2018-TIOL-2515-HC-MUM-IT
PR CIT Vs HARDIK BHARAT PATEL: BOMBAY HIGH COURT (Dated: November 19, 2018)
Income tax - CBDT Circular No.6 of 2016
Keywords - borrowed funds - business income - share transactions
The Revenue Department preferred the present appeal challenging the action of ITAT in directing the AO to treat the profit arising on the frequent and voluminous transactions initiated with borrowed funds in shares as 'Long Term Capital Gain' instead of 'Business Income.
On appeal, the HC held that,
Whether the stand once taken by the assessee cannot be subject to change and consistently the income on sale of securities which are held as investment would continue to be taxed as long capital gains or business income as opted by Assessee - YES: HC
++ the attention of this Court is drawn to Circular No. 6 of 2016 dated Feb 29, 2016 issued by the CBDT. This circular issued with regard to the issue of taxability of surplus on sale of shares and securities, whether as capital gain or business income in case of long term holdings of shares and securities i.e in excess of 12 months. It has clarified therein that with a view to reduce litigation and uncertainty in the matter of taxibility, as long term capital gains or business income, the assessee has an option to treat the income from sale of listed shares and securities as income arising under the head 'Long Term Capital Gains', then the same shall be accepted by AO. However, the stand once taken by the assessee would not be subject to change and consistently the income on the sale of securities which are held as investment would continue to be taxed as long capital gains or business income as opted by the Assessee. The circular makes no distinction whether the investments made in shares were out of borrowed funds or out of its own funds. Thus, the distinction which has been sought to be made by the Revenue cannot override the CBDT Circular, which is binding upon it. In the said view, as the issue stands concluded in favour of assessee.
Revenue's appeal dismissed
2018-TIOL-2514-HC-MUM-IT
PR CIT Vs GODREJ INDUSTRIES LTD: BOMBAY HIGH COURT (Dated: November 24, 2018)
Income Tax - Sections 32(1) (ii a), 115JB, 143(3) & 263
Keywords - Additional depreciation on machinery - Assets used for 180 days
The assessee firm was engaged in the business of manufacturing. The assessee filed its return of income for the relevant AY declaring the total income at nil as per the normal provision of the Income tax act and Rs. 21.86 crore as book profit. The return was selected for scrutiny and the AO computed the total loss at Rs 29.83 crore.
The AO order came for revision before the CIT which set aside the order on the issue of certain depreciations and advances not added back while computing book profit. Subsequently, the AO issued notice to the assessee and restricted the claims of depreciation and disallowed additional depreciation u/s 32(1) (ii a) in respect of eligible assets put to use for less than 180 days. On assessee's appeal, the CIT (A) allowed 50% of the additional depreciation u/s 32(1) (ii a). The ITAT dismissed the appeal of the Revenue.
On hearing the Revenue's appeal, the HC held that,
Whether the assessee can claim additional depreciation on assets in the succeeding assessment year where the acquisition of asset was completed and used for less than 180 days in the previous year – YES: HC
++On perusal of the facts of the case, the assessee's claim of additional depreciation on block of assets arose from Section 32 (1) (ii a) of the Act. The second proviso to clause (ii) u/s 32(1) restricts the assessee's claim of depreciation to 50% in case, the assets are acquired by the Assessee during the previous year and put to use for the purposes of business or profession for a period less than 180 days in the said previous year,
++ and in considering the observation reached by the Karnataka HC in CIT vs Rittal India Pvt Ltd. after which by amendment, the legislature added a third proviso to clause (ii) of section 32(1) of the Act, which recognized the right of an assessee to claim the remaining 50% depreciation in subsequent year in case where machinery and plant being acquires and put to use for less than 180 days in the previous year, it was apparent even without the aid of the statutory amendment to held that remaining 50% unclaimed depreciation would be available to the Assessee in the succeeding Assessment Year.
