj as their witnesses and/or any evidence from them indicating that no interest is paid by them. Tribunal was correct in rejecting the cash method of accounting followed by the assessee and substituting the mercantile method in relation to the accrued interest on loan advanced to the landlord - Decided in favour of the respondent/revenue and against the appellants/assessees.
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2015 (8) TMI 1215
Higher rate of depreciation @ 40% - assessee was engaged in the business of letting out assets on hire - Held that:- Decided against revenue and in favour of the respondent-assessee as decided in assessee own case [2011 (6) TMI 737 - BOMBAY HIGH COURT] - Decided against revenue. Lease equalization credited to P&L Account over and above the lease rental - Tribunal held it cannot be considered as income and thereby upholding reducing of assessee's total income by lease equalization - Held that:- Assessing Officer has completely misunderstood the claim of the respondent-assessee in respect of the lease equalization fund. It is not disputed even by the Assessing Officer that the lease rent which has been received by the respondent/assessee has been offered to tax. Even if one accepts the submission on behalf of the revenue that these guidelines have not been notified by the Central Government for under Section 145(2) of the Act and thus cannot be accepted yet what follows is that the amount credited as a lease equalization fund to Profit and Loss Account has to be ignored as it is not real income. It is an amount which is completely notional and brought into the books only for complying with accounting standards and has no relevance to determine the amount of net income chargeable to tax. In that view of the matter, the respondent-assessee was completely justified in reducing the amount of ₹ 2.06 crores credited to the Profit and Loss Account as lease equalization fund for the purposes of determining the income chargeable to tax. - Decided against revenue. Expenditure incurred on stamp duty paid for acquisition of leasehold land for 30 years - ITAT allowed as revenue expenditure - Held that:- Tribunal by the impugned order to state that the period of lease for which the property has been taken, cannot be regarded as a decisive test to determine the nature of the expenditure. In any case, it is not disputed before us that the stamp duty amount has been paid on the lease deed for the purposes of carrying on assessee's business. Once the aforesaid position is accepted then the amount of stamp duty paid for has to be allowed as revenue nature. - Decided against revenue.
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2015 (8) TMI 1214
Penalty levied u/s 271D and 271E - cash loans taken by the assessee in contravention of 261SS - Tribunal was correct in holding that the orders imposing penalty under Section 271D and E were passed within the period of limitation prescribed under Section 275(1)(c) and whether the Tribunal was correct in confirming the findings? - Held that:- The only case of the assessee is that if the period of limitation prescribed in Section 271(1)(c) is reckoned from the date of the assessment order dated 6.11.2007, the penalty order passed by the Joint Commissioner on 29.7.2008 is beyond the time permitted in the above section. As we have already held, the initiation of the penalty proceedings is not by the Assessing Officer but by the Joint Commissioner and if that be so, the order levying penalty passed by the Joint Commissioner is within the time prescribed in Section 275(1)(c). It is the admitted case that amounts were received from partners and other sister concerns of the assessee and were repaid, there is no material whatsoever to infer that these receipts were anything other than loans or deposits. There is no law that every receipt from a partner or a sister concern cannot, in all circumstances, be treated as a loan or deposit. On the other hand, the nature of the receipt would depend upon the agreement between the parties and the evidence that is produced. As we have already stated, there is no material whatsoever to accept the case of the assessee that these are loan or deposit. In such circumstances, the findings of the Assessing Officer confirmed by the Appellate Commissioner and the Tribunal that it was a loan or deposit that was received by the assessee also has to be upheld and we do so. - Decided in favour of the Revenue
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2015 (8) TMI 1213
Dis-allowance of insurance claim written off - Held that:- It appears that theft was committed on 10th of September, 1989. Insurance was claimed by the assessee which was rejected by the insurance company in the next year mainly for the reason that there was no theft of plant and machinery or the raw materials. This amount was written off in the year 1993-94. Thus, in the assessment year 1993-94 no theft was committed, but, it was in the year 1989 and, therefore, rightly A.O. as well as the Commissioner (Appeals) have dis-allowed the insurance claim written off. ITAT has failed to appreciate that the theft was committed in the year 1989, whereas, the claim was written off in the assessment year 1993-94, despite the claim was rejected by the insurance company in the very next year of the theft and, therefore, such amount of insurance claim ought to be added in the income of the assessee. - Decided in favor of revenue. Additions made u/s 40A(3) - ITAT upholding the order of the CIT(A) in restricting the additions made u/s 40A(3) to 20% of the cash purchases in excess of ₹ 10,000/- Held that:- In the facts of the present case, 175 vouchers were also fabricated, because no vouchers were signed for the receipts of such cash. Moreover, Section 40A(3) of the Income Tax Act, 1961 imposes a limit of 20% of disallowance of the total cash transaction which was brought into effect from 1st of April, 1996, whereas, prior thereto, there were no such limit of 20%. The present matter is pertaining to assessment year 1993-94 and, hence, the 20% limit which was brought into force from 1st of April, 1996 is not applicable. These aspects of the matter have not been properly appreciated by the Commissioner (Appeals), nor by ITAT, nor even exception/conditions referred to in Rule 6DD of the Income Tax Rules 1962 have been proved by the respondent-assessee. - Decided in favor of revenue.
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2015 (8) TMI 1212
Penalty under Section 271(1)(c) - compensation "in lieu of giving up their right" received - CIT(A) deleted penalty confirmed by ITAT - Held that:- The Court finds that in the present case the order of the CIT (A) explaining why Section 271(1)(c) is not attracted in the facts and circumstances of the case merits no interference. The issue that arose for determination in the quantum appeal does appear to have been debatable as is evident from the narration of facts. There was a reference made by the Assessee itself in the note of computation, that pursuant to the settlement agreement with Schneider, it had received compensation "in lieu of giving up their right under Press Note 18, which debarred the collaborator from carrying out business in India, without the permission of JV partners". The compensation was also "in lieu of agreeing not to use the name after an interim period i.e. to give up the benefit over a period of time of being known in the market as a joint venture partner of TE". Secondly, the Assessee armed itself with a legal opinion. These facts are sufficient to distinguish the present case from the facts in Zoom Communication (2010 (5) TMI 34 - DELHI HIGH COURT ) where the Court observed that apart from a making wrong claim, the Assessee did so not on the basis of any advice given to it by an auditor or tax expert. Even in MAK Data (2013 (11) TMI 14 - SUPREME COURT) the Supreme Court held on facts that the Assessee there had no intention to declare its true income and no explanation was offered by it for the concealment of income. In the facts of the present case, the Court is satisfied that no error of law was committed either by the CIT (A) or the ITAT in holding that Explanation 1 to Section 271(1)(c) of the Act was not attracted. This was not a case of an Assessee furnishing inaccurate particulars. - Decided in favour of assessee.
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2015 (8) TMI 1211
Validity of assessment proceedings under Section 143 (3) read with Section 158BC - satisfaction had not been recorded during the course of assessment proceedings in respect of the person searched i.e. SAPL - rectification of mistake - Held that:- It was on recall application filed by the Revenue to recall the order dated 14th March, 2012 that the Tribunal realized that the proceedings in respect of the person searched i.e. SAPL has been completed on 28th February 2005 while the notice to the Petitioner was issued on 20th April 2004 i.e. during the pendency of the Assessment proceedings of SAPL. It was in that view that the Tribunal proceeded to hold that it had committed a mistake in as much as it had given a finding of the impugned satisfaction not being recorded during the course of proceeding of SAPL without ascertaining the date of completion of proceedings in respect of SAPL. The observations made by the Tribunal that the issue raised by the Revenue would amount to review during the course of hearing of the Revenue's application of recall of the order dated 14th March 2012 has to be seen in the light of the further observations of the Tribunal in the order dated 30th August, 2013 that it had committed a mistake and therefore exdebito justice, it was obliged to correct a mistake in having proceeded on fundamentally incorrect basis. The issue does not stand concluded by virtue of the order of recall dated 30th August 2013. This would only enable the parties to putforth their views on correct facts. There is basis for the Tribunal to recall it's order dated 14th March 2012 as it does appear that the Tribunal had proceeded on a factual erroneous basis. We do not see what prejudice is being caused to the Petitioner in attending hearing before the Tribunal and arguing the matter on merits. The Tribunal has withdrawn it's order dated 14th March 2012 as stated in it's order dated 30th August 2013 for a mistake committed by it while passing order dated 14th March 2012. One more fact which cannot be lost sight of is that the period to file an appeal from the order dated 14th March, 2012 to this Court under Section 260A of the Act has long expired. Thus allowing the Petition at this late stage in the present facts may lead to injustice as it would revive the order dated 14th March, 2012 against which an appeal would be time barred. This of course, is not the basis for rejecting the Petition which we have dismissed on merits. However, this delay is just one more factor not to exercise our extra ordinary jurisdiction of writs.
