TMI Tax Updates - e-Newsletter
September 2, 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:
Nature of payment received - royalty or Fee for Technical services (FTS) - BCCI becomes the owner of the program content produced by the assessee. The job of the assessee ends upon the production of the program content and the broadcasting is carried out by some other entity to which license was given by the BCCI - cannot be held as royalty - AT
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Income Tax:
Claim of exemption under section 11 denied - assessee is rendering services to its members custom house agents, to carry out their business/professional activities - assessee cannot be considered as a charitable organization - AT
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Income Tax:
Once the assessee has capitalized the payment in question though the assessee has not deducted the tax at source on such payment, Section 40(a)(i) cannot be invoked for disallowance of depreciation - AT
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Income Tax:
Loss on account of futures and options set off against the business profit - the entire transaction carried out by the assessee, indicated above, was within the umbrella of speculative transaction. There was, as such, no bar in setting off the loss arising out of derivatives from the income arising out of buying and selling of shares - AT
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Income Tax:
Deduction u/s 10B - manufacturing activity or not - the process of extraction of rock and converting it into dimensional block had resulted in transformation of the object or article or thing into a new and a distinct object or thing having a different name, character and use - deduction allowed - AT
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Income Tax:
Just because an expenditure is debited in books towards brand building, which it purportedly is, and statutory recognition has since been accorded to such an intangible asset, as a brand would not by itself imply that an advantage in the capital field, or of enduring value to the business has, arisen to the assessee upon incurring the expenditure. - AT
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Customs:
Refund of Duty Payment of Interest assessee would be entitled to costs or compensation for high handedness of the department, by initially not refunding amount for over 12 years, and then refusing to pay interest even after order of Tribunal - HC
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Customs:
Non-fulfilment of export obligation Order of ADGFT, was very clear and explicit in directing Assistant Commissioner not to stop exports of petitioner as long as items were freely exportable, as appeal preferred them was pending and not disposed of - HC
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Customs:
Delay in Provisional Assessment of Bills of Entries Central Board of Excise and Customs (C.B.E. & C.) to inquire into matter as to why there was delay at level of Commissioners in processing such like cases - HC
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Indian Laws:
The Chief Justice, in his administrative capacity, cannot constitute a Larger Bench for the purpose of deciding a pure question of law simply because the Chief Justice is of the view that such question, notwithstanding a decision of a Division Bench of this Court in one way or other, is required to be heard by a Larger Bench. - HC
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Service Tax:
Denial of input tax credit - the security guard service and telephone connections services has been availed by their back up office where General Manager is also residing and the services availed for the security guards at residence of General Manager and back up office cannot be segregated - credit allowed - AT
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Service Tax:
C&FA Service or BAS - appellant's principle activity is not related to clearing & forwarding of goods, as it is clearly evident from the agreement that the appellant was appointed as Commission Agent for marketing and sale of goods - AT
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Service Tax:
The principles of fair adjudication required the adjudicating authority to provide the material sought to be relied upon by him to the assessee and to seek his comments on the same - AT
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Central Excise:
Denial of consequential refund - entire demand arose out of differential duty worked out in each invoice. The goods were already cleared - question of unjust enrichment does not arise. - appellants are eligible for refund amount debited in RG.23C-Part-II as re-credit of cenvat credit - AT
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Central Excise:
Clandestine removal of goods - Recovery of incriminating documents - The uncorroborated statements of third party cannot be adopted as an evidence, without corroboration from an independent source though such statements can be of some value but cannot be solely relied upon for the purpose of holding against the assessee. - AT
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VAT:
Re-opening of Assessment Fixation of tax rate at 16% against 10% Revenue was not justified in demanding tax at 16% by seeking to reopen concluded assessments by issuing clarification - HC
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VAT:
Rejection of refund claim Filing of W form, manually Circular cannot abridge or overrule provisions of Rule 11(2) of Tamil Nadu Value Added Tax Rules, 2007 - HC
Articles
Notifications
Circulars / Instructions / Orders
News
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Dr. Hasmukh Adhia takes over as Revenue Secretary
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India Announces New Partnership to Accelerate Financial Inclusion for Everyone;
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Shaktikanta Das Takes over as Secretary, Department of Economic Affairs
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RBI Reference Rate for US $
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Change in Tariff Value of Crude Palm Oil, RBD Palm Oil, others Palm Oil, Crude Palmolein, RBD Palmolein, others Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Areca Nuts, Gold and Silver Notified
Case Laws:
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Income Tax
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2015 (9) TMI 55
Additions u/s 68 - unsecured loans - unexplained cash credit - proof of source of source or origin of the cash credits Held that:- Revenue authorities as well as the Tribunal found the entire transaction not genuine. There was sufficient evidence on record to suggest that in case of all the depositors, their bank accounts contained meager balance shortly before sizable amount of ₹ 1 lakh and upward were given to the assessee through such account. In such bank accounts, cash amounts were credited and immediately entire amounts were withdrawn through issuance of such cheques in favour of the assessee - It was noticed that such creditors did not maintain any books of account. Nowhere their capacity to raise such amount for drawing cheque of sizable amounts was established - Very genuineness of the transaction was not established as decided by HC [2013 (10) TMI 154 - GUJARAT HIGH COURT ] Decided against the Assessee.
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2015 (9) TMI 54
Share application money - Addition u/s 68 - Held that:- The assessee has not been able to establish the identity, creditworthiness of the share applicants and the genuineness of the transaction - The surrounding circumstances and inquiries made by the Assessing Officer were significant but the said finding have been ignored by the Tribunal - It has failed to take holistic view - See Commissioner of Income Tax Versus N. Tarika Properties Investment Pvt. Ltd. [ 2013 (11) TMI 1496 - DELHI HIGH COURT] - Decided in favour of Revenue.
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2015 (9) TMI 25
Undisclosed stock of gold & diamond jewellery - Whether ITAT was right in deleting the addition without considering that the assessee has not disclosed the aforesaid addition before the Settlement Commission as provided under section 245D(4) - ITAT deleted the addition added as undisclosed income for A.Y. 200203 on the strength of the seized document marked - Held that:- No error has been committed by the Commissioner of Income Tax (Appeals) nor by the ITAT in deleting both the aforesaid additions. Firstly on the ground that voluntarily disclosure made by Mr. P.P. Arya includes the aforesaid amount which is at ₹ 22,84,923/- and so far as addition of ₹ 41,51,301/- is concerned, it is submitted that the basic principles of accountancy have been properly appreciated by the Commissioner of Income Tax (Appeals) and the ITAT. There is no variance of stocks. Nonetheless, the closing stock was made as per cost price by the assessee and the said plea cannot be altered by the department. Since the assessee is valuing the closing stock on the basis of the cost price or market price whichever is lower and therefore, assessee has valued his stock at cost price which is also supported by the auditors report and therefore, this addition of ₹ 41,51,301/- has been rightly dealt by both the authorities under the Income Tax Act namely, Commissioner of Income Tax (Appeals) and ITAT. The documents which are exhibited A/JJ/6 contains the balance sheet, trading and profit and loss account, inventory of stock and valuation of stock for the period 01.04.2001 to 25.09.2001 showing net profit of the assessee at ₹ 41,81,301/- In fact, this is an error committed by Assessing Officer without appreciating the fact that what is the basic principles of valuation of the closing stock. No illegality has been committed by both the authorities below and hence, this appeal may not be entertained by this Court. - Decided against revenue.
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2015 (9) TMI 24
Condonation of delay - Held that:- The Court is not satisfied with the reasons offered for the extraordinary delay of 1271 days in filing ITA No. 453 of 2012 and the delay of 1876 days in filing ITA No. 464 of 2012. Accordingly CM Nos. 13614/2010 in ITA No. 453/2012 and CM No. 14085/2012 in ITA No. 464/2012 are dismissed. The reasons for the delay of 426 days in re-filing ITA No. 453 of 2012 are also wholly unconvincing.
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2015 (9) TMI 23
Entitlement to claim benefit u/s 10B - 10 years exemption by amendment to sub-section (3) of section 10B with effect from 1/4/1994 or benefit of 8 years exemption under amendment by the Finance Act, 1988, with effect from 1/4/1989, particularly, when assessee commenced manufacturing/production from the year 1993 ? - Held that:- We find substance in the submissions made by the learned Counsel for the Assessee that an Assessee would be entitled to get the benefit of the amended provisions of Section 10B extending the period of exemption to 10 years from the date of the relevant assessment year in which the manufacturing operations commenced. Hence, the matter is remanded to the Assessing Officer to decide the question on the basis of the aforesaid decision of the Karnataka High Court in Commissioner of Income Tax V/s. DSL Software Ltd. (2011 (10) TMI 423 - KARNATAKA HIGH COURT). Interpretation of the provisions of Section 80HHC - ITAT deleting the exclusion made by the AO in respect of amount received towards uptopping vessel income, machinery hire income, barge management expenses and in respect of amount received towards miscellaneous income, sale of scrap, service charges, grant-in-aid for medical expenses, recovery of fuel, group insurance, deptch money - Held that:- The test has necessarily to be whether or not 90% sought to be excluded is independent income having no nexus with export and therefore similar to the income described in sub clause (baa) of the Explanation to Section 80HHC of the Act. Having gone through the impugned order of the Tribunal, we do not find any detailed discussion about the test applied by the Tribunal. It appears that for the Assessment Year under consideration, the Tribunal relied on its order for the Assessment Year 2001-02 and held that the items under consideration are either operational or reimbursement of expenses and, therefore, the Tribunal held that all these items are not falling under explanation. In view of the aforesaid decision of this Court in Sesa Goa Ltd. (2015 (5) TMI 621 - BOMBAY HIGH COURT), we are inclined to remand the matter.
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2015 (9) TMI 22
Disallowance @ 50% u/s 40A(2)(a) read with Section 37(1) - AO held that the payment made to the MM Mumbai @ ₹ 500 per hour was excessive and unreasonable - ITAT concluded that the payment to MM Mumbai at the said rate could not be said to be excessive and unreasonable and also found that none of the three situations contemplated by Section 40A (2) (a) of the Act was attracted - Held that:- ITAT has in fact returned a finding of fact after analyzing the material and sufficient details available on record. The Revenue has not been able to persuade the Court to hold that the said finding is perverse. Accordingly, the Court declines to frame a question of law as regards the said issue. - Decided against revenue. Addition of expenditure incurred towards payment of royalty to Metso Minerals (Australia) - AO held this to be of enduring benefit and treated it as capital expenditure nature while allowing depreciation @25% thereon denied by ITAT - Held that:- ITAT analyzed that there is no assignment of the intellectual property rights in terms of the agreements in favour of the Assessee. The licenses were granted on non-exclusive basis and for a limited period. The Assessee was not authorized to use or permit others to use such technology except as specifically permitted by the licensor. In these circumstances, the decision of the ITAT that the said expenditure could not be considered as a capital expenditure does not suffer from any illegality or perversity and is consistent with the settled legal position explained in CIT Vs. Ciba India Ltd. (1967 (12) TMI 3 - SUPREME Court ) - Decided against revenue. Dividend income - CIT (Appeals) reduced the disallowance by 50% and this has been concurred with by the ITAT - Held that:- In view of the concurrent findings of both the CIT (A) and the ITAT, the Court is satisfied that in the facts and circumstances of the case, no substantial question of law arises as regards this issue. - Decided against revenue.
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2015 (9) TMI 21
Release the jewellery as seized - Petitioner has confined his argument to the limited extent of directing the Competent Authority to consider and dispose of the representation of the Petitioner dated 18.11.2013, expeditiously - Held that:- Considering the limited prayer now sought for by the the petitioner, without going into the merits of the case, the Petitioner is directed to produce a copy of the representation dated 18.11.2013 along with a copy of this order to the Deputy Commissioner of Income Tax, Circle-1, Trichy and on such production, the Deputy Commissioner of Income Tax, Circle-1, Trichy is directed to consider and dispose of the representation of the petitioner, dated 18.11.2013, with regard to return of the jewellery in question to the petitioner, on merits and in accordance with law, after giving an opportunity of personal hearing to the petitioner, within a period of four weeks from the date of receipt of a copy of this order.
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2015 (9) TMI 20
Disallowance made u/s 43B - certain items of excise duty - amount deposited by the assessee in PLA - Held that:- Under the 'Inclusive method', the figures of purchase, sale and inventories are required to be taken with the element of tax or duty etc. Since the amount of unutilized balance of excise duty under PLA does not form part of purchase, this amount will be eligible for separate deduction u/s 43B. At the same time, the last year's unutilized PLA getting deduction in that year due to the application of section 43B, would be required to be added back to the income of the current year as determined above. We, therefore, set aside the impugned order and direct the AO to firstly recast the assessee's Profit and loss account on inclusive basis and then make suitable deduction in respect of the amount of unutilized PLA at the end of the current year and also the preceding year. Deduction for Modvat credit by means of its inclusion in Purchase value of raw materials can be treated as allowed by way of debit to the Profit and loss account only when it also gets exhausted. If, even after a debit to the Profit and loss account, the amount appears in balance sheet, in one form or the other, the deduction cannot be said to have been actually allowed on payment, till it is exhausted and gets removed from the balance sheet also. In such circumstances, the amount of unexhausted (not necessarily only unutilized) Modvat credit i.e. which appears in balance sheet either in the form of increased value of closing stock (Rs.2 in our example) and increased value of raw material representing unutilized Modvat credit (Re.1 in our example) - calls for separate deduction in terms of section 43B. We, therefore, set aside the impugned order and direct the AO to first recast the assessee's Profit and loss account on inclusive basis, then allow deduction for the equivalent amount of Modvat credit as represented by ₹ 3 in our example. The AO should also make sure that the equivalent of ₹ 3 allowed as deduction on payment basis u/s 43B in this year should not get deducted in the next year and further, the corresponding amount of deduction allowed u/s 43B in the preceding year, should also be separately added to the income of the current year. Disallowance u/s 43B in dispute is the amount of excise duty paid under protest to the tune of ₹ 45 lac - Held that:- Issuance of notice of demand by the competent Excise authority makes the amount otherwise deductible by means of incurring the liability. This satisfies the condition of section 43B which provides for deduction on actual payment in respect of an otherwise deductible amount. Since the amount in question has been paid during the year, it qualifies for deduction in terms of section 43B under the exclusive method. Thus on one hand deduction for excise duty paid under protest is available in the year of payment under the exclusive method, the same amount cannot be allowed to get deducted once again on the finalization of the dispute with the Excise department on its transfer to Excise duty account. Simultaneously, the amount of excise duty paid under protest in earlier years getting deduction u/s 43B calls for inclusion in the total income of the current year on the removal of the amount from Excise duty paid under protest account. We have noticed above that section 145A is applicable to the year under consideration and accordingly, income is required to be determined by switching over to the 'Inclusive method' and then allowing deduction u/s 43B on payment basis. We, therefore, set aside the impugned order and direct the AO to first recast the assessee's Profit and loss account on inclusive basis, inter alia, by including the amount of excise duty paid under protest to the purchase value of goods. Disallowances u/s 43B on items of customs duty - Held that:- In view of the detailed discussion with reference to the applicability of section 145A to the year in question, there can be no escape from valuation of purchase, sale and inventories under the inclusive method. We, therefore, direct the AO to recast Profit and loss account under 'Inclusive method' as per the mandate of section 145A, thereby, inter alia, increasing the purchase value with the above customs duty. Then the AO will allow separate deduction for the above referred sums to the extent not getting eventually deducted separately by way of increased purchase price, as has been discussed above. At the same time, we also direct the AO to make sure that such amount separately getting deducted in this year does not get deduction once again in the next year. In the like manner, the last year's similar deduction separately allowed should be taxed in the computation of income of the current year. Customs duty paid under protest - Held that:- As discussed similar issue supra while dealing with 'Excise duty paid under protest' by holding that first the Profit and loss account be recast as per 'Inclusive method' in terms of section 145A and then some adjustments as stated above be separately made. Such directions are fully applicable pro tanto to the customs duty paid under protest. The AO is directed to follow the same. Disallowance u/s 43B is customs duty included in closing stock - Held that:- As elaborately discussed this aspect supra in the context of excise duty included in the value of closing stock. In principle, we hold that the amount of customs duty of ₹ 22.52 crore is allowable in the year in question, but, the AO is directed to first verify the argument of following the 'Inclusive method' and then allow deduction u/s 43B in the manner discussed above, if the same did not get eventually allowed. The AO should further make it is sure that no double deduction is allowed on this score, either in the current year with the last year's amount getting separately deducted u/s 43B or in the next year with the current year's amount getting separate deduction. Adjustments on account of last year's disallowances u/s 43B - Held that:- We agree with the argument that since the amount of unutilized Modvat credit stood disallowed in the preceding year by the tribunal on the premise that the same before its set off cannot be treated as tax paid, then the same should be excluded from the total income of the current year, if voluntarily offered by the assessee for taxation. The AO is directed to verify this aspect and allow deduction for this sum, if the same was eventually disallowed in the preceding year and the assessee once again offered it for taxation in the computation of total income for the current year. Certain amounts claimed by the assessee as deductible in the preceding year u/s 43B as excise duty and customs duty and voluntarily offered for taxation in the current year's income - Held that:- As apart from the sustenance of disallowance of ₹ 71.63 crore in the preceding year, there is no other disallowance u/s 43B which has been upheld by the Tribunal. It is overt that all other disallowances made by the AO u/s 43B have been deleted by the tribunal. The ld. AR could not furnish any detail of the remaining amount of ₹ 69.96 crore (Rs.141.59 crore minus ₹ 71.63 crore), allegedly finally disallowed u/s 43B of the Act by the tribunal in the preceding year. It is simple and plain that if the tribunal has allowed deduction for the amounts disallowed by the AO in the preceding year, then the same are rightly chargeable to tax in the current year. This ground is, therefore, dismissed, subject to our decision on ground no. 3.5 in granting deduction of ₹ 71,63,89,449, representing last year's unutilized Modvat credit which was claimed by the assessee as deductible u/s 43B but disallowed by the AO and also the tribunal. Transfer pricing adjustment of Royalty for licensed trademark - Held that:- Addition on account of transfer pricing adjustment can be made by making a comparison between the transacted value of an international transaction and its ALP. Thus it is clear that the availability of the transacted value of an international transaction is sine qua non. If such transacted value is either not separately available or cannot be precisely determined from a combined value of a number of international transactions, then the entire exercise of determining ALP fails. Instantly, we are confronted with such a peculiar situation. There is no separate value of the international transaction of royalty for use of licensed trademark and the tribunal has held in the earlier year that it is a payment of inseparable royalty for use of both the licensed information and the licensed trademarks. In such circumstances and respectfully following the order of the tribunal for the immediately preceding year, we order for the deletion of the addition of ₹ 127.195 crore on account of transfer pricing adjustment of royalty for use of licensed trademark. Royalty for Licensed information whether capital expenditure? - Held that:- Our finding decides the nature of royalty payment for use of licensed information as revenue expenditure and not its quantum part. We have noticed above that the tribunal in its order for the immediately preceding year has also given some observations, which prima facie indicate that the entire amount of royalty is for the use of licensed information. Since we have held the royalty for use of licensed information as revenue expenditure, the quantification aspect becomes irrelevant. It is so because the TPO has held royalty for use of licensed information at ALP. We, therefore, hold that the amount of royalty considered by the AO as capital expenditure should be allowed as a revenue expenditure. At the same time, depreciation allowed by the AO on this amount should be taken back. R&D cess on royalty paid - Held that:- The AO disallowed a sum of ₹ 9.68 crore after proportionately allowing deduction to the extent of depreciation allowed by him on royalty. There is no dispute on the nature of cess, which is on royalty and has been treated both by the assessee as well as the AO as part and parcel of royalty and accordingly claimed/disallowed in line with the treatment of royalty. Since we have allowed deduction for the entire amount of royalty paid by the assessee during the year by deleting the TP adjustment and also overturning the action of the AO in treating the remaining half part as capital expenditure, the consequential amount of cess on royalty payment automatically becomes deductible. We, therefore, direct to allow deduction of ₹ 9.68 crore. Royalty paid to non-AE - Held that:- If there is a transaction with non-AE that automatically goes out of reckoning for the purposes of processing it u/s 92 of the Act. Further, we do not consider it necessary to consider this issue on merits because in earlier paras we have deleted entire royalty addition made by the AO, comprising of transfer pricing adjustment on account of international transaction of payment for use of 'Licensed trademark'; and payment for use of 'Licensed information' treated by him as capital expenditure. The net effect of this deletion is that even if the amount under consideration is paid to AE, still it is deductible. Be that as it may, we find that this ground is otherwise also not sustainable. The reason being that the TPO made transfer pricing adjustment in respect of royalty paid for use of licensed trademark. On the contrary, this amount paid to M/s Auto Chassis International is admittedly for use of know-how and not their trademark. Treatment to subsidy - revenue receipt as against the assessee's claim of capital receipt - Held that:- Assessee was allowed subsidy under Industrial Policy 1999 of the Government of Haryana. Para 7 of the Certificate puts condition for entitlement of subsidy by providing that: 'incentive would be given only in respect of vehicles rolled out of production capacity of 70000 vehicles added as a result of first expansion and not to the production augmented by capacity addition of 30000 vehicles as a result of second expansion.' When we consider section 25A along with Rule 28C of Haryana General Sales-tax Act/Rules, it becomes evident that the object of subsidy is in line with the Industrial Policy of Haryana Government, being 'attracting new investments and growth of existing industry.' In our considered opinion, such subsidy cannot be characterized as anything other than a capital receipt. It has been brought to our notice that the Tribunal, for the immediately preceding assessment year, has also treated similar subsidy as capital receipt. T.P. Adjustment of AMP Expenses - Held that:- Presently, we have the benefit of the judgment of the Hon'ble Delhi High Court in Sony Ericsson (2015 (3) TMI 580 - DELHI HIGH COURT ), which has also dealt with the treatment to be given in the context of a manufacturer.No reasons, except the pendency of the matter in the Hon'ble High Court in assessee's own case, have been given by the ld. AR to claim departure from the view taken by the tribunal in earlier cases. We, therefore, turn down the request of the ld. AR in this regard. With these observations, we send the matter back to the file of TPO/AO for a fresh determination of the ALP of the AMP expenses in accordance with our above observations. In view of our decision in restoring the issue of calculation of ALP of AMP expenses to the TPO/AO, the assessee's appeal against the order passed by the AO/TPO u/s 154, enhancing the amount of TP adjustment, would automatically be taken care of in such fresh proceedings. We want to clarify that in such fresh proceedings, the assessee will be at liberty to lead any fresh evidence in support of its case. Excess consumption of raw materials - Held that:- It is manifest that the net difference of ₹ 1.62 crore is nothing, but, excess consumption over the standard consumption. Such shortage of ₹ 1.62 crore is only 0.018% of total consumption of material debited to the Profit & Loss Account. In view of the fact that this amount has actually been consumed in the manufacturing of goods, it cannot call for any disallowance. There may be production efficiencies or inefficiencies leading to under or over consumption of inputs vis-a-vis standard consumption. Such under or over consumption becomes a part of the cost of production. In our considered opinion, there can be no logic in disallowing such amount, which is nothing but excess consumption of inputs. Similar view has been taken by the Tribunal in the assessee's own case for earlier assessment years including the immediately preceding assessment year. This ground is allowed. Disallowance u/s 14A - Held that:- AO's decision in applying Rule 8D for making disallowance u/s 14A of the Act, cannot be countenanced. It is noted that similar disallowance was made for the immediately preceding year. When the matter came up for consideration before the tribunal, the Bench held that the disallowance u/s 14A cannot be made as per Rule 8D and the question of computation of disallowance u/s 14A has been remitted to the AO for doing it afresh as per law. Respectfully following the precedent, we also set aside the impugned order on this score and send the matter to the file of AO for making disallowance u/s 14A, in accordance with the view taken by the Tribunal in its order for the assessment year 2005-06. Disallowance u/s 35DDA - Held that:- It is observed that similar issue came up for consideration before the Tribunal in its order for the AY 2004-05. After making a thorough discussion on the issue, the Tribunal has held that Rule 2BA is relevant only for the purpose of availing exemption u/s 10 by employees and not for the purpose of allowing deduction to the employer u/s 35DDA of the Act. Resultantly, the disallowance made by the AO came to be knocked down by the tribunal. In the absence of any distinguishing factor having been pointed out by the ld. DR, respectfully following the precedent, we direct to allow deduction u/s 35DDA Disallowance of club membership fee - Held that:- In our considered opinion, this issue is no more res integra in view of the judgment of the Hon'ble Supreme Court in CIT vs. United Glass Manufacturing Company Ltd. [2012 (9) TMI 914 - SUPREME COURT] in which it has been held that no disallowance can be made for club membership in respect of the employees of the company. Similar view has been taken by the Tribunal in the assessee's own case for the earlier assessment years including the immediately preceding year. Respectfully, following the above precedents, we order for the deletion of this addition. Depreciation on software expenses capitalized in earlier years - Held that:- It is obvious that once the AO has refused to grant deduction of software expenses claimed by the assessee and capitalized the same by treating it as capital asset, then depreciation on the written down value of such software expenses is required to be granted as per law. Since no such detail is available about the written down value of software expenses capitalized in earlier years, we set aside the impugned order and remit the matter to the file of AO for allowing deduction in respect of the written down value of the software expenses capitalized in earlier years. Charging of statutory interest u/s 234B, 234C and 234D of the Act.- Held that:- This ground is consequential and is, accordingly, allowed except the charging of interest u/s 234C. The ld. AR argued that the AO computed interest u/s 234C on the basis of income finally determined as against the income-tax due on returned income. We find force in the arguments put forth on behalf of the assessee that computation of interest u/s 234C for deferment of advance tax is required to be made on the basis of 'tax due on the returned income' as has been enshrined in the provision itself. We, therefore, direct the AO to verify this aspect of the matter and compute interest u/s 234C as per law.
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2015 (9) TMI 19
Transfer pricing adjustment - Whether the AE has received intra group services ? - What are the economic and commercial benefits derived by the recipient of intra group services ? - Whether a comparable independent enterprise would have paid for the services in comparable circumstances? - Held that:- There is no whisper by lower authorities that the ALP work provided by the assessee suffers from any infirmity. It is not proper to go for an ALP ascertainment without finding any fault with the assessees working. The TP services provide that the AO himself first record its objections on the merits of the working of the assessee. Without doing so, the ALP determination becomes a questionable exercise. In the entirety of facts and circumstances we hold that the TP adjustment to the ALP as furnished by the assessee is without any justification. The same is deleted. Apropos the issue about the reimbursement of business services, an amount of ₹ 31,01,476/- has been disallowed as the assessee could not produce any evidence except ledger account. We find no infirmity in the orders of the lower authorities. Since assessee has failed to provide any corroborative evidence in this behalf, the adjustment of ₹ 31,01,476/-made by the lower authorities cannot be found fault with. The same is upheld. Addition on account of alleged suppressed sales of scrap - Held that:- In our considered view the approach adopted by DRP is unsustainable in as much as it has the power to issue necessary direction on the basis of material available on record. There is no gainsaying by shrugging off the decision on the pretext of not being an appellate authority. Adverting to AOs observation, assesses books are upheld, no evidence at all has been indicated to form even a suspicion that assessee indulged in any type of suppression of sales. Thus the finding is nothing but an assumed allegation. Never in past or future the assesss scrape sales have been question. The addition being presumptive and based on conjectures is deleted. This ground is allowed. Not allowing the claim of inventories written off - Held that:- We have heard the rival contentions and perused material on the record. ITAT in assesssees own case has allowed the similar claim of inventory write off in AYs 2003-4 to 06-07. Treating the revenue expenditure on account of restructuring as one time expenditure for enduring benefit, hence capital in nature - Held that:- Assessee incurred these expenses for shifting of Corporate office from Gurgaon to Mumbai wholly and exclusively for its business. Besides Honble High Court gave the permission for charging of these expenses against amalgamation reserves. In assessment year 2006-07, similar expenditure of ₹ 11,12,24,780/- were allowed by the AO in assessment framed u/s 143(3) after considering the details of such expenditure reflected in the notes to the accounts. In view of the foregoing we are of the considered view that assessees claim falls in the category of revenue expenses and deserve to be allowed Disallowance u/s 40(a)(ia) - non deduction of TDS - Held that:- AO in A. Y 2008-09, raised similar issues in respect of Trade Inventive and Distributor Coverage Expenses. The AO himself accepted the same contentions of the assessee and made no disallowance qua these payments u/s 40(a)(ia). Since revenue itself has accepted no TDS liability on such trade incentive in AY 2008-09, the disallowance made u/s 40(a) (ia) for the year is unjustified. Adverting to advertisement issue represents purchases of articles like display units, wall units, floor stands, posters, banners etc., on which VAT was paid. The transactions being of purchase simpliciter and VAT being charged thereon, there is no justification in holding it as advertisement contract. Consequently the question of TDS liability thereon does not arise. Hence the impugned disallowance made u/s 40(a)(ia) is deleted Disallowance of advertisement payment made to Group M Media Pvt. Ltd. - Liability of deduction of tax at source arises u/s 195 - Held that:- Since the assessee has deducted TDS u/s 194C, it cannot be disallowed u/s 40(a)(ia). Consequently this ground of the assessee is also allowed.
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2015 (9) TMI 18
Addition u/s 69B - unaccounted investment in property - CIT(A) deleted addition accepting addition evidence - Held that:- hatever evidence narrated by the Assessing Officer and CIT(A) shows that the assessee had purchased plot No. 168 Shyampuri Kalwad Road, Jaipur at ₹ 16 lacs. The assessee had shown only ₹ 1,01,000/- paid on date of agreement i.e. on 24/4/2007 but the remaining amount of ₹ 14,99,000/- was paid from undisclosed source. The assessees explanation is after thought when he has disclosed this plot in purchase as well as closing stock in P&L account and balance sheet submitted before the CIT(A) during the appeal proceedings. The affidavit filed by the appellant has partly considered by the ld CIT(A), which also goes against the fact of the case that Shri Murlidhar Purohit filed affidavit on 02/5/2011 and admitted the possession of plot with him. However, the registered deed with the third party was dated 20/10/2008, which is contradictory the fact of affidavit. We have considered view that this issue required further investigation from the side of seller of plot, from Shri Ramesh Sharma purchaser of plot, actual possession of plot etc. The Assessing Officer is directed to take final decision on the basis of enquiry and evidences. Accordingly, this ground of appeal is set aside for de novo. The Assessing Officer is directed to give sufficient time to the assessee before deciding this issue.- Decided partly in favour of assessee for statistical purposes. Addition on account of 1/3rd disallowance out of taxi running expenses - Held that:- The assessee had shown total tour and travel receipt at ₹ 1,59,454/- against which he claimed expenses at ₹ 37,540/-. The assessee had not produced any evidence before the Assessing Officer as well as CIT(A) in support of expenses. However, without expenses, the income cannot be earned. The expenses claimed on diesel, petrol, salary of driver can be collected by the appellant but this business is totally unorganized. Therefore, we confirm addition at ₹ 5,000/- in place of disallowance made by the Assessing Officer at ₹ 11,893/- in the interest of justice. - Decided partly in favour of assessee.
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2015 (9) TMI 17
Penalty u/s 271(1)(c) - whether change of accounting system which resulted valuation of stock at a lower side do not show deliberate intention of the assessee of furnishing inaccurate particulars/ concealment of facts - CIT(A) deleted addition - Held that:- The assessee had submitted its explanation before the AO at the time of assessment proceedings as well as penalty proceedings. The assessee has changed the method of valuation of closing stock which will automatically be the opening stock of subsequent year. The assessee had duly disclosed complete particulars regarding change in the method of valuation of stock in process from cost plus expenses to estimated realizable value which was mentioned by the assessee in its annual report of the company and tax audit report that in the Modern Thread Unit, the valuation of stock in process had been changed from cost plus expenses to net realizable value. The valuation of work in process had been done as per AS-2 issued by Institute of Chartered Accountant of India. Further the company had been closed on 20-08-2001 and valuation of stock was done on 31-03-2002. Thus there was no production carried out by the company since 31-03-2002. The ld. DR could not controvert this findings of the ld. CIT(A). The cases relied on by the assessee are squarely applicable to the case of the assessee. Therefore, in view of the above facts and circumstances of the case, we confirm the order of the ld. CIT(A). - Decided against revenue.
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2015 (9) TMI 16
Nature of payment received - royalty or Fee for Technical services (FTS) - DRP/AO held that the amount received by the assessee from Board of Control of Cricket in India (BCCI) is assessable to tax as Fee for technical services and alternatively as Royalty also - IndiaUK Double Taxation Avoidance Agreement - Held that:- Royalty means consideration for the transfer of all or any rights (including the granting of a licence) in respect of a patent, invention, model, design, secret formula or process or trade mark or similar property. In the instant case, we have noticed that the BCCI becomes the owner of the program content produced by the assessee. The job of the assessee ends upon the production of the program content and the broadcasting is carried out by some other entity to which license was given by the BCCI. Hence, in our view, the question of transfer of all or any right does not arise in the facts and circumstances of the instant case. Hence, we are of the view that the payment received by the assessee cannot be considered as "royalty" in terms of the India-UK DTAA. Though, it is not necessary to examine about the applicability of provisions of sec. sec. 9(1)(vi) of the Act, yet the facts discussed above would show that the payment received by the assessee cannot fall within the purview of sec. 9(1)(vi) of the Act also. Question of existence of permanent establishment and taxability of "reimbursement of expenses" grounds were not considered by the Ld DRP/AO, since they proceeded to assess the receipts as fee for technical services/royalty. Hence we set aside both the issues to the file of the AO for consideration of the same afresh. - Decided in favour of assessee for statistical purposes.
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2015 (9) TMI 15
Rejection of books of accounts - trading addition - CIT(A) deleted addition - Held that:- It emerges from the record that the AO failed to conduct any further enquiry as to rejection of books of account of the assessee. The rejection of books of account by the AO does not appear to be justifiable and the G. P. addition made is also not sustainable in view of the fact that the assessee has shown better gross profit and net profit rate on increased turnover. Thus we find no reason to interfere in the order of the ld. CIT(A) which is sustained - Decided in favour of assessee. Credit of TDS deducted on the renal receipts - CIT(A) allowed claim - Held that:- We find from the records that the property had been transferred to M/s. A. G. & Company and the rent received during the transit period was transferred to M/s. A. G. & Company and the taxes were paid. The decision of ITAT Mumbai Bench as relied on by the ld. AR of the assessee in his written submission in the case Arvind Murjani Brands (P) Ltd. vs. ITO (2012 (5) TMI 138 - ITAT MUMBAI) is fully applicable in the case of the assessee. Once the actual recipient of the income i.e. M/s. A. G. & Company has paid taxes on the rental income then it cannot be taxed twice by disallowing the TDS in the hands of the assessee company. Thus we find no reason to interfere in the order of the ld. CIT(A) which is sustained. - Decided in favour of assessee. Disallowance u/s 40(a)(ia) on advertisement expenses - short deduction of TDS - assessee submitted that the assessee made payment on account of advertisement expense incurring during the year which were paid during the year itself, therefore, it is not payable at the end of the year - Held that:- It is observed that judgement in the case of M/s. Merilyn Shipping & Transport vs. ACIT (2012 (4) TMI 290 - ITAT VISAKHAPATNAM ) has been upheld by Hon'ble Allahabad High Court in the case of CIT vs. Vector Shipping Services (P) Ltd. [2013 (7) TMI 622 - ALLAHABAD HIGH COURT]. Revenues SLP against the same has also been dismissed by the Hon'ble Supreme Court. Thus, the issue stands settled in favour of the assessee
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2015 (9) TMI 14
Trading addition - net profit rate of 12% applied by the AO for determining the income from property business - Held that:- The assessee had shown gross profit rate before interest and depreciation @ 20.61% which has not been objected by ld. D/R and claimed by the assessee that it is better compared to preceding year. The AO pointed out the various defects in the books of account viz. non-maintenance of closing stock, purchases in cash and also not produced the sales/purchase vouchers of material used in construction business. Therefore, book results of the assessee cannot be held complete and correct. Thus provisions of section 145(3) are squarely applicable. Therefore, we confirm NP rate @ 10% in place of 12% applied by the AO subject to depreciation and interest payment. We are of the considered view that no notional addition can be made on account of disallowance of interest on OD account. Further, no evidence has been brought on record that assessee had used funds available with him somewhere else as the burden is lying on the Revenue to prove otherwise which has not been discharged by the revenue. No prudent businessman would create loss by availing OD facility and paying interest on it. There was a business necessity of the assessee for availing the OD facility. It is undisputed fact that funds had not been utilized during the year but liability on account of interest had been occurred. Therefore, we allow the interest claimed by the assessee being just and in the interest of business. Accordingly NP rate on construction receipts @ 10% is confirmed subject to depreciation and interest paid. The AO is directed to calculate the income as per above observations made by this Bench. - Decided partly in favour of assessee. Addition by rejection of book result under section 145(3) in respect of business of furniture and fixtures - Held that:- The defects pointed out in the books of account by the AO are sufficient to invoke provisions of section 145(3) of the Act. The ld. A/R of the assessee had not brought on record to whom the interest payment was made in the books of M/s. Guman Furniture & Fixtures. The OD facility as claimed by the assessee was for construction business which has already been discussed in preceding paras. Besides this, there is no evidence which substantiated the assessees claim that he had made heavy payment of interest amount. Further NP rate disclosed by the assessee is below the rate of comparable case in the line of business. The AO was reasonable to apply 1% NP rate in furniture and fixture business. Therefore, we are of the considered view that there is no reason to interfere with the order of ld. CIT (A). Accordingly, we uphold the order of ld. CIT (A). - Decided against assessee.
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2015 (9) TMI 13
Income from hotels - income from business or house property - Held that:- The inference drawn by the Assessing Officer that the assessee intended to let out the hotels on rent and earn rental therefrom is not justified. Our this view also finds support from the decision of the Hon'ble Bombay High Court in the case of Mohiddin Hotels P. Ltd. (2005 (9) TMI 46 - BOMBAY High Court ), wherein in the similar facts and circumstances of the case has held that when the agreement did not relate to a bare tenement but was in respect of the hotel, the hotel was complete with fittings and fixtures and ready for commencing the business, all licences, permissions and no objection certificates required for running hotels were to be obtained in the name of the assessee was a pointer to the aspect that the assessee intended to exploit the hotel properties as business asset, and therefore, the income was income from business u/s. 28 of the Act. Hence, we find no infirmity in the order of the Commissioner of Income Tax (Appeals), which is hereby confirmed and the grounds of appeal of the Revenue are dismissed. - Decided against revenue.
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2015 (9) TMI 12
Disallowance of the claim u/s 24(a) against the rental income - Held that:- The total receipts are shared by 4 owners of this property as mentioned above in their respective shares indicate in the supplement agreement. It is a fact that other co-owners have also disclosed their share of income in their respective returns. The AO has not verified the other co-owners income as to remaining 50% income from said property. The case relied on by the ld. AR of the assessee support assessees claim that the claim of the assessee in past has been accepted as income from house property. There is no reason to change head of income from house property to business income. It is a trite that rule of res judicata does not apply in income-tax proceedings but the principle of consistency has to be followed while delivering justice. Further the AO had not allowed the assessees claim of business expenses claimed during the assessment proceedings. He simply observed that the assessee has failed to submit the details of expenditure incurred and depreciation along-with evidence but the assessee has furnished the details before the AO vide letter dated 14-12-2010 which has not been adjudicated by the AO properly. Even the ld. CIT(A) also ignored the assessees claim at the appellate stage. Thus in view of the facts and circumstances of the case, the assessees income is treated under the head income from house property and allow deduction u/s 24(a) of the Act. - Decided in favour of assessee.
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2015 (9) TMI 11
Claim of exemption under section 11 denied - income from non-members - CIT(A) has allowed the claim of principles of mutuality to the extent of income received from the members - Held that:- Prior to the amendment ie upto 31.03.2009, all the objects of any general public utility is eligible to be classified as charitable purpose under section 2(15) of the Act. After 01.04.2009, as per the second limb of section 2(15), any activity of rendering any services in relation to any trade, commerce and business for a cess or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity cannot come under the purview of charity. In the present case, the assessee is rendering services to its members custom house agents, to carry out their business/professional activities. Therefore, the activities of the assessee directly amount to the services rendered by it in relation to the trade, business and commerce. Hence, the assessee cannot be considered as a charitable organization and therefore, the Assessing Officer as well as the ld. CIT(A) rightly denied the exemption claim of the assessee under section 11 of the Act. Assessee is not eligible for claiming exemption under section 11 of the Act and also not eligible for claiming principles of mutuality. The Hon'ble Kerala High Court in the case of Investors Club, Trissur v. CIT [2008 (2) TMI 546 - KERALA HIGH COURT] has observed that "we do not know how the assessee can claim principles of mutuality when the assessee has entitled to claim exemption under charitable organization, it has got registration under section 12A of the Act. Depreciation claim correctly denied - The assessee has not provided any material to show that he is entitled to claim depreciation again on the same assets. That apart, once the exemption claimed by the assessee under section 11 of the Act is disallowed, the claim of depreciation has to be calculated as per the regular provisions of the Act. Accordingly, this ground of appeal of the assessee is also dismissed. - Decided against assessee.
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2015 (9) TMI 10
Registration under section 12AA denied - non charitable activities - Held that:- The facts in the present case are almost similar to that of the facts in The Chartered Accountants Study Circle which was formed for the benefit of professionals as well as students of Chartered Accountants. In this case, as submitted by the Authorized Representative, the memorandum of the society has been amended with retrospective effect and this was not placed before the Director of Income Tax (Exemptions). According to the amended memorandum benefits are not restricted only to the members of the society or orthopaedic surgeons and since the Director of Income Tax (Exemptions) has not examined the amended memorandum and the case laws relied on by the counsel, we deem it appropriate to remit the matter to the file of the Director of Income Tax (Exemptions) for fresh consideration in the light of the submissions and the above said decisions of the High Court and the Tribunal . Accordingly, we set aside the impugned order and remit the matter back to the file of the Director of Income Tax (Exemptions) for de novo consideration. - Decided in favour of assessee for statistical purposes.
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2015 (9) TMI 9
Disallowance of depreciation by invoking the provisions of section 40(a)(i) in respect of the payments made for purchase of software and capitalized by the assessee - Held that:- Once the assessee has capitalized the payment in question though the assessee has not deducted the tax at source on such payment, Section 40(a)(i) cannot be invoked for disallowance of depreciation. Accordingly, we set aside the orders of the authorities below and the addition made by the Assessing Officer is deleted. See SMS Demang (P.) Ltd. V DCIT [2010 (1) TMI 624 - ITAT, DELHI ] - Decided in favour of assessee.
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2015 (9) TMI 8
Loss on account of futures and options set off against the business profit - CIT(A) allowed claim - Held that:- Both trading of shares and derivative transactions are not coming under the purview of Section 43(5) of the Act which provides definition of speculative transaction exclusively for purposes of section 28 to 41 of the Act. Again, the fact that both delivery based transaction in shares and derivative transactions are nonspeculative as far as section 43(5) is concerned goes to confirm that both will have same treatment as regards application of the Explanation to Section 73 is concerned, which creates a deeming fiction. Now, before application of the said Explanation, aggregation of the business profit/loss is to be worked out irrespective of the fact, whether it is from share delivery transaction or derivative transaction. As decided in Baljit Securities Pvt. Ltd. [2014 (6) TMI 475 - CALCUTTA HIGH COURT] where an assessee, being the company, besides dealing in other things also deals in purchase and sale of shares of other companies, the assessee shall be deemed to be carrying on a speculation business. The assessee, in the present case, principally is a share broker, as already indicated. The assessee is also in the business of buying and selling of shares for self where actual delivery is taken and given and also in buying and selling of shares where actual delivery was not intended to be taken or given. Therefore, the entire transaction carried out by the assessee, indicated above, was within the umbrella of speculative transaction. There was, as such, no bar in setting off the loss arising out of derivatives from the income arising out of buying and selling of shares. This is what the learned Tribunal has done - Decided in favour of the assessee
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2015 (9) TMI 7
Treatment of cash seized in the course of search - assessment u/s 153A - Held that:- Unexplained income arising out of ₹ 35,00,000 having been brought to tax in the hands of the assessee's husband, Sri G. Janardhan Reddy, the addition in the hands of the assessee is the case on hand is to be deleted as the same income cannot be taxed twice. In coming to this finding, we are bolstered in our view by the Affidavit sworn to by Sri G. Janardhan Reddy to confirm that the same addition is accepted by him in his case and that no further appeal has been preferred in the matter - Decided in favour of assessee.
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2015 (9) TMI 6
Eligibility for deduction u/s 10B - manufacturing activity or not - exporting granite blocks which were extracted from quarries and cut into dimensional blocks using wire-cutting machine - denial of exemption u/s 10B was resorted to by the AO on the premise that the process involved in the business of the assessee was removal of rock from parent rock by using wire cutting machine and thus, according to the AO, this did not amount to manufacture as defined u/s 2 (29BA) -CIT (A) allowed the assessees claim Held that:- After taking into account all the facts into consideration and also the ruling of the Honble Supreme Court in the case of Sesa Goa [2004 (11) TMI 14 - SUPREME Court] we are of the view that, as rightly observed by the CIT (A), though the case [CIT v. Sesa Goa Ltd] was prior to amendment to insertion of s. 2 (29BA) of the Act w. E.f. 1.4.2009, the process of extraction of rock and converting it into dimensional block had resulted in transformation of the object or article or thing into a new and a distinct object or thing having a different name, character and use. Thus, the dimensional block was a different name with distinct use and character. Thus, the provisions of s. 2 (29BA) (a) of the Act [the ruling of the jurisdictional High court in the case of Puttur Petro Products P Ltd [2013 (12) TMI 251 - KARNATAKA HIGH COURT] and also the Boards circular No.729 dated 1.11.1995] clearly show that the process involved in the case of the assessee was manufacture as defined u/s 2 (29BA) of the Act. Therefore, the assessee was entitled for deduction u/s 10B of the Act as the assessees business activity amounted to manufacture or production of an article or thing as envisaged in s. 10B of the Act for both the AYs under consideration. In substance, there is no infirmity in the findings of the CIT (A) which requires our intervention. - Decided in favour of assessee.
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2015 (9) TMI 5
Penalty u/s. 271(1)(c) - gift of ₹ 40,000/- received by the appellant from his father-in-law - reason for making the addition u/s. 68 was that the father in law in his affidavit had stated that he does not have a bank account and his income is below taxable limit - Held that:- On perusing the affidavit of the donor dated 11/12/2009, it is seen that the relationship of the assessee and the donor is not in doubt, his age being 61 years is also not in dispute. In the affidavit, the donor has stated that he has made gift out of past saving of carting business. Before us, Revenue has not brought any material on record to demonstrate that the donor could not have earned and saved the amount which he has gifted to his son in law. Further it is a well settled law that penalty proceedings are entirely distinct from assessment proceedings and however relevant and good, the findings in assessment proceedings may not be conclusive so far as penalty proceedings are concerned. It is well settled that the parameters of judging the justification for addition made in the assessment proceedings is different from the penalty imposed on account of concealment of income or filing of inaccurate particulars of income and that certain disallowance/additions could legally be made in the assessment proceedings on the preponderance of probabilities but no penalty could be imposed u/s.271(1)(c) of the Act on preponderance of probability and the Revenue has to prove that the claim of the assessee was not genuine or was inflated its tax liability. Further merely because additions have confirmed in appear or no appeal has been filed by assessee against additions made, it cannot be the sole ground for coming to the conclusion that assessee has concealed any income. - Decided in favour of assessee.
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2015 (9) TMI 4
Allowability of expenditure incurred by the assessee on brand building - revenue v/s capital expenditure - Held that:- There is no force in the argument of the ld. DR that the brand building expenditure shall be always treated as capital expenditure. As the expenditure has not resulted in capital asset, so has to be recorded as expenditure in capital field. It should be noted that the assessee had to incur this kind of expenditure year after year so as to keep the product in market otherwise when the advertisement was not followed up subsequently even the advantage secured from earlier advertising would get dissipated . Just because an expenditure is debited in books towards brand building, which it purportedly is, and statutory recognition has since been accorded to such an intangible asset, as a brand would not by itself imply that an advantage in the capital field, or of enduring value to the business has, arisen to the assessee upon incurring the expenditure. Rather, the business being competitive and prudence and conservatism being fundamental accounting assumptions, capitalization of such expenses or ascribing lasting abiding value to such expenses, could only be done on sound footing and cogent basis.( Alembic Chemical Works vs. CIT (1989 (3) TMI 5 - SUPREME Court). In our opinion the expenditure cannot be attributed to capital expenditure on brand building. Accordingly, we are inclined to uphold the order of the CIT(A) and dismiss the grounds taken by revenue. - Decided in favour of assessee.
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2015 (9) TMI 3
Addition of reimbursement of expenses of lotus note charges and other expenses by treating the same as fees for technical services - Held that:- Since the assessee has not filed copy of any agreement for providing lotus note book services so as to support assessees contention regarding reimbursement and not in the nature of fee for technical services, the CIT(A) had confirmed the disallowance. In the absence of such agreement the nature of services rendered and reimbursement of the same cannot be verified, so as to hold that it was not in the nature of fee for technical services. Since it was alleged to be mere reimbursement, onus is on the assessee to demonstrate the actual amount incurred on behalf of the associated enterprises on the basis of entries passed in the books of account and supporting bills/vouchers of such expenses. In the absence of agreement, it cannot be inferred as to whether the invoice raised by the assessee was on account of reimbursement merely or otherwise. We also found that the AO has not given any finding to the effect that it does not partake the nature and character of included services as defined in DTAA on the concept of Article 13(4)(c) of DTAA between Indian and UK. Accordingly, we set aside both the orders of lower authorities and matter is restored back to the file of AO for deciding afresh in terms of our above observations. - Decided in favour of assessee for statistical purposes
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2015 (9) TMI 2
Reopening of assessment - whether CIT(Appeals) has erred in annulling the assessment order under section 143(3)/147 - Held that:- In the Assessment year under consideration before us, this material aspect of the case has not been rebutted that the issue of allowability of royalty of expenses was duly considered by the Assessing Officer while framing the original assessment under sec. 143(3) of the Act on 29.12.2006 and since then, there was no change of law or material and the decision of the Hon'ble Supreme Court in the case of Southern Switch Gear Ltd. vs. CIT (1997 (12) TMI 105 - SUPREME Court) was very much in existence, when the original assessment order was framed on 29.12.2006. We are thus respectfully following the ratios laid down by the Hon'ble Supreme Court in the case of CIT vs. Kelvinator India Ltd. (2010 (1) TMI 11 - SUPREME COURT OF INDIA ) hold that the Learned CIT(Appeals) has rightly come to the conclusion that the Assessing Officer was not justified in reopening of the assessment under sec. 147 of the Act holding the same as void ab initio and consequently the assessment in question as annulled. We thus hold that there is no infirmity in the first appellate order on the issue. The same is upheld. - Decided in favour of assessee. Penalty imposed under sec. 271(1)(c) - whether CIT(Appeals) while deleting the penalty has ignored the fact that assessee had made a wrong claim of ₹ 23,07,349 in relation to the commission of the ex-gratia paid to its directors even though the same was not allowable as per the provisions of sec. 36(1)(ii)? - Held that:- the very addition made by a disallowance of ₹ 23,07,349 on account of commission and ex-gratia payment made to directors of the assessee company by invoking sec. 36(1)(ii) of the Act, which remained the subject matter of penalty in question, has been deleted by the ITAT. The ITAT has also approved the first appellate order in this regard on an identical issue for the assessment year 2004-05, following which the Learned CIT(Appeals) in the assessment year under consideration has held the levy of penalty as unjustified on the basis that in the assessment year 2004-05, the Learned CIT(Appeals) has allowed the appeal of the assessee on the issue. We thus do not find any reason to interfere with the first appellate order. - Decided in favour of assessee.
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2015 (9) TMI 1
Disallowance of unexplained expenditure - CIT(A) deleted addition - Held that:- CIT(A) granted relief to the assessee on all five grounds viz., ground no. 4 to 8 before the first appellate authority, in a cryptic and slip shod manner without separate adjudication on every issue and without addressing the explanation and additional and other relevant evidence of the assessee and objections of the AO on the particular issue. It is expected from judicial and quasi judicial authorities that they should adjudicate and address all the issues/grounds which have been raised before them for adjudication and which may be subject to further legal scrutiny before higher forum or authority. We are unable to appreciate manner and approach of the ld. CIT(A) in which he granted relief to the assessee deleted the ex parte and ad hoc additions made by the AO. Under above noted facts and circumstances of the present case, we have no hesitation to hold that the Revenue authorities were not justified in making ex parte ad hoc additions and also deleting the same without detailed and separate adjudication as per provisions of the Act. In this situation we are of the considered opinion that all five issues as mentioned and raised by the assessee before ld. CIT(A) require de novo adjudication at the end of AO. Thus, we restore the same to the file of the AO for proper adjudication after affording due opportunity of hearing for the assessee and without being prejudiced and influenced by the earlier assessment and impugned order. Since the case is restored for limited purpose only on five counts as stated above, accordingly, ground no. 2 & 3 of the Revenue are deemed to be allowed- Decided in favour of revenue for statistical purposes.
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Customs
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2015 (9) TMI 34
Refund of Duty Payment of Interest delay in refund - Aggrieved by order of tribunal, granting refund of custom duty along with interest, revenue preferred present appeal Whether Revenue was liable to pay interest on refund of duty Held that:- Section 27-A makes it clear that interest would be payable if amount is not refunded within three months from date of application Explanation of provision only means that liability to pay amount would arise after order of refund of amount is finalized, either in appeal or by Commissioner, Tribunal or Court, but such liability would be from three months after date of application Same cannot be interpreted that liability to pay interest would be from date of order of Tribunal or Court, which may be passed in appeal Supreme court in case of Ranbaxy Laboratories Ltd. [2011 (10) TMI 16 - Supreme Court of India] held that interest has to be paid from three months after date of application filed by respondent Thus, liability to pay interest would be from three months after date of application till date of its actual payment Also respondent would be entitled to costs or compensation for high handedness of appellant, by initially not refunding amount for over 12 years, and then refusing to pay interest even after order of Tribunal Decided against Revenue.
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2015 (9) TMI 32
Imposition of penalty for non-fulfilment of export obligation ADGFT passed order vide their proceedings, stating that since appeal preferred by petitioner was pending and not disposed of, Assistant Commissioner was directed not to stop exports as long as items are freely exportable Show cause notice proposing to impose penalty on petitioner for non-fulfilment of export obligation on ground that petitioner did not submit necessary documents to prove fulfilment of export obligation and export business of petitioner was stopped in view of order passed by JDGFT Held that:- Order of ADGFT, was very clear and explicit in directing Assistant Commissioner not to stop exports of petitioner as long as items were freely exportable, as appeal preferred them was pending and not disposed of Hence, since appeal preferred by petitioner is also pending, respondents directed to remove alert in Electronic Data Interchange (EDI) System issued against petitioner Petition disposed of.
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2015 (9) TMI 31
Release of Seized Vehicle Petitioner seeking direction upon respondent 1 to 3 to release seized truck, seized by 3rd respondent Held that:- admitted by petitioner that vehicle stands in name of fourth respondent It has not transferred in his name for want of clearance of loan amount availed from fourth respondent It was also not in dispute that vehicle was used to transport one metal idol and one stone idol in container and petitioner allege that he was not aware of above fact and that vehicle was given only to transport coconut Since vehicle was seized by officials of Customs Department and as petitioner was not owner of vehicle, relief sought by petitioner cannot be granted Hence, Petition dismissed as devoid of merits Decided against petitioner.
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2015 (9) TMI 30
Setting aside of confiscation and penalty order Monetary limit Whether Tribunal's order setting aside confiscation and penalty ordered by Adjudicating Authority is in order, when there is clear violation of procedure contemplated under EXIM Policy by importer Held that:- AO initially imposed redemption fine and penalty, which, on appeal, was subsequently reduced by Commissioner (Appeals) and on further appeal by assessee, Tribunal set aside order of Commissioner (Appeals) Therefore, very clear from records that monetary limit having been fixed at ₹ 2 lakhs, even as per order of Commissioner (Appeals), redemption fine and penalty being less than ₹ 2 lakhs, appeal is not maintainable Without going into merits of question of law formulated appeal dismissed as not maintainable Decided against revenue.
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2015 (9) TMI 29
Delay in Provisional Assessment of Bills of Entries Assessment of Bills of Entries for clearance of goods were filed long back Respondents were alleged to have taken no steps for provisional assessment Held that:- apparent that there was enormous delay in processing Bills of Entry Delay in performance of statutory duties, renders remedy provided by statute illusory Central Board of Excise and Customs (C.B.E. & C.) to inquire into matter as to why there was delay at level of Commissioners in processing such like cases Petition disposed of.
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2015 (9) TMI 28
Execution of Bank Guarantee Release of goods Petitioner challenges calculation which relates to execution of bank guarantee for provisional release of goods Petitioner was willing to furnish bank guarantee equivalent to 30% of differential value of duty calculated by respondent Held that:- Supreme Court in Commissioner v. Navshakti Industries Ltd. [2011 (5) TMI 149 - SUPREME COURT] directed provisional release of subject goods based on condition that security in form of bank guarantee equivalent to 30% of differential duty be furnished In present case, vide impugned order value of bank guarantee stipulated was 1.75 times differential rate of duty Said condition was clearly onerous and burdensome Thus petitioner to furnish bank guarantee in sum equivalent to 30% of differential duty Petition disposed of Decided in favour of Petitioner.
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Service Tax
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2015 (9) TMI 53
Clearing & Forwarding Agency Service or Business Auxiliary Service - penalty of under Sections 78 & 76 and also under 75A and 77 of the Finance Act - Held that:- Appellant's principal activity is sale and marketing of goods on behalf of the principal manufacturer and also for carrying out storage and distribution. The lower authorities have held that the levy would fall under C&F Agent service because the appellants are handling the goods in addition to sale and marketing. In view of definition and Explanation to Section 65 (19), it is clear that appellant's principle activity is sale and marketing of the goods for their principal manufacturer, eventhough they may handle the goods for storage and distribution and forwarding of goods. The Tribunal in an identical issue in the case of CCE Vs Transasia Sales Syndicate (2007 (7) TMI 82 - CESTAT, BANGALORE ) held that service rendered by the assessee do not fall under Clearing & Forwarding service but as "Commission Agents". - appellant's principle activity is not related to clearing & forwarding of goods, as it is clearly evident from the agreement that the appellant was appointed as Commission Agent for marketing and sale of goods. Therefore, the demand under C&F service is not sustainable as held in the above Tribunal's decision in CCE Vs Transasia Sales Syndicate (supra) which has been upheld by Hon'ble Supreme Court as reported in [2012 (3) TMI 419 - SUPREME COURT]. - service tax demand confirmed under C&F service is not sustainable - Decided in favour of assessee.
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2015 (9) TMI 52
Denial of input tax credit - Credit on security guards, telephone connections installed at the residence of bank employees and professional charges for professional work - Held that:- The amount of service tax on these services is wrongly availed as cenvat credit as per notification No. 23/04 as they have not used in or in relation to output services. On plain reading of the show cause notice, it is clear that fees paid to the consultant representative by the appellant has availed services of different consultants for each purpose. These observations in the Show cause notice can not be made without examining the invoice. Therefore, it is observed that before issuing the show cause notice, invoices for the fees paid to the consultant were with the department. If the authorities below could have asked the appellant to provide the copy of the invoices, the appellant could have provided when the appellant has enclosed all the copies of enclosed invoices along with their appeal papers. In these circumstances, as appellant had provided all the copies of invoices for the service provided by the consultants are on record, the appellant is entitled to take cenvat credit if same is in order as per the conditions of notification No. 23/04. Further, the security guard service and telephone connections services has been availed by their back up office where General Manager is also residing and the services availed for the security guards at residence of General Manager and back up office cannot be segregated, therefore, the appellant is entitled to take cenvat credit on these service also. - appellant has availed input service disputed in this case has been availed for providing output service. Therefore, appellant is entitled to take cenvat credit - Decided in favour of assessee.
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2015 (9) TMI 51
Simultaneous penalty u/s 76 & 78 - service tax was deposited before issuance of the show cause notice - Held that:- The appellant had been providing the impugned service since October, 2005 but had neither taken registration nor filed any returns. The service was provided under an agreement with M/s Hindustan Lever Ltd. The said agreement clearly brings out the nature of service and there was no scope for any ambiguity or doubt about the taxability thereof. In these circumstances, the allegation of suppression on the part of the appellant is clearly sustainable warranting imposition of mandatory penalty under Section 78 - order is being issued pursuant to and in compliance of the order dated 3.11. 2014 of Punjab and Haryana High Court which duly takes note of the fact that as per the judgements of the same High Court in the case of First Flight Courier Ltd [2011 (1) TMI 52 - High Court of Punjab and Haryana] and M/s. Akash Cable [2011 (2) TMI 80 - HIGH COURT OF PUNJAB AND HARYANA], even if the penalties under Sections 76 and 78 could be imposed simultaneously during the relevant period, penalty under Section76 would not be justified when penalty under Section 78 is imposed - Penalty u/s 76 is set aside - Penalty u/s 78 is upheld - Decided partly in favour of assessee.
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2015 (9) TMI 50
Deputation of employees by the overseas associates - Manpower Supply and Recruitment Services - Service provider not situated in India - remittances were prior to 18.04.2006 - Held that:- The reversal of the normal inherence of tax mandated by the provisions of the Act was introduced by the legislative dynamics of Section 66A introduced by the Finance Act, 2006 w.e.f. 18.04.2006. Prior to 18.04.2006, a recipient of Manpower Supply and Recruitment service was not liable to remit tax in the absence of any legislative authorisation for levy and collection of service tax on a recipient of the service. Export of services - liability for remittance of tax on the basis of book entries made even though no consideration is actually received prior to 10.05.2008 - Held that:- For entries made prior to 10.05.2008 there is no liability to remittance of tax merely on account of amendment to the provisions of Section 67 of the Act is a principle concluded by decisions of this Tribunal in Sify Technologies vs. CCE [2010 (11) TMI 232 - CESTAT, CHENNAI] and Gecas Services India Pvt. Ltd. vs. CST, New Delhi [2014 (7) TMI 410 - CESTAT NEW DELHI]. Demand alongwith interest and penalties as specified in the impugned order, cannot be sustained. The impugned order is accordingly quashed - Decided in favour of assessee.
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2015 (9) TMI 49
Waiver of pre deposit - Held that:- law relating to taxation of service by Finance Act, 1994 is not commodity taxation law, it would be proper to give an opportunity to the appellant to adduce necessary evidence supporting its claim on the value of the goods used in execution of the works contract. If the authority is satisfied as to the value of use of the goods in the work as pleaded by learned counsel to be substantiated by evidence, the gross value of the contract shall get reduced by the proved value of the goods. The residue shall only be liable to service tax at the appropriate rate prevailed during the relevant period. - Matter remanded back - Decided in favour of assessee.
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2015 (9) TMI 48
Commercial or Industrial Construction Services - Inclusion of value of free supply of materials - held that:- adjudicating authority observed that the service provider recovers the cost of the activities either in cash or by other consideration then the value of such service and material are required to be added in the assessable value for charging tax. Learned Advocate also submits that adjudicating authority had not properly considered the other issues. In our considered view, the adjudicating authority should reconsider the main issues, in the light of decision of the Tribunal in the case of Bhayana Builders (P) Limited & Others (2013 (9) TMI 294 - CESTAT NEW DELHI (LB)) and also other issues. - Matter remanded back - Decided in favour of assessee.
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2015 (9) TMI 47
Imposition of penalty - GTA service - whether the appellant had not paid the service tax, on reverse charge basis, in respect of GTA services so received by him with any malafide - Held that:- The appellants have strongly contended that they are research body and were exempted from payment of excise duty or VAT, etc. As such, they were not aware of the provisions of payment of service tax on reverse charge basis, inasmuch as it was not the appellant who had provided the services. In such a scenario, they submit that they were under a reasonable bona fide impression that no tax is required to be paid by them. As soon as they were pointed out that they were liable to pay service tax, the same was paid immediately before the issuance of show-cause notice. - when there was a reasonable cause on the part of the appellant, the penal provisions are not required to be invoked - Impugned order is set aside - Decided in favour of assessee.
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2015 (9) TMI 46
Denial of CENVAT Credit - Availment on the basis of ineligible documents - Held that:- Report of the jurisdictional Central Excise officer was not supplied to the assessee so as to seek their comments nor the details given in the said report and the grounds for holding the documents ineligible stand disclosed in the impugned order, thus making the appellant incapable of contesting the same. The principles of fair adjudication required the adjudicating authority to provide the material sought to be relied upon by him to the assessee and to seek his comments on the same. Inasmuch as the same has admittedly not been done, we set aside the impugned order - Matter remanded back - Decided in favour of assessee.
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Central Excise
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2015 (9) TMI 41
Denial of refund claim - Refund of accumulated cenvat credit - Export of goods it has been alleged that documents have not been produced for verification but the fact is that all documents were produced to the Superintendent who verified the documents and submitted the report to the Assistant Commissioner. - Held that:- Decision in the case of assessee's own previous case followed - Decided in favour of assessee.
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2015 (9) TMI 40
Availment of exemption on chewing tobacco under Notification No. 8/2004-CE dated 21/01/2004 - whether the appellants are eligible for exemption on compound under Notification No.52/2002, as their finished products i.e. chewing tobacco are wholly exempt under Notification No. 8/2004 - Held that:- Notification exempts all goods falling under tariff item 21069020 and chapter 24 of the first schedule to the CETA, 1985 manufactured in a factory and used within the said factory for manufacture of final products. The benefit of this notification is, however, not applicable where the final products are exempt from the whole of the duty of excise leviable. - Commissioner has discussed as to how the benefit of Notification No. 8/2004 is not applicable to the compound. However, he has not recorded any findings in regard to the submission of the appellants that while calculating the duty payable but for exemption, the duty payable on compound is to be taken as zero. It is the contention of the appellants that by adopting the above methodology, duty payable for the purpose of investment works out to excise duty payable on the final products but for the said exemption and the said amount is already invested and therefore, no duty is leviable on the compound. The facts were however, not available before the adjudicating authority while passing the order. It is the contention of the appellants that notification 52/2002 is not applicable to the inter-mediate products where the final products are wholly exempt from duty. Since in their case the final products are exempt subject to certain conditions, the said final products cannot be said to be wholly exempt. Matter requires a fresh look by the adjudicating authority - Impugned order is set aside - Matter remanded back - Decided in favour of assessee.
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2015 (9) TMI 39
Denial of consequential refund - claim is not supported by any quantification or valid evidence that incidence of duty has not been passed on to any other customer - Held that:- As regards the demand of proof of evidence on payment of ₹ 1,07,245/-, we find from extract of RG-23C Part II at page 24 which clearly shows that at Sl.No.1, there is an endorsement in the RG-23C Part II showing payment of ₹ 1,07,245/- towards SCN OC NO.403/97 dt.31.3.97. This debit was made towards the SCN which clearly confirms that appellant debited entire amount in RG-23C Part II as a proof of payment towards the SCN which is now sought as refund in view of Commissioner (Appeals) order. Therefore, appellant has produced sufficient evidence on payment of duty in RG-23C Part II. As regards unjust enrichment clause, we find that entire demand arose out of differential duty worked out in each invoice. The goods were already cleared during the period 3.4.96 to 31.3.97 whereas the SCN was issued subsequently. On perusal of the amount involved, they have made the payment by way of RG-23C Part-II and therefore question of unjust enrichment does not arise. - appellants are eligible for refund amount debited in RG.23C-Part-II as re-credit of cenvat credit - Impugned order is set aside - Decided in favour of assessee.
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2015 (9) TMI 38
Denial of refund claim - whether refund is hit by limitation and doctrine of unjust enrichment would apply and whether appellants are eligible for refund as per the rate contract issued by TWAD Board w.e.f. 28.3.98 - Held that:- Appellant cleared the goods on payment of duty from March 98 to August 98 whereas the claim was filed on 27.11.98. Therefore refund claim pertaining to excise duty paid for the period March 98 and April 98 and partly May-98 are hit by limitation as time-barred for the reason that as per Section 11B of Central Excise Act, the relevant date is the date of payment of excise duty and the claim has to be filed within a period of 6 months from the date of payment of duty. Therefore, the refund claim for the period 28.3.98 to 27.5.98 is time barred and the refund for the period 28.5.98 to 31.8.98 is not hit by limitation - appellant supplied PCC pipes to TN Government and it is a government body which is governed by the rate contract issued by TWAD Board every year. Prima facie, the refund claim relates to duty paid for the intervening period after the end of the financial year 1997-98 and pending receipt of revised rate contract from TWAD Board for the year 1998-99 and the appellant had cleared the goods as per the rate contract price of the previous year 1997-98. This fact has been clearly seen from the letter dt. 28.10.98 issued by Joint Chief Engineer, TWAD Board to the appellant. As per the conditions of the said letter, the revised rate was fixed for 1998-99 but issued only on 28.10.98. By respectfully following the Apex Court's decision [2015 (5) TMI 492 - SUPREME COURT], I hold that appellants are eligible for refund for the period from 28.5.98 to 31.8.98. As regards on the question of unjust enrichment, I find that unjust enrichment clause is not applicable in the present case as the TWAD Board has not paid any excess excise duty to the appellant and appellant had collected only the price as per the rate contract for the year 1998-99 - Refund is time barred for the period from 28.3.1998 to 27.5.1998 - the appellant is eligible for refund for the period 28.5.98 to 31.8.98 - Decided partly in favour of assessee.
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2015 (9) TMI 37
Clandestine removal of goods - Recovery of incriminating documents - Held that:- Entire case of the Revenue is based upon the statements of the authorized representatives of M/s Usha Enterprisesand M/s SreeTirumala Steel Rolling Mills Pvt. Ltd. Apart from that, there is not even an iota of evidence on record to show that the appellant has not actually received the inputs in question. Even the said statements have not been tested about their correctness by granting cross examination. There is no inculpatory statement of the present appellant and on the contrary, the appellant's representative, has clarified, in the statement recorded during the investigation that the inputs were actually received by them. Evidence collected by the Revenue is only in the shape of statements of third party. It is well settled that in the case of clandestine allegation, the onus to establish the same is on the Revenue, which is required to be satisfied by production of sufficient, tangible and positive evidence. The uncorroborated statements of third party cannot be adopted as an evidence, without corroboration from an independent source though such statements can be of some value but cannot be solely relied upon for the purpose of holding against the assessee. Revenue is silent on the issue that if the appellant has not received the materials in question, how have they manufactured the corresponding final products. It is not the Revenue's case that they have procured the raw material from any other alternative source. It is not only impractical but impossible to manufacture the final product without raw material in question. The appellants having reflected the raw material in their Cenvat credit account and having shown the utilization of the same, heavy duty stands cast on the Revenue to establish that such raw material was not the one which was covered by invoice in question and stands procured by the assessee from any other source. There is neither any allegation much less any evidence to reflect upon the procurement of raw material from any outside source. - no merits in the Revenue's stand. Accordingly, the impugned order is set aside - Decided in favour of assessee.
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2015 (9) TMI 36
Waiver of pre deposit - Imposition of penalty - Seizure of goods since goods not entered in statutory records - Manufacture of Pan masala - Presence of lime, katha, betel nut and tobacco - Held that:- Apart from relied upon report of Shriram Institute, Revenue has not produced any evidence on record to support its finding that lime and katha was also being procured by the appellant from various raw materials and was being used in the manufacture of their final product. Apart from the fact of absence of evidences, we note that there is a contra report from U.P. Government Food Laboratories. - report fairly reveals that it was the sealed sample, which was sent to them. This makes it clear that the same very sample which was sent by the Revenue to Shriram Institute and which was available with the assessee, has been sent to U.P. Government Food Laboratory. The second objection of the Revenue that it was delayed sending of the sample can also not be appreciated for two reasons. First it was the Revenue itself, which after seizing the goods on 27-2-2010, treated a sample from the same after a gap of six months i.e. on 25-8-2010 and secondly on the ground that the said report of Shriram Institute was never intimated to the appellants before the issuance of the show cause notice and was supplied to them, for the first time, with the show cause notice itself dated 30-11-2011. In such scenario, sending of the samples on 2nd of February, 2012 by the appellant cannot be held to be a delayed action on their part. In any case even the delayed sending of the samples would not cause any aspersions on the outcome of the report given by U.P. Government Food Laboratory so as to dismiss the same on this sole ground. - appellants have a good prima facie case in their favour. We also note that the test report of Shriram Institute even if presumed to be correct, cannot be applied in respect of all the clearances made right from the beginning and at the most would apply only to the lot from which the samples were drawn. We accordingly dispense with the condition of pre-deposit of dues as also interest and penalties in all the cases - Stay granted.
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2015 (9) TMI 35
Denial of refund claim - Bar of limitation - Jurisdiction of Court - Held that:- Appellant in the present proceedings is a merchant exporter and not a person who undertook first manufacture and subsequent processing of the returned goods. Appellant is not concerned as to what activities are undertaken by TGBL. Appellant will be interested to get rebate claim of the duty paid on 20.09.1997 before the returned goods were allowed to be cleared under Rule 173 H of the erstwhile Central Excise Rules 1944, on the documents relating to export of goods. Rule 173 L of the erstwhile Central Excise Rules, 1944 can be followed only by the manufacture/re-manufacture of the goods and not by the merchant exporter. Revenue did not challenge the second clearance made by TGBL after re-processing holding that duty was required to be paid by TGBL for the second time and get refund under Rule 173 L for the earlier duty paid. Under the present factual matrix appellants claim cannot be considered to be a refund claim of Rule 173 L. As the main dispute agitated by the appellant is that their claim is one of rebate and not refund under Rule 173 L of the Central Excise Rules, 1944, this Bench agree with the contention of the Learned Advocate that it is a case of rebate and CESTAT does not have the jurisdiction to entertain this appeal. - Appeal disposed of.
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CST, VAT & Sales Tax
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2015 (9) TMI 45
Re-opening of Assessment Fixation of tax rate at 16% against 10% Writ court while deciding issue relating to issuance of show cause notice to re-open assessment held that revenue was not justified in reopening assessment as assessments were complete and tax was paid by assessee Held that:- Supreme Court in Mathuram Agrawal vs. State of Madhya Pradesh [1999 (10) TMI 125 - Supreme Court of India] and Manish Maheshwari vs. Assistant Commissioner of Income-tax and Another [2007 (2) TMI 148 - SUPREME COURT OF INDIA] held that admittedly there was ambiguity with regard to rate of tax payable by assessees and benefit of said ambiguity should be extended to assessees and not to Revenue Present court fully in agreement with holding that assessments in respect of respondent / assessee having been completed pursuant to order passed by Special Tribunal and tax at rate of 10% was also collected, Revenue was not justified in demanding tax at 16% by seeking to reopen concluded assessments by issuing clarification No ground to interfere with impugned order passed in writ petition Decided against revenue.
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2015 (9) TMI 44
Stay of Payment of Tax Revisionist preferred first appeal and also filed application seeking stay of payment of disputed tax in its entirety Appellate authority disposed of stay application by permitting assessee to deposit only 50 per cent of disputed tax however, Tribunal modified first appellate authoritys order and stayed 75 per cent of disputed tax Whether revisionist was entitled for complete stay of deposit amount Held that:- Tribunal neither considered prima facie merits of revisionist case nor has taken into account financial distress of revisionist in payment of disputed tax amount and other relevant factors Therefore, order of Tribunal is unreasoned and appears to have been passed in routine and casual manner Impugned order of Tribunal cannot be sustained and is set aside Matter remanded for afresh consideration , on merits in accordance with law Decided in favour of Revisionist.
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2015 (9) TMI 43
Rejection of refund claim Filing of W form, manually Vide impugned order first respondent had rejected claim for refund made by petitioner, by filing form 'W', manually Whether impugned order rejecting claim for refund was justified in law Held that:- respondents pointed out that Circular bearing No.22/2011, makes it clear that refund claims filed, manually, on or after 1.1.2012, would not be processed, he is not in position to show that such ban is supported by Rule or Regulation Clear that Circular cannot abridge or overrule provisions of Rule 11(2) of Tamil Nadu Value Added Tax Rules, 2007 Court finds it appropriate to set aside impugned order of first respondent and is directed to consider form 'W' refund claim filed by petitioner, manually, and pass appropriate orders thereon, on merits and in accordance with law Decided in favour of Assesse.
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2015 (9) TMI 42
Consideration of Minority view of bench - Majority view of larger bench of Tribunal favours what revisionist sought to contend However said view has not been accepted by Tribunal comprising of lesser number of Members, and accordingly, rejected contentions of revisionist Whether tribunal was justified in considering minority view and discarding majority view of bench Held that:- in matter of administration of justice, it is bounded duty of smaller bench to follow applicable judgment rendered by larger bench, i.e. majority view and not to follow minority view which has got no application It is well within competence of smaller bench to take steps to have matter referred to larger bench, if they are unable to accept applicable views expressed by larger bench That having not been done, therefore impugned judgment set aside and matter remit back to Tribunal with direction to re-consider matter in accordance with law Decided in favour of Revisionist.
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Indian Laws
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2015 (9) TMI 27
Validity of Punjab Government notification dated 16th November, 2012 - Provision relating to marriage palaces - Held that:- The concessional CLU charges and licence/permission fee are payable in single instalment while the EDC charges for a hotel can be paid in two equal six-monthly instalments within a year as prescribed in Clause-4 of the notification. It may be mentioned here that Hotel has been indisputably categorized as an Industry. - there is a vast difference between a hotel and a marriage palace with respect to the nature of construction, total covered area, requisite facilities for the visitors, nature and standards of utilities and multiple usages. There can be thus no comparison between the two incomparable entities. Since the marriage palaces and hotels do not constitute one and the same homogeneous class, the prescription of different rates of statutory charges/fee for them cannot be held to be discriminatory. Such a differentiation falls within the four corners of reasonable classification. CLU and EDC charges have been prescribed after due deliberations and keeping in view the relevant factors like the Collector rates, the value of land and its potentiality etc. These charges have been increased wherever the proportionately higher FAR has been allowed. Secondly, the record produced before us does indicate that the relevant information was called for and the rates were recommended on the basis of a uniform criteria which were finally approved by the Council of Ministers. - The grievance of the petitioners with regard to the alleged excessive rates of EDC/CLU etc. has thus been partially redressed in some of the zones. Sixthly, the remedy against the rates of development charges, if any, lies by way of an appeal under Section 142(1) of the 1995 Act. (17) We may also at this stage deal with the petitioners contention that Development Charges have been levied without any assessment by the Arbitrator as contemplated under Section 139 of the 1995 Act. We may also refer to the first proviso to sub-Section (2)(b) of Section 139 to meet with the petitioners contention that levy of EDC at different rates for different zones is impermissible. The aforesaid provision explicitly enables prescription of different rates of development charges for different parts of the planning area. Subject policy is purposefully retroactive so as to give effect and comply with the directions issued by this Court in exercise of PIL jurisdiction. Various vital issues of paramount public importance like, public safety, congestion on roads and parking chaos created by the existing marriage palaces, were the subject-matter of consideration in the cited PIL. - The policy creates a new obligation on the marriage palaces in presenti. Such a restriction though have the effect of relating back to a date prior to the issue of policy notification but for all intents and purposes, it is retroactive only. The past illegalities committed by the petitioners in setting up unauthorized marriage palaces fall within the sweep of the policy and such illegalities can be regularized subject to the petitioners compliance of the conditions prescribed therein. All the marriage palaces are abutting National or State Highways, scheduled roads or local roads. They draw business only because of their connectivity to main roads. In the absence of any facts and figures which the petitioners have not brought on record, it is difficult to know as to how many of these are using water supply from State canals or water supply system. Assuming they dont use either, the ground water is not their personal property. There are innumerable allied burdens also put on the State Exchequer by the activities of marriage palaces like maintenance of law and order, traffic control, monitoring by pollution controlling agencies etc. It is thus totally farce to say that they are being asked to pay hefty charges or fee without any services in lieu thereof. - The petitioners are not required to leave half of their land for parking as they may provide dedicated parking area equivalent to 50% of their gross area may be through the multi-level parking etc. We uphold the notification dated 16th November, 2012 as modified vide subsequent notification 07.01.2013 - Decided against Appellants.
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2015 (9) TMI 26
Reference petition - Application for early hearing of petition - Held that:- Rule 5 authorises either a learned Single Judge or a Division Bench to refer the matter pending before them or any question arising in such matter to a Division Bench of two-Judges or a larger Bench respectively. On such Reference being made, it is the duty of the Chief Justice to constitute either a Division Bench or a larger one for the decision on the question referred or for decision of the matter referred. - Rule 6 of the Rules of 1993 merely authorizes the Chief Justice to place any pending matter or any type of pending matters to a Division Bench or a Larger Bench notwithstanding the fact that according to the Rules of 1993 those matters are required to be decided by any learned Single Judge or a Division Bench fixed by the Chief Justice in exercise of his power of fixation of roster. The aforesaid Rule also authorizes the Chief Justice to place the matter, which is otherwise required to be heard by a Division Bench, for hearing before a Larger Bench. The Chief Justice, in his administrative capacity, cannot constitute a Larger Bench for the purpose of deciding a pure question of law simply because the Chief Justice is of the view that such question, notwithstanding a decision of a Division Bench of this Court in one way or other, is required to be heard by a Larger Bench. Even if on any important question, there is no decision of this court, such fact cannot enable a learned Chief Justice to constitute a Larger Bench suo motu in exercise of administrative power. - We are quite conscious of the inherent power of the Chief Justice as the master of roster. By virtue of such power, it is for the Chief Justice to decide which of the learned judges or the existing benches should decide any particular matter or a type of the matters. Such inherent power, however, does not authorize a Chief Justice to make a Reference in a judicial side by taking aid of his suo motu order in administrative capacity. So far the Reference by a learned Single Judge of the Court or a Bench of this Court is concerned, Rule 5 of the Gujarat High Court Rules, 1993 is the statutory provision exclusively dealing with the same and on the basis of such provision, there is no scope of initiating a suo motu Reference by a Chief Justice in his administrative capacity - We, therefore, find that the preliminary objection raised by the learned counsel appearing on behalf of the Gujarat High Court Advocates Association has substance and on that ground alone, we dispose of all these suo motu References as not maintainable. - Decided against Appellant.
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