Revenue's Appeal Dismissed
2018-TIOL-2513-HC-MUM-IT
CIT Vs DECCAN EDUCATION SOCIETY: BOMBAY HIGH COURT (Dated: November 26, 2018)
Income tax - Section 10(23C)
Keywords - charitable trust - educational purposes - exemption benefits - government grants - receipts in excess of ceiling
The assessee is a registered Public Charitable Trust running large number of educational institutions and nursing colleges in the State of Maharashtra. The Trust was established by Lokmanya Tilak and was in existence since more than 125 years. For the relevant A.Y, the assessee filed its return claiming exemption u/s 10(23C)(iiiab). The AO examined the audited accounts of assessee and in so far as the institutions which were receiving grants from the Government and those which did not receive such grants but whose total receipts were less than Rs. One Crore, the he did not disturb the assessee's claim of exemption. However, the AO noticed that there were three educational institutions run by the assessee which did not receive grant from the Government and whose total receipts exceeded Rs. One Crore during the relevant period. He was of the opinion that qua these institutions, the assessee's claim of exemption was not valid. Accordingly, he framed assessment.
On appeal, the Tribunal rejected the Revenue's contention that the assessee was not existing solely for educational purpose. The Tribunal was of the opinion that the exemption u/s 10(23C)(iiiab) was in relation to the assessee and was not specific to the institutions individually run by the Trust.
On appeal, the HC held that,
Whether an educational institution is precluded from generating reasonable surplus - NO: HC
Whether merely because, in the process of running an educational institution, surplus funds are generated, it would not disqualify the institution from being an institution existing solely for educational purpose - YES: HC
Whether when a trust satisfies the statutory requirement, the exemption provision would apply, irrespective of the fact that in isolated cases of a few institutions runs by such Trust, the requirement may not be seen to have been fulfilled - YES: HC
++ the central question is whether the exemption u/s 10(23C)(iiiab) is specific to the assessee trust or whether such exemption can be examined by further bifurcating the position of different institutions which are run by the assessee trust. The Revenue's ground that the assessee trust did not exist solely for the purpose of educational activity, needs to be recorded for rejection. It is by now well settled through various series of judgments of the Supreme Court that an educational institution is not precluded from generating reasonable surplus. Merely because, in the process of running an educational institution, the surplus funds are generated, would not disqualify the institution from being an institution existing solely for the educational purpose;
++ the provisions of Section 10(23C)(iiiab) grants exemption in relation to any income received by any person on behalf of any university or other educational institution existing solely for educational purposes and not for the purpose of profit, and which is wholly or substantially financed by the Government. This provision, thus, exempts the income received by a person on behalf of the institutions specifying the requirements of the said clause. The exemption is not relatable to the individual institution run under the common umbrella of a Trust. Therefore, if the assessee trust satisfies the statutory requirement, the exemption provision would apply, irrespective of the fact that in isolated cases of a few institutions runs by such Trust, the requirement may not be seen to have been fulfilled. Therefore, the argument of the Revenue that it should be institution specific and not the society as a whole in our opinion is not correct.