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2015 (8) TMI 1210
Unaccounted cash payment - addition on the basis of seized documents - ITAT consequently held that there was no basis for sustaining the addition in respect of alleged cash transactions referred to in the document in the hands of the Assessee - Held that:- Revenue having taken a conscious decision to initiate proceedings against Inmon under Section 147/143 (3) of the Act, and having in those proceedings added the entire cash amount aforementioned in the hands of Inmon, must pursue those proceedings to their logical end. There is no factual or legal basis for seeking to add the same cash amount in the hands of both Inmon and the Respondent Assessee for the same AY. Further, nothing has been placed before the Court by the Revenue to doubt the correctness of the factual findings of the ITAT in respect of the document qua the Respondent Assessee. No substantial question of law arises for examination. - Decided against revenue.
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2015 (8) TMI 1209
Unexplained investment in stock - CIT(A) deleted the addition under section 69 - Held that:- Commissioner of Income-tax (Appeals) has particularly referred to the decision of the hon'ble Punjab and Haryana High Court in the case of Chauhan Papers P. Ltd. [2006 (10) TMI 426 - PUNJAB & HARYANA HIGH COURT] wherein it was held that if stock statement is made on estimate basis then addition is not called for. As observed earlier the assessee has merely given statement of monthly stock on the basis of a rough estimate by incorporating monthly purchases and sales and, therefore, that statement cannot be made the basis of addition. If there was a difference in stock, the differences should have been ascertained as at the end of the year then possibly the Assessing Officer could have made addition which has not been done. Therefore, we find nothing wrong with the order of the Commissioner of Income-tax (Appeals) and we confirm the same. - Decided against revenue. Disallowance of proportionate interest with regard to debit balance in the name of its related concern - Held that:- Commissioner of Income-tax (Appeals) has correctly noted the fact that once it is a case of sale then even if the amount has not been received it cannot be construed as a case of diversion of funds. In any case one of the partner of M/s. Vibhor Sood and Bros., i.e., Smt. Kiran Sood has also given a loan of ₹ 10 lakhs to the assessee-firm.Therefore, we find nothing wrong with the order of the learned Commissioner of Income-tax (Appeals) and we confirm the same.- Decided against revenue.
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2015 (8) TMI 1208
Rejection of books of accounts - net profit assessed at 12 per cent. of the gross receipts and income was accordingly computed - Held that:- The authorities below have given the reasons for rejection of the books of account. The assessee has failed to verify the genuineness of the opening and closing balance of labour payable. The details called for by the Assessing Officer were not furnished. The assessee failed to justify the quantitative and qualitative details of the closing stock. The queries raised by the Assessing Officer were not properly addressed. Therefore, these were the sufficient reasons for rejection of the books of account by the Assessing Officer. The findings given by the Assessing Officer are thus, not rebutted by the assessee to the satisfaction of the authorities below. Even during the course of arguments, assessee could not specify as to what is the illegality in the orders of the authorities below in rejecting the books of account. Therefore, considering the findings of fact recorded by the authorities below for rejection of the books of account, we do not find any justification to interfere with their orders for rejection of the books of account. The cross-objection of the assessee is therefore, liable to be dismissed on this ground. - Decided against assessee. Reasonableness of the profit rate applied by the authorities below - Held that:- AO has applied the profit rate of 12 per cent. for estimating the income of the assessee, however the history of the assessee suggests that the assessee at the maximum has shown net profit rate of 3.17 per cent. Therefore, considering the totality of the facts and circumstances, history of the assessee and objections raised by the Assessing Officer for rejection of the books of account, it would be reasonable and appropriate to apply profit rate of 8 per cent. as against 5 per cent. applied by the learned Commissioner of Income-tax (Appeals) because the Commissioner of Income-tax (Appeals) has failed to note that substantial defects have been pointed out in maintenance of the books of account which could not give the true picture of the profit earned by the assessee. Decided partly in favour of revenue.
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2015 (8) TMI 1207
Revision u/s 263 - as per CIT(A) AO in the present case failed to examine correct facts relating to export agency commission paid to the non-residents which were actually paid for various market services partaking the character of technical services - Held that:- The AO in the present case failed to examine the correct facts relating to the Export Agency Commission paid to the non-residents which were actually paid for various market service partaking the character of "technical services". AO has not examined the commission paid to various agents with regard to nature of services rendered by them, procurement of orders by them, agreements entered into with them etc. and applicability of provisions of section 40(a)(i) read with section 9(1)(vii) of the Act while completing the assessment. The order passed by the Assessing Officer under section 143(3) read with section 147 allowing the claim of the assessee without examining the payments made to non-resident agents towards sales commission and applicability of provisions of section 40(a)(i) read with section 9(1)(vii) of the Act is certainly an order passed erroneously and prejudicial to the interests of the Revenue. Therefore, we hold that the Commissioner of Income Tax rightly invoked the provisions under section 263 of the Act directing the Assessing Officer to complete the assessment afresh after providing effective opportunity to the assessee. - Decided against assessee.
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2015 (8) TMI 1206
Computation of capital gains - whether indexed cost of acquisition has to be computed with reference to the year in which the previous owner was held the assessee as held by CIT(A) or the year in which the assessee become owner by way of inheritance? - Held that:- The object of giving relief to an assessee by allowing indexation is with a view to offset the effect of inflation. As per the CBDT Circular No.636 dated 31/8/1992 a fair method of allowing relief by way of indexation is to link it to the period of holding the asset. The said circular further provides that the cost of acquisition and the cost of improvement have to be inflated to arrive at . The indexed cost of acquisition and the indexed cost of improvement and then deduct the same from the sale consideration to arrive at the long term capital gains. If indexation is linked to the period of holding the asset and in the case of an assessee covered under Section 49(1) of the Act, the period of holding the asset has to be determined by including the period for which the said asset was held by the previous owner, then obviously in arriving at the indexation, the first year in which the said asset was held by the previous owner would be the first year for which the said asset was held by the assessee. See CIT v. Manjula J. Shah [2011 (10) TMI 406 - BOMBAY HIGH COURT] The expression “held by the assessee” used in Explanation (iii) to Section 48 has to be understood in the context and harmoniously with other Sections. The cost of acquisition stipulated in Section 49 means the cost for which the previous owner had acquired the property. The term “held by the assessee” should be interpreted to include the period during which the property was held by the previous owner. See Arun Shungloo Trust v. CIT [2012 (2) TMI 259 - DELHI HIGH COURT ] - Decided in favour of assessee.
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2015 (8) TMI 1205
Treatment of expenditure incurred on repairs and maintenance as capital expenditure - Held that:- A perusal of the bills exhibited in the paper book show that the expenses have been incurred for the purchase of G.P. sheets, M. S. Angles, M. S. Channels and M. S. Beams. This clearly show that old hoardings were replaced by new hoarding with new structure. Our view is also fortified by the fact that the assessee has also incurred expenditure on fabrication of hoarding structures on the terrace. Obviously, the expenditures have been incurred for obtaining new advantages. The assessee has made new hoarding and supporting for the hoarding, the entire frame and foundations have been reconstructed which is evident from the bills on record. Thus we decline to interfere with the findings of the Ld. CIT(A) on treatment of expenditure incurred on repairs and maintenance as capital expenditure - Decided against assessee. Charge on income - payment was diversion of income by overriding title - Held that:- The Undisputed fact is that in order to retire Shri Neville J. Mistry and to admit PTV and STV as partners with MS and KTV, it was agreed to pay ₹ 30 lakhs to Neville J. Mistry. Since the assessee was not having sufficient funds, the money was taken from TDV. It was agreed that on payment of said ₹ 30 lakhs Neville J. Mistry will retire from the firm. As per the agreement, Rs., 30 lakhs was given by TDV to MS, PTV, STV and KTV. A bare perusal of this would show that TDV had given loan to four persons. The loan was secured by a charge on the income of M/s. Fizza Publicity (assessee). ₹ 13.70 lakhs paid by the assessee is nothing but the repayment of loan for and on behalf of the 4 persons. In our understanding of the fact and the law, this is nothing but the application of income has rightly held by the Ld. CIT(A). - Decided against assessee. Disallowance u/s. 43B on account of Service tax payable - the amount has not been paid before the due date of filing the return. - Held that:- The assessee has debited the entire sum of ₹ 18,44,091/- to its profit and loss account therefore the fact of the case are clearly distinguishable from the facts of the decision relied upon by theLd. Counsel. We also find that the Tribunal has considered the decision of the Co-ordinate Bench in the case of ACIT Vs Real Image Media Technologies (P) Ltd.(2007 (12) TMI 263 - ITAT MADRAS-C) which has been considered by the Ld. CIT(A) and rightly distinguished. Since the assessee has claimed the deduction in respect of the entire amount of service tax, the disallowance made by the AO and confirmed by the Ld. CIT(A) is upheld - Decided against assessee. Disallowance of electricity expenses - Held that:- Revenue authorities have grossly failed in understanding the facts of the case. It is the say of the Ld. Counsel that the electricity expenses pertain to the electricity on hoarding sites and not to the company premises used by the assessee along with others. As the facts have not been properly appreciated by the lower authorities, in the interest of justice and fair play, we restore this issue to the file of the AO. The assessee is directed to furnish necessary details before the AO and the AO is directed to decide the issue afresh - Decided in favour of assessee for statistical purposes.
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2015 (8) TMI 1204
Claim of exemption under section 54 denied - no purchase deed was executed by the builder and that there was only an allotment letter issued - Held that:- As per the Revenue the advance could be returned at any time and, therefore, the assessee may lose the exemption under section 54 of the Act. In our considered opinion, the aforesaid does not militate against assessee’s claim for exemption in the instant assessment year, as there is no evidence that the advance has been returned. In case, if it is found that the advance has been returned, it would certainly call for forfeiture of the assessee’s claim under section 54 of the Act. In such a situation, the proviso below section 54(2) of the Act would apply whereby it is prescribed that such amount shall be charged under section 45 as income of the previous year, in which the period of three years from the date of the transfer of the original asset expires. The aforesaid provisions also does not justify the action of the Assessing Officer in denying the claim of exemption under section 54 in the instant assessment year. The assessee can be said to have complied with the requirement of section 54 of the Act; and, the exemption has been incorrectly denied by the lower authorities. As a matter of passing, we may also mention here the reliance placed by Ld. Representative of the assessee on the decision of our Coordinate Bench in the case of Shri Khemchand Fagwani vs. ITO, [2015 (8) TMI 1019 - ITAT MUMBAI] wherein also claim of exemption under section 54 of the Act was allowed under similar circumstances. In the light of the precedent, we find no reason to deny the claim under section 54 of the Act. - Decided in favour of assessee.
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2015 (8) TMI 1203
Bogus purchases - deletion of 75% of bogus purchases by CIT(A) - matter further travelled to the Hon’ble Bombay High Court, wherein set aside the order of the ITAT insofar as it relates to disallowance of purchases and restored the matter back to the file of ITAT for fresh consideration of the issue - Held that:- After considering the assessee's affidavit, the Hon'ble High Court restored the matter back to the file of the Tribunal for fresh consideration by considering the assessee's plea that the assessee has furnished PAN of eight parties from whom purchases have been made by the assessee. However, details of such PAN No. of eight parties do not find any mentioned in the orders of the lower authorities nor in the orders of the tribunal passed on earlier occasions. Genuineness of purchase can be verified only after examining the assessment records of these parties as per PAN No. details filed through affidavit, before Hon’ble High Court. For this purpose both the Id. AR and Id. DR fairly conceded that the matter may be restored to the file of the A. O. for re-examining the alleged purchases in the light of the fact that all the eight parties from whom purchases was made are having PAN. Thus we restore the matter back to the file of the A. O. for deciding the genuineness of the purchases made from eight parties having PAN as supplied by the assessee before the Hon'ble High court as per the affidavit dated 31.12.2011, as reproduced above. - Decided in favour of assessee and revenue for statistical purposes.
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2015 (8) TMI 1202
Sale of shares - assessment as Capital Gains or Business income - AY 2007-08 - Held that:- The gains arising on its sale should be assessed as Short term capital gains only. Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the assessing officer to assess the gains arising on sale of shares of M/s Adani Enterprises Limited under the head “Income from Capital gains”.- Decided in favour of assessee. Disallowance of foreign travel expenses - Held that:- It is well settled that the expenditure need not produce revenue immediately, since it is usual that these expenditure may bear fruits in future. The assessee has also submitted that these expenses have not been incurred by the directors, but the representatives of the assessee company who hold high educational qualification, meaning thereby the element of personal expenditure is also ruled out. Hence, we are of the view that the tax authorities are not right in law in holding that the travelling expenses are capital/pre-operative in nature. Accordingly we set aside the order of Ld CIT(A) on this issue and direct the AO to allow the deduction towards foreign travel expenses.- Decided in favour of assessee. Assessment of Short term capital gain arising on sale of shares as business income - AY 2008-09 - Held that:- The assessee has accumulated the shares initially in instalments and later sold them in instalments. As in last year, no interest bearing funds have been used and average holding period is about 180 days. The assessee has held the same as its investment. The assessee has declared the gains under the head business in respect of shares held as trading asset. All these factors support the contention of the assessee that the shares of M/s Balaji Telefilm Ltd were held as investment. Accordingly, we hold that the tax authorities are not justified in assessing the profit generated on sale of shares of M/s Balaji Telefilm Ltd as business income, that too, without bringing any other material on record. Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the AO to assess the same under the head “Short term Capital Gain”.- Decided in favour of assessee. Disallowance made u/s 14A - Held that:- The provisions of Rule 8D should not applied in the instant case, since the disallowance computed under Rule 8D works out to disproportionately higher figure of ₹ 13,57,011/-. Hence, considering the facts discussed above, we are of the view that the disallowance of ₹ 2,07,022/- made by the assessee does not call for any interference. In view of the above, we set aside the order of Ld CIT(A) on this issue and direct the AO to restrict the disallowance u/s 14A of the Act to the amount disallowed by the assessee. - Decided in favour of assessee.
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2015 (8) TMI 1201
Disallowance u/s 14A - CIT(A) deleted the addition - Held that:- Nothing has been brought on record by the AO to hold why the suo moto disallowance made by the assessee u/s 14A on facts could not be accepted. On consideration thereof it is seen that in the peculiar facts and circumstances of the case where the AO has not recorded his finding as to why he was not satisfied by the correctness of assessee’s claim of expenditure. No distinguishing facts and circumstances has been pointed out by the Ld. Sr. DR. In assessee’s own case in 2008-09 wherein it was held that Rule 8D cannot be applied for want of recording of requisite satisfaction by the AO it was submitted that facts and circumstances being identical, the departmental appeal on identical fact had been dismissed - Decided against revenue. Addition on commission paid to the Managing Director of the assessee company, u/s 36(1)(ii)- Held that:- As decided in assessee's own case for 2007-08 & 2008-09 as per section 17(1) of the Act, the term “salary” includes any, fees, commission, perquisites or profit in lieu salary, All the sums are taxable under the head “salary” only. These two directors, while filing the return of income, declared not only the salary but commission also as part of income under the head “salary” The same are assessed as such. Therefore, it is incorrect to hold that bonus or commission shall not form part of salary or remuneration. In accordance with the provisions of section 36(1)(ii) any sum paid to an employee as bonus or commission for services rendered where such sum would, not have been payable to him as profit or dividend if it had not been paid as bonus or commission is allowable. The sum paid to the directors is as an employee of the company. The bonus or commission payable for the services rendered and are in accordance with the terms or employment. The directors are not only shareholders of the company. Therefore, it cannot be said that if the commission was not paid, such sum would have been paid to the employees as profit or dividend. Thus, the exception provided in section 36(1)(ii) do not apply. In such circumstances the amount payable as commission are allowable u/s 36(1)(ii) of the Act. - Decided in favour of assessee.
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2015 (8) TMI 1200
Principle of mutuality - Co-operative Society - Disallowance of deduction u/s. 80P - Revenue has denied deduction on the profits earned by assessee from consumer and garments division on the ground that such activities are akin to the activities of consumer society - Held that:- It is an admitted position that these activities were carried out by the assessee for several years and no objection whatsoever was raised by the Department on this count. The assessee has been consistently following the same method of accounting and the nature of activities carried out in the past, as well as, in subsequent assessment years is same. It was only during the impugned assessment year and the following assessment year that the Revenue has raised dispute with respect to profits from consumer goods and garments division We are of the considered view that since the turnover from the consumer divisions as compared to the total turnover of the assessee is miniscule, it would not change the nature of activities of Co-operative Society. The assessee Co-operative Society is primarily engaged in providing credit facilities to its members and it is for the benefit for members that consumer division and cloth division have been included in the activities of the society. By providing such facilities to its members it cannot be said that the assessee is engaged in trading of consumer goods on commercial basis. The profits arising from aforesaid divisions are not liable to be taxed under the principle of mutuality. Any income generated from facilities, amenities, privileges provided to the members in accordance with the bye-laws and regulations of the society is exempt on the principle of mutuality. See CIT Vs. Ranchi Club Ltd. [1991 (9) TMI 52 - PATNA High Court] - Decided in favour of assessee
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2015 (8) TMI 1199
Contingent liability disallowed - Held that:- Provision should be made for all known liabilities and losses even though the amount cannot be determined with certainty. In this case, the assessee is not disputing the liability at all. The assessee is disputing only quantification of demand raised by the electricity board. Therefore, in our view incurring of liability is certain and it is not contingent. Only quantification is to be made as to how much expenditure to be incurred on electricity charges. In the circumstances, we hold that expenditure is allowable expenditure. - Decided in favour of assessee. TDS on reimbursement of expenses - Held that:- There is no categorical finding that expenses were all only reimbursements made by the assessee. No such categorical finding is coming out from the orders of the lower authorities. The alternative submission of the assessee that the provisions of section 40(a)(ia) have no application for the payments made within the accounting year in view of the decision of the hon'ble Allahabad High Court in the case of CIT v. Vector Shipping Services Pvt. Ltd. [2013 (7) TMI 622 - ALLAHABAD HIGH COURT ] is accepted, as this Tribunal is consistently holding such view. Therefore, for limited purpose of examining as to whether all these payments were made within the accounting year, this issue is remitted back to the file of the Assessing Officer - Decided in favour of assessee for statistical purposes. Disallowing the bad debts written off - Held that:- Following the decision of the hon'ble Supreme Court in the case of T. R. F. Ltd. [2010 (2) TMI 211 - SUPREME COURT ] we direct the Assessing Officer to delete the disallowance of bad debts of ₹ 18,440 which was written off by the assessee in the books of account.- Decided in favour of assessee
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2015 (8) TMI 1198
Additions u/s 41(1) on account of cessation of liability - Held that:- It is not a case where the CIT(A), in the absence or because of the failure of the assessee to provide addresses, confirmations etc. from the alleged creditors, has assumed that the liability has ceased to exist, but he himself made further enquiries to find out the alleged creditors through the official machinery. When he had satisfied himself that neither in the last so many years those parties had ever been seen by anybody, nor any known address of them was available, there was never any demand of payment by any of the above named parties from the assessee for the last more than 10 years, no income tax returns had been filed by them, only then he concluded that the liability of the assessee, in fact, had ceased to exist. In our view, merely because the assessee now has offered the said amount as income, that itself, does not support the case of the assessee that the liability had not ceased to exist in the year under consideration, rather, this fact supports, the case of the Revenue that even after passing of further 5 years from the date of assessment, the assessee could not trace his creditors. We, therefore, do not find any infirmity in the well-reasoned order of the Ld. CIT(A) in this respect. There being no merit in the appeal of the assessee, the same is accordingly dismissed - Decided against assessee.
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2015 (8) TMI 1197
Expenditure on purchase of Audio Rights - revenue v/s capital expenditure - Held that:- We concur with the finding of the learned CIT(A) that the assessee is a manufacture of music and the new material is the master plate which can be obtained only by way of assignment of copyrights. Since the assignment of copy rights and the amount paid is for procuring new material and to ensure its smooth and legal supply as understood in the commercial parlance, the expenditure is Revenue in nature. The master plate of one movie cannot be used for another and for every movie a new and different master plate is required; indicating that the master plate is nothing more than raw material. From the factual matrix of the case on hand, we find that the master plate of a movie is only a new material from which copies are produced on cassettes for that movie only and being material to the evaluation of the gross profit derived from the manufacture and sale of copies / cassettes, would, in our considered view, be construed as Revenue expenditure. - Decided in favour of assessee.
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2015 (8) TMI 1196
Penalty proceedings under Section 271(1)(c) - assessee offered an amount voluntarily - Held that:- In penalty proceedings, the burden was always on the revenue to prove concealment and a finding reached in the quantum appeal that a particular income is liable to be added as income of the assessee is not binding in penalty proceedings. In this case, the A.O. imposed the penalty based on the statement recorded under Section 131 of the Act and thereafter, the assessee has submitted detailed reply with regard to the nature of business under what circumstance the amount was offered as the additional income. The A.O. without enquiry/investigation to verify the correctness of the explanation given by the assessee, he has simply rejected the explanation given by the assessee and imposed the statement given by the Managing Partner of the company during the course of survey. Keeping in view the facts and circumstances of the case and also following the above said judicial precedence, we are of the opinion that this is not a fit case to levy penalty under Section 271(1)(c) - See CIT v. S. Khader Khan Son (2013 (6) TMI 305 - SUPREME COURT ) - Decided in favour of assessee.
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2015 (8) TMI 1195
Penalty under section 272B - not quoting PAN in the appeal filed before the CIT(A), - Held that:- The department has brought no material before us to show that the assessee was allotted PAN by the AO as per the provisions of sub-section (2) of section 139A of the Act. Further, as per the provisions of section 273B, penalty under section 272B is not leviable, if the alleged default was for reasonable cause.We further find from the challan of Tribunal fee, attached with the appeal memo that the assessee has quoted PAN therein. We further find that no material was brought before us to show that the assessee was informed by the department of her PAN and legal requirement of putting PAN at any time so that it can be inferred that the default was willful or bona fide. Keeping in view the entire facts, in our considered view, the default on the part of the assessee was because of her ignorance and not because of any mala fide intention, and therefore, we delete the penalty levied under section 272B of the Act. - Decided in favour of assessee.
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2015 (8) TMI 1194
Premium paid on Keyman Insurance - disallowance of excess premium and added to the income - CIT(A) following his predecessors order in assessee’s own case for A.Y. 06-07 decided the issue in favour of Assessee - Held that:- CIT(A) while granting the relief has noted that the premium paid in the current financial year was the second installment and the first installment of premium paid in A.Y. 05-06 by the Assessee has been accepted and not disputed by Revenue. Before us, the Revenue could not controvert the findings of CIT(A), nor could he bring any decision of High Court in its support. We also find that the Hon. Bombay High Court in the case of CIT vs. B.N. Exports (2010 (3) TMI 186 - BOMBAY HIGH COURT) has held that premium on the Keyman Insurance Policy of partner of the firm is wholly and exclusively for the purposes of business and is allowable as business expenditure. In view of the aforesaid facts, we find no reason to interfere with the order of CIT(A) and thus this ground of Revenue is dismissed. - Decided in favour of assessee.
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Customs
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2015 (8) TMI 1227
Obtaining Export obligation discharge certificate fraudulently – Cancellation of anticipatory bail – Because of fraudulent methods adopted by respondent to obtain Export Obligation Discharge Certificate, there is loss to Government of India and in order to safeguarding sum of public money criminal proceedings were initiated against which anticipatory bail was granted to respondent – Petitioner seeking cancellation of anticipatory bail granted – Held that:- submissions made by Assistant Solicitor General of India will not serve as ground for cancellation of anticipatory bail granted to respondent – Once anticipatory bail is granted by Court, it could be cancelled only if respondent abuses said concession as observed by Supreme court in Dolat Ram and others v. State of Haryana [1994 (11) TMI 424 - SUPREME COURT] – It is not case of petitioner that respondent is abusing concession granted to him – Submission that grounds for granting bail was incorrect will not serve as ground for cancellation of anticipatory bail granted to respondent – Decided against petitioner.
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2015 (8) TMI 1226
Punishment for contravention in relation to cannabis plant and cannabis – Appeal against Conviction – After hearing parties, trial Court vide impugned judgment, convicted appellant for commission of offence punishable under Sections 20 of NDPS Act and sentenced him to undergo rigorous imprisonment and to pay fine – Appellant assailed said order of conviction on grounds of non-compliance of NDPS Act – Held that:- As PW-5 and PW-7, being material witness of recovery, are not alleged to have any animus or hostility against appellant prior to incident, therefore, no motive can be ascribed to them to testify falsely in present case – Accused cannot be acquitted merely because no independent witness was produced – Compliance or noncompliance of Section 50 is relevant only in case of personal search of person – Said Section does not extend to search vehicle or container or bag, as held by Supreme Court in Ajmer Singh's case [2010 (2) TMI 1051 - SUPREME COURT] – PW-3, PW-4 and PW- 7 in their deposition deposed that, so long as, case property remained in their possession, neither they nor anyone else tampered, therewith – Trial Court rightly observed that since appellant is native of Himachal Pradesh, police could not involve him falsely in case in hand by bringing him from his State – Considering that appellant has been in jail from date of his arrest and has already spent 9 years in jail, sentence reduced to 10 years instead of 12 years – Order of conviction modified – Decided against appellant.
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2015 (8) TMI 1225
Filling of supplementary claim – Duty Drawback – Petitioners filed supplementary claim by applications under Rule 15 claiming amount – Said claim was rejected as time barred and also on ground that Order-in-Original passed by Commissioner did not cover drawback claims pertaining to shipping bill covered in supplementary claim – Revision was filed against said order of commissioner – Revisional Authority upheld order of commissioner holding that supplementary claims were barred by limitation – Held that:- The contention was that, if Rule 15(1) was applicable Rule and that provided time limit, could time limit have been relaxed by Government in exercise of its power to relax conferred by Rule 17 of Drawback Rules – It was necessary for the Joint Secretary to have rendered a finding as to whether the power to relax under Rule 17 has been invoked and if invoked before him, could the power be exercised at the stage at which the matter is brought before him. Once the Commissioner has held that Rule 17 enables the consideration of the supplementary claim on merits, then, the above exercise in its entirety was necessary. It was incumbent upon the Revisional Authority to render complete findings and conclusion and not leave the matter half way and by some cryptic observation and reasoning. Thus, Revisional order passed by Department of Revenue quashed and set aside – Merely because such stand was taken by Petitioners, Revisional Authority should not once again render same findings but deal with all these issues and contentions based thereon – Authority to decide whether order passed by Commissioner (Appeals) and specifically referring to Rule 17 in above background, was legal or proper – Petition disposed of.
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2015 (8) TMI 1224
Imposition of redemption fine when goods not available – Tribunal vide impugned order partly allowed appeal of respondent by dropping redemption fine as goods were not seized and were not available – Whether tribunal was legally justified in dropping redemption fine – Held that:- Availability of goods is one of criteria which has been evolved in reported decision of current Court in case of Commissioner of Customs (Import), Mumbai v. Finesse Creation Inc. [2009 (8) TMI 115 - HIGH COURT OF JUDICATURE AT BOMBAY] – It was held that redemption fine is concept which arises in event goods are available and are to be redeemed – If goods are not available there is no question of redemption of goods – View of Tribunal in given facts and circumstances, considering language of Section 125(1) does not suffer from such serious legal infirmity or perversity which would warrant interference – Section 125 speaks of option to pay fine in lieu of confiscation – Appeal dismissed – Decided against revenue.
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2015 (8) TMI 1223
Illegal Seizure of Goods – Clearance of goods upon payment of duty – Petitioner seeking appropriate direction, commanding respondent to complete final assessment of Customs duty and to grant provisional release of imported goods on basis of bills of entry – Petitioner contended that there is no reason for non-clearance of imported goods and action of authorities in not permitting petitioner to have imported goods cleared upon payment of duty is illegal, improper and abuse of power – Held that:- It is not a case made out in the opposition that the goods imported were exempted from duty provided the conditions attached thereto are fully observed not it is a case that the goods imported is prohibited under the Act or any other law for the time being inforce or a case of removal or attempt to remove from a customs area or a warehouse without the permission of the appropriate authority. Authorities contended that on basis of letter, officer has reason to believe that petitioner is evading duty and because of provisions contained in Section 111(j)(o), proper officer formed opinion that imported goods are liable to confiscation and invoked provisions of Section 110 – It is apparent that authorities have wrongly invoked provisions, Court cannot be mute spectator and still relegate parties to authorities to take decision and determine dispute – Therefore, court feels that action of authorities in seizing goods under Section 110 is illegal, improper and invalid and cannot be sustained in law –Accordingly order of seizure set aside – Since authorities have categorically stated that assessment has already been done, said authority shall allow clearance of goods if duty so assessed is paid by petitioner – Petition disposed of.
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2015 (8) TMI 1222
Condonation of Delay – Tribunal vide impugned order reported in [2013 (10) TMI 1340 - DELHI HIGH COURT] refused to condone delay of 217 days in filing of appeal by observing that appellant was satisfied with order of commissioner but when proceedings were pending before original adjudicating authority, appeal was preferred before Tribunal on second thought - High court upheld order of tribunal by dismissing appeal of assess - Supreme court dismissed special leave petition filed by appellant.
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Service Tax
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2015 (8) TMI 1249
Demand of service tax - maintenance and repair services - They were collecting corpus for maintenance, etc., and the said balance of funds along with account of utilisation, are transferred to the newly formed society, in terms of Sections 5 & 6 of the said Maharashtra Ownership Flat Act, 1963 - Held that:- Appellants are not liable to pay service tax under the category of "maintenance and repair services" and "one time maintenance charges" collected from buyers of the flat, relying on the earlier ruling of this Tribunal in the case of Kumar Beheray Rathi (2013 (12) TMI 269 - CESTAT MUMBAI) - Decided in favour of assessee.
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2015 (8) TMI 1248
Renting of Immovable Property Service - Valuation - Inclusion of notional interest - Penalty u/s 77 - Held that:- Appellants have received a huge sum of Rs, 20 crores, interest free as security deposit at the time of execution of the agreement. The monthly rental fixed is so nominal in regard to the property that is leased. Again, the renewal terms of the agreement are that the agreement can be renewed up to 20 years. If renewed to such extended period, the refund of the security deposit need to be made only after 20 years. But as to the rate of rent, it is specifically stated that the rent shall not be revised or enhanced even if the agreement is renewed for extended periods. Further, there is a lock-in-period of 5 years whereby the appellant is assured to retain the deposit for a period of 5 years even in the event of the Lessee/ GSPL terminating the agreement prior to the expiry of 5 years. The judgments rendered in K. Raheja Corp. (P) Ltd. [2015 (2) TMI 886 - CESTAT MUMBAI] and Murli Realtors Pvt. [2014 (9) TMI 461 - CESTAT MUMBAI] where the Tribunal has held that notional interest on interest free security deposit cannot be added to the rent agreed between the parties for the purpose of levy of service tax on renting of immovable property, is not applicable to the present case. The facts of the instant case stands on a different footing for the reason that the security deposit is very huge and the rent fixed is reduced to a nominal amount in regard to the property leased - the appellants have not been able to make out a case for full waiver of pre-deposit - stay granted partly.
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2015 (8) TMI 1247
Authorised service station service - Free services during warranty period - Whether respondent is liable to pay service tax on free own services provided by the dealers - Hed that:- it has not been brought out by Revenue whether any consideration is received by the dealers from the manufacturer or the buyers of vehicles - Decision in the case of CCE, Indore vs. Jabalpur Motors Ltd. reported in [2015 (1) TMI 1140 - CESTAT NEW DELHI] followed - Decided against Revenue.
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2015 (8) TMI 1246
Denial of refund claim - Export of service - Goods used in India - Erection, Commission & Installation and Business Auxillery Services - Held that:- On analyzation of the activity of the respondents it can be seen that the respondents procure orders from Indian customers for their holding Company in Japan. The products are then supplied to Indian customers as per these purchase orders - The respondents receive commission for procurement of purchase orders. Therefore the services of the respondents in procuring purchase orders/marketing is definitely utilized/benefited by the Company in Japan. Further it is not in dispute that the respondents received the commission in convertible foreign exchange. If the respondents did not canvass the purchase orders and send it to their client Company in Japan, there would be no supply of goods or use of goods in India at all. So merely because the goods supplied were ultimately used in India, cannot be a reason to hold that there was no export of the output service. In the present case, the effective use and enjoyment of the service of procuring purchase order is by the Company in Japan and therefore the only conclusion possible is that the services were exported. - Commissioner (Appeals) has rightly allowed the refund claim of the respondents - Decided against Revenue.
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2015 (8) TMI 1245
Power of Commissioner (Appeals) to remand the matter - Held that:- under section 85(4) the language is used in wider context. It does not restrict the type of order which the Commissioner (Appeals) may pass. Rather it states that the Commissioner (Appeals) may pass such order as he thinks fit. Thus scope of remand is included in the provision of law liad down in the section 85(4). Reliance is placed on the case of CST, Delhi vs. World Vision-[2009 (11) TMI 452 - CESTAT, NEW DELHI ] Reliance is also placed on the Supreme Court judgment in the case of UOI Vs. Umesh Dhaimode [1997 (2) TMI 140 - SUPREME COURT OF INDIA] holding that an order of remand necessarily annuls the decision which is under appeal. Therefore, the appellate authority has the power to remand a matter to the lower authority. - Decided against Revenue.
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2015 (8) TMI 1244
Collection of amount in the name of service tax - Amount received from several purchasers of flats - Held that:- the original authority also observed that in many cases the works used was ‘service charges' and not service tax; moreover original authority also had examined all the documents and came to the conclusion that the appellants had not charged service tax and collected the same; moreover he also took note of the fact that appellants had obtained indemnity letters from the purchasers of the flats undertaking to reimburse the service tax to them in case it comes possible; during the relevant period, there was no clarity regarding law of service tax and it is the submissions of the learned counsel that appellants had taken such indemnity letters. On the basis of the above facts, the original authority dropped the demand The only ground taken is that the association of the flat owners had forwarded several copies of price list wherein the service tax element had been shown. Unlike original authority there is no detailed discussion at all in the order of the Commissioner (Appeals) except for the observation that in the price list service tax has been shown. - The original adjudicating authority had reached the correct conclusion in the facts and circumstances of the case. - Demand set aside - Decided in favour of assessee.
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2015 (8) TMI 1243
Denial of CENVAT Credit - Rent-a-cab service and Gardening service - Held that:- Rent-a-cab Operator service or Bus operator services was utilized by them for transportation of their staff members, officers and employees from their residence to the factory and from the factory to the residence and for many other works undertaken by their staff members, officers engaged in the business activity of production and sale of finished goods. - Tribunal in the case of Mundra Port & SEZ Ltd vs CCE Rajkot [2008 (9) TMI 117 - CESTAT AHEMDABAD] allowed the CENVAT Credit on Rent-a-cab service on the identical facts. It is seen that the Tribunal in the case of M/s ISMT Ltd Vs CCE Aurangabad [2009 (12) TMI 124 - CESTAT, MUMBAI], held that a good garden creates a better atmosphere and environment which increases the working efficiency and CENVAT Credit was allowed. - Impugned order set aside - Decided in favour of assessee.
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2015 (8) TMI 1242
Services of maintenance and repair - Assessee discharged their service tax liability on 30% of the gross value of the contract for repairing the transformers - As the balance 70% of the contract value was in relation to the value of the parts replaced during repair activities, they discharged VAT on the same. - Held that:- 70% of the contract value has admittedly paid the VAT. There are many decisions to the effect that service tax cannot be charged in respect of the sale of goods on which VAT has been paid. As such, at this stage, we are of the view that the appellant has a good prima facie case in it's favour so as to allow the stay petition unconditionally - Stay granted.
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Central Excise
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2015 (8) TMI 1237
Duty demand - Valuation of goods - Related person - deduction of these trade discounts offered to dealer being a group company selling entire production of the assessee - held that:- just because the entire production of goods of the appellant company was being sold to M/s. AIL who were selling the same at a higher price or that M/s. AIL were incurring the expenses or marketing and advertisement of the goods produced by the appellant company, the two cannot be treated as related persons in the sense that there was mutuality of interest in the business of each other. Similarly, just because the appellant company along with two other group companies, had extended loan of about ₹ 50 crore to M/s. AIL, it cannot be said that the transactions between the appellant company and M/s. AIL was not on principal to principal basis, as it is not the contention of the department that the loans extended by the appellant company - and two other group companies, M/s. Adonis (India) Limited were interest free loans or at interest much lower than the market rates. The appellant company and M/s. AIL can be treated as related persons if there is an evidence to prove that the appellant company had all pervasive financial year and managerial control over M/s. AIL and M/s. AIL were just an extension of the appellant company. But in this regard, we do not find any such evidence. Commissioner was required to go only into the question of duty demand of ₹ 35,63,928/- confirmed against the appellant company and also question of imposition of penalty on them and other notice. The duty demand of ₹ 28,35,170/- had not been challenged by the department and as such was not the subject matter of the appeals filed before the Tribunal which were decided by the Tribunal vide order dated 4/5/2001. In view of this, the Commissioner's order confirming the duty demand of ₹ 28,35,170/- is not only totally incorrect order but also a perverse order and, therefore this part of the order has to be set aside. Apex Court also in the case of CCE Vs. Xerographic Limited reported in [2006 (3) TMI 308 - SUPREME COURT] has held that the distributor companies of an assessee cannot be treated as related persons, as existence of extra commercial consideration for discarding the normal price between the assessee and the distributor companies has not been shown. In our view, the ratio of these judgment of the Apex Court is applicable to the facts of this case. - Demand set aside - Decided in favour of assessee.
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2015 (8) TMI 1236
Denial of CENVAT Credit - agricultural tractors - switching over from Rule 6(3)(b) to Rule 6(2) of the Cenvat Credit Rules - delay in reversal of the cenvat credit. - Exemption under Notification No.23/2004-CE dated 9.7.2004 - Held that:- There is nothing in Cenvat Credit Rules or any other provision in the law that before switching over to Rule 6(2) above, a manufacturer is required to reverse the credit of inputs available in its stores, work in progress and in the finished goods on that date and only after reversing the credit the manufacturer can switch over to Rule 6(2). In the absence of any such prohibition, we are unable to appreciate Revenue's contention that the appellant is required to pay an amount under Rule 6(3)(b) till 24.9.2004 i.e. the date when they reversed the credit attributable to inputs in its stores, work in progress and on the finished goods as on 31.8.2004. In the present case, the appellant has not reversed the credit on inputs on proportional basis as envisaged in the amended Rule 6(3) and in our view, the discussion on the said Rule is irrelevant in the facts of the present case. In the present case, the appellant has switched over to Rule 6(2) w.e.f. 1.9.2004 and reversed actual credit on its stores, work in progress and finished products as on 31.8.2004 and thus submissions by both sides are irrelevant to the facts of the present case. - Decided in favour of assessee.
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2015 (8) TMI 1235
Recovery of wrongly taken cenvat credit - personal penalty whereas the company is under liquidation - Imposition of penalty under Rule 26 - Held that:- Show cause notice had been issued not only to the appellant company M/s. DTL, Unit-II (Aluminium Division) but also to the Managing Director, Shri M.B. Baheti, Shri Ravindernath Jain, Joint Managing Director and Shri Rajesh Maheshwari, Manager (Finance). Even if the Commissioner could not adjudicate the question of duty demand against M/s.DTL in view of the liquidation order of the High Court on 11.07.2005, in our view, the Commissioner could always adjudicate the question of imposition of penalty on the appellant, Shri M.B. Baheti and Shri Rajesh Maheshwari. Moreover, though the Commissioner has confirmed the duty demand against M/s.DTL, they are not in appeal and, therefore, this Tribunal is not required to go into the question as to whether the confirmation of duty demand against M/s.DTL was correct or not. Statement dated 28.07.2003 of Shri M.Baheti, Managing Director, which is being used against him, is that after taking stock of the situations in the wake of search of Unit M/s. DTL, Unit-II, he had removed Shri Rajesh Maheshwari from M/s. DTL as he found him solely responsible for this act. From this statement, no conclusion can be drawn that Shri M. Baheti was involved in day-to-day functions of the Aluminium Division of M/s.DTL or had knowledge about its activity of duty evasion. Moreover, from his statement referred to in para-15 of the show cause notice, it is seen that Shri H.P. Gupta, Advisor and Shri Rajesh Maheshwari, Manager (Finance) had been reporting to Mr. Ravindra Jain, Joint Managing Director and that during 1997-98, M/s. DTL (Aluminium Division) had become a sick unit and it had been decided to sell the assets of the aluminium division of the company to Shri Ravindera Jain and Shri Jain was inducted to run this Unit. Thus from this statement, it is clear that it is Shri Ravinder Jain, who was running the Aluminium Division and Shri M. Baheti was not involved in day-to-day functions of this Unit. In our view, therefore, the evidences on record are not sufficient to conclude that Shri Baheti was, in any way, concerned in removal of the clandestinely cleared goods from M/s. DTL. In view of this, the imposition of penalty under Rule 26 of the Central Excise Rules on Shri M. Baheti would not be sustainable and has to be set aside. - Decided partly in favour of assessee.
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2015 (8) TMI 1234
Denial of CENVAT Credit - Various services - Held that:- Credit on annual operation and maintenance service of windmill, normal maintenance and services availed in respect of functioning of wind mill are allowed. Appeals have been filed by Revenue against cenvat credit of service tax paid on lease rental allowed by the authority below. Record reveals that rent paid is directly attributable to the generation of wind energy. - issue of Cenvat credit of service tax paid on rental services is also allowed. Protection of the windmill being an integral part of generation of wind energy, the service tax paid on security services availed should be allowed as Cenvat credit - Revenue has no evidence to discard such submission placing any cogent evidence to the contrary to establish that there is no integral relation between the security services availed to protect the windmill and ensure operation thereof. Accordingly, Cenvat credit on this count is also allowed. Insurance policy taken to protect them from various health hazards is obligation of the employer under the Factories Act. Accordingly, service tax paid in respect of such services is considerable tor allowance of Cenvat credit. Revenue does not dispute to such claim since there was no evidence on record to show that policy relates to any other property or contingency. Accordingly, the Cenvat credit relating to service tax paid on availing insurance services for workers is allowable. Cenvat credit on service tax paid to avail passenger carrying package policy is claimed. But no evidence was produced to show that such a policy has any integral connection either to any output or output services. In absence of such integral connection, Cenvat credit thereon is not allowable. There is a claim of insurance paid towards fire policy of factory-residential colony. Nothing was brought to record to show that the residential colony was for workers of the factory. Therefore, without the connection of the insurance policy to the workplace or workers, the claim of Cenvat credit on service tax paid in respect of insurance service is not allowable. Crane charges tor windmill blade replacement claimed in one of the appeal was not refuted by Revenue. Such activity is not strange to the windmill operation or set up. Blades being affixed to the windmill at a quite high level from the earth, using of service of crane for such purpose cannot be said to be without nexus to maintenance of the windmill. Therefore, Cenvat credit in respect of service tax paid to avail the services of the crane is allowed. There is a claim of availing club services, which are no way concerned for either manufacture or providing of output services. In such circumstances, the claim of input credit thereof is not allowed. - Decided partly in favour of assessee.
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2015 (8) TMI 1233
Classification of Flexible Intermediate Bulk Containers (FIBC) - Classification under Heading 392090 / 39232990 or 6305 32 00 - Held that:- The Board has issued the clarification for the purpose of All Industry Rates of Duty Drawback and categorically clarified that classification of the product FIBC under drawback tariff item 6305. It is pertinent to state that both the drawback schedule and ITC Code issued by DGFT and CETH are aligned with HSN, the classification issued by the Board assumes vital importance and Revenue cannot change the classification under Central Excise Tariff Chapter 3923. - Point No. 29 of the Minutes of the Meeting of DGFT held on 25.7.2013 clarified item FIBC - Therefore, both the Board s Circular and DGFT have clarified that FIBC is classifiable under Chapter 6305 - Further, the HSN Explanatory Note of Chapter 39 clearly excludes FIBC of Heading 6305 from Chapter 3923. Parallelly HSN Explanatory Note 6305 3200 specifically includes description of FIBC. It is pertinent to state that prior to alignment of Tariff with the HSN Chapter 63 of CETH had only one sub heading i.e. 6301 till 1994-95. With effect from 2005 the Central Excise Tariff was aligned with HSN and the Chapter 63 expanded to include more sub headings from 6301 to 6310. - FIBC is rightly classifiable under 6305 3200 and not under 39232990 - Decied against Revenue.
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2015 (8) TMI 1232
Classification of goods - classification of Flexible Intermediate Bulk Containers under 3993 and 2990 of the Schedule to the Central Excise Tariff Act, 1985 - Held that:- As set out by the appellant, because of the classification, he is put into loss and inconvenience especially with the foreign buyers. Under these circumstances, the status-quo is to be maintained till the dispute is resolved by the Tribunal one way or the other. The proper course would be that the Tribunal shall hear the matter expeditiously, within three months from today. But till such time, the order passed by the Commissioner, shall not be given effect to - Stay granted.
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2015 (8) TMI 1231
Extension of time for protection umbrella - waiver of pre-deposit - Apprehension of coercive action for recovery of excise duty - Held that:- Court earlier granted protective umbrella to the petitioner with the spirit that the appellant should not be subjected to coercive process until he gets an opportunity to argue on waiver of pre-deposit - Taking into consideration the statement made on affidavit that the application has not come up for hearing so far before the Tribunal, the interest of justice would require this Court to extend the protective umbrella to the petitioner. - case of the petitioner has not come up for hearing even after four months, I am inclined to grant protective umbrella to the petitioner. - when the application is listed for hearing, if any adjournment is sought by the petitioner or the case is adjourned for any reason attributable to the petitioner, this protective umbrella shall lose its efficacy. - Appeal disposed of.
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2015 (8) TMI 1230
Waiver of pre deposit - appellant has not referred the dispute to a Committee of Disputes which was constituted earlier by the Government of India - Held that:- In another appeal of the appellant before us, the Tribunal entertained the application for dispensation and waiver of pre-deposit of duty, interest and penalty and passed an order thereon [2012 (6) TMI 669 - CESTAT, MUMBAI]. - The appeal therefore should not have been dismissed without adjudication. Even if, it was dismissed for want of prosecution on the application of the appellant, the same should have been restored. The restoration application could not have been dismissed by the reasons which are assigned in the impugned order. - impugned order is quashed and set aside and the appeal of the appellant is restored to the file of the Tribunal - Decided in favour of assessee.
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2015 (8) TMI 1229
Legality of imposition of amount of penalty - Held that:- whether there is infraction of provisions of law, wilful or otherwise and whether there was any mens rea is factual, which requires adjudication by the authority below - Held that:- Since appellant herein had no such opportunity of urging the same, we feel that it would be in the best interest of parties as also justice that an opportunity of hearing, which is fair and complete, is afforded to them, for addressing the Tribunal on all issues. - Penalty set aside - Matter remanded back - Decided in favour of assessee.
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2015 (8) TMI 1228
Validity of impugned order - Tribunal held that application was in substance an application to rectify the mistakes made in the order and not a simplicitor application for recalling the order of dismissal of an appeal by default - Held that:- adjudicating authority was aware the noticee had expired as evident from the Order-in-Original. It is also evident the order dated 25th April, 2011 was passed in the presence of the Junior Departmental Representative pursuant to the appeal containing the statement of facts referred to by us earlier having been served on the Department. In such situation the mistake made by the Tribunal in passing the order on 25th April, 2011 recording abatement of appeal though at the instance of the appellant himself, was made in presence of the Department, which was aware about the identity of the appellant and the fact that it was the noticee who had died and not the appellant. This is how the gross mistake came about which by the miscellaneous application the writ petitioners sought to correct, but was turned down by the Tribunal - miscellaneous application of the writ petitioner was one for procedural review of the impugned order dated 25th April, 2011. We are of the opinion the Tribunal should have recalled the said order dated 25th April, 2011 in the light of Rule 41 to secure the ends of justice. In the facts and circumstances noted above, the Tribunal ought to have proceeded to have the appeal heard on merits - Matter remanded back - Decided in favour of assessee.
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CST, VAT & Sales Tax
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2015 (8) TMI 1241
Power to Assessment – Impugned order is challenged on ground that 1st respondent has no power of assessment, since same has been conferred on jurisdictional assessing authority -2nd respondent – Held that:- Admittedly 1st respondent, issued impugned notice and 2nd respondent conducted inspection at their factory premises and after spending whole day in assessing actual burning loss and actual consumption of electricity, after inspection, arrived at finding and based on finding 2nd respondent has also framed assessment – Therefore, it is not open to 1st respondent to undertake any inspection in guise of demonstration to make assessment – When petitioner has admittedly submitting assessments only to 2nd respondent, 1st respondent cannot embark upon fresh demonstration of the petitioner premises with the aid of the central excise department and the electricity board officials– Therefore, impugned communication of 1st respondent, requesting Assistant Executive Engineer, to depute responsible officer to attend work with respect to trial production is quashed – Decided in favour of Petitioner.
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2015 (8) TMI 1240
Penalty u/s 78(5) - Evasion of duty - Mens rea - violation of sub-section (2) of Section 78 of the Rajasthan Sales Tax Act, 1994 - Held that:- It has been noticed by the Tax Board that there were several discrepancies noticed in the documents produced by the vehicle In-charge at the time of interception. It has been observed by the Tax Board that the documents namely; bill was prepared later on after the vehicle was intercepted and clear cut case has been made out by the Tax Board which is a finding of fact recorded by it that the bill, which was produced at the time of interception and the bill, which was later on produced, was quite different and had variance and it was further noticed that it was not verifiable even from the records maintained by the assessee and produced before the AO. - There is a finding of fact by the Tax Board that the photocopies were merely kept to keep the offices of Revenue in dark, as original bill book was blank and entries could be made as per choice and convenience and further these can be categorized in the category of false and forged and it is a clear cut case of evasion of Tax. Therefore, once there is a clear cut admission by the assessee himself that the bill was prepared later on and in my view as well, there is no case made out by the assessee and it was a clear cut case of evasion of tax and the penalty has been rightly imposed by the AO and sustained by the Tax Board - Decision in the case of Guljag Industries [2007 (8) TMI 344 - SUPREME Court] - Decided against assessee.
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2015 (8) TMI 1239
Bank liability to pay VAT – Whether petitioner-bank was covered by definition of “dealer” under section 2(12) of Orissa Value Added Tax Act, 2004 and was liable to value added tax on sale of pledged assets effected by it for recovery of loan – Held that:- As observed by Supreme court in Federal Bank Limited [2007 (3) TMI 364 - SUPREME COURT OF INDIA] when bank sells pledged goods in exercise of its statutory power, such sales were required to be indicated in its balance sheet and profit and loss account as per Act – However, ratio of Federal Bank was not confined to specific inclusion of bank in definition “dealer” but on consideration of nature of banking business – In OVAT Act, “dealer” means any person who carries on business of buying and selling – Apex court clearly held that sale of goods to recover loan was part of banking business – We do not find any reason to exclude bank from definition of “dealer” under OVAT even in absence of express inclusion of bank in said definition – Therefore, bank was not dealer liable to pay value added tax on transaction of sale of goods in auction conducted by it to recover loan dues, was not correct –Petition disposed of – Decided against Assesse.
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2015 (8) TMI 1238
Rule 11B(2)(c) – Constitutional Validity – Invalid and Ultra Vires – Petitioner seeking declaration that rule 11B(2)(c) of Central Sales Tax (Kerala) Rules,1957 as invalid and ultra vires being in consistent with Central Sales Tax (Registration and Turnover) Rules framed by Central Government and beyond power conferred on State Government – Held that:- rule-making authority cannot legislate law which has effect of amending provisions of statute – State's power to make rules under Central Act, extends only to extent provided for under Central Act – Therefore, it was submitted that State Government has no authority under section 13(3) to frame rule 11B(2)(c) requiring production of additional documents than documents prescribed under section 6(2) to treat subsequent sale as exempt – Only condition to attract statutory mandate contained in section 6(2) was submission of documents prescribed in proviso to section – Therefore, once documents prescribed under proviso was submitted in respect of subsequent sale, provision will operate and exemption provided under provision will come into effect with its full scope and amplitude and State had no authority to whittle down effect of exemption provided under statute by framing any rules or otherwise – Therefore rule 11B(2)(c) was invalid and ultra vires – Decided in afavour of Assesse.
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Indian Laws
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2015 (8) TMI 1221
Denial of promotion from the post of Commissioner of Income Tax to that of Chief Commissioner of Income Tax - Held that:- non-consideration of the claim of the appellant is concerned, we are satisfied that the proposition of law relevant for the controversy in hand, was declared upon by this Court in Abhijit Ghosh Dastidar v. Union of India and others, [2008 (10) TMI 599 - SUPREME COURT] - impugned order passed by the High Court, deserves to be set aside, inasmuch as, the claim of the appellant could not be ignored by taking into consideration, uncommunicated Annual Confidential Reports for the years 1995-1996, 1996-1997 and 1998-1999, wherein the appellant was assessed as "good". In the absence of the aforesaid entries, it is apparent, that the remaining entries of the appellant being "very good", he would be entitled to be considered fit for the promotion, to the post of Chief Commissioner of Income Tax, on the basis of the then prevailing DoPT guidelines, and the remaining valid Annual Confidential Reports. - respondents ought to be directed to reconsider the claim of promotion of the appellant, to the post of Chief Commissioner of Income Tax, for the vacancies which arose during the years 2000-2001 and 2001-2002 on the basis of the communicated reports for the years 1997-1998 and 1999-2000, within a period of three month - Decided in favour of Appellant.
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2015 (8) TMI 1220
Whether the rights of an occupant/licensee/ tenant protected under a State Rent Control Act (Bombay Rent Act, 1947 and its successor the Maharashtra Rent Control Act, 1999, in the instant case), could be adversely affected by application of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 - Held that:- In the case of a company under the Companies Act, 1956 as in the present case, it is necessary that the premises must belong to or must be taken on lease by a company which has not less than 51 per cent paid up share capital held by the Central Government. - if there are rights created in favour of any person, whether they are property rights or rights arising from a transaction in the nature of a contract, and particularly if they are protected under a statute, and if they are to be taken away by any legislation, that legislation will have to say so specifically by giving it a retrospective effect. This is because prima facie every legislation is prospective Appellant was undoubtedly protected as a ‘deemed tenant’ under Section 15A of the Bombay Rent Act, prior to the merger of the erstwhile insurance company with a Government Company, and he could be removed only by following the procedure available under the Bombay Rent Act. A ‘deemed tenant’ under the Bombay Rent Act, continued to be protected under the succeeding Act, in view of the definition of a ‘tenant’ under Section 7(15)(a)(ii) of the Maharashtra Rent Control Act, 1999. Thus, as far as the tenants of the premises which are not covered under the Public Premises Act are concerned, those tenants who were deemed tenants under the Bombay Rent Act continued to have their protection under the Maharashtra Rent Control Act, 1999. It is very clear that in the facts of the present case, the appellant’s status as a deemed tenant was accepted under the state enactment, and therefore he could not be said to be in “unauthorised occupation”. His right granted by the state enactment cannot be destroyed by giving any retrospective application to the provisions of Public Premises Act, since there is no such express provision in the statute, nor is it warranted by any implication. In fact his premises would not come within the ambit of the Public Premises Act, until they belonged to the respondent No. 1, i.e until 1.1.1974. The corollary is that if the respondent No. 1 wanted to evict the appellant, the remedy was to resort to the procedure available under the Bombay Rent Act or its successor Maharashtra Rent Control Act, by approaching the forum thereunder, and not by resorting to the provisions of the Public Premises Act. Application of the Public Premises Act will be only from 16.9.1958, or from such later date when concerned premises become Public Premises on the concerned landlord becoming a Government Company or Public Corporation. When the law laid down by the different Benches of this Court including by the Constitution Benches on retrospectivity is so clear, and so are the provisions of the Public Premises Act, there is no occasion for this Court to take any other view. - since the issue of retrospective application of the Public Premises Act, to tenancies entered into before 16.9.1958, or before the property in question becoming a public premises, was neither canvassed nor considered by the bench in Ashoka Marketing (1990 (8) TMI 393 - SUPREME COURT), the decision does not, in any way, prevent this Bench from clarifying the law regarding the same. This follows from the judgment of the Supreme Court in State of Haryana Vs. Ranbir @ Rana reported in [2006 (4) TMI 496 - supreme court] wherein it was held that a decision, it is well-settled, is an authority for what it decides and not what can logically be deduced therefrom. - Decided in favour of appellant.
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