CBDT ACCEPTS BOMBAY HC ORDER ALLOWING COST OF PRODUCTION OF ABANDONE
Oct 6, 2015
CBDT ACCEPTS BOMBAY HC ORDER ALLOWING COST OF PRODUCTION OF ABANDONED FEATURE FILM AS REVENUE EXPENDITURE
The deduction in respect of the cost of production of a feature film certified for release by the Board of Film Censors in a previous year is provided in Rule 9A of Income Tax Rules, 1962.
2. In the case of abandoned films, however, since certificate of Board of Film Censors is not received, in some cases no deduction was allowed by applying Rule 9A of the Rules or by treating the expenditure as capital expenditure.
3. The matter has been examined in light of judicial decisions on this subject. The order of the Hon. Bombay High Court dated 28.1.15 in ITA 310 of 2013 in the case of Venus Records and Tapes Pvt. Ltd. on this issue has been accepted and the aforesaid disputed issue has not been further contested. Consequently, it is clarified that Rule 9A does not apply to abandoned feature films and that the expenditure incurred on such abandoned feature films is not to be treated as a capital expenditure. The cost of production of an abandoned feature film, is to be treated as revenue expenditure and allowed as per the provisions of Section 37 of the Income-tax Act.
4. Being a settled issue, no appeals may henceforth be filed on this ground by the officers of the Department and appeals already filed, if any, already filed on this issue before various Courts/Tribunals may be withdrawn/not pressed upon. This may be brought to the notice of all Officers concerned.
F.No.279/Misc. /140/2015- ITJ
Sd/-
(D S Chaudhry)
CIT (A&J), CBDT
Exemption u/s 10(23C)—Any person' includes AOP or not
HYDERABAD TRIBUNAL
Exemption u/s 10(23C)—Any person' includes AOP or not—Exemption of Receipts or income received by any person—Assessee was running a school and had certain receipts from the school—Assessee had also sold some property during the year on which there was a capital gain—Assessee had claimed exemption u/s 10(23C)(iiiad) of the entire income and filed NIL return—During the course of assessment proceedings, AO had not allowed the deduction u/s 10(23C)(iiiad) on the receipts of school—AO was of the opinion that since the objects of assessee does not have any object of running schools, assessee was not entitled for deduction u/s 10(23C)—AO took the receipts from the school at NIL as against loss reported and brought to tax Long Term Capital Gain and assessed total income at Rs. 8,39,884—CIT(A) upheld assessee's contentions and allowed the exemption u/s 10(23C)—Revenue claimed that as per the objects assessee-trust was not existing solely for educational purposes and hence, it was not eligible for exemption u/s 10(23C)(iiiad)—Held, Intention of Legislature was very clear that the educational institution should exist solely for educational purposes then, the receipts or income received by any person was exempt—'any person' can be AOP also— In fact, there was no separate status of trust as defined under the definition of 'person'—Trusts and Societies are generally categorized under the class 'Assessment of Persons' or 'Body of Individuals' whether incorporated or not—Revenue's objection that assessee-trust was assessed as an AOP and therefore, does not entitle for Section 10(23C) exemption has no validity, because provisions of Section 10(23C) are applicable to any income of the nature prescribed received by any person—Since the school was existed solely for the purpose of education and the receipts from the school are covered by the provisions of Section 10(23C)(iiiad) ,opinion of the CIT(A) in granting the exemption—Revenue's appeal dismissed
2(14)
CBDT clarifies that Finance Act, 2013 amendment for computing distance 'aerially' for the purposes of 'agricultural land' u/s 2(14)(iii)(b) , prospective in nature; As per 2(14)(iii)(b) , land situated beyond 8 kms from municipality shall be considered as 'agricultural land' and shall be excluded from the capital asset definition; Acknowledges that method of measuring the distance of the land from the municipality gave rise to considerable litigation; In this regard, takes note of Bombay HC ruling in Maltibai R. Kadu wherein it was held that Finance Act, 2013 amendment to be applicable prospectively from AY 2014-15 onwards; Bombay HC had further held that for period prior to AY 2014-15, the distance should be measured having regard to the shortest road distance; Accepting the said Bombay HC ruling, CBDT directs Department to not file any appeal on this ground, further instructs that appeals already filed may be withdrawn: CBDT
NDPS - When a minimum punishment is prescribed, no court can impose
NEW DELHI: THE accused-respondents were chargesheeted under Section 8 read with Section 20 of the NDPS Act and accordingly, they were sent up for trial. Accused persons denied the accusations and claimed trial. The prosecution to substantiate its stand examined number of witnesses and brought in series of documents in evidence. The trial Judge taking note of the fact that Mushtaq Ahmad, the first respondent and Gulzar Ahmad, the second respondent were in possession of 6 kg. 200 gms and 4 kgs. of charas respectively and the prosecution had been able to establish the same, treated the contraband article as commercial quantity and accordingly found them guilty for the offence punishable under Section 20(b) (ii) (C) of the NDPS Act and eventually considering the gravity of the offence and the proliferating and devastating menace the drugs have been able to create in the society and keeping in view the need for eradication, sentenced each of them to suffer rigorous imprisonment for a period of 12 years and further to pay a fine of Rs.2 lakhs each and in case of default of payment of fine to undergo rigorous imprisonment for period of one year to one under Section 8 read with Section 20 (b) (ii) (B) of the NDPS Act.
On appeal, the High Court restricted the period of custody to the period already undergone, that is, slightly more than seven years and to pay a fine of Rs.25,000/- each with a modified default clause.
The State is in appeal against the High Court order.
Commercial quantity : The trial Judge had treated the seized contraband article falling within the definition of commercial quantity and accordingly found the accused persons guilty and imposed the sentence. He has taken note of the fact that the notification issued on 19.10.2001 clearly shows that more than one kilogram is commercial quantity.
The Supreme Court concluded and held that the seized item fell under the commercial quantity and hence the conviction recorded by the trial court under Section 20 (b) (ii) (C) is absolutely impeccable.
The Supreme Court quashed the High Court order and found the accused guilty of offence punishable under Section 20(b)(ii)(C) of the NDPS Act and each of them is sentenced to undergo rigorous imprisonment for ten years and to pay a fine of Rs.1 lac and, in default of payment of such fine, to suffer rigorous imprisonment for a further period of one year.
Minimum Punishment - When a minimum punishment is prescribed, no court can impose lesser punishment. : Section 20 (b) (ii) (C) stipulates that the minimum sentence will be ten years which may extend to twenty years and the minimum fine imposable is one lakhs rupees which may extend to two lakhs rupees. The provision also provides about the default clause which stipulates imposition of fine exceeding two lakh rupees, for the reasons to be recorded by the Court. When a minimum punishment is prescribed, no court can impose lesser punishment.
In Narendra Champaklal Trivedi v. State of Gujarat, while a submission was advanced that in exercise of power under Article 142 of the Constitution, that the Supreme Court can impose a lesser punishment than the prescribed one, the Court ruled that:-
"...where the minimum sentence is provided, we think it would not be at all appropriate to exercise jurisdiction under Article 142 of the Constitution of India to reduce the sentence on the ground of the so-called mitigating factors as that would tantamount to supplanting statutory mandate and further it would amount to ignoring the substantive statutory provision that prescribes minimum sentence for a criminal act..."
Excise & Customs : 'Fly ash' is 'fully burnt coal' produced during combustion of coal in course of generation of electricity; though it may be marketable under Explanation to section 2(d), it is not a manufactured product and not liable to duty however, Fly ash brick made out of 'fly ash' is a commercial distinct and marketable product and therefore, same is a manufactured product liable to duty
[2015] 61 taxmann.com 402 (Madras)
HIGH COURT OF MADRAS
Mettur Thermal Power Station
v.
Central Board of Excise and Customs
[2015] 61 taxmann.com 402 (Madras)
HIGH COURT OF MADRAS
Mettur Thermal Power Station
v.
Central Board of Excise and Customs
Adjudication is the legal process by which an arbiter or judge reviews evidence and argumentation including legal reasoning set forth by opposing parties or litigants to come to a decision which determines rights and obligations between the parties involved. Three types of disputes are resolved through adjudication:
Disputes between private parties, such as individuals or corporations.
Disputes between private parties and public officials.
Disputes between public officials or public bodies.
In taxation matters many a case has been remanded to the lower authority by the higher authorities for various reasons. The remanding may be to the next lower appellate authority or it may be to the original adjudicating authority. If the case is remanded to original Adjudicating Authority the remanding order is to indicate about the nature of adjudication to be carried out whether de novo proceedings to be initiated or to adjudicate particular aspect as specified in the remanding order by the higher appellate authority.
In this article some case laws related to re-adjudication is discussed.
Restricted order of remand
In 'Commissioner of Customs V. National Steel & Agro Industries Limited' – 2015 (9) TMI 511 - BOMBAY HIGH COURT the matter in dispute was adjudicated by the Adjudicating Authority and in the earlier round the Tribunal passed an order for remanding the matter. The Adjudicating Authority in the re-adjudication process passed order which was set aside by the Tribunal on the appeal filed by the assessee. The Revenue approached the High Court. The Revenue contended that when the Tribunal has remanded the matter back to the Commissioner for de novo consideration, then nothing can be said to be concluded by such an order. It was open to the Commissioner to readjudicate the show cause notice in its entirety. The Tribunal has erroneously held that the remand was for specific and limited purpose. The assessee contended that the remand was for a limited purpose. The Tribunal did not permit the re-opening of any concluded issue. The Tribunal concluded the issue as to whether the activity of the assessee amounts to manufacture. The remand was for a specific purpose and only to re-relate to utilization of imported materials with the terms of Advance Licensing Scheme. In such circumstances the other issue which was concluded could not have been re-opened and the Tribunal rightly interfered in such an exercise of the adjudicating authority. The appeal therefore does not deserve to be admitted as it does not raise any substantial question of law.
The High Court found that the Tribunal had clearly concluded the issue that the activity of the assessee could be termed as 'manufacture'. The only limited issue and which was being dealt with by the Tribunal is whether the assessee has produced documents to satisfy the imported materials under the Advance Licensing Scheme have been correctly utilized as per the terms and conditions of the scheme read with relevant notification. The High Court held that in the teeth of restricted order of remand the Adjudicating Authority could not have travelled beyond it. The Tribunal noticed in the order under challenge that the Adjudicating Authority did travel beyond its earlier direction. The High Court dismissed the appeal.
Remanding order subject to payment of duty
In 'Terumo Penpol Limited V. Commissioner of Customs (Appeals), Chennai' – 2015 (6) TMI 500 - MADRAS HIGH COURT the petitioner challenged the order of Commissioner (Appeals) in the present writ petition. The Commissioner (Appeals) agreed with the contentions of the petitioner, set aside the original order and at the instance of the Revenue the Appellate Authority remanded the matter back to the Original Adjudicating Authority. The Appellate Authority further directed to pay EDD equivalent to 5% of the assessable value till the issue of fresh order. The petitioner contended that while remanding the matter, the Commissioner (Appeals) has no authority to direct the petitioner to pay EDD equivalent to 5% of the assessable value since the entire issue has to be revised by the Original Adjudicating Authority afresh for a reason that when there is a direction to reconsider the issue by the Original Au8thority giving direction to the petition to pay EDD equivalent to 5% of the assessable value will definitely bear some influence on the merits of the matter.
The Revenue opposed the petition since the petitioner has alternative remedy by filing appeal before Tribunal on payment of 10% of the duty demanded. The High Court did not accept the contentions of the Revenue since when the matter is remanded back to the Original Adjudicating Authority all the issues are to be adjudicated afresh, without being influenced by any of the observation. While so, viewing the impugned order, direction given to pay EDD equivalent to 5% of the assessable value, against the petition will prejudice the mind of original Adjudicating Authority while deciding the issue. The High Court deletes the portion of the order directing to pay EDD equivalent to 5% of the assessable value.
Ignoring the directions in remand order
In 'Raj Kumar Mundra V. Commissioner of Customs, Kandla' – 2013 (8) TMI 885 - CESTAT AHMEDABAD the Tribunal observed from the order passed by the Adjudicating Authority that the order has been passed by totally ignoring the directions given to it by CESTAT. If the Adjudicating Authority had any reservations about the non execution of directions given by CESTAT, then either a suitable modification application should have been field against the remand order before CESTAT or an appeal should have been filed by the Revenue before the appropriate appellate authority. The attitude depicted by the Adjudicating Authority clearly shows that he has clearly by passed the remand directions given by the Tribunal in re-adjudication process.
In 'Hit Kari Hitech Fibres Private Limited V. Commissioner of Central Excise, Raigad' – 2013 (9) TMI 651 - CESTAT MUMBAI the Tribunal held that while re-adjudicating the case the Commissioner should have consider the issue of valuation of impugned goods raised before Commissioner, particularly when the Department itself has determined the assessable value for the period July 2002 to December 2004 on the basis of 115% or 110% of cost of production under Valuation Rules. Since the impugned goods are captively and are not comparable to goods cleared by them from their factory, value is to be determined as per Valuation Rules. The Tribunal directed the Commissioner to re-determine the value of impugned goods as per Valuation Rules. The Commissioner will also consider the imposition of penalty after re-determination of duty.
Adopting the principles of Natural Justice
In 'Kamtech International Private Limited V. Commissioner of Customs (I&G)' – 2012 (12) TMI 153 - SUPREME COURT the grievance of the appellant is that the Adjudicating Authority is requested to re-quantify the short levy of customs duty on the basis of prices quoted by M/s Export Management Service Group to M/s Kamtech but at no point of time the appellants were confronted with the said information. The appellant prayed that the Adjudicating Authority may be directed to supply copies of all the documents which are likely to be relied upon for the purpose of fresh adjudication to avail the appellants to meet the Revenue's case. The Supreme Court directed that while examining the case for the purpose of quantification of short levy the Adjudicating Authority shall supply all the documents, on which it proposes to place reliance, to the appellants. It will be open to the appellants to furnish their explanation thereon. They would also be permitted to lead additional evidences in support of their claim.
In 'Union of India V. Lampo Computers (P) Limited' – 2014 (4) TMI 1032 - KARNATAKA HIGH COURT in the re-adjudication proceedings, in regard to remand order, despite the Tribunals specific directions, the copies of documents relied upon were not provided to the appellants. The impugned order deciding the appeal without such documents or without examining whether such documents have any effect on merits of the case was set aside. The Tribunal was directed to decide the case on merits after examining the effect of non supply of documents relied upon by the department in show cause notice.
By: Mr. M. GOVINDARAJAN
Recent case laws
Wed Oct 7, 2015 4:18 am (PDT) . Posted by:
ca.bhupendrashah
2015-TIOL-1593- ITAT-AHM + Story
2015-TIOL-1592- ITAT-AHM
Effluent Channel Projects Ltd Vs DCIT
Whether the receipt received by the assessee as contribution from the members for life-time membership to avail effluent disposal facility offered by the assessee during the accounting period relevant for this A.Y is to be spread over a period of five years. - Assessee' s Appeal partly Allowed : AHMEDABAD ITAT
2015-TIOL-1591- ITAT-AHM
ITO Vs Biotech Ophthalmic Pvt Ltd
Whether an amount cannot be taxed in the hands of the Assessee as deemed dividend u/s 2(22)(e) unless the assessee is a shareholder in the company from which the amounts are received.
Whether the direction given by the CIT(A), for taxability of the deemed dividend in the hands of some other person can constitute "an express direction necessary for disposal of a case". - Revenue' s appeal dismissed : AHMEDABAD ITAT
2015-TIOL-1590- ITAT-DEL
ACIT Vs Smt Usha Rani Talla
Whether AO is justified in making a reference to the DVO u/s 142A where the assessee had made the investment in the properties through her bank accounts and no material was brought on record by the Assessing Officer to show that the assessee had made any excess investments in the property over and above the value recorded in the sale deed and the Assessing Officer had not given any comment or even rejected the books of accounts before making a reference to the DVO for ascertaining the actual investment in the property and the Assessing Officer has not even recorded any reason for referring the matter to the DVO for the estimation of the value of property.
Whether Assessig Officer violated the principles of natural justice where after the receipt of the valuation report from the DVO, the Assessing Officer had given only one day time to the assessee to explain the difference in the value of the property as estimated by the DVO and the value shown in the purchase deed.
Whether assessee is entitled to exemption u/s 54 where during the relevant assessment year, the assessee had sold a property and the sale proceed of the aforesaid property was invested in the purchase of another property in the same assessment year. - Revenue' s Appeal dismissed : DELHI ITAT
2015-TIOL-1589- ITAT-DEL
Dbh International Pvt Ltd Vs ITO
Whether the AO is justified in invoked provisions of section 14A r/w Rule 8D and has disallowed the expenses relating to earning exempt income when the AO has neither recorded his satisfaction nor given reasons as to how the claim of expenditure in relation to tax free income has not been correctly made by the assessee as envisaged u/s 14A(2) and has mechanically invoked Rule 8D. - Assessee' s appeal allowed : DELHI ITAT
2015-TIOL-1588- ITAT-DEL
DCIT Vs M/s Sutlej Textiles And Industries Ltd
Whether subsidies received under various schemes to assist in setting up of industry / expansion of industrial units can be treated as capital subsidy which is not liable to tax. - Revenue' s appeal dismissed : DELHI ITAT
2015-TIOL-1587- ITAT-MUM
Lupin International Vs ITO
Whether the CIT (A) was justified in disallowing the Assessee' s claim of discounting charges when the borrowed funds were utilized for the purpose of appellant' s business. - Assessee' s Appeal Allowed : MUMBAI ITAT
2015-TIOL-1586- ITAT-HYD
Matrix Laboratories Ltd Vs ADDL CIT
Whether the CIT(A) was justified in confirming the order of the AO in excluding patent infringement income received in convertible foreign exchange from the export turnover of the eligible 100% EOU for the purpose of computing deduction u/s10B when the income was from settlement of patent infringement income received in a suit relating to patent.
Whether the CIT(A)was justified in rejecting the basis adopted by the Assessee for appointment of Common Corporate overheads to all the units of the Assessee including the 100% EOU when allocation of expenditure as was done by the assessee is more rationale and is in tune with the principles laid down by the ICA and also for the purpose of Company Law.
Whether the CIT(A) was justified in rejecting that Superannuation contribution of Rs. 25,65,000/- in respect of a promoter Managing Director is deductible u/s 37. - Assessee' s appeal partly allowed : HYDERABAD ITAT
2015-TIOL-1585- ITAT-PUNE
Deccan Education Society Vs ADDL CIT
Whether income received by any person on behalf of an educational institution existing solely for education purpose and not for purpose of profit and which is wholly or substantially financed by the Government, is exempt from tax - YES: ITAT
Whether exemption u/s 10(23C)(iiiab) is allowable to a society, if it is substantially financed by the Government and is also a public charitable trust existing solely for educational purposes - YES: ITAT
Whether exemption u/s 10(23C)(iiiab) can be denied to a society on ground that it is not a 'trust&# 39; and merely a 'society&# 39; - NO: ITAT
Whether in the absence of any evidence to contrary, the duly accounted voluntary donations received towards corpus fund can be termed as capitation fees collected for profit motive so as to disentitle the society from exemption u/s 10(23C)(iiiab) and (iiiac) - NO: ITAT
Whether where no donation is demanded for giving admission to any student, no offence is committed under Maharashtra Educational Institution (Prohibition of Capitation Fee) Act, 1987 - YES: ITAT
Whether merely because some of the donors stated that they have given the donation for admission, it would disentitle the society from getting exemption - NO: ITAT
Whether where trust's main object is imparting education, the benefit of provisions of section 10(23C)(iiiab) and section (iiiac) can be denied to the same, merely on the basis of contradictory statements of a few donors - NO: ITAT - Assesee' s appeal allowed : PUNE ITAT
2015-TIOL-1584- ITAT-JAIPUR
ACIT Vs M/s Modern Threads India Ltd
Whether penalty u/s 271(1)(c) is leviable on the basis of addition made on account of change in method of valuation of closing stock where the assessee had submitted its explanation before the AO at the time of assessment proceedings as well as penalty proceedings and duly disclosed complete particulars regarding change in the method of valuation of stock in process from cost plus expenses to estimated realizable value and the valuation of work in process had been done as per AS-2 issued by Institute of Chartered Accountant of India. - Revenue' s appeal dismissed : JAIPUR ITAT
Indirect Tax Basket
SERVICE TAX SECTION
2015-TIOL-2137- CESTAT-MUM + Story
Reliance Clinical Research Services Pvt Ltd Vs CST
ST - Technical Testing & Analysis service - Clinical testing of new drugs - Explanation inserted in definition 65(106) w.e.f 01.05.2006 expounded the scope of the definition and, therefore, it cannot be clarificatory in nature - Explanation is effective prospectively only - Demands set aside & appeals allowed: CESTAT [para 7.1, 7.4, 7.5] - Appeals allowed : MUMBAI CESTAT
2015-TIOL-2136- CESTAT-DEL
Chhattar Pal Sharma Vs CST
Service Tax - Assessee has paid an amount of Rs.2,15,732/ - and also deposited penalty of Rs. 1,43,522/- - Amount of Rs. 1,91,194/- is being disputed as assessee is claiming to be eligible for SSI exemption under Notfn 6/2005-ST - As such, assessee has made out a good case for waiver of any further pre deposit: CESTAT - Stay granted : DELHI CESTAT
2015-TIOL-2135- CESTAT-MUM
Hiranandani Constructions Pvt Ltd Vs CCE
ST - Appellant having collected an amount from prospective flat buyers towards management, maintenance or repair service, department of the view that the same is taxable under the category of 'Management, Maintenance or Repair service' .
Held: Issue is now squarely covered by the Tribunal decision in Kumar Beheray Rathi - 2013-TIOL-1806- CESTAT-MUM and Goel Nitron Constructions - 2015-TIOL-1787- CESTAT-MUM where, the Bench after analysing the provisions of Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management & Transfer) Act, 1963 held that the amounts collected by the appellant therein are not liable to be taxed under the FA, 1994 - Tax on GTA having been paid by appellant along with interest and the amount being negligible, there is no reason to visit appellant with penalty - Appeal disposed of: CESTAT [para 6, 7, 8] - Appeal disposed of : MUMBAI CESTAT
2015-TIOL-2134- CESTAT-MUM
Bhima Sahakari Karkhana Ltd Vs CCE
ST - Inward freight - GTA service - Case of revenue is that appellant, being a factory, is required to pay Service Tax from 01.01.2005 in view of notification 35/2004-ST - appellant taking a stand that they being a sugar manufacturing co-op, amounts paid by them are for combined expenses of harvesting, loading and transportation of sugarcane to sugar factory and entire charges are reflected as harvesting and transport charges; that inward freight was paid to owners of individual trucks and not to Goods Transport Agency and, therefore, ST liability cannot arise.
Held - above stand of appellant is not controverted by Revenue as also the stand that no consignment note is issued by truck owners - issue is now squarely covered by Tribunal decision in Nandganj Sihori Sugar Co. Ltd. where it is held that mere transportation of goods in a motor vehicle is not a service provided under GTA - order unsustainable, hence set aside - appeal allowed: CESTAT [para 7, 8] - Appeal allowed : MUMBAI CESTAT
CENTRAL EXCISE SECTION
2015-TIOL-2133- CESTAT-MUM + Story
M/s John Deere India Pvt Ltd Vs CCE
CX - Conversion from EOU to DTA - Rule 11(3) of CCR, 2004 will apply only in a situation where final products are exempted and lying in stock - no requirement to reverse carry-over of unutilized credit lying in balance: CESTAT [para 6.2, 6.3] - Appeal allowed : MUMBAI CESTAT
2015-TIOL-2132- CESTAT-MAD
Tamilnadu Asbestos Vs CCE
Central Excise - Refund - appellant who is a State Public Sector Undertaking, engaged in manufacture of PCC Pipes, supplied Asbestos pipes to Tamil Nadu Water Supply and Drainage Board (TWAD Board) during the period 28.3.1998 to 31.8.1998 as per the contract price of the year 1997-98 pending receipt of the rate contract for the year 1998-99 - TWAD subsequently reduced the contract price with retrospective effect from 28.3.1998; refund claimed as excess duty paid as per the revised rate contract for the said period - The adjudicating authority rejected the claim on limitation and on merits; the same was upheld by Commissioner (Appeals) in the impugned order agitated herein.
Held: Appellant cleared the goods on payment of duty from March 98 to August 98 whereas the claim was filed on 27.11.98 - Based on limitation counted from 'relevant date' prescribed in Sec 11B of the Central Excise Act, 1944, the refund claim for the period 28.3.98 to 27.5.98 is time barred and the refund for the period 28.5.98 to 31.8.98 is not hit by limitation. [Para 5]
The refund claim relates to duty paid for the intervening period after the end of the financial year 1997-98 and pending receipt of revised rate contract from TWAD Board for the year 1998-99 and the appellant had cleared the goods as per the rate contract price of the previous year 1997-98 - In the present case, since the rates are fixed by TWAD Board which is applicable for full year, there is no variation in the price and the supplier fixes the rate contract every financial year, clearances cannot be stopped and the appellant has to clear on a higher price till receipt of the fresh rate contract - Tribunal in the case of CCE Bhubaneswar Vs Jayshree Chemicals Ltd., and Supreme Court in the case of M/s.HPL SOCOMAC Ltd. Vs CCE Gurgaon allowed the refund in identical circumstances; ratio squarely applicable to the instant case. [Para 6, 7]
When appellant had paid excise duty at higher price for the intervening period based on the previous year rate pending the receipt of the rate contract for the year 1998-99, they are eligible for refund of excise duty paid for the intervening period subject to limitation - unjust enrichment clause is not applicable in the present case as the TWAD Board has not paid any excess excise duty to the appellant and appellant had collected only the price as per the rate contract for the year 1998-99. [Para 8, 9] - Appeal partly allowed : CHENNAI CESTAT
2015-TIOL-2131- CESTAT-MAD
CCE Vs M/s Chettinad Cement Corporation Ltd
Central Excise - CENVAT credit - input service credit of tax paid on Geological Consultant Service used for the mine and Construction of Walls and Concrete Work made in the mining area held admissible by Commissioner (Appeals) and agitated by Revenue herein.
Held: Services of Geological Consultant was necessary for the mine, for which, the service tax was paid to avail his services - respondents eligible to the Cenvat credit of such tax - on the issue of Construction of Walls and Concrete Work flooring in the mine, Commissioner (Appeals) has shown justification as to requirement of the construction in the mining area - impugned order upheld. [Para 2, 3] - Appeal dismissed : CHENNAI CESTAT
2015-TIOL-2130- CESTAT-MUM
CCE Vs Virender Processors Pvt Ltd
CX - Respondent exported certain goods and claimed rebate of Additional Duties of Excise (T&TA) - Revenue' s case is that since no Additional Duties of Excise (T&TA) is leviable on the final product and, therefore, there is no question of availing credit relating to Additional Duties of Excise (T&TA) on the inputs and further since no input credit could have been availed no question of refund under Rule 5. Held: Issue is squarely covered in favour of the respondent by the decision of the High Court of Bombay in the respondent&# 39;s own case 2009-TIOL-764- HC-MUM-CX - following the same, the appeals filed by Revenue are dismissed: CESTAT [para 5] - Appeals dismissed : MUMBAI CESTAT
2015-TIOL-2129- CESTAT-MUM
Hercules Hoists Ltd Vs CCE
Ramesh Nair, Member (J) CE - s.4 of CEA, 1944 - Appellant engaged in manufacture of material handling equipment bearing their brand name 'INDEF&# 39; - enquiry revealed that during the period 01.07.2000 to 31.03.2004 goods manufactured by appellant were being marketed by one M/s Indef Marketing Services Ltd., a 100% subsidiary of appellant and which later on merged with appellant - appellant had also appointed a network of Authorized marketing associates (AMAs) who in turn appoint dealers in their respective territories - as per business policy followed by appellant, 50% of expenses incurred by dealers towards advertisement which primarily projects them as dealers of appellant reimbursed by appellant - Revenue alleges that the 50% amount reimbursed by appellant will form part of Transaction value.
Held: As per the definition of Transaction value, if any amount is spent by AMA or dealer for advertisement or publicity, same will form part of the transaction value - however, in the present case, AMAs are not advertising the goods per se but what they are doing is to put an advertisement such as in Yellow pages and at other places like billboard so as to indicate that they are the dealers of INDEF equipment - from the advts it is clear that the advertisements are mainly to the effect that a particular dealer deals in the product of the appellant - these advts. cannot be called as advts. for the manufactured goods but are advertisements of the dealer - undoubtedly, such advts. indirectly helps the appellant and it is for this reason that they are reimbursing 50% of the expenses - moreover, Revenue has demanded duty on amount reimbursed by appellant to dealers and not the amount spent by the dealer - amount reimbursed by dealer is not additional consideration and on the contrary this is an amount which is paid by the appellant to the dealer out of the sale proceeds or the value already recovered/to be recovered by appellant from AMAs/dealers - appeals allowed: CESTAT [para 4, 5] - Appeals allowed : MUMBAI CESTAT
2015-TIOL-2128- CESTAT-MUM
Bajaj Electricals Ltd Vs CCE
CX – Appellant manufacturing various types of fans and selling to their wholesaler/dealer – in addition to trade discount, appellant reducing bill in the name of service charges which is also based on per piece of fan – Revenue alleging that 'service charges' will form part of AV – appellant submitting that 'service charges' is also a type of discount and it is uniformly given to all wholesalers/ dealers and is known to dealers – further, due to objection from department w.e.f 01.09.1999 they changed nomenclature to 'additional trade discount' . Held: Service charges do not appear to be a trade discount for the simple reason that in the same invoice there is a discount with the name 'trade discount' – appellant has not been able to bring out any evidence whatsoever to support their contention that deduction due to service charges is nothing but trade discount – contention of appellant cannot be acceded to – so also by changing nomenclature the appellant is only trying to mislead the department and by this change the service charges cannot become additional trade discount – Order upheld & appeals dismissed: CESTAT [para 5, 6] - Appeals dismissed : MUMBAI CESTAT
CUSTOMS SECTION
2015-TIOL-233- SC-NDPS+ Story
State Through Intelligence Officer Narcotics Control Bureau Vs Mushtaq Ahmad Etc
NDPS - Conviction - commercial quantity : The accused-respondents were chargesheeted under Section 8 read with Section 20 of the NDPS Act and accordingly, they were sent up for trial. The trial Judge taking note of the fact that respondents were in possession of 6 kg. 200 gms and 4 kgs. of charas respectively and the prosecution had been able to establish the same, treated the contraband article as commercial quantity and accordingly found them guilty for the offence punishable under Section 20(b) (ii) (C) of the NDPS Act and eventually considering the gravity of the offence and the proliferating and devastating menace the drugs have been able to create in the society and keeping in view the need for eradication, sentenced each of them to suffer rigorous imprisonment for a period of 12 years and further to pay a fine of Rs.2 lakhs each and in case of default of payment of fine to undergo rigorous imprisonment for period of one year to one under Section 8 read with Section 20 (b) (ii) (B) of the NDPS Act. The Supreme Court concluded and held that the seized item fell under the commercial quantity and hence the conviction recorded by the trial court under Section 20 (b) (ii) (C) is absolutely impeccable.
Minimum Punishment - When a minimum punishment is prescribed, no court can impose lesser punishment. : Section 20 (b) (ii) (C) stipulates that the minimum sentence will be ten years which may extend to twenty years and the minimum fine imposable is one lakhs rupees which may extend to two lakhs rupees. The provision also provides about the default clause which stipulates imposition of fine exceeding two lakh rupees, for the reasons to be recorded by the Court. When a minimum punishment is prescribed, no court can impose lesser punishment. - State Appeal allowed : SUPREME COURT OF INDIA
2015-TIOL-2127- CESTAT-MUM
Gurmeet Singh Kohli Vs CC
Cus - Appellant did not make any pre-deposit of 10% of the penalty imposed on him as mandated u/s 129E(iii) of the Customs Act, 1962 - appellant submitting that two SCNs were issued, one to Madhura Industrial Textiles & another to Can Pack India and appellant was a common noticee in both the SCNs; that during investigation appellant deposited an amount of Rs.7 lakhs towards his liabilities; however, adjudicating authority appropriated entire amount against one demand; that total liability is Rs.9.4 lakhs and Rs.10.80 lakhs and as he has deposited Rs.7 lakhs same should be considered sufficient for purpose of s.129E - AR submitting that since Rs.7 lakhs has been appropriated in another case, nothing is left for the present case and, therefore, appellant has not met the requirement of s.129E.
Held: From the o-in-o impugned in appeal, it is evident that no amount has been appropriated and which fact is not disputed by appellant - as whatever was deposited has already been appropriated in another case, same cannot be taken for purpose of compliance u/s 129E - in the interest of justice, appellant given time to deposit the said amount and report compliance - application disposed of: CESTAT [para 4, 5] - Application disposed : MUMBAI CESTAT
2015-TIOL-2126- CESTAT-MUM
Abbott Healthcare Pvt Ltd Vs CC
Cus - 'Mama' s Best India Chocolate 400 grams' imported by appellant by classifying the same under CTH/CETH 1901 9090 claiming concessional rate of BCD as being supplies from AIFTA Country of Origin under notification 46/2011 as the goods were covered by the Country of Origin certificate issued by Director General of Customs, Singapore - Customs authorities noticed that the actual trade name of the goods on the container was 'Mama's Best Premium Chocolate' and not as declared and that it was a nutritional powder which is taken as proprietary food and classifiable under 2106 9099 - demand made of differential duty for earlier clearances also - in appeal before Tribunal, importer submitted that similar matter involving classification of product 'SIMILAC-2' imported by the appellant was disposed of in their favour.
Held: There is no dispute as to the claim of the appellant that the imported goods contain cocoa of 2.5% and hence chapter note of chapter heading 19.01 clearly applies to the imported goods and, therefore, the product merits classification under 19.01 as being specific entry - in view of HSN Explanatory note also, products imported by appellant would get covered under chapter heading 19.01 and not under 2106 9099 as alleged by Revenue - Orders set aside and appeals allowed with consequential relief: CESTAT [para 8.1, 8.2, 8.3] - Appeals allowed : MUMBAI CESTAT
Recent case laws
NOTIFICATION
77
Notification No 77 of 2015 Dated: September 30, 2015
CIRCULAR
16
Major Relief for Film Producers: CBDT accepts Bombay HC order allowing cost of production of abandoned feature film as revenue expenditure
INSTRUCTION
F.No.225/141/ 2015-ITA. II
Validation of tax-returns through Electronic Verification Code
CASE LAWS
2015-TIOL-1583- ITAT-MUM
ACIT Vs Maharashtra State Electricity Distribution Co Ltd
Whether admission of additional evidences by the CIT(A) was justified in terms of Rule 46A if there were valid reasons due to which some of the evidences could not be submitted by the assessee before the AO during the course assessment proceedings – Whether an expenditure can be allowed against the business income only if the expense has been incurred for the purpose of the business and has been incurred during the year under consideration – Whether on the facts of the case, the electricity duty being not a sum payable by the assessee as a primary liability by way of tax, duty cess or fee, section 43B cannot be said to be attracted to the assessee in respect of electricity duty collected by it for being passed on the State Govt. - Assessee' s appeal partly allowed : MUMBAI ITAT
2015-TIOL-1582- ITAT-AHM
ITO Vs Shri Manmohan Anand Singh Rajput
Whether penalty cannot be imposed, when there is no concrete material on the record to demonstrate that particulars of income have been deliberately concealed or inaccurate particulars are furnished - YES: ITAT - Revenue' s appeal dismissed : AHMEDABAD ITAT
2015-TIOL-2316- HC-MUM-IT
CIT Vs Venus Records And Tapes Pvt Ltd
Whether cost of an abandoned film written off, should be treated as revenue expenditure - YES: HC - Revenue' s appeal dismissed : BOMBAY HIGH COURT
Indirect Tax Basket
CENTRAL EXCISE SECTION
2015-TIOL-2125- CESTAT-DEL
Rama Wood Craft Vs CCE & ST
CX - Whether Cenvat credit of duty paid on inputs used in manufacture of finished goods, which were supplied to SEZ developers would be admissible or not - As per Steel Authority of India Ltd. 2013-TIOL-384- HC-CHATTISGARH- CX, amendment to Rule 6 (6) of CCR, 2004 w.e.f. 31/12/08 has to be treated as retrospective amendment and for the period prior to 31/12/08 also supplies to SEZ developers have to be treated as exports and Cenvat credit in respect of inputs used in manufacture of finished goods supplied to SEZ developers would be admissible - Requirement of pre-deposit of Cenvat credit demand, interest and penalty is waived: CESTAT - Stay granted : DELHI CESTAT
2015-TIOL-2124- CESTAT-MAD
Sakthi Sugars Ltd Vs CCE
Central Excise - CENVAT credit - The principal issue involved in this appeal is whether appellant is eligible to the Cenvat credit on inputs and capital goods in respect of the goods used in the construction of the plant as well as installation of machinery etc.
Held: Appellant deserves to be heard on the admissibility as held in a catena of rulings - In view of fair submission of the appellant and also development of the law, appellant is directed to make an application to the Adjudication authority within a month of receipt of this order to fix the hearing on readjudication of the matter afresh on the issues involved as emerged from the show-cause notice - Appellant is entitled to a fair opportunity of hearing of all issues both on facts and law as well as the evidence - Upon hearing and framing the issue properly, the Adjudicating authority shall pass a reasoned and speaking order. [Para 2, 3] - Matter remanded : CHENNAI CESTAT
Detailed Judgment PFA.
I-T - Whether activity of embroidery work on sarees constitutes manu
AHMEDABAD: THE issue is - Whether activity of embroidery work on the sarees constitutes manufacturing activity as the character of saree changes and it does not remain the original grey synthetic cloth. YES is the answer.
Facts of the case
The assessee is a firm engaged in the business of embroidery work on grey synthetics cloth. It filed return for relevant AY. The case of the assessee was selected for scrutiny assessment and notice u/s 143(2) was issued which was duly served upon the assessee. On scrutiny of the accounts, it revealed to the AO that the assessee had claimed depreciation on the plant & machinery. But AO disallowed the claim of the assessee on the ground that it was engaged in the job work activity of embroidery work on the sarees. According to the AO, saree remained saree whether or not the embroidery work being done on the same. Its name and basic features also not changed. The only change effected in it was, in terms of value. Thus, the embroidery work did not constitute any manufacturing activity. On appeal, the CIT(A) allowed the claim of the assessee. Aggrieved Revenue filed appeal before Tribunal.
After hearing parties, Tribunal held that,
++ See Empire Industries Ltd. v. Union of India [1985] In this case, assessee was carrying on business of conversion of Jumbo Rolls of photographic films into small flats and rolls in desired sizes. It claimed deduction under sec. 80-HH and 80-I as well as investment allowance under sec. 32AB. The controversy arose whether conversion of jumbo rolls into small sizes amounts to manufacture or production, eligible for deduction under sec. 32AB or deduction under sections 80-HH and 80-I of the Income-tax Act, 1961. Supreme Court has held that this activity amounts to manufacture or production. Thus, we think it is not necessary to recapitulate and recite all the decision on the construction expression "manufacture&q uot;. But suffice to say that core of all the decisions of the Supreme Court or High Court is to the effect that broadly manufacture is a transformation of an article, which is commercially different from the one which is converted. It is a change of one object to another for the purpose of marketability. It brings something into existence, which is different from that, which originally existed. The new product is a different commodity physically as well as commercially. The Court also explained broader test to determine whether manufacture is there or not, it is propounded that when a change or series of changes are brought out by application of processes which take the commodity to the point where, commercially, it cannot be regarded as the original commodity but is, instead recognized as a distinct and new article that has emerged as a result of the process. Thus, in our opinion, the moment the assessee has carried the embroidery work, the character of sari had changed. It does not remain the original grey synthetic cloth. It has its independent market and value in the market other than the grey synthetic cloth. Thus, the AO failed to appreciate this aspect. We further, find that the First Appellate Authority has appreciated the controversy in right perspective as well as followed the order of the ITAT, wherein, it has been held that the embroidery work is an activity of manufacture. In view of the above discussion, we do not find any merit in the appeal of the Revenue. It is dismissed.
ST - Clinical testing of new drugs - Explanation inserted in definit
MUMBAI: THE appellants are engaged in providing Clinical Trial/Research Service to various Pharmaceutical companies located in India and abroad in respect of clinical testing of new drugs.
Revenue authorities harbored the view that the services are covered under "Technical Testing and Analysis" and chargeable to Service Tax.
Demand notices for recovery of ST for the period 01.07.2003 to 31.03.2006 came to be issued to the appellants and same were confirmed by the Commissioner in October/November 2009.
The appellants submitted before the CESTAT that prior to introduction of the explanation i.e. from 01.05.2006, the activities of Clinical Trial and Tests of new drugs carried out by the appellants cannot be held to be liable to service tax under the head "Technical Testing and Analysis" service. Inasmuch as since the Explanation added to section 65(106) has expanded the scope of the definition, it would not be applicable for the past period. Reliance is placed on the decisions in B.A. Research India Ltd. - 2010-TIOL-509- CESTAT-AHM and Synchron Research Services P. Ltd. - 2011-TIOL-1907- CESTAT-AHM wherein it is held that the explanation will not be applicable prior to 01.05.2006.
The Explanation inserted w.e.f 01.05.2006 by the Finance Act reads -
Explanation: For the removal of doubts, it is hereby declared that for the purposes of this clause, "technical testing and analysis" includes testing and analysis undertaken for the purpose of clinical testing of drugs and formulations; but does not include testing or analysis for the purpose of determination of the nature of diseased condition, identification of a disease, prevention of any disease or disorder in human beings or animals.
Prior to the introduction of explanation, the section read-
"Technical testing and analysis" means any service in relation to physical, chemical, biological or any other scientific testing or analysis of goods or material or any immoveable property, but does not include any testing or analysis service provided in relation to human beings or animals" .
The AR while adverting to the same Explanation submitted that the explanation only sought to clarify what is covered under Technical Testing and Analysis services; that the Explanation is stating the obvious. The AR inter alia also placed reliance on the decision in Sulochana Amma vs. Narayan Nair - 2002-TIOL-292- SC-MISC for the proposition that Explanation to a section is not a substantive provision by itself and it is entitled to explain the meaning of the words contained in the section or clarify certain ambiguities or clear them up.
The Bench observed that the issue is no more res integra.
After extracting paragraphs 8 to 10 of the Tribunal decision in B.A. Research India Ltd. (supra) wherein the Bench went into very same dispute and in respect of very same Explanation and held that the Explanation is effective prospectively, the CESTAT set aside the impugned orders and allowed the appeal.
CX - Conversion from EOU to DTA - Rule 11(3) will apply only in situ
CX - Conversion from EOU to DTA - Rule 11(3) will apply only in situation where final products are exempted and lying in stock - no requirement to reverse carry-over of unutilized credit lying in balance: CESTAT
MUMBAI: THE appellants converted their EOU into DTA unit on 08.08.2011. On conversion into DTA unit, the appellant had discharged the applicable duties on the inputs in stock, inputs contained in finished goods and Work in Progress (WIP) due to the reason that being a EOU they had received inputs without payment of duty. After reversing/paying the duty on conversion to DTA there was a carry-over of unutilized credit lying in balance.
This credit was utilized towards discharge of the duty liability in respect of goods cleared from DTA unit. This was objected to by the department and resultantly a SCN was issued directing the appellant to show cause as to why CENVAT credit so carried forwarded to DTA unit be not held as lapsed and an amount of Rs.1,05,98,681/ - utilized/paid by them on clearances made to DTA through such CENVAT credit be not demanded with interest.
The CCE, Pune-III confirmed the demand. He held that the provisions of Rule 11 of CCR, 2004 will be attracted and the credit lying in balance when the appellant switched over from EOU to DTA need to lapse as the appellant' s final product "agricultural tractors" were fully exempted with effect from 01.03.2006.
After considering the submissions made by both sides, the Bench observed -
+ We find from the impugned order that the adjudicating authority has not disputed the fact that the appellant utilized the carried forward CENVAT credit towards discharge of their duty liability in respect of goods i.e. aggregates, components and parts of tractors. This undisputed facts would mean that the appellant herein was not manufacturing only exempted agricultural tractors but was also manufacturing other products on which duty liability arises.
+ It can be seen from bare perusal of the sub-rule (11(3) of CCR, 2004) that the same will apply only in a situation where final products are exempted and lying in stock. In our considered view, the above sub-rule may not be applicable in the facts of this case which is not disputed that there is a discharge of Central Excise duty liability on the other finished products manufactured and cleared like aggregates, components & parts of tractors.
After distinguishing the case laws cited by the AR, the CESTAT held that the impugned order is unsustainable and liable to be set aside.
The appeal was allowed.
Excise & Customs : Where NIL rate of duty is based upon condition th
[2015] 61 taxmann.com 385 (Mumbai - CESTAT)
CESTAT, MUMBAI BENCH
Commissioner of Central Excise, Mumbai IV
v.
Brahans Rubber (P.) Ltd.
[2015] 61 taxmann.com 447 (CLB - New Delhi)
COMPANY LAW BOARD, NEW DELHI BENCH
Ram Saroop
v.
Hindustan Thompson Associates (P.) Ltd.
Competition Act: Where there were other players in relevant market o
[2015] 61 taxmann.com 366 (CCI)
COMPETITION COMMISSION OF INDIA
Ms. Bharti Verma
v.
Global Information Systems Technology (P.) Ltd.
INSTRUCTION NO.11/2015 [F.NO.225/187/2014-ITA-II] - SECTION 92CA OF THE INCOME-TAX ...
SECTION 92CA OF THE INCOME-TAX ACT, 1961 - TRANSFER PRICING - REFERENCE TO TRANSFER PRICING OFFICER (TPO) IN SPECIFIED DOMESTIC TRANSACTION CASES
INSTRUCTION NO.11/2015 [F.NO.225/187/2014-ITA-II], DATED 16-9-2015
Clarifications have been sought from the Board as to which authority will function as Transfer Pricing Officer ('TPO') for the purposes of determining Arms Length Price ('ALP') in respect of Specified Domestic Transactions ('SDTs') as per the provisions of section 92CA of the Income-tax Act, 1961('Act').
2. The Board has considered the matter and it is hereby clarified that such cases involving SDTs shall continue to be handled by the TPOs working under the Commissioner (Transfer-Pricing). The Board, under section 120 of the Act, has already issued Notification No.(s) 58 & 59/2014 (F.No. 187/29/2014/ITA.I) dated 03.11.2014 to this effect.
3. This may be brought to the notice of all concerned
__._,_.___
No comments:
Post a Comment