Revenue's appeal dismissed
2018-TIOL-2512-HC-MUM-IT
PR CIT Vs CREDIT ANALYSIS AND RESEARCH LTD: BOMBAY HIGH COURT (Dated: November 27, 2018)
Income tax - actual accrual of expenditure - crystallization of liability - performance related pay - scientific method
The assessee company had filed its return which included an expenditure of Rs.1.77 Crores, for which, the provision was made by the Assessee. This amount related to the performance related pay to the Director and other employees of the Company. Assessing Officer objected to such expenditure on the ground that, the liability had not crystallized. The addition made by the Assessing Officer in the order of assessment, was challenged by the Assessee before the Appellate Commissioner. On appeal, the CIT(A) deleted the addition made on account of provisions of performance related pay to director and staff. When the matter reached ITAT, the findings of CIT(A) were upheld
On appeal, the HC held that,
Whether when a liability has accrued but the computation thereof with precession, is not possible presently, the provision could be made on the basis of actuary by applying some scientific method - YES: HC
++ having perused the documents on record, the Director was entitled to the performance related pay. The payment could not be made only on account of the fact that, the approval of the board of Director of the Company, was awaited. In the meantime, Assessee made a provisions for such expenditure, claiming that the liability had crystallized. Accordingly, Assessee debited the amount in its P&L A/c. The CIT(A) and the Tribunal noted that eventually the approval of the Board of Director was granted and the payment was also made soon thereafter. Tax at source was deducted while making such payments. The Tribunal, therefore, concluded that the liability to make payments had crystallized. The payments could not made only because approval of the Board of Directors, was not forthcoming;
++ this Court finds no error in the view of the Tribunal. The principle that when a liability has accrued but the computation thereof with precession, is not possible presently, the provision could be made on the basis of actuary by applying some scientific method or procedure, is well established principle. In the present case, in fact, the facts are even better. Not only that the liability had crystallized, the computation thereof was also readily available. Payment could not be made simply, because, the approval of Board of Directors which was necessary, was awaited. The liability had thus, crystallized. On the principle of accrued liability, the Assessee was well within its right to claim the expenditure.
Revenue's appeal dismissed
2018-TIOL-2511-HC-MUM-IT
CHERYL J PATEL Vs ACIT: BOMBAY HIGH COURT (Dated: November 26, 2018)
Income tax - affirmation by appellate authority - application of mind - consideration of submissions - reasoned order
The assessee, an individual, had preferred the present appeal challenging the action of ITAT in dismissing the assessee's appeal by merely recording that it had accepted the opinion of the CIT(A).
On appeal, the HC held that,
Whether an appellate order which affirms the order of lower authority, must indicate due application of mind to the contentions raised by asseseee in the context of findings of lower authority which were the subject matter of challenge - YES: HC
++ it is found that while discussing various issues, the Tribunal has not given any independent reasons showing consideration of the submissions made on behalf of the assessee. This Court is conscious of the fact that an appellate order which affirms the order of the lower authority need not be a very detailed order, nevertheless, there should be some indication in the order passed by the appellate authority, of due application of mind to the contentions raised by the asseseee in the context of findings of the lower authority which were the subject matter of the challenge before it. In view of the same, the interest of justice would be served if the order is quashed and set aside and the appeals are restored to the Tribunal for fresh consideration.
Case remanded
2018-TIOL-2510-HC-MUM-IT
CHEMITO TECHNOLOGIES PVT LTD Vs ACIT: BOMBAY HIGH COURT (Dated: November 27, 2018)
Income tax - Section 37
Keywords - acquisition of trademark - nexus with business
The assessee company under an agreement, paid sum of Rs.60 lakhs to the GVF, out of which, sum of Rs.50 lakhs was stated to have been paid for the purposes of acquiring a trademark "Global Pagoda". The remaining amount of Rs.10 lakhs was paid for the purpose of the meditational activities and training imparted by GVF to the employees of the assessee company. Though, the Department accepted the assessee's claim of deduction in relation to the payment of Rs.10 lakhs but disputed the rest. Ultimately, issue reached the Tribunal, wherein it was held that no expenditure of any kind upon the employee of the assessee was shown before any authority. The ITAT further opined that the assessee might pay any amount of anyone but the relevancy with the business was liable to be viewed, and hence upheld the views of lower authorities.
On appeal, the HC held that,
Whether expenditure incurred for acquisition of trademark does not deserve to be allowed in the absence of its nexus with the business activities of concerned taxpayer - YES: HC
++ from the material on record, it can be seen that two Revenue authorities and the Tribunal, concurrently came to the conclusion that, Assessee failed to establish the connection between the expenditure and its business activities. It is further found that, there is nothing on record to suggest that trademark in question, had any marketable value and that the assessee had used said trademark for purpose of its products. This Court is also informed that the assessee company is engaged in the business of manufacturing scientific instruments. The issue is purely factual. No question of law therefore, arises.
Assessee's appeal dismissed
2018-TIOL-2509-HC-KERALA-IT
CANON GRANITES PVT LTD Vs DCIT: KERALA HIGH COURT (Dated: October 30, 2018)
Income tax - interim stay - pre deposit condition - prosecution of company
The assessee is a granite trader. For the A.Ys 2011-2012, 2013-2014 and 2014-2015, it had faced high pitched assessment proceedings. When the assessee took the matters in appeal, a conditional order was passed directing the assessee to pay 15% of the demand for having further proceedings stayed. This came to be challenged by pointing out that though the Company had been an assessee since 2002, it had faced no scrutiny. Later on in 2011, the Company's Director complained to the CBI about the demands by certain officials of the Income Tax Department for illegal gratification. Acting on the complaint, the CBI laid a trap and and registered crimes against a few officials. It was therefore explained that this action of the company was the reason why the Department had been after the Company.
The counsel for assessee admitted that the precondition for paying 15% of the disputed tax per se could not be termed illegal. But, then, according to him, the pre-condition must be viewed in the backdrop of the Company's complaint and the Departmental determination to persecute the Company.
On Writ, the HC held that,
Whether the quantum of conditional pre-deposit can be reduced in peculiar cases deserving an exception - YES: HC
++ this Court as well as the Supreme Court has time and again reiterated the well-settled legal principle: discretion by a competent judicial or quasi-judicial authority calls for no interference unless it suffers from perversity or gross illegality. Here, viewed in isolation, the conditional orders in these writ petitions are unexceptional: the condition of 15% pre-deposit is reasonable. But the issue here needs to be viewed in the backdrop of the proceedings that preceded. Strange or fortuitous as it may seem, until 2011 the Company had never been subjected to scrutiny. Then, from that year onwards it has never been let go of. Indeed, the CBI registered crimes on the Company's complaint and those crimes are in progress. The Company entertains a notion - may be ill-founded - that it has been victimized and subjected to high pitched, repeated assessments;
++ it is therefore seen that a citizen has complained about a crime: the crime of graft. An organisation like CBI has registered a crime after laying the trap. Perhaps accidentally, though, the company that complained has been in the departmental crosshairs ever since. As the counsel has put it, the conditional stay in an appeal is only an interim arrangement. The repeated assessments and the preconditions may have left the Company with the feeling of victimization. Its Directors have opened their mouth against the graft or alleged graft in the Department. Normally, it pays to complain. Here, the complainant is, it seems, made to pay. So the Department could have taken a lenient view to inspire confidence in the Company that it need not end up as a victim only because it has pointed out a flaw in the system, as it were. Therefore, first, the pre-condition of the assessee's depositing 15% demanded tax can neither be termed perverse nor illegal. Yet, it is a peculiar case that deserves an exception. So, the amount of pre deposit stands reduced to 5% per each assessment year. Once the Company pays 5% of the demanded tax, the appellate authority will hear the appeals on merits, with no further coercive steps until the adjudication completed.
Case disposed of
2018-TIOL-2508-HC-MUM-CUS
CC Vs ALANKAR SHIPPING AND CLEARING PVT LTD: BOMBAY HIGH COURT (Dated: October 31, 2018)
Cus - Customs House Agency Licensing Regulations, 1984 - (a) Whether the CESTAT is right in law in setting aside the order of cancellation of the CHA Licence after holding that there is a violation of Regulation 14(d) of the CHALR, 1984 by the CHA? (b) Whether CESTAT, which is a creature of the Statute, is vested with the jurisdiction to grant relief by taking a lenient view, the power for which does not come out of the parent enactment? (c) Whether the findings of the CESTAT that there are no violations of Regulation 14(a) and 14(l) of the CHALR, 1984 by the CHA are based on no evidence or partly relevant or partly irrelevant evidence and are otherwise perverse and arbitrary? (d) Whether CESTAT can ignore that a penalty of Rs.5 lakhs under section 112(b) of the Customs Act, 1962 was imposed on the CHA by Commissioner of Customs (Preventive), which was reduced to Rs.2 lakh by the CESTAT itself vide its order No.A/963-66/99-NB(DB) dated 29.10.1999, which was upheld by Apex Court, thereby confirming the involvement of the CHA in the case ?
Held: In the case of Interport Impex P. Ltd. - 2016-TIOL-2935-HC-MUM-CUS and Ajay Clearing Enterprises - 2016-TIOL-694-HC-MUM-CUS, this Court has held that the Tribunal in taking a liberal view had not exercised its discretion arbitrarily or capriciously and its order could not be termed as perverse or vitiated by any error of law apparent on the face of the record - this Court, like in the present case, held that the loss already suffered from the date of revocation till the date of the impugned order of the Tribunal was sufficient and no further revocation of licence was warranted - hence, this Court does not find that the impugned order has in the facts and circumstances of the present case taken a view which is in any manner perverse and/or arbitrary - this Court, accordingly, answers question (a) in the affirmative i.e. in favour of the assessee and against the Revenue - question (b) has already been answered by the Supreme Court in the case of K.M. Ganatra - 2016-TIOL-13-SC-CUS, where the Supreme Court has held that the Tribunal has power under the CHALR to modify the order of the Commissioner by taking a lenient view and restricting the period of revocation - the Revenue does not dispute this position and hence this question stands answered in the affirmative in favour of the Assessee - the two statements on behalf of the importers i.e. the statements of Shri Bhavesh Gandhi had endorsed the authorisation of the Respondent as CHA - hence, this finding of the Tribunal on the evidence and material on record viz. that the Respondent has established its authorisation as Customs House Agent on behalf of the importers and, therefore, violation of Regulation 14(a), cannot, in any manner be held to be perverse and/or arbitrary - the Tribunal found that the alleged violation on the part of the Respondent in not preparing or presenting documents to the Customs Authorities strictly in accordance with the Rules and orders relating thereto to have not been proved - this view taken by the Tribunal that the Respondent is not guilty of the charge of having violated Regulation 14(l) of the 1984 Regulations is a possible view taken by the Tribunal on the evidence and material on record which cannot be held to be in any manner perverse and/or arbitrary - accordingly, question (c) is answered in the negative i.e. in favour of the Assessee and against the Revenue - with regard to question (d), both the parties submitted that this substantial question of law does not arise from the impugned order of the Tribunal - accordingly, the Revenue did not press this question of law - in the above view, questions (a), (b) and (c) are answered in favour of the Respondent-Assessee and against the Appellant-Revenue - question (d) is dismissed as not pressed by the Appellant - accordingly, the Appeal is dismissed : HIGH COURT [para 11, 12, 13, 15, 16, 17, 18]
Appeal of Revenue dismissed
2018-TIOL-2507-HC-MUM-IT
PR CIT Vs ADAR CYRUS POONAWALLA: BOMBAY HIGH COURT (Dated: November 19, 2018)
Income tax - business venture - sale of shares - short term capital loss - set off of capital gains
The assessee is an individual. For the A.Y 2007-08, he filed the return which was taken in scrutiny by the AO. During the such scrutiny assessment, the AO noticed two transactions; the first one was the sale of shares by the assessee of one City Park Pvt Ltd. The said company had allotted 6,66,333 shares to Shri. Cyrus S. Poonawalla i.e., assessee's father on par @ Rs. 10/- per share. Remaining 667 shares were allotted to him later on. All these 6,67,000 shares were received by assessee as a gift from his father. The assessee sold the said shares during the period relevant to the assessment year under consideration. During the same period, the assessee entered into another transaction namely purchasing and sale of HCL Technologies Ltd for a total consideration of Rs. 29.36 Crores. Later on, HCL Technologies announced bonus issue of shares in the ratio of one share for every one share held. The assessee, accordingly, received equal number of bonus shares. Later on, the assessee sold 4,71,517 shares of HCL Technologies for a consideration of Rs. 14.28 Crores. This resulted into a loss of Rs. 15.01 Crores which the assessee claimed as short term capital loss. The assessee claimed to set off the capital gain earned in the process of sale of shares of City Part Pvt Ltd against the capital loss suffered by him in the process of sale of the shares of HCL Technologies. The Revenue objected to this claim of assessee mainly on the ground that both the transactions were in the nature of assessee's business transactions, and were solely entered in order to avoid tax liability.
On appeal, the CIT(A) held that the first of the transaction of the assessee i.e sale of shares of City Parks Pvt Ltd was not a business transaction, however, he ruled to the contrary in respect of the transaction in the case of HCL Technologies. The Tribunal allowed the assessee's appeal essentially holding that neither of the two sets of transactions were in the nature of business venture. According to the Tribunal, the assessee was not in the business of buying and selling shares and therefore, the assessee's claim for set off or loss against the gain was permissible.
On appeal, the HC held that,
Whether when taxpayer had claimed set off of loss against the gain in sale of shares, the Department cannot frown upon the same by pointing out that in such process, taxpayer had reduced his tax liability - YES: HC
++ the entire issue hinges on the question whether the transactions in question were in the nature of business transactions or holding of shares by the assessee was purely in the nature of investment. Surely, the Revenue cannot object to legitimate tax planning. Legitimately, if the assessee had claimed set off of loss against the gain in sale of shares, the Revenue cannot frown upon the same simply by pointing out that in the process, the assessee reduced his tax liability. The Tribunal has examined both the transactions extensively. With respect to the first transaction of sale of shares in City Parks Pvt ltd., the Tribunal noted that the shares were gifted by his father who himself had held the shares as investment. The company was unlisted Pvt Ltd Company. There was no material on record to suggest that the assessee had entered into the business venture in the process. Likewise in the second transaction also, the Tribunal noted that the Revenue has, in the preceding and succeeding assessment years, accepted, the sale of shares by the assessee as investment and the proceed was treated as capital gain. With respect to HCL Technologies, when the assessee sold the bonus shares in the later year, the Revenue treated the gain as capital gain. This Court is in agreement with the view of the Tribunal.
Revenue's appeal dismissed
2018-TIOL-2506-HC-KAR-IT
CIT Vs ACER INDIA PVT LTD: KARNATAKA HIGH COURT (Dated: November 19, 2018)
Income tax - Section 80IB
Keywords - deduction u/s 80IB - eligible profit - interest income
The Revenue Department preferred present appeal challenging the action of ITAT in holding that the interest income of Rs.25,83,813/- had to be included in the eligible profits for computing deduction u/s 80IB when the interest income was not derived from the eligible business, contrary to the decision of Apex Court in 262 ITR 278 - 2003-TIOL-51-SC-IT and 317 ITR 218 - 2009-TIOL-100-SC-IT.
On appeal, the HC held that,
Whether interest income would constitute independent source of income beyond the first degree nexus between profits and the industrial undertaking, and hence does not fall within the expression "profits derived from industrial undertaking" u/s 80-IB - YES: HC
++ the issue under appeal stands covered by the judgments of Supreme Court in the case of PANDIAN CHEMICALS LTD., vs. COMMISSIONER OF INCOME TAX - 2003-TIOL-51-SC-IT and LIBERTY INDIA LTD., vs. COMMISSIONER OF INCOME TAX - 2009-TIOL-100-SC-IT. Following the said judgments, this issue stands answered against the assessee.
Revenue's appeal partly allowed
2018-TIOL-2505-HC-MUM-IT
ACC REAL ESTATE AND DEVELOPERS Vs ACIT: BOMBAYHIGH COURT (Dated: November 19, 2018)
Income tax - Section 145
Keywords - accrued income - mercantile system of accounting
The assessee is a partnership firm engaged in the business of land development. As part of its business, the assessee entered into an agreement for development of land with the owners thereof, admeasuring 31 acres situated at Hadapsar, for total consideration of Rs.4.75 crores. Thereafter, assessee executed a Deed of Assignment assigning all its rights and interest in respect of the said land in favour of one M/s Sahastrajeet Reality Private Limited for consideration of Rs.12.44 crores. For the A.Y 2007-08, the assessee offered a sum of Rs.2.44 crores by way of tax, crediting such sum to its P&L A/c. The balance of Rs.10 crores was received during the period relevant to the A.Y 2008-09 and 2009-10 and was offered to the tax as its business income. The assessee contended that for the said project, the assessee had followed the cash system and offered the income to tax on actual receipt basis. The return for the said A.Y 2007-08 was taken in scrutiny by the AO, who then taxed the entire income during the said year on accrual basis. The appeal challenging such assessment, came to be dismissed.
On appeal, the HC held that,
Whether taxpayer is permitted to choose to follow mercantile system for all other projects and make a departure only for one of the projects by changing the system of accounting - NO: HC
++ it is undisputed that the assessee except for the project in question had been following the mercantile system of accounting. The Tribunal has recorded that the assessee has been regularly following mercantile system of accounting and that there has been no change in the method of accounting. Further, for the rest of the projects also the assessee made no change in its accounting system. In other words, it was only for the limited purpose of the present project that the assessee adopted the cash system. Sectios 145(1) provides that income payable under the head "profit and loss account of business" and income from other source shall subject to the provisions of Subsection 2 be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. In terms of this provision, therefore, the choice of the assessee would be either of following mercantile or cash system of accounting. The assessee, however, cannot choose to follow mercantile system for all other projects and make a departure only for one of the projects by changing the system of accounting. The Tribunal, therefore, correctly held this issue against the assessee;
++ therefore, the assessee was bound to follow the mercantile system of accounting and offer the income to tax on the basis of accrual and not actual receipts. The assessee, however, argued that the assignment under which such accrual arose itself was invalid and therefore, it cannot be stated that accrual of income crystallized till the Urban Land Ceiling Act was repealed and sale deed was executed. There are many short-comings of this contention of the assessee. Firstly, the assessee had claimed to have acquiesced certain rights in the property in question by way of assignment. Further, even when the Urban Land Ceiling Act was still in forced, such rights the assessee desired to pass on to the assignee for which the deed of assignment was executed. The assessee had never questioned such deeds. In fact, once ULC Act was repealed, such arrangement was finalised. Further, whatever be the nature of the agreement and accrual of rights in favour of the purchaser of the land or the assignor or the assignee the assessee never argued that its right to receive the consideration was under jeopardy. Under the assignment agreement itself there was specific mention of transfer of rights in the property in lieu of which the assignee would pay agreed sum to the assessee.
Assessee's apppeal dismissed
2018-TIOL-2504-HC-MAD-CX
SHREE AMBIKA SUGARS LTD Vs JOINT SECRETARY: MADRAS HIGH COURT (Dated: October 04, 2018)
CE - Rebate claims of excise duty and sugar cess paid on white sugar filed by the petitioners, in terms of rule 18 of Central Excise Rules, 2018, rejected.
Held: When the export is not disputed by the revenue, the rebate claim cannot be rejected on the ground of procedural infractions - if documents are rejected on the ground of impossibility of correlation, mala-fide on the part of the applicant has to be established by the Department to reject the rebate claims - the issue of eligibility of sugar cess as rebate is no more res integra - the decision in the case of TVS Motor Co. Ltd. - 2015-TIOL-1478-HC-KAR-CX squarely applies to the instant case - in the circumstances, the ends of justice will be met if the case is remitted back to the original authority for fresh consideration in the light of the observations made in this order after giving opportunity of hearing to the petitioners and to file documents to establish their claims - