IT : Where details of properties had already been disclosed to department under VDIS, addition on account of unaccounted investments made in immovable properties was to be deleted
IT : While determining undisclosed income, under investment method depreciation was admissible as deduction against income so determined; assessee was justified in taking written down value of vehicles instead of taking cost thereof
IT : In absence of any material to contradict stock valuation at cost shown by assessee, addition based on selling price was to be deleted
IT : Since ladies in indian families normally possess quantity of jewelleries as was found in search and assessee declared investments in gold and silver articles in VDIS, value of gold and silver would not be includible in undisclosed income
IT : Where liability towards creditors were collated from seized material only and Assessing Officer did not bring any material on record to disapprove claim of assessee, disallowance of liability towards sundry creditors was not justified
IT : Where addition made by Assessing Officer towards insufficient drawings was based on estimated basis without making reference to any seized materials, addition was to be deleted
[2015] 60 taxmann.com 77 (Chennai - Trib.)
IN THE ITAT CHENNAI BENCH 'A'
Assistant Commissioner of Income-tax
v.
Kandasamy Sah
IT : While determining undisclosed income, under investment method depreciation was admissible as deduction against income so determined; assessee was justified in taking written down value of vehicles instead of taking cost thereof
IT : In absence of any material to contradict stock valuation at cost shown by assessee, addition based on selling price was to be deleted
IT : Since ladies in indian families normally possess quantity of jewelleries as was found in search and assessee declared investments in gold and silver articles in VDIS, value of gold and silver would not be includible in undisclosed income
IT : Where liability towards creditors were collated from seized material only and Assessing Officer did not bring any material on record to disapprove claim of assessee, disallowance of liability towards sundry creditors was not justified
IT : Where addition made by Assessing Officer towards insufficient drawings was based on estimated basis without making reference to any seized materials, addition was to be deleted
[2015] 60 taxmann.com 77 (Chennai - Trib.)
IN THE ITAT CHENNAI BENCH 'A'
Assistant Commissioner of Income-tax
v.
Kandasamy Sah
Whether e-wallets/virtual cards needs to be disclosed under Black Money Act?
The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015" ("the Black Money Act") has been enforced from July 1, 2015. It provides for 30% tax on the value of undisclosed foreign income or assets with a penalty equivalent to three times of tax so computed. It further provides for prosecution of up to 10 years in case of willful attempt to evade tax on foreign income or assets held outside India.
E-wallet/virtual cards
E-wallet/virtual card account are similar to bank account where inward and outward cash movement takes place from the account.
Monies held in e-wallet/virtual cardscan be disclosed under Black Money compliance window.
Declaration can be made if e-wallets/virtual cards maintained on a website hosted outside India and funded from undisclosed income.
Compliance window for declaration will remain open till Sept. 30, 2015.
Benefits of declaration
Need to pay taxes and penalty of 60% instead of 120% of undisclosed income.
Immunity from prosecution
Relief from penalty of ten lakhs.
Further there is acompliance window for taxpayers, i.e., one-time opportunity for taxpayers to voluntarily disclose the undisclosed foreign income or assets. Any person who opts for this compliance window would get immunity from prosecution and he shall be liable pay tax at the rate of 30% and reduced penalty of 100% of tax. Declaration under compliance window can be made during the period from July 1, 2015 to September 30, 2015.
The Government has already notified Form 6 for declaration of undisclosed foreign income or asset under the compliance window. The taxpayer has an option to file the declaration either manually or electronically on the e-filing website of the department using his digital signature.
Many persons maintains an e-wallet/virtual card online on a website hosted in foreign Country. Whether such e-wallet/virtual needs to be disclosed under the Black Money Act?. The CBDT has issued clarification to clear the air on this issue. But before we proceed further lets analyze what is e-wallet or virtual cards.
What is E-wallet/Virtual Card?
E-wallet is an online prepaid account where one can stock money like Paytm. As it is a pre-loaded facility, consumers can buy a range of products from airline tickets to grocery without swiping a debit or credit card.
Virtual card is a limit Debit card, which can be created using the Internet Banking facility for ecommerce transactions. The Card can be used to shop online at any merchant website that accepts Visa Cards, without any difference from a regular plastic Card.
Nowadays e-commerce transactions are increasing day by day as people prefer to buy goods and services via e-commerce websites like amazon, Flipkart and Snapdeal. For buying such product or service an option of payment via e-wallet and Virtual Cards is also available.
Whether amounts held in e-wallets and virtual cards needs to be disclosed under Black Money Act?
The CBDT has clarified vide Circular No. 15/2015, dated 3-9-2015that monies held in e-wallets and virtual cards needs to be disclosed under the Black Money Act. However, disclosure is required only in those cases where e-wallets and virtual cards are maintained online on a website hosted in a foreign country which was initially funded by income chargeable to tax and on which taxes has not been paid. Thus, a person earning income by playing online games or Poker through e-wallet or virtual cards needs to make declaration in respect of such wallet and cards under the Black Money Law.
How to make valuation of e-wallet/virtual cards under the Black Money Act?
The CBDT has clarified vide Circular No. 15/2015, dated 3-9-2015that e-wallet/virtual card account are similar to bank account where inward and outward cash movement takes place from the account. Therefore, valuation and declaration of e-wallet account may be made as in case of bank account.
Their valuation shall be made by making addition of all the deposits made in the account since the date of its creation. Provided that where any deposit is made from the proceeds of any withdrawal from the account, such deposit shall not be taken into consideration while computing the value of the account.
Conclusion:
Declaration of e-wallets/virtual cards can be made under the compliance window till September 30, 2015. Such declaration will attract lower taxes and penaltiesof 60% of undisclosed income. However, after September 30, 2015 monies held in e-wallets/virtual cards will be charged to higher taxes and penalties of 120%.
As per the provisions of Black Money Act any failure to furnish information of foreign bank Account wouldattract penalty often lakhs.However such penal provision shall not apply in respect of an asset, being one or more bank accounts having an aggregate balance offive lakhsor less at any time during the previous year.
The CBDT has clarified that e-wallet/virtual cards are similar to bank accounts, thus,aforesaid penalty provisions will be applicable on non-disclosure of monies held in e-wallets/virtual cards.
The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015" ("the Black Money Act") has been enforced from July 1, 2015. It provides for 30% tax on the value of undisclosed foreign income or assets with a penalty equivalent to three times of tax so computed. It further provides for prosecution of up to 10 years in case of willful attempt to evade tax on foreign income or assets held outside India.
E-wallet/virtual cards
E-wallet/virtual card account are similar to bank account where inward and outward cash movement takes place from the account.
Monies held in e-wallet/virtual cardscan be disclosed under Black Money compliance window.
Declaration can be made if e-wallets/virtual cards maintained on a website hosted outside India and funded from undisclosed income.
Compliance window for declaration will remain open till Sept. 30, 2015.
Benefits of declaration
Need to pay taxes and penalty of 60% instead of 120% of undisclosed income.
Immunity from prosecution
Relief from penalty of ten lakhs.
Further there is acompliance window for taxpayers, i.e., one-time opportunity for taxpayers to voluntarily disclose the undisclosed foreign income or assets. Any person who opts for this compliance window would get immunity from prosecution and he shall be liable pay tax at the rate of 30% and reduced penalty of 100% of tax. Declaration under compliance window can be made during the period from July 1, 2015 to September 30, 2015.
The Government has already notified Form 6 for declaration of undisclosed foreign income or asset under the compliance window. The taxpayer has an option to file the declaration either manually or electronically on the e-filing website of the department using his digital signature.
Many persons maintains an e-wallet/virtual card online on a website hosted in foreign Country. Whether such e-wallet/virtual needs to be disclosed under the Black Money Act?. The CBDT has issued clarification to clear the air on this issue. But before we proceed further lets analyze what is e-wallet or virtual cards.
What is E-wallet/Virtual Card?
E-wallet is an online prepaid account where one can stock money like Paytm. As it is a pre-loaded facility, consumers can buy a range of products from airline tickets to grocery without swiping a debit or credit card.
Virtual card is a limit Debit card, which can be created using the Internet Banking facility for ecommerce transactions. The Card can be used to shop online at any merchant website that accepts Visa Cards, without any difference from a regular plastic Card.
Nowadays e-commerce transactions are increasing day by day as people prefer to buy goods and services via e-commerce websites like amazon, Flipkart and Snapdeal. For buying such product or service an option of payment via e-wallet and Virtual Cards is also available.
Whether amounts held in e-wallets and virtual cards needs to be disclosed under Black Money Act?
The CBDT has clarified vide Circular No. 15/2015, dated 3-9-2015that monies held in e-wallets and virtual cards needs to be disclosed under the Black Money Act. However, disclosure is required only in those cases where e-wallets and virtual cards are maintained online on a website hosted in a foreign country which was initially funded by income chargeable to tax and on which taxes has not been paid. Thus, a person earning income by playing online games or Poker through e-wallet or virtual cards needs to make declaration in respect of such wallet and cards under the Black Money Law.
How to make valuation of e-wallet/virtual cards under the Black Money Act?
The CBDT has clarified vide Circular No. 15/2015, dated 3-9-2015that e-wallet/virtual card account are similar to bank account where inward and outward cash movement takes place from the account. Therefore, valuation and declaration of e-wallet account may be made as in case of bank account.
Their valuation shall be made by making addition of all the deposits made in the account since the date of its creation. Provided that where any deposit is made from the proceeds of any withdrawal from the account, such deposit shall not be taken into consideration while computing the value of the account.
Conclusion:
Declaration of e-wallets/virtual cards can be made under the compliance window till September 30, 2015. Such declaration will attract lower taxes and penaltiesof 60% of undisclosed income. However, after September 30, 2015 monies held in e-wallets/virtual cards will be charged to higher taxes and penalties of 120%.
As per the provisions of Black Money Act any failure to furnish information of foreign bank Account wouldattract penalty often lakhs.However such penal provision shall not apply in respect of an asset, being one or more bank accounts having an aggregate balance offive lakhsor less at any time during the previous year.
The CBDT has clarified that e-wallet/virtual cards are similar to bank accounts, thus,aforesaid penalty provisions will be applicable on non-disclosure of monies held in e-wallets/virtual cards.
RESERVE BANK OF INDIA
Mumbai - 400 001
RBI/2015-16/ 175 September 10, 2015
A.P. (DIR Series) Circular No.13
To,
All Authorised Dealer Category – I Banks
Madam/ Sir
Trade Credit Policy - Rupee (INR) Denominated trade credit
Attention of Authorized Dealer Category - I (AD Category - I) banks is invited
to Schedule III to the Foreign Exchange Management (Borrowing or Lending
in Foreign Exchange) Regulations, 2000 notified vide Notification No. FEMA
3/2000-RB dated May 03, 2000 read with Regulation 6(3) of the said
Regulations regarding raising of trade credit (buyers' credit / suppliers' credit)
from overseas supplier, bank and financial institution for import of capital and
non-capital goods into India.
2. With a view to providing greater flexibility for structuring of trade credit
arrangements, it has been decided that the resident importer can raise trade
credit in Rupees (INR) within the following framework after entering into a loan
agreement with the overseas lender:
i. Trade credit can be raised for import of all items (except gold)
permissible under the extant Foreign Trade Policy
ii. Trade credit period for import of non-capital goods can be upto one
year from the date of shipment or upto the operating cycle
whichever is lower
iii. Trade credit period for import of capital goods can be upto five
years from the date of shipment
iv. No roll-over / extension can be permitted by the AD Category - I
bank beyond the permissible period
v. AD Category - I banks can permit trade credit upto USD 20 mn
equivalent per import transaction
vi. AD Category - I banks are permitted to give guarantee, Letter of
Undertaking or Letter of Comfort in respect of trade credit for a
maximum period of three years from the date of shipment
vii. The all-in-cost of such Rupee (INR) denominated trade credit
should be commensurate with prevailing market conditions
viii. All other guidelines for trade credit will be applicable for such Rupee
(INR) denominated trade credits
3. Overseas lenders of Rupee (INR) denominated trade credits will be eligible
to hedge their exposure in Rupees through permitted derivative products in
the on-shore market with an AD Category - I bank in India. Necessary
guidelines for hedging will be issued separately.
4. AD Category – I banks may bring the contents of this Circular to the notice
of their constituents and customers.
5. The directions contained in this circular have been issued under Section
10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999)
and are without prejudice to permissions / approvals required, if any, under
any other law.
Yours faithfully
(B. P. Kanungo)
Principal Chief General Manager
Mumbai - 400 001
RBI/2015-16/ 175 September 10, 2015
A.P. (DIR Series) Circular No.13
To,
All Authorised Dealer Category – I Banks
Madam/ Sir
Trade Credit Policy - Rupee (INR) Denominated trade credit
Attention of Authorized Dealer Category - I (AD Category - I) banks is invited
to Schedule III to the Foreign Exchange Management (Borrowing or Lending
in Foreign Exchange) Regulations, 2000 notified vide Notification No. FEMA
3/2000-RB dated May 03, 2000 read with Regulation 6(3) of the said
Regulations regarding raising of trade credit (buyers' credit / suppliers' credit)
from overseas supplier, bank and financial institution for import of capital and
non-capital goods into India.
2. With a view to providing greater flexibility for structuring of trade credit
arrangements, it has been decided that the resident importer can raise trade
credit in Rupees (INR) within the following framework after entering into a loan
agreement with the overseas lender:
i. Trade credit can be raised for import of all items (except gold)
permissible under the extant Foreign Trade Policy
ii. Trade credit period for import of non-capital goods can be upto one
year from the date of shipment or upto the operating cycle
whichever is lower
iii. Trade credit period for import of capital goods can be upto five
years from the date of shipment
iv. No roll-over / extension can be permitted by the AD Category - I
bank beyond the permissible period
v. AD Category - I banks can permit trade credit upto USD 20 mn
equivalent per import transaction
vi. AD Category - I banks are permitted to give guarantee, Letter of
Undertaking or Letter of Comfort in respect of trade credit for a
maximum period of three years from the date of shipment
vii. The all-in-cost of such Rupee (INR) denominated trade credit
should be commensurate with prevailing market conditions
viii. All other guidelines for trade credit will be applicable for such Rupee
(INR) denominated trade credits
3. Overseas lenders of Rupee (INR) denominated trade credits will be eligible
to hedge their exposure in Rupees through permitted derivative products in
the on-shore market with an AD Category - I bank in India. Necessary
guidelines for hedging will be issued separately.
4. AD Category – I banks may bring the contents of this Circular to the notice
of their constituents and customers.
5. The directions contained in this circular have been issued under Section
10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999)
and are without prejudice to permissions / approvals required, if any, under
any other law.
Yours faithfully
(B. P. Kanungo)
Principal Chief General Manager
I-T - Whether it is open to assessee to raise additional grounds before appellate authority to effect that capital gain should not be included in total income for purposes of taxation, even though it has offered the same to tax in subject AY - YES: HC
MUMBAI: THE issue before the Bench is - Whether it is open to the assessee to raise additional grounds before the appellate authority to the effect that a capital gain should not be included in the total income for the purposes of taxation, even if he has offered the same to tax in the subject A.Y. YES is the answer.
Facts of the case
A) The assessee is engaged in finance company. The assessee while filing its return had itself accepted before the AO that the short term capital gain accrued to it, should be taxed in the concerned A.Y. However, before the CIT(A), the assessee claimed to the contrary. The grievance of the Revenue was that the assessee having itself claimed that the sale of property would be chargeable to tax as short term capital gains in the subject A.Y in its return, could not urge to the contrary, on the ground that the transaction of sale had failed.
B) The assessee during the concerned A.Y had also claimed depreciation on leased assets. The AO however disallowed the same on the ground that they were not genuine, and that the transaction of lease was in fact, a finance transaction. On appeal before the CIT(A), the assessee although accepted its lease transaction as a finance transaction, however raised an alternative plea that the lease rental may be reduced by the capital component embedded in it and the balance alone be taxed as income. The CIT(A) accepted such alternate submission of the assessee by holding that the AO, having treated the lease transaction as a finance or a loan transaction in absence of conclusive proof of any genuine purchase or lease of assets, he ought not to have assessed to tax the income offered to tax as lease rent in its entirety. On further appeal, the Tribunal restored the matter back to the file of AO.
Having heard the parties, the High Court held that,
Short term capital gain
++ it is found that this Court in the case of CIT v/s. Pruthvi Brokers and Shareholders Pvt. Ltd. has held that Appellate Authorities have power to consider a claim, not made in the return. Thus, it follows that even where an assessee has offered tax in the subject assessment year, it was open to the assessee before the Appellate Authority to raise additional grounds to the effect that same should not be included in the total income for the purposes of taxation;
Depreciation on leased assets
++ a perusal of the impugned order of the CIT(A) records the fact for the present A.Y, that the CIT(A) has followed his order for A.Y 1995-96 by inter alia observing that the disallowance of depreciation made by the AO is justified, where the assessee has neither raised objection for the same before the AO, not the CIT. It would thus be noticed that CIT(A) while following the order for the A.Y 1995-96 has not followed the same in its entirety. The CIT(A) after holding that the assessee is not entitled to its claim for depreciation as the lease transactions under reference, were not genuine did not consider the alternative submission made with regard to Finance Transaction. Besides, the order passed by the CIT(A) for the A.Y 1995-96, had not dealt with the genuineness of the lease transaction. Nevertheless, for the subject A.Y, he holds, it is not genuine without giving any notice to the assessee. Therefore, by the impugned order, the Tribunal held that CIT(A) has decided on the issue of the lease transaction not being genuine without having given a hearing to the assessee. It is in the above view that the impugned order of the Tribunal has restored the issue to the AO for fresh consideration, after recording the fact that the AO also relied upon the materials without confronting the assessee' s with the same. Therefore, the impugned order of the Tribunal cannot be faulted with.
MUMBAI: THE issue before the Bench is - Whether it is open to the assessee to raise additional grounds before the appellate authority to the effect that a capital gain should not be included in the total income for the purposes of taxation, even if he has offered the same to tax in the subject A.Y. YES is the answer.
Facts of the case
A) The assessee is engaged in finance company. The assessee while filing its return had itself accepted before the AO that the short term capital gain accrued to it, should be taxed in the concerned A.Y. However, before the CIT(A), the assessee claimed to the contrary. The grievance of the Revenue was that the assessee having itself claimed that the sale of property would be chargeable to tax as short term capital gains in the subject A.Y in its return, could not urge to the contrary, on the ground that the transaction of sale had failed.
B) The assessee during the concerned A.Y had also claimed depreciation on leased assets. The AO however disallowed the same on the ground that they were not genuine, and that the transaction of lease was in fact, a finance transaction. On appeal before the CIT(A), the assessee although accepted its lease transaction as a finance transaction, however raised an alternative plea that the lease rental may be reduced by the capital component embedded in it and the balance alone be taxed as income. The CIT(A) accepted such alternate submission of the assessee by holding that the AO, having treated the lease transaction as a finance or a loan transaction in absence of conclusive proof of any genuine purchase or lease of assets, he ought not to have assessed to tax the income offered to tax as lease rent in its entirety. On further appeal, the Tribunal restored the matter back to the file of AO.
Having heard the parties, the High Court held that,
Short term capital gain
++ it is found that this Court in the case of CIT v/s. Pruthvi Brokers and Shareholders Pvt. Ltd. has held that Appellate Authorities have power to consider a claim, not made in the return. Thus, it follows that even where an assessee has offered tax in the subject assessment year, it was open to the assessee before the Appellate Authority to raise additional grounds to the effect that same should not be included in the total income for the purposes of taxation;
Depreciation on leased assets
++ a perusal of the impugned order of the CIT(A) records the fact for the present A.Y, that the CIT(A) has followed his order for A.Y 1995-96 by inter alia observing that the disallowance of depreciation made by the AO is justified, where the assessee has neither raised objection for the same before the AO, not the CIT. It would thus be noticed that CIT(A) while following the order for the A.Y 1995-96 has not followed the same in its entirety. The CIT(A) after holding that the assessee is not entitled to its claim for depreciation as the lease transactions under reference, were not genuine did not consider the alternative submission made with regard to Finance Transaction. Besides, the order passed by the CIT(A) for the A.Y 1995-96, had not dealt with the genuineness of the lease transaction. Nevertheless, for the subject A.Y, he holds, it is not genuine without giving any notice to the assessee. Therefore, by the impugned order, the Tribunal held that CIT(A) has decided on the issue of the lease transaction not being genuine without having given a hearing to the assessee. It is in the above view that the impugned order of the Tribunal has restored the issue to the AO for fresh consideration, after recording the fact that the AO also relied upon the materials without confronting the assessee' s with the same. Therefore, the impugned order of the Tribunal cannot be faulted with.
EXPORT PROMOTION CAPITAL GOODS (EPCG) SCHEME UNDER NEW FOREIGN TRADE POLICY
Chapter 5 of the Foreign Trade Policy 2015-2020 deals with the EPCG scheme. The objective of this scheme is to facilitate import of capital goods for producing quality goods and services to enhance India's export competitiveness.
Capital goods
The following are the capital goods for the purpose of this scheme:
Capital goods as defined in Chapter 9 including in CKD/SKD condition thereof. The term 'capital goods' is defined as any plant, machinery, equipment or accessories required for manufacture or production, either directly or in directly, of goods or for rendering services, including those required for replacement, modernization, technological up gradation or expansion. It includes packaging machinery and equipment, refrigeration equipment, power generating sets, machine tools, equipment and instruments for testing, research and development, quality and pollution control. Capital goods may be for use in manufacturing, mining, agriculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture and viticulture as well as for use in services sector;
Computer software systems;
Spaces, moulds, dies, jigs, fixtures, tools & refractories for initial lining and spare refractories; and
Catalysts for initial charge plus one subsequent charge.
EPCG Scheme
This scheme allows import of capital goods for pre production, production and post production at zero customs duty;
The Authorization holder may also procure capital goods from indigenous sources. A person holding an EPCG authorization may source capital goods from a domestic manufacturer. Such domestic manufacture shall be eligible for deemed export benefit. Such domestic sourcing shall also be permitted from EOUs. These supplies shall be counted for the purpose of fulfillment of positive net foreign exchange by said EOU as provided in Para 6.09 (a) of FTP;
Import of capital goods for project imports notified by Central Board of Excise and Customs is also permitted;
Import shall be subject to an export obligation equivalent to 6 times of duty and on capital goods, to be fulfilled in 6 years reckoned from the date of issue of Authorization;
Authorization shall be valid for import for 18 months from the date of issue of authorization;
Revalidation of authorization shall not be permitted;
In case of countervailing duty is paid in cash on imports under EPCG, incidence of CVD would not be taken for computation of net duty saved, provided CENVAT is not availed;
Second hand capital goods shall not be permitted to be imported under this Scheme;
Authorization shall not be issued for import of any capital goods, including plants and power generator sets of any kind, for
Export of electrical energy;
Supply of electrical energy under deemed exports;
Use of power in their own unit; and
Supply/export of electricity transmission services;
Import of items which are restricted for import shall be permitted under this scheme only after approval from Exim Facilitation Committee at DGFT headquarters;
If the goods proposed to be export under this scheme are restricted for export, the authorization shall be issued only after approval for issuance of export authorization from Exim Facilitation Committee.
Coverage of the scheme
The scheme covers the manufacturer exporters with or without supporting manufacturer( s), merchant exporters tied to supporting manufacturer( s) and service providers,. The name of the supporting manufacturer( s) shall be endorsed on the authorization before installation of the capital goods in the factory of the supporting manufacturer( s). If there is any change the Regional Authority shall intimate such change to jurisdictional Central Excise Authority of existing as well as changed supporting manufacturer( s) and the Customs at port of registration of authorization.
The scheme also covers a service provider who is designated or certified as a Common Service Provider(CSP) by the DGFT, Department of Commerce or State Industrial Infrastructural Corporation of a Town of Export Excellence subject to the following conditions:
Export by users of the common service, to be counted towards fulfillment of export obligation of the CSP shall contain EPCG authorization details of the CSP in the respective shipping bills and concerned Regional Authority must be informed about the details of the Users prior to such export;
Such export will not count towards fulfillment of specific export obligations in respect of other EPCG authorization; and
Authorization holder shall be required to submit bank guarantee equivalent to the duty saved. Bank guarantee can be given by CSP or by any one of the users or a combination thereof, at the option of CSP.
Condition
Import of capital goods shall be subject to Actual User condition till export obligation is completed.
Export Obligation
The following are the conditions to be fulfilled for export obligations:
EO shall be fulfilled by the authorization holder through export of goods manufactured him or his supporting manufacturers/ services rendered by him, for which authorization has been granted;
It shall be over and above the average level of exports achieved by the applicant in the preceding three licensing years for the same and similar products within the overall EO period including extended period, if any, except for categories mentioned in para 5.13 (a) of Hand book of procedures. Such average would be the arithmetic mean of export performance in the preceding three licensing years for same and similar products;
In case of indigenous sourcing of capital goods, specific EO shall be 25% less than the EO stipulated;
Shipments under advance authorization, Duty Free Import Authorization, draw back scheme or reward schemes would also count for fulfillment of EO;
The export shall be physical. Deemed exports shall also be counted towards fulfillment of export obligations;
It can also be fulfilled by the supply of ITA-1 items to DTA provided realization is in free foreign exchange;
Royalty payments received in freely convertible currency and foreign exchange received for R&D services shall also be counted for discharge;
Payment received in rupee terms for such services notified in Appendix 3E shall also be counted towards discharge of export obligation.
Calculation of EO
Export obligation shall be reckoned with reference to actual duty saved amount in case of direct imports. It shall be reckoned with reference to notional customs duties saved on FOR value in case of domestic sourcing.
Incentive for EO
Where authorization holder has fulfilled 75% or more of specific export obligation and 100% of average export obligation, till date, if any, in half or less than half the original export obligation period specified, remaining export obligation shall be condoned and the authorization redeemed by Regional Authority concerned. No benefit shall be permitted where incentive for early EO fulfillment has been availed.
Reduced EO
For the exports of the Green Technology products, EO shall be 75% of EO as stipulated. There shall be no change in average EO imposed, if any. The list of Green Technology Products is given in Para 5.29 of HBP.
For the units located in Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and J&K, specific EO shall be 25% of the EO as stipulated. There shall be no change in average EO imposed.
Units under BIFR/Rehabilitation
A company holding EPCG authorization and registered with BIFR/Rehabilitation Department of a State Government or any firm/company acquiring a unit holding authorization which is under BIFR/Rehabilitation may be permitted the EO extension as per rehabilitation package prepared by operating agency and approved by BIFR/Rehabilitation Department. If time period up to which extension is to be granted is not specially mentioned in the BIFR order, the extension of 3 years from the date of Export obligation period (including extended period)or the date of NIFR order, whichever is later, shall be granted without payment of composition fee.
Post Export EOCG Duty Credit Script(s)
The Post Export EPCG duty credit script(s) shall be available to exporters who intend to import capital goods on full payment of applicable duties in cash and choose to opt for this scheme. Basic customs duty paid on capital goods shall be remitted in the form of freely transferable duty credit scrip(s).
Specific EO shall be 85% of the applicable specific EO under this scheme. Average EO shall remain unchanged. Duty remission shall be in proportion to the EO fulfilled. All provisions for utilization of scrips shall also be applicable to Post Export EPCG Duty Credit Scrip(s). All the provisions of the existing scheme shall apply insofar as they are not inconsistent with this scheme.
By: Mr. M. GOVINDARAJAN
Chapter 5 of the Foreign Trade Policy 2015-2020 deals with the EPCG scheme. The objective of this scheme is to facilitate import of capital goods for producing quality goods and services to enhance India's export competitiveness.
Capital goods
The following are the capital goods for the purpose of this scheme:
Capital goods as defined in Chapter 9 including in CKD/SKD condition thereof. The term 'capital goods' is defined as any plant, machinery, equipment or accessories required for manufacture or production, either directly or in directly, of goods or for rendering services, including those required for replacement, modernization, technological up gradation or expansion. It includes packaging machinery and equipment, refrigeration equipment, power generating sets, machine tools, equipment and instruments for testing, research and development, quality and pollution control. Capital goods may be for use in manufacturing, mining, agriculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture and viticulture as well as for use in services sector;
Computer software systems;
Spaces, moulds, dies, jigs, fixtures, tools & refractories for initial lining and spare refractories; and
Catalysts for initial charge plus one subsequent charge.
EPCG Scheme
This scheme allows import of capital goods for pre production, production and post production at zero customs duty;
The Authorization holder may also procure capital goods from indigenous sources. A person holding an EPCG authorization may source capital goods from a domestic manufacturer. Such domestic manufacture shall be eligible for deemed export benefit. Such domestic sourcing shall also be permitted from EOUs. These supplies shall be counted for the purpose of fulfillment of positive net foreign exchange by said EOU as provided in Para 6.09 (a) of FTP;
Import of capital goods for project imports notified by Central Board of Excise and Customs is also permitted;
Import shall be subject to an export obligation equivalent to 6 times of duty and on capital goods, to be fulfilled in 6 years reckoned from the date of issue of Authorization;
Authorization shall be valid for import for 18 months from the date of issue of authorization;
Revalidation of authorization shall not be permitted;
In case of countervailing duty is paid in cash on imports under EPCG, incidence of CVD would not be taken for computation of net duty saved, provided CENVAT is not availed;
Second hand capital goods shall not be permitted to be imported under this Scheme;
Authorization shall not be issued for import of any capital goods, including plants and power generator sets of any kind, for
Export of electrical energy;
Supply of electrical energy under deemed exports;
Use of power in their own unit; and
Supply/export of electricity transmission services;
Import of items which are restricted for import shall be permitted under this scheme only after approval from Exim Facilitation Committee at DGFT headquarters;
If the goods proposed to be export under this scheme are restricted for export, the authorization shall be issued only after approval for issuance of export authorization from Exim Facilitation Committee.
Coverage of the scheme
The scheme covers the manufacturer exporters with or without supporting manufacturer( s), merchant exporters tied to supporting manufacturer( s) and service providers,. The name of the supporting manufacturer( s) shall be endorsed on the authorization before installation of the capital goods in the factory of the supporting manufacturer( s). If there is any change the Regional Authority shall intimate such change to jurisdictional Central Excise Authority of existing as well as changed supporting manufacturer( s) and the Customs at port of registration of authorization.
The scheme also covers a service provider who is designated or certified as a Common Service Provider(CSP) by the DGFT, Department of Commerce or State Industrial Infrastructural Corporation of a Town of Export Excellence subject to the following conditions:
Export by users of the common service, to be counted towards fulfillment of export obligation of the CSP shall contain EPCG authorization details of the CSP in the respective shipping bills and concerned Regional Authority must be informed about the details of the Users prior to such export;
Such export will not count towards fulfillment of specific export obligations in respect of other EPCG authorization; and
Authorization holder shall be required to submit bank guarantee equivalent to the duty saved. Bank guarantee can be given by CSP or by any one of the users or a combination thereof, at the option of CSP.
Condition
Import of capital goods shall be subject to Actual User condition till export obligation is completed.
Export Obligation
The following are the conditions to be fulfilled for export obligations:
EO shall be fulfilled by the authorization holder through export of goods manufactured him or his supporting manufacturers/ services rendered by him, for which authorization has been granted;
It shall be over and above the average level of exports achieved by the applicant in the preceding three licensing years for the same and similar products within the overall EO period including extended period, if any, except for categories mentioned in para 5.13 (a) of Hand book of procedures. Such average would be the arithmetic mean of export performance in the preceding three licensing years for same and similar products;
In case of indigenous sourcing of capital goods, specific EO shall be 25% less than the EO stipulated;
Shipments under advance authorization, Duty Free Import Authorization, draw back scheme or reward schemes would also count for fulfillment of EO;
The export shall be physical. Deemed exports shall also be counted towards fulfillment of export obligations;
It can also be fulfilled by the supply of ITA-1 items to DTA provided realization is in free foreign exchange;
Royalty payments received in freely convertible currency and foreign exchange received for R&D services shall also be counted for discharge;
Payment received in rupee terms for such services notified in Appendix 3E shall also be counted towards discharge of export obligation.
Calculation of EO
Export obligation shall be reckoned with reference to actual duty saved amount in case of direct imports. It shall be reckoned with reference to notional customs duties saved on FOR value in case of domestic sourcing.
Incentive for EO
Where authorization holder has fulfilled 75% or more of specific export obligation and 100% of average export obligation, till date, if any, in half or less than half the original export obligation period specified, remaining export obligation shall be condoned and the authorization redeemed by Regional Authority concerned. No benefit shall be permitted where incentive for early EO fulfillment has been availed.
Reduced EO
For the exports of the Green Technology products, EO shall be 75% of EO as stipulated. There shall be no change in average EO imposed, if any. The list of Green Technology Products is given in Para 5.29 of HBP.
For the units located in Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and J&K, specific EO shall be 25% of the EO as stipulated. There shall be no change in average EO imposed.
Units under BIFR/Rehabilitation
A company holding EPCG authorization and registered with BIFR/Rehabilitation Department of a State Government or any firm/company acquiring a unit holding authorization which is under BIFR/Rehabilitation may be permitted the EO extension as per rehabilitation package prepared by operating agency and approved by BIFR/Rehabilitation Department. If time period up to which extension is to be granted is not specially mentioned in the BIFR order, the extension of 3 years from the date of Export obligation period (including extended period)or the date of NIFR order, whichever is later, shall be granted without payment of composition fee.
Post Export EOCG Duty Credit Script(s)
The Post Export EPCG duty credit script(s) shall be available to exporters who intend to import capital goods on full payment of applicable duties in cash and choose to opt for this scheme. Basic customs duty paid on capital goods shall be remitted in the form of freely transferable duty credit scrip(s).
Specific EO shall be 85% of the applicable specific EO under this scheme. Average EO shall remain unchanged. Duty remission shall be in proportion to the EO fulfilled. All provisions for utilization of scrips shall also be applicable to Post Export EPCG Duty Credit Scrip(s). All the provisions of the existing scheme shall apply insofar as they are not inconsistent with this scheme.
By: Mr. M. GOVINDARAJAN
Direct Tax Basket
2015-TIOL-2089- HC-MUM-IT
CIT Vs M/s Hindustan Organics Chemicals Ltd
Whether the Revenue is justified in filing appeals from orders of the Tribunal on issues which are concluded by the decisions of HC or by the decision of Tribunal and no appeals to higher forums have been filed therefrom - NO: HC
Whether in case an appeal is required to be filed by the Revenue against the assessee, the justification for the same must be indicated either in the Memo of Appeal or by filing a separate affidavit before the date of the appeal being listed for admission - YES: HC - Case deferred : BOMBAY HIGH COURT
2015-TIOL-1428- ITAT-MAD
ITO Vs Shri D Umapathy
Whether tax has to be deducted on the amount paid by the assessee and not only the amount payable by the assessee - YES : ITAT - Revenue' s appeal allowed : CHENNAI ITAT
Indirect Tax Basket
SERVICE TAX SECTION
2015-TIOL-2098- HC-MUM-ST + Story
Vodafone India Ltd Vs CCE
ST – Bharti Airtel's case 2014-TIOL-1452- HC-MUM-ST does not need a relook - subsequent Bench cannot come to the opinion that a particular provision was misinterpreted and under that pretext seek to reinterpret it again - CENVAT credit on Tower Parts & Pre-fabricated buildings is not admissible: High Court [para 14, 15, 16 - Appeals dismissed : BOMBAY HIGH COURT
CENTRAL EXCISE SECTION
2015-TIOL-1907- CESTAT-DEL
CCE Vs M/s Shiv Prasad Mills Pvt Ltd
CX - Assessee are rerolling mills engaged in manufacture of MS rolled products for which raw material is MS ingots which they purchased from various ingots manufacturers - One of raw material suppliers is M/s Nirmal lnductomelt Pvt. Ltd. (NIPL) - Merely on basis of entries in ledger book recovered from M/s.NIPL which indicated supply of certain quantity of MS Ingots to assessee, it cannot be concluded that assessee were indulging in duty evasion by under reporting production of rolled products - Revenue has made its case on basis that assessee have under reported their production of rolled products - No justification for adopting power consumption norm of M/s.SSSRM to unit of assessee, as while rolling mills of M/s.SSSRM is automatic rolling mills, assessee' s rolling mill is manual - No experiment has been conducted by revenue to ascertain as to whether rolling mills of assessee is comparable with rolling mills of M/s.SSSRM in terms of technology and production - As per technical report on performance, and energy consumption of re-rolling mills by National Institute of Secondary Steel Technology, established by Ministry of Steel, Govt. of India, there is no justification for adopting power consumption norm of 102.09 units per MT of M/s.SSSRM in respect of assessee - No infirmity in impugned order - Appeal dismissed: CESTAT [Para 6, 7, 8] - Appeal dismissed : DELHI CESTAT
2015-TIOL-1906- CESTAT-MUM
Ruby Mills Ltd Vs CCE
CX - Rebate - Rule 18 of CER - From a reading of clause (a) of first proviso to sub-section (2) of Section 11B of CEA, 1944, it is clear that the provision of unjust enrichment is not applicable in respect of rebate of duty of excise paid on excisable goods exported out of India or on excisable materials used in the manufacture of goods which are exported out of India - In the present case the undisputed fact is that duty paid sized yarn has been used in the manufacture of fabric and the said fabric was exported out of India, therefore duty so paid on sized yarn is clearly rebatable under Rule 18 and in accordance with clause (a) of first proviso to subsection (2) of Section 11B, the bar of unjust enrichment is not applicable - in view of the above undisputed and unambiguous position in law Refund/rebate is admissible - appeal allowed with consequential relief: CESTAT [para 5] - Appeal allowed : MUMBAI CESTAT
2015-TIOL-2089- HC-MUM-IT
CIT Vs M/s Hindustan Organics Chemicals Ltd
Whether the Revenue is justified in filing appeals from orders of the Tribunal on issues which are concluded by the decisions of HC or by the decision of Tribunal and no appeals to higher forums have been filed therefrom - NO: HC
Whether in case an appeal is required to be filed by the Revenue against the assessee, the justification for the same must be indicated either in the Memo of Appeal or by filing a separate affidavit before the date of the appeal being listed for admission - YES: HC - Case deferred : BOMBAY HIGH COURT
2015-TIOL-1428- ITAT-MAD
ITO Vs Shri D Umapathy
Whether tax has to be deducted on the amount paid by the assessee and not only the amount payable by the assessee - YES : ITAT - Revenue' s appeal allowed : CHENNAI ITAT
Indirect Tax Basket
SERVICE TAX SECTION
2015-TIOL-2098- HC-MUM-ST + Story
Vodafone India Ltd Vs CCE
ST – Bharti Airtel's case 2014-TIOL-1452- HC-MUM-ST does not need a relook - subsequent Bench cannot come to the opinion that a particular provision was misinterpreted and under that pretext seek to reinterpret it again - CENVAT credit on Tower Parts & Pre-fabricated buildings is not admissible: High Court [para 14, 15, 16 - Appeals dismissed : BOMBAY HIGH COURT
CENTRAL EXCISE SECTION
2015-TIOL-1907- CESTAT-DEL
CCE Vs M/s Shiv Prasad Mills Pvt Ltd
CX - Assessee are rerolling mills engaged in manufacture of MS rolled products for which raw material is MS ingots which they purchased from various ingots manufacturers - One of raw material suppliers is M/s Nirmal lnductomelt Pvt. Ltd. (NIPL) - Merely on basis of entries in ledger book recovered from M/s.NIPL which indicated supply of certain quantity of MS Ingots to assessee, it cannot be concluded that assessee were indulging in duty evasion by under reporting production of rolled products - Revenue has made its case on basis that assessee have under reported their production of rolled products - No justification for adopting power consumption norm of M/s.SSSRM to unit of assessee, as while rolling mills of M/s.SSSRM is automatic rolling mills, assessee' s rolling mill is manual - No experiment has been conducted by revenue to ascertain as to whether rolling mills of assessee is comparable with rolling mills of M/s.SSSRM in terms of technology and production - As per technical report on performance, and energy consumption of re-rolling mills by National Institute of Secondary Steel Technology, established by Ministry of Steel, Govt. of India, there is no justification for adopting power consumption norm of 102.09 units per MT of M/s.SSSRM in respect of assessee - No infirmity in impugned order - Appeal dismissed: CESTAT [Para 6, 7, 8] - Appeal dismissed : DELHI CESTAT
2015-TIOL-1906- CESTAT-MUM
Ruby Mills Ltd Vs CCE
CX - Rebate - Rule 18 of CER - From a reading of clause (a) of first proviso to sub-section (2) of Section 11B of CEA, 1944, it is clear that the provision of unjust enrichment is not applicable in respect of rebate of duty of excise paid on excisable goods exported out of India or on excisable materials used in the manufacture of goods which are exported out of India - In the present case the undisputed fact is that duty paid sized yarn has been used in the manufacture of fabric and the said fabric was exported out of India, therefore duty so paid on sized yarn is clearly rebatable under Rule 18 and in accordance with clause (a) of first proviso to subsection (2) of Section 11B, the bar of unjust enrichment is not applicable - in view of the above undisputed and unambiguous position in law Refund/rebate is admissible - appeal allowed with consequential relief: CESTAT [para 5] - Appeal allowed : MUMBAI CESTAT
Direct Tax Basket
2015-TIOL-2094- HC-MUM-IT + Story
CIT Vs M/s Bfil Finance Ltd
Whether it is open to the assessee to raise additional grounds before the appellate authority to the effect that a capital gain should not be included in the total income for the purposes of taxation, even if he has offered tax on the same in the subject A.Y - YES: HC
Whether where an issue has been restored by the Tribunal back to the file of AO observing that the AO has not considered the submissions in its entirity, said decision of the Tribunal requires no interference - YES: HC - Revenue' s appeal dismissed : BOMBAY HIGH COURT
2015-TIOL-2093- HC-MAD-IT
M/s Dharmapuri Paper Mills Pvt Ltd Vs JCIT
Whether the amount withdrawn from the reserves created or provisions made in a previous year relevant to the A.Y commencing on or after Ist April, 1997 can be reduced from the book profit, if the book profit of such year is not increased by those reserves out of which the said amount was withdrawn - NO: HC - Assessee' s appeal allowed : MADRAS HIGH COURT
2015-TIOL-2092- HC-P&H-IT
Harish Ahuja Vs CIT
Whether making addition by applying GP rate after rejecting the books of account u/s 145(3) is justified when no stock register is maintained by the assessee - YES: HC - Assessee' s appeal dismissed : PUNJAB AND HARYANA HIGH COURT
2015-TIOL-1435- ITAT-MUM
DCIT Vs M/s Varun Resorts Ltd
Whether mere disallowance of a claim would not entail imposition of penalty u/s 271(1)(c) - YES: ITAT - Revenue' s appeal dismissed : MUMBAI ITAT
2015-TIOL-1434- ITAT-DEL
M/s Tuner Recreations Pvt Ltd Vs ITO
Whether the case should be remanded to AO when due to unavoidable circumstances for non-producing the relevant evidence and non-appearance before the Revenue Authorities, assessee is not able to produce its views on matter - YES: ITAT - Case remanded : DELHI ITAT
2015-TIOL-1433- ITAT-BANG
M/s Bangalore Credit Co-Operative Society Vs DCIT
Whether if the interest amount on the standard assets representing the loan given to the members of the assessee society, than the said income is eligible for the deduction u/s 80P. - Assessee' s Appeal Allowed : BANGALORE ITAT
2015-TIOL-1432- ITAT-BANG
M/s Karnataka Municipal Data Society Vs ITO
Whether interest income accrued on FDs, made out of grants received from Govt, is exempt from tax on the principle of mutuality - NO : ITAT - Assessee' s appeal dismissed : BANGALORE ITAT
2015-TIOL-1431- ITAT-LKW
ITO Vs M/s Saraswati Educational Charitable Trust
Whether once donation received was taken as income of the assessee which was applied for charitable purposes, provisions of section 68 cannot be invoked. - Revenue' s Appeal dismissed : LUCKNOW ITAT
2015-TIOL-1430- ITAT-PANAJI
DCIT Vs M/s Rani Infrastructure Development Ltd
Whether no TDS is required to be deducted when the recipient of loan interest, has shown the said amount as income in the return and has paid the tax due thereon - YES: ITAT - Revenue' s appeal dismissed : PANAJI ITAT
2015-TIOL-1429- ITAT-NAGPUR
M/s Shubham Food Products Vs ITO
Whether in order to hold the subsidy as a liability, the AO has to examined the exact claim of subsidy pronounced by the appropriate authority as also the terms of clauses of re-payment of the subsidy granted -YES: ITAT
Whether if such subsidy is treated as a liability, then it is not justifiable to hold that the cost of an asset was made by the amount of subsidy granted by the DIC - YES: ITAT - Assessee' s appeal partly allowed : NAGPUR ITAT
Indirect Tax Basket
SERVICE TAX SECTION
2015-TIOL-2095- HC-MAD-ST + Story
M/s Ganga Foundations Pvt Ltd Vs Commissioner Large Taxpayer Unit (LTU)
Service Tax - Mandatory pre-deposit under Section 35F - Whether the amended provisions of Section 35F are applicable for the demands prior to 06.08.2014.
Held: The applicability of Section 35 F of the Finance Act is pending consideration before the Division Bench of this Court - Petitioner is permitted to file an appeal along with waiver application, within a period of two weeks from the date of receipt of a copy of this order. Since the matter is pending before the Division Bench of this Court, testifying the validity of Section 35-F of the Finance Act, relating to pre-deposit, the appellate authority is directed to receive the appeal along with waiver application filed by the petitioner, which would be subject to the result of the issue pending before the Division Bench. - Petition disposed of : MADRAS HIGH COURT
2015-TIOL-1914- CESTAT-AHM
M/s Cmi Fpe Ltd Vs CCE & ST
ST - Assessee availed input service credit during period October 2007 to February 2008 on sales commission in respect of service rendered abroad - CENVAT Credit on overseas commission would not be admissible and hence, the denial of CENVAT Credit on merit is sustainable - In view of various decisions of Tribunal, Board's Circular and decision of Punjab & Haryana High Court in Ambika Overseas 2011-TIOL-951- HC-P&H-ST, there is sufficient material to take up the view that assessee was holding a bonafide belief of admissibility of CENVAT credit on overseas sales commission - As assessee has taken the credit and duly recorded in CENVAT account, thus, there is no material available to invoke the extended period of limitation - Accordingly, demand of CENVAT Credit alongwith interest and penalty for extended period cannot be sustained: CESTAT - Appeal partly allowed : AHMEDABAD CESTAT
2015-TIOL-1913- CESTAT-BANG
M/s Nirmalsai Constructions Vs CCE & ST
Service Tax - Waiver of Pre-deposit - Construction of transport terminal - Sub-contractor to L&T - Demand vis-Ã -vis entire contract raised against principal contractor was partly allowed by CESTAT - Part of the demand raised against Sub-contractor included in the main demand - On facts, pre-deposit waived and stay granted unconditionally. (Para 3) - Stay ordered : BANGALORE CESTAT
2015-TIOL-1912- CESTAT-MUM
CST Vs M/s Msim Global Support & Technology Services Pvt Ltd
ST - Refund - Rule 5 of CCR, 2004 - Notfn. 5/2006-CE(NT) - Refund claimed of unutilized CENVAT credit of Rs.36,61,517/ - on the ground that the output services were provided and that they were not in a position to utilize the credit of tax paid on input services - claim rejected on the ground that respondent could not satisfy that the services on which refund has been claimed have actually gone into the consumption of output services exported - Commissioner( A) setting aside order and, therefore, Revenue in appeal. Held: Division Bench in case of Morgan Stanley Advantage Services Ltd. - 2014-TIOL-2289- CESTAT-MUM has held that there cannot be two yardsticks in the sense that on one hand availability of CENVAT credit is not under dispute but for granting refund, dispute was raised - ratio of this judgement is directly applicable to the present case - Commissioner( A) has considered the issue in detail and given findings which are found to be absolutely correct and legal and same do not require any interference - order upheld and Revenue appeal dismissed: CESTAT [para 5] - Appeal dismissed : MUMBAI CESTAT
2015-TIOL-1911- CESTAT-MUM
Aam Services India Pvt Ltd Vs CCE
ST - Rule 5 of CCR, 2004 - Notfn. 5/2006-CE(NT) - Refund of ST credit taken on input services and used for export services during the period January 2009 to March 2009 -Refund claim denied on the ground of limitation by contending that refund claim should have been filed within the period of one year from the date of raising of the invoices for the export services rendered. Held: There is no dispute as to the fact that the appellant had exported the services and are claiming the refund of tax paid on input services, which are used for providing such export service - it is also undisputed that the refund claims have been filed on 26/03/2010 and that foreign remittance have come during the period April to June 2009 - in view of this factual matrix issue is no more res integra as Tribunal in the case of Bechtel India Pvt. Ltd. - 2013-TIOL-1977- CESTAT-DEL had held that in case of export of services, export is complete only when foreign exchange is received in India and, therefore, the relevant date of export of services is date of receipt of foreign exchange; that since refund claims have been filed within one year from the date of receipt of foreign exchange, they are to be held as filed in time and cannot be held as time barred - since issue is settled in favour of appellant, orders of rejection are set aside and appeal is allowed with consequential relief: CESTAT [para 6, 7, 8] - Appeal allowed : MUMBAI CESTAT
2015-TIOL-1910- CESTAT-MUM
Bhadresh Trading Corporation Ltd Vs CST
ST - Refund claim of ST paid on specified input services received and used for export of goods during the period October 2007 to September 2008 rejected on the ground that the appellant had not adhered to the conditions of Notification 41/2007-ST and that ST credit taken on Terminal Handling charges is not eligible for refund. Held: Entire case is that the condition (e) to the notification 41/2007-ST has not been satisfied - it is on record that the appellant has not filed or claimed drawback of the service tax paid on the specified services - in view of this, the rejection of refund claim is totally incorrect and not sustainable: CESTAT [para 7]
ST - Refund - ST paid on terminal handling charges are eligible for claiming refund under notification 41/2007-ST as held in the case of Stone Shippers - 2014-TIOL-2340- CESTAT-MUM - Order set aside and appeal allowed with consequential relief:CESTAT [para 8] - Appeal allowed : MUMBAI CESTAT
CENTRAL EXCISE SECTION
2015-TIOL-1917- CESTAT-MUM + Story
M/s Rajaram Steel Industries Pvt Ltd Vs CCE & C
CX - Section 11 of CEA, 1944 - Merely by sale of immovable assets, recovery of arrears cannot be made from the buyer of the assets - if any property is sold under auction, buyer cannot be held liable for payment of the arrears of the previous owner of the property - Appeal allowed: CESTAT [para 6, 6.1] - Appeal allowed : MUMABI CESTAT
2015-TIOL-1916- CESTAT-MAD
M/s M M Engineers Pvt Ltd Vs CCE
Central Excise - Exemption - appellant manufactured and cleared cranes, hoists lifting equipments etc., by availing exemption under Notification No.10/97, dated 01.03.1997 - The Adjudicating authority dropped the proceedings initiated in the show-cause notice - Commissioner (Appeals) in the impugned order set aside the Order-in-Original and allowed the Revenue' s appeal; now agitated herein.
Held: Adjudicating authority examined the issues in detail and allowed the exemption under Notification No.10/07, as the appellant produced the relevant certificate from the Regional Director BARC/CAT - In the appellant' s own case, for the later period, on an identical issue, the Tribunal vide Final Order No.664/12, dated 11.06.2012 has held the decision in favour of the appellant - following the same, impugned order in the instant case set aside [Para 4, 5] - Appeal allowed : CHENNAI CESTAT
2015-TIOL-1915- CESTAT-MAD
K G Denim Ltd Vs CCE
Central Excise - Stay/dispensation of pre deposit - Valuation - issue relates to clearance of goods by an 100% EOU to DTA - appellant, an EOU cleared goods on stock transfer to DTA by adopting the price available in their own DTA unit whereas the department enhanced the value by adopting Rule 8 of Customs Valuation Rules, 1988.
Held: Considering rescinding of the Board's circular dt. 29.9.2004 as well as the Tribunal ruling in the Nagreeka Exports case, prima facie, appellant has made out a case for waiver of predeposit of entire demand - same granted. [Para 6] - Stay granted : CHENNAI CESTAT
CUSTOMS SECTION
2015-TIOL-1909- CESTAT-MUM
M/s Great Offshore Ltd Vs CC
Cus Classification issue decided in favour of appellant and consequently refund arises of the amount of differential duty which was paid along with interest although the department has filed an appeal before the Supreme Court (and which has been admitted) along with Stay petition, but even after two years no stay has been granted and, therefore, miscellaneous application filed by importer seeking implementation of Tribunal order dated 07.11.2012.
Held: From the Board Circular 802/35/2004- CX dated 08.12.2004 it is very clear that if Revenue is unable to obtain a stay within 3 months then refund should be granted since it is an admitted position that the Supreme Court has not granted a stay, the respondent Revenue is bound to follow the Board Circular Respondent should have implemented the Tribunal' s order immediately on completion of 3 months and refund along with interest should have been given Respondent directed to grant refund within a period of two months and report compliance: CESTAT [para 4] - Application allowed : MUMBAI CESTAT
2015-TIOL-1908- CESTAT-MUM
Lilaram Gobindram Vs CC
Cus - Appellant imported 'Comoros Cloves' and claimed benefit of exemption notification 96/2008-Cus - Customs officers noticed that the declaration as prescribed at point no.11 of the Annexure A of rule 9 of Rules of Origin was not certified by the exporter from the exporting country and the authorised signatory had only certified the declaration of the export as correct even though the exporter had made no such declaration - holding that such a certificate had no sanctity, the lower authorities held the same to be invalid and denied the preferential concessions - Commissioner( A) upheld the order and, therefore, appellant before CESTAT.
Held: It is undisputed that the goods imported viz. "cloves" are agricultural products and imported from the country which finds a mention in appendix to Notfn. 96/2008-Cus - Perusal of Certificate of origin does indicate that the goods were exported from one of the countries mentioned in appendix to the impugned notfn. - Certificate has been signed by the 'African Commodities House Ltd.' as mentioned in Annexure B - Procedure given in Annexure B when read holistically would mean that minor discrepancies would not ipso facto invalidate the certificate of origin if the same corresponds to the product imported - Identical goods imported at various other ICDs were certified by the same issuing authority and was accepted by Revenue authorities - in view of the foregoing and peculiar facts and circumstances of the case, the impugned order is set aside with a direction to lower authorities to assess the B/E by extending the benefit of notification 96/2008-Cus and allow clearance: CESTAT [para 7, 9, 10, 11, 13] - Appeal allowed : MUMBAI CESTAT
2015-TIOL-2094- HC-MUM-IT + Story
CIT Vs M/s Bfil Finance Ltd
Whether it is open to the assessee to raise additional grounds before the appellate authority to the effect that a capital gain should not be included in the total income for the purposes of taxation, even if he has offered tax on the same in the subject A.Y - YES: HC
Whether where an issue has been restored by the Tribunal back to the file of AO observing that the AO has not considered the submissions in its entirity, said decision of the Tribunal requires no interference - YES: HC - Revenue' s appeal dismissed : BOMBAY HIGH COURT
2015-TIOL-2093- HC-MAD-IT
M/s Dharmapuri Paper Mills Pvt Ltd Vs JCIT
Whether the amount withdrawn from the reserves created or provisions made in a previous year relevant to the A.Y commencing on or after Ist April, 1997 can be reduced from the book profit, if the book profit of such year is not increased by those reserves out of which the said amount was withdrawn - NO: HC - Assessee' s appeal allowed : MADRAS HIGH COURT
2015-TIOL-2092- HC-P&H-IT
Harish Ahuja Vs CIT
Whether making addition by applying GP rate after rejecting the books of account u/s 145(3) is justified when no stock register is maintained by the assessee - YES: HC - Assessee' s appeal dismissed : PUNJAB AND HARYANA HIGH COURT
2015-TIOL-1435- ITAT-MUM
DCIT Vs M/s Varun Resorts Ltd
Whether mere disallowance of a claim would not entail imposition of penalty u/s 271(1)(c) - YES: ITAT - Revenue' s appeal dismissed : MUMBAI ITAT
2015-TIOL-1434- ITAT-DEL
M/s Tuner Recreations Pvt Ltd Vs ITO
Whether the case should be remanded to AO when due to unavoidable circumstances for non-producing the relevant evidence and non-appearance before the Revenue Authorities, assessee is not able to produce its views on matter - YES: ITAT - Case remanded : DELHI ITAT
2015-TIOL-1433- ITAT-BANG
M/s Bangalore Credit Co-Operative Society Vs DCIT
Whether if the interest amount on the standard assets representing the loan given to the members of the assessee society, than the said income is eligible for the deduction u/s 80P. - Assessee' s Appeal Allowed : BANGALORE ITAT
2015-TIOL-1432- ITAT-BANG
M/s Karnataka Municipal Data Society Vs ITO
Whether interest income accrued on FDs, made out of grants received from Govt, is exempt from tax on the principle of mutuality - NO : ITAT - Assessee' s appeal dismissed : BANGALORE ITAT
2015-TIOL-1431- ITAT-LKW
ITO Vs M/s Saraswati Educational Charitable Trust
Whether once donation received was taken as income of the assessee which was applied for charitable purposes, provisions of section 68 cannot be invoked. - Revenue' s Appeal dismissed : LUCKNOW ITAT
2015-TIOL-1430- ITAT-PANAJI
DCIT Vs M/s Rani Infrastructure Development Ltd
Whether no TDS is required to be deducted when the recipient of loan interest, has shown the said amount as income in the return and has paid the tax due thereon - YES: ITAT - Revenue' s appeal dismissed : PANAJI ITAT
2015-TIOL-1429- ITAT-NAGPUR
M/s Shubham Food Products Vs ITO
Whether in order to hold the subsidy as a liability, the AO has to examined the exact claim of subsidy pronounced by the appropriate authority as also the terms of clauses of re-payment of the subsidy granted -YES: ITAT
Whether if such subsidy is treated as a liability, then it is not justifiable to hold that the cost of an asset was made by the amount of subsidy granted by the DIC - YES: ITAT - Assessee' s appeal partly allowed : NAGPUR ITAT
Indirect Tax Basket
SERVICE TAX SECTION
2015-TIOL-2095- HC-MAD-ST + Story
M/s Ganga Foundations Pvt Ltd Vs Commissioner Large Taxpayer Unit (LTU)
Service Tax - Mandatory pre-deposit under Section 35F - Whether the amended provisions of Section 35F are applicable for the demands prior to 06.08.2014.
Held: The applicability of Section 35 F of the Finance Act is pending consideration before the Division Bench of this Court - Petitioner is permitted to file an appeal along with waiver application, within a period of two weeks from the date of receipt of a copy of this order. Since the matter is pending before the Division Bench of this Court, testifying the validity of Section 35-F of the Finance Act, relating to pre-deposit, the appellate authority is directed to receive the appeal along with waiver application filed by the petitioner, which would be subject to the result of the issue pending before the Division Bench. - Petition disposed of : MADRAS HIGH COURT
2015-TIOL-1914- CESTAT-AHM
M/s Cmi Fpe Ltd Vs CCE & ST
ST - Assessee availed input service credit during period October 2007 to February 2008 on sales commission in respect of service rendered abroad - CENVAT Credit on overseas commission would not be admissible and hence, the denial of CENVAT Credit on merit is sustainable - In view of various decisions of Tribunal, Board's Circular and decision of Punjab & Haryana High Court in Ambika Overseas 2011-TIOL-951- HC-P&H-ST, there is sufficient material to take up the view that assessee was holding a bonafide belief of admissibility of CENVAT credit on overseas sales commission - As assessee has taken the credit and duly recorded in CENVAT account, thus, there is no material available to invoke the extended period of limitation - Accordingly, demand of CENVAT Credit alongwith interest and penalty for extended period cannot be sustained: CESTAT - Appeal partly allowed : AHMEDABAD CESTAT
2015-TIOL-1913- CESTAT-BANG
M/s Nirmalsai Constructions Vs CCE & ST
Service Tax - Waiver of Pre-deposit - Construction of transport terminal - Sub-contractor to L&T - Demand vis-Ã -vis entire contract raised against principal contractor was partly allowed by CESTAT - Part of the demand raised against Sub-contractor included in the main demand - On facts, pre-deposit waived and stay granted unconditionally. (Para 3) - Stay ordered : BANGALORE CESTAT
2015-TIOL-1912- CESTAT-MUM
CST Vs M/s Msim Global Support & Technology Services Pvt Ltd
ST - Refund - Rule 5 of CCR, 2004 - Notfn. 5/2006-CE(NT) - Refund claimed of unutilized CENVAT credit of Rs.36,61,517/ - on the ground that the output services were provided and that they were not in a position to utilize the credit of tax paid on input services - claim rejected on the ground that respondent could not satisfy that the services on which refund has been claimed have actually gone into the consumption of output services exported - Commissioner( A) setting aside order and, therefore, Revenue in appeal. Held: Division Bench in case of Morgan Stanley Advantage Services Ltd. - 2014-TIOL-2289- CESTAT-MUM has held that there cannot be two yardsticks in the sense that on one hand availability of CENVAT credit is not under dispute but for granting refund, dispute was raised - ratio of this judgement is directly applicable to the present case - Commissioner( A) has considered the issue in detail and given findings which are found to be absolutely correct and legal and same do not require any interference - order upheld and Revenue appeal dismissed: CESTAT [para 5] - Appeal dismissed : MUMBAI CESTAT
2015-TIOL-1911- CESTAT-MUM
Aam Services India Pvt Ltd Vs CCE
ST - Rule 5 of CCR, 2004 - Notfn. 5/2006-CE(NT) - Refund of ST credit taken on input services and used for export services during the period January 2009 to March 2009 -Refund claim denied on the ground of limitation by contending that refund claim should have been filed within the period of one year from the date of raising of the invoices for the export services rendered. Held: There is no dispute as to the fact that the appellant had exported the services and are claiming the refund of tax paid on input services, which are used for providing such export service - it is also undisputed that the refund claims have been filed on 26/03/2010 and that foreign remittance have come during the period April to June 2009 - in view of this factual matrix issue is no more res integra as Tribunal in the case of Bechtel India Pvt. Ltd. - 2013-TIOL-1977- CESTAT-DEL had held that in case of export of services, export is complete only when foreign exchange is received in India and, therefore, the relevant date of export of services is date of receipt of foreign exchange; that since refund claims have been filed within one year from the date of receipt of foreign exchange, they are to be held as filed in time and cannot be held as time barred - since issue is settled in favour of appellant, orders of rejection are set aside and appeal is allowed with consequential relief: CESTAT [para 6, 7, 8] - Appeal allowed : MUMBAI CESTAT
2015-TIOL-1910- CESTAT-MUM
Bhadresh Trading Corporation Ltd Vs CST
ST - Refund claim of ST paid on specified input services received and used for export of goods during the period October 2007 to September 2008 rejected on the ground that the appellant had not adhered to the conditions of Notification 41/2007-ST and that ST credit taken on Terminal Handling charges is not eligible for refund. Held: Entire case is that the condition (e) to the notification 41/2007-ST has not been satisfied - it is on record that the appellant has not filed or claimed drawback of the service tax paid on the specified services - in view of this, the rejection of refund claim is totally incorrect and not sustainable: CESTAT [para 7]
ST - Refund - ST paid on terminal handling charges are eligible for claiming refund under notification 41/2007-ST as held in the case of Stone Shippers - 2014-TIOL-2340- CESTAT-MUM - Order set aside and appeal allowed with consequential relief:CESTAT [para 8] - Appeal allowed : MUMBAI CESTAT
CENTRAL EXCISE SECTION
2015-TIOL-1917- CESTAT-MUM + Story
M/s Rajaram Steel Industries Pvt Ltd Vs CCE & C
CX - Section 11 of CEA, 1944 - Merely by sale of immovable assets, recovery of arrears cannot be made from the buyer of the assets - if any property is sold under auction, buyer cannot be held liable for payment of the arrears of the previous owner of the property - Appeal allowed: CESTAT [para 6, 6.1] - Appeal allowed : MUMABI CESTAT
2015-TIOL-1916- CESTAT-MAD
M/s M M Engineers Pvt Ltd Vs CCE
Central Excise - Exemption - appellant manufactured and cleared cranes, hoists lifting equipments etc., by availing exemption under Notification No.10/97, dated 01.03.1997 - The Adjudicating authority dropped the proceedings initiated in the show-cause notice - Commissioner (Appeals) in the impugned order set aside the Order-in-Original and allowed the Revenue' s appeal; now agitated herein.
Held: Adjudicating authority examined the issues in detail and allowed the exemption under Notification No.10/07, as the appellant produced the relevant certificate from the Regional Director BARC/CAT - In the appellant' s own case, for the later period, on an identical issue, the Tribunal vide Final Order No.664/12, dated 11.06.2012 has held the decision in favour of the appellant - following the same, impugned order in the instant case set aside [Para 4, 5] - Appeal allowed : CHENNAI CESTAT
2015-TIOL-1915- CESTAT-MAD
K G Denim Ltd Vs CCE
Central Excise - Stay/dispensation of pre deposit - Valuation - issue relates to clearance of goods by an 100% EOU to DTA - appellant, an EOU cleared goods on stock transfer to DTA by adopting the price available in their own DTA unit whereas the department enhanced the value by adopting Rule 8 of Customs Valuation Rules, 1988.
Held: Considering rescinding of the Board's circular dt. 29.9.2004 as well as the Tribunal ruling in the Nagreeka Exports case, prima facie, appellant has made out a case for waiver of predeposit of entire demand - same granted. [Para 6] - Stay granted : CHENNAI CESTAT
CUSTOMS SECTION
2015-TIOL-1909- CESTAT-MUM
M/s Great Offshore Ltd Vs CC
Cus Classification issue decided in favour of appellant and consequently refund arises of the amount of differential duty which was paid along with interest although the department has filed an appeal before the Supreme Court (and which has been admitted) along with Stay petition, but even after two years no stay has been granted and, therefore, miscellaneous application filed by importer seeking implementation of Tribunal order dated 07.11.2012.
Held: From the Board Circular 802/35/2004- CX dated 08.12.2004 it is very clear that if Revenue is unable to obtain a stay within 3 months then refund should be granted since it is an admitted position that the Supreme Court has not granted a stay, the respondent Revenue is bound to follow the Board Circular Respondent should have implemented the Tribunal' s order immediately on completion of 3 months and refund along with interest should have been given Respondent directed to grant refund within a period of two months and report compliance: CESTAT [para 4] - Application allowed : MUMBAI CESTAT
2015-TIOL-1908- CESTAT-MUM
Lilaram Gobindram Vs CC
Cus - Appellant imported 'Comoros Cloves' and claimed benefit of exemption notification 96/2008-Cus - Customs officers noticed that the declaration as prescribed at point no.11 of the Annexure A of rule 9 of Rules of Origin was not certified by the exporter from the exporting country and the authorised signatory had only certified the declaration of the export as correct even though the exporter had made no such declaration - holding that such a certificate had no sanctity, the lower authorities held the same to be invalid and denied the preferential concessions - Commissioner( A) upheld the order and, therefore, appellant before CESTAT.
Held: It is undisputed that the goods imported viz. "cloves" are agricultural products and imported from the country which finds a mention in appendix to Notfn. 96/2008-Cus - Perusal of Certificate of origin does indicate that the goods were exported from one of the countries mentioned in appendix to the impugned notfn. - Certificate has been signed by the 'African Commodities House Ltd.' as mentioned in Annexure B - Procedure given in Annexure B when read holistically would mean that minor discrepancies would not ipso facto invalidate the certificate of origin if the same corresponds to the product imported - Identical goods imported at various other ICDs were certified by the same issuing authority and was accepted by Revenue authorities - in view of the foregoing and peculiar facts and circumstances of the case, the impugned order is set aside with a direction to lower authorities to assess the B/E by extending the benefit of notification 96/2008-Cus and allow clearance: CESTAT [para 7, 9, 10, 11, 13] - Appeal allowed : MUMBAI CESTAT
Direct Tax Basket
2015-TIOL-2089- HC-MUM-IT
CIT Vs M/s Hindustan Organics Chemicals Ltd
Whether the Revenue is justified in filing appeals from orders of the Tribunal on issues which are concluded by the decisions of HC or by the decision of Tribunal and no appeals to higher forums have been filed therefrom - NO: HC
Whether in case an appeal is required to be filed by the Revenue against the assessee, the justification for the same must be indicated either in the Memo of Appeal or by filing a separate affidavit before the date of the appeal being listed for admission - YES: HC - Case deferred : BOMBAY HIGH COURT
2015-TIOL-1428- ITAT-MAD
ITO Vs Shri D Umapathy
Whether tax has to be deducted on the amount paid by the assessee and not only the amount payable by the assessee - YES : ITAT - Revenue' s appeal allowed : CHENNAI ITAT
Indirect Tax Basket
SERVICE TAX SECTION
2015-TIOL-2098- HC-MUM-ST + Story
Vodafone India Ltd Vs CCE
ST – Bharti Airtel's case 2014-TIOL-1452- HC-MUM-ST does not need a relook - subsequent Bench cannot come to the opinion that a particular provision was misinterpreted and under that pretext seek to reinterpret it again - CENVAT credit on Tower Parts & Pre-fabricated buildings is not admissible: High Court [para 14, 15, 16 - Appeals dismissed : BOMBAY HIGH COURT
CENTRAL EXCISE SECTION
CIT Vs M/s Hindustan Organics Chemicals Ltd
Whether the Revenue is justified in filing appeals from orders of the Tribunal on issues which are concluded by the decisions of HC or by the decision of Tribunal and no appeals to higher forums have been filed therefrom - NO: HC
Whether in case an appeal is required to be filed by the Revenue against the assessee, the justification for the same must be indicated either in the Memo of Appeal or by filing a separate affidavit before the date of the appeal being listed for admission - YES: HC - Case deferred : BOMBAY HIGH COURT
2015-TIOL-1428- ITAT-MAD
ITO Vs Shri D Umapathy
Whether tax has to be deducted on the amount paid by the assessee and not only the amount payable by the assessee - YES : ITAT - Revenue' s appeal allowed : CHENNAI ITAT
Indirect Tax Basket
SERVICE TAX SECTION
2015-TIOL-2098- HC-MUM-ST + Story
Vodafone India Ltd Vs CCE
ST – Bharti Airtel's case 2014-TIOL-1452- HC-MUM-ST does not need a relook - subsequent Bench cannot come to the opinion that a particular provision was misinterpreted and under that pretext seek to reinterpret it again - CENVAT credit on Tower Parts & Pre-fabricated buildings is not admissible: High Court [para 14, 15, 16 - Appeals dismissed : BOMBAY HIGH COURT
CENTRAL EXCISE SECTION
Mandatory pre-deposit for demands before 06.08.2014 - Pending consideration of provisions of Sec 35F, Madras HC allows filing appeal before Tribunal with waiver petition
CHENNAI: THE assessee is engaged in construction service. A Show Cause Notice was issued to the assessee demanding Service Tax for the period 2007-2011. The assessee replied to the notice contesting the demand on the ground that the explanation inserted vide Finance Act, 2010 is only prospective as also clarified by the Board vide Circular dated 10.02.2012. However, the Adjudicating Authority confirmed the demand. Aggrieved by the same, the assessee filed a Writ Petition before the High Court.
The assessee submitted that, the reasoning of the respondent is contrary to the provisions and the decisions of the Hon'ble Apex Court that any amendment by way of insertion to a provision can be applied only prospectively and the Circulars issued by the Board clearly confirm that the Explanation is effective from 01.07.2010, which are binding on its officers.
Besides, according to the learned counsel for the petitioner, the question of applicability of substituted Section 35-F of the Finance Act, to the orders passed after 06.08.2014 or to the appeals filed on or after 06.08.2014, is still pending consideration before the Division Bench of this Court, irrespective of the final orders by Kerala High Court reported in 2015-TIOL-895- HC-KERALA- ST Kerala and the interim orders of the Andhra Pradesh High Court reported in 2015-TIOL-511- HC-AP-CX. In the circumstances, filing appeal against the impugned order by mandatorily depositing 7.5% of the amount demanded will not only make hardship to the petitioner but also will lead to depriving right of appeal without pre-deposit of 7.5% of the said amount.
After hearing both sides, the High Court held:
CHENNAI: THE assessee is engaged in construction service. A Show Cause Notice was issued to the assessee demanding Service Tax for the period 2007-2011. The assessee replied to the notice contesting the demand on the ground that the explanation inserted vide Finance Act, 2010 is only prospective as also clarified by the Board vide Circular dated 10.02.2012. However, the Adjudicating Authority confirmed the demand. Aggrieved by the same, the assessee filed a Writ Petition before the High Court.
The assessee submitted that, the reasoning of the respondent is contrary to the provisions and the decisions of the Hon'ble Apex Court that any amendment by way of insertion to a provision can be applied only prospectively and the Circulars issued by the Board clearly confirm that the Explanation is effective from 01.07.2010, which are binding on its officers.
Besides, according to the learned counsel for the petitioner, the question of applicability of substituted Section 35-F of the Finance Act, to the orders passed after 06.08.2014 or to the appeals filed on or after 06.08.2014, is still pending consideration before the Division Bench of this Court, irrespective of the final orders by Kerala High Court reported in 2015-TIOL-895- HC-KERALA- ST Kerala and the interim orders of the Andhra Pradesh High Court reported in 2015-TIOL-511- HC-AP-CX. In the circumstances, filing appeal against the impugned order by mandatorily depositing 7.5% of the amount demanded will not only make hardship to the petitioner but also will lead to depriving right of appeal without pre-deposit of 7.5% of the said amount.
After hearing both sides, the High Court held:
Considering the submissions on either side and in view of the fact that the applicability of Section 35 F of the Finance Act is pending consideration before the Division Bench of this Court, this Court permits the petitioner to file an appeal along with waiver application, within a period of two weeks from the date of receipt of a copy of this order. Since the matter is pending before the Division Bench of this Court, testifying the validity of Section 35-F of the Finance Act, relating to pre-deposit, the appellate authority is directed to receive the appeal along with waiver application filed by the petitioner, which would be subject to the result of the issue pending before the Division Bench.
CX - Merely by sale of immovable assets, recovery of arrears cannot be made from buyer of assets - If any property is sold under auction, buyer cannot be held liable for payment of arrears of previous owner of property: CESTAT
MUMBAI: M/S Sumit Rerolling Mills Pvt. Ltd. was taken over by the bank for non-payment of dues and the unit was later auctioned and in such auction, one, Zia Iron Stores purchased the property. Thereafter, the present appellant purchased the unit from Zia Iron Stores.
The appellant was issued letters in July and October 2008 by the Superintendent, Range Nagpur for payment of government dues of Rs. 5,06,189/- outstanding against M/s. Sumit Rerolling Mills Pvt. Ltd. (predecessor company), citing section 11 of the CEA, 1944. For the record, the said outstanding dues were confirmed against M/s. Sumit Rerolling Mills Pvt Ltd. as per o-in-o dated 20/10/1995 & 02/11/1999.
Aggrieved by the said demand, the appellant had filed an appeal before the Commissioner (Appeals), who vide the impugned order directed the appellant to pay the dues and rejected the appeal.
Before the CESTAT, against this order, the appellant inter alia submitted that they have purchased the immovable assets not from M/s Sumit Rerolling Mills Pvt. Ltd but from Zia Iron Stores. Inasmuch as they have not succeeded the business of M/s. Sumit Rerolling Mills Pvt. Ltd. but have only purchased the factory premises and not the business and, therefore, the appellant is not liable to pay the dues of M/s. Sumit Rerolling Mills Pvt.Ltd. Reliance is placed on the decisions in Rana Girders Ltd. - 2013-TIOL-39- SC-CX, Himgiri Ispat Pvt. Ltd. - 2014-TIOL-320- HC-UKHAND- CX, Krishna Lifestyle Technologies Ltd. - 2008-TIOL-86- HC-MUM-CX forsupport.
The AR reiterated the findings of the lower authorities and submitted that since the assets which was purchased by the appellant was originally owned by M/s. Sumit Rerolling Mills Pvt.Ltd., therefore, arrears of Central Excise dues are liable to be paid by the appellant as they have succeeded in the purchase of M/s. Sumit Rerolling Mills Pvt. Ltd. Furthermore, as per the assignment deed the dues of Central Excise are supposed to be paid by the first purchaser, therefore, the appellant is liable to pay arrears; that the appellant has given an undertaking while obtaining Central Excise registration to pay the arrears which is pending against M/s. Sumit Rerolling Mills Pvt. Ltd. and for this reason also the demand made is legal and proper.
The Bench extracted the provisions of section 11 of the CEA, 1944 and observed -
+ I find that, proviso provides that where person against whom duty is recoverable transfers or otherwise, disposes of his business or trade in whole or any part or effect any change in ownership thereto in consequence of which he is succeeding in such business or trade by any other person, recovery of the pending dues against the person who is succeeded can be made from the person so succeeding.
+ In the present case it is not under dispute that firstly the duty is recoverable from M/s. Sumit Rerolling Mills Pvt. Ltd but the assets was purchased by the appellant, not from M/s. Sumit Rerolling Mills Pvt. Ltd but from Zia Iron Stores. As per the provisions, if the asset is sold by M/s. Sumit Rerolling Mills Pvt. Ltd to the appellant then only proviso to provisions of Section 11 will attract.
+ The asset was neither sold by M/s. Sumit Rerolling Mills Pvt. Ltd nor it was purchased by appellant from M/s. Sumit Rerolling Mills Pvt. Ltd, for this reason the proviso to Section 11 shall not attract. I also observed that in the whole chain of transaction of the immovable assets M/s. Sumit Rerolling Mills Pvt. Ltd has no locus standi because the assets was not sold by M/s. Sumit Rerolling Mills Pvt. Ltd whereas it was first acquired by the bank, who under auction sold the asset not to the appellant but to Zia Iron S tores and subsequently the appellant has purchased the assets from M/s. Zia Iron Stores.
+ In this transaction, neither M/s. Sumit Rerolling Mills Pvt. Ltd is the predecessor nor the appellant is successor. With regard to the proviso to Section 11, recovery under Section 11 and proviso thereto cannot be made from appellant.
+ I also observe that in the proviso to Section 11 it is clearly provided that the recovery of arrears pending against predecessor can be made from the successor only in case when there is transfer of business or trade either in whole or in part, the proviso to Section 11 does not stipulates applicability in case of sale of assets of the predecessor to successor. In the present case, it is undisputed fact that firstly appellant has not taken over the business or trade which was being run by M/s. Sumit Rerolling Mills Pvt. Ltd. For this reason also proviso Section to 11 is not applicable.
+ I am in agreement with the submission of the Ld. Counsel that in view of the Krishna Lifestyle Technologies Ltd (supra) case the recovery from the successor can only be made when the business or trade is transferred either in whole or in part from the predecessor to the successor.
+ In view of the above judgment, it has been clearly settled that only when business or trade is transferred in part or whole and merely by sale of immovable assets, recovery of arrears cannot be made from the buyer of the assets.
+ In the present case, it is undisputed that the immovable assets were first sold in auction by the bank to Zia Iron Stores and thereafter the appellant has purchased the property from Zia Iron Stores. It has been held in the numerous judgments that if any property is sold under auction, buyer cannot be held liable for payment of the arrears of the previous owner of the property.
Extracting liberally from the decisions cited by the appellant, the Bench observed that it is settled that wherever the property was sold under auction by secured creditors such as banks, financial institutions, recovery of government dues cannot be made from buyer of the property.
Opining that the sale certificate of the bank, assignment deed between bank and Zia Iron Stores and assignment deed between Zia Iron Stores and the appellant have no relevance to the case on hand and that even if any such clause exists the same cannot be used for making recovery, the Bench held that Revenue was in error to confirm demand amount on the appellant.
As for the undertaking given by the appellant while obtaining registration regarding the payment of arrears, the CESTAT observed that the same was given without prejudice to the legal rights of the appellant and, therefore,the same was not sufficient for enforcing the recovery of arrears as the appellant is not legally liable for payment of arrears of M/s. Sumit Rerolling Mills Pvt. Ltd.
The order was set aside and the appeal was allowed with consequential relief.
Aggrieved by the said demand, the appellant had filed an appeal before the Commissioner (Appeals), who vide the impugned order directed the appellant to pay the dues and rejected the appeal.
Before the CESTAT, against this order, the appellant inter alia submitted that they have purchased the immovable assets not from M/s Sumit Rerolling Mills Pvt. Ltd but from Zia Iron Stores. Inasmuch as they have not succeeded the business of M/s. Sumit Rerolling Mills Pvt. Ltd. but have only purchased the factory premises and not the business and, therefore, the appellant is not liable to pay the dues of M/s. Sumit Rerolling Mills Pvt.Ltd. Reliance is placed on the decisions in Rana Girders Ltd. - 2013-TIOL-39- SC-CX, Himgiri Ispat Pvt. Ltd. - 2014-TIOL-320- HC-UKHAND- CX, Krishna Lifestyle Technologies Ltd. - 2008-TIOL-86- HC-MUM-CX forsupport.
The AR reiterated the findings of the lower authorities and submitted that since the assets which was purchased by the appellant was originally owned by M/s. Sumit Rerolling Mills Pvt.Ltd., therefore, arrears of Central Excise dues are liable to be paid by the appellant as they have succeeded in the purchase of M/s. Sumit Rerolling Mills Pvt. Ltd. Furthermore, as per the assignment deed the dues of Central Excise are supposed to be paid by the first purchaser, therefore, the appellant is liable to pay arrears; that the appellant has given an undertaking while obtaining Central Excise registration to pay the arrears which is pending against M/s. Sumit Rerolling Mills Pvt. Ltd. and for this reason also the demand made is legal and proper.
The Bench extracted the provisions of section 11 of the CEA, 1944 and observed -
+ I find that, proviso provides that where person against whom duty is recoverable transfers or otherwise, disposes of his business or trade in whole or any part or effect any change in ownership thereto in consequence of which he is succeeding in such business or trade by any other person, recovery of the pending dues against the person who is succeeded can be made from the person so succeeding.
+ In the present case it is not under dispute that firstly the duty is recoverable from M/s. Sumit Rerolling Mills Pvt. Ltd but the assets was purchased by the appellant, not from M/s. Sumit Rerolling Mills Pvt. Ltd but from Zia Iron Stores. As per the provisions, if the asset is sold by M/s. Sumit Rerolling Mills Pvt. Ltd to the appellant then only proviso to provisions of Section 11 will attract.
+ The asset was neither sold by M/s. Sumit Rerolling Mills Pvt. Ltd nor it was purchased by appellant from M/s. Sumit Rerolling Mills Pvt. Ltd, for this reason the proviso to Section 11 shall not attract. I also observed that in the whole chain of transaction of the immovable assets M/s. Sumit Rerolling Mills Pvt. Ltd has no locus standi because the assets was not sold by M/s. Sumit Rerolling Mills Pvt. Ltd whereas it was first acquired by the bank, who under auction sold the asset not to the appellant but to Zia Iron S tores and subsequently the appellant has purchased the assets from M/s. Zia Iron Stores.
+ In this transaction, neither M/s. Sumit Rerolling Mills Pvt. Ltd is the predecessor nor the appellant is successor. With regard to the proviso to Section 11, recovery under Section 11 and proviso thereto cannot be made from appellant.
+ I also observe that in the proviso to Section 11 it is clearly provided that the recovery of arrears pending against predecessor can be made from the successor only in case when there is transfer of business or trade either in whole or in part, the proviso to Section 11 does not stipulates applicability in case of sale of assets of the predecessor to successor. In the present case, it is undisputed fact that firstly appellant has not taken over the business or trade which was being run by M/s. Sumit Rerolling Mills Pvt. Ltd. For this reason also proviso Section to 11 is not applicable.
+ I am in agreement with the submission of the Ld. Counsel that in view of the Krishna Lifestyle Technologies Ltd (supra) case the recovery from the successor can only be made when the business or trade is transferred either in whole or in part from the predecessor to the successor.
+ In view of the above judgment, it has been clearly settled that only when business or trade is transferred in part or whole and merely by sale of immovable assets, recovery of arrears cannot be made from the buyer of the assets.
+ In the present case, it is undisputed that the immovable assets were first sold in auction by the bank to Zia Iron Stores and thereafter the appellant has purchased the property from Zia Iron Stores. It has been held in the numerous judgments that if any property is sold under auction, buyer cannot be held liable for payment of the arrears of the previous owner of the property.
Extracting liberally from the decisions cited by the appellant, the Bench observed that it is settled that wherever the property was sold under auction by secured creditors such as banks, financial institutions, recovery of government dues cannot be made from buyer of the property.
Opining that the sale certificate of the bank, assignment deed between bank and Zia Iron Stores and assignment deed between Zia Iron Stores and the appellant have no relevance to the case on hand and that even if any such clause exists the same cannot be used for making recovery, the Bench held that Revenue was in error to confirm demand amount on the appellant.
As for the undertaking given by the appellant while obtaining registration regarding the payment of arrears, the CESTAT observed that the same was given without prejudice to the legal rights of the appellant and, therefore,the same was not sufficient for enforcing the recovery of arrears as the appellant is not legally liable for payment of arrears of M/s. Sumit Rerolling Mills Pvt. Ltd.
The order was set aside and the appeal was allowed with consequential relief.
IT: Order passed by Tribunal under section 254(2) is not appealable under section 260A
[2015] 60 taxmann.com 305 (Punjab & Haryana)
HIGH COURT OF PUNJAB AND HARYANA
Commissioner of Income-tax
v.
Saroop Tanneries Ltd.
[2015] 60 taxmann.com 305 (Punjab & Haryana)
HIGH COURT OF PUNJAB AND HARYANA
Commissioner of Income-tax
v.
Saroop Tanneries Ltd.
IT : Section 36(1)(va) and section 43B operate in different fields i.e. the former takes care of employee' s contribution to provident fund and the latter employer' s contribution to provident fund. Assessee is entitled to deduction u/s 43B only with regard to employer' s contribution. Assessee entitled to deduction of employee' s contribution to provident fund only if the same is paid within the due date provided u/s 36(1)(va)-i. e. within the due dates provided by the respective labour laws
[2015] 61 taxmann.com 119 (Kerala)
HIGH COURT OF KERALA
Commissioner of Income-tax, Cochin
v.
Merchem Ltd.
NEGATIVE LIST OF SERVICES: PROCESSES AMOUNTING TO MANUFACTURE
[2015] 61 taxmann.com 119 (Kerala)
HIGH COURT OF KERALA
Commissioner of Income-tax, Cochin
v.
Merchem Ltd.
NEGATIVE LIST OF SERVICES: PROCESSES AMOUNTING TO MANUFACTURE
NEGATIVE LIST OF SERVICES: PROCESSES AMOUNTING TO MANUFACTURE
Any process that amount to manufacture or production of goods is included in the negative list. This 'expression' has also been defined in clause (40) of section 65B inserted by the Finance Act, 2012. Though the words 'production' or 'manufacture' are not separately defined in clause 40, the expression as a whole has been provided and defined. Accordingly, "process amounting to manufacture or production of goods" means a process on which duties of excise are leviable under section 3 of the Central Excise Act, 1944 or any process amounting to manufacture of alcoholic liquors for human consumption, opium, Indian hemp and other narcotic drugs and narcotics on which duties of excise are leviable under any State Act for the time being in force.
Clause 40 of section 65B had been amended by the Finance Act, 2013 and w.e.f. 10-5-2013, it shall also include processes under Medicinal and Toilet Preparations (Excise Duties) Act, 1955.
Amendment made by Finance Act, 2013 (w.e.f. 10.05.2013)
Finance Act, 2013 has amended the definition of 'process amounting to manufacture or production of goods' under section 65B(40) so as to include in its scope the process on which duties of excise are leviable under the Medicinal and Toilet preparations (Excise Duties) Act, 1955. Thus, w.e.f. 10.05.2013, all such processes on which excise duty is leviable under Medicinal and Toilet Preparations (Excise Duties) Act, 1999 shall also be covered under negative list and no Service Tax would be levied. However, Service Tax shall be leviable on such process between 1.7.2012 and 9.5.2013.
Amendment made by Finance Act, 2015 (w.e.f. 1-6-2015)
Finance Act, 2015 has amended the entry (f) to carve out from the negative list, process amounting to manufacture or production of alcoholic liquor for human consumption. Consequently, Service Tax shall be levied on bottling/job work/contract manufacturing of potable liquor (meant for human consumption) for a consideration. Alcoholic liquor meant for industrial use or for any other purpose shall still be covered under negative list (e.g. industrial spirits etc).
Certain specified job works/production processes are exempt from Service Tax vide Entry No. 30 of exemption Notification No. 25/2012-ST. To give effect to the exclusion of processes in relation to alcoholic liquor from negative list, exemption under Notification No. 25/2012-ST has also been amended to exclude exemption to intermediate production processes/job works in relation to alcoholic liquor meant for human consumption.
It may, however, be noted that manufacture of liquor meant for human consumption is subject to state excise duties and not Central Excise Duty under the Central Excise Act, 1944. CBEC vide letter DOF No. 334/5/2015-TRU dated 28.02.2015 has clarified the amendment as follows –
"The entry in the Negative List that covers service by way of any process amounting to manufacture or production of goods [section 66D (f)] is being pruned to exclude any service by way of carrying out any processes for production or manufacture of alcoholic liquor for human consumption. Consequently, Service Tax shall be levied on contract manufacturing/ job work for production of potable liquor for a consideration. In this context, the definition of the term "process amounting to manufacture or production of goods" [section 65 B (40)] is also being amended, along with the Negative List entry [section 66D (f)], with a consequential amendment in S. No. 30 of notification No. 25/12- ST, to exclude intermediate production of alcoholic liquor for human consumption from its ambit."
By: Dr. Sanjiv Agarwal
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Any process that amount to manufacture or production of goods is included in the negative list. This 'expression' has also been defined in clause (40) of section 65B inserted by the Finance Act, 2012. Though the words 'production' or 'manufacture' are not separately defined in clause 40, the expression as a whole has been provided and defined. Accordingly, "process amounting to manufacture or production of goods" means a process on which duties of excise are leviable under section 3 of the Central Excise Act, 1944 or any process amounting to manufacture of alcoholic liquors for human consumption, opium, Indian hemp and other narcotic drugs and narcotics on which duties of excise are leviable under any State Act for the time being in force.
Clause 40 of section 65B had been amended by the Finance Act, 2013 and w.e.f. 10-5-2013, it shall also include processes under Medicinal and Toilet Preparations (Excise Duties) Act, 1955.
Amendment made by Finance Act, 2013 (w.e.f. 10.05.2013)
Finance Act, 2013 has amended the definition of 'process amounting to manufacture or production of goods' under section 65B(40) so as to include in its scope the process on which duties of excise are leviable under the Medicinal and Toilet preparations (Excise Duties) Act, 1955. Thus, w.e.f. 10.05.2013, all such processes on which excise duty is leviable under Medicinal and Toilet Preparations (Excise Duties) Act, 1999 shall also be covered under negative list and no Service Tax would be levied. However, Service Tax shall be leviable on such process between 1.7.2012 and 9.5.2013.
Amendment made by Finance Act, 2015 (w.e.f. 1-6-2015)
Finance Act, 2015 has amended the entry (f) to carve out from the negative list, process amounting to manufacture or production of alcoholic liquor for human consumption. Consequently, Service Tax shall be levied on bottling/job work/contract manufacturing of potable liquor (meant for human consumption) for a consideration. Alcoholic liquor meant for industrial use or for any other purpose shall still be covered under negative list (e.g. industrial spirits etc).
Certain specified job works/production processes are exempt from Service Tax vide Entry No. 30 of exemption Notification No. 25/2012-ST. To give effect to the exclusion of processes in relation to alcoholic liquor from negative list, exemption under Notification No. 25/2012-ST has also been amended to exclude exemption to intermediate production processes/job works in relation to alcoholic liquor meant for human consumption.
It may, however, be noted that manufacture of liquor meant for human consumption is subject to state excise duties and not Central Excise Duty under the Central Excise Act, 1944. CBEC vide letter DOF No. 334/5/2015-TRU dated 28.02.2015 has clarified the amendment as follows –
"The entry in the Negative List that covers service by way of any process amounting to manufacture or production of goods [section 66D (f)] is being pruned to exclude any service by way of carrying out any processes for production or manufacture of alcoholic liquor for human consumption. Consequently, Service Tax shall be levied on contract manufacturing/ job work for production of potable liquor for a consideration. In this context, the definition of the term "process amounting to manufacture or production of goods" [section 65 B (40)] is also being amended, along with the Negative List entry [section 66D (f)], with a consequential amendment in S. No. 30 of notification No. 25/12- ST, to exclude intermediate production of alcoholic liquor for human consumption from its ambit."
By: Dr. Sanjiv Agarwal
More and more.....
CBDT constitutes two internal committees to study/examine feasibility of recommendations made by Tax Administration Reform Commission (TARC) with regard to group assessment, peer review of select orders of AOs & implementation of ' industry' based jurisdiction for tax officers instead of the prevailing 'territorial&# 39; jurisdiction; TARC had recommended that the assessment team could comprise more than one AO in complex cases where the addition proposed is more than a specified amount or higher than the amount what taxpayer considers due; On study of 'industry&# 39; vs 'territorial&# 39; jurisdiction, CBDT mandates Committee to study efficacy of the latter considering the responsibilities discharged by the AOs who are spread over 500 locations; Committees to submit report by Oct. 15, 2015
ITAT grants capital-gains exemption benefit u/s 54F to assessee on entire amount of investment in new house, rejects Revenue's action of restricting exemption to lower value disclosed in registered sale deed; Dismisses Revenue's argument that assessee indulged in undervaluation of property to avoid stamp duty and registration charges; Remarks that "the fact that there was undervaluation of the value of the property for the purpose of stamp duty, was an issue which was alien to the question of allowing deduction u/s 54F of the Act"; Further, holds that the term 'residential house' should be understood as a house "habitable with all amenities in place", therefore the entire amount including the amount paid to builder for amenities like car parking etc. qualifies for deduction; Concludes that once the factum of investment in acquiring a residential house was established and not disputed by Revenue, deduction cannot be denied : Bangalore ITAT
F.No.225/246/2014/ITA.II
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
New Delhi the September, 2015
OFFICE MEMORANDUM
Subject: Committee to study the feasibility of implementing 'Industry Based Jurisdiction' instead of prevailing 'Geographical Jurisdiction' in a phased manner-reg.
Board has constituted a Committee to examine the feasibility of implementing 'Industry Based Jurisdiction' in a phased manner instead of the prevailing 'Territorial Jurisdiction' as recommended by the Tax Administration Reform Commission ('TARC').
2. The composition of the Committee is as follows:
| Sl No. | Name | Designation | |
| 1 | Ms Sunita Puri | Principal Commissioner of Income Tax -IV, Delhi | Committee In- charge |
| 2 | Sh. B. K. Singh | CIT(A)-11, Delhi | Members |
| 3 | Sh. Samar Bhadra | ADG (System)-3, Delhi | |
| 4 | Sh Rajeev Ranka | Add I. CIT (Audit-1), Delhi | |
| 5 | Sh. Rajesh Kedia | Addl CIT, Delhi | |
| 6 | Smt. Garima Bhagat | Addl CIT, Delhi | Member Secretary |
3. The terms of reference of the Committee will be as follows:
(i) To carry out analysis of prevailing 'territorial jurisdiction' in Income Tax Department and study of its various aspects keeping in view the various responsibilities assigned and discharged by the Assessing officers who are located in more than 550 locations ranging from mofussil charges to metropolises.
(ii) Efficacy of existing dedicated Ranges dealing with cases of Trusts I AOP I Professionals I Industry specific jurisdiction (in some corporate charges) etc. may be analyzed with a view to examine the feasibility of implementing the same on all India basis in a phased manner.
4. The Committee may co-opt other members, as it deems fit to have proper representation, co-ordination and feedback from field formations in metro I non-metro I mofussil charges.
5. The Committee shall submit its report to Member (IT), CBDT by 15 th October, 2015.
6. The Headquarters of the Committee will be in Delhi.
This issues with the approval of the Chairperson, CBDT.
(Rohit Garg)
Deputy Secretary (ITA.II)
Deputy Secretary (ITA.II)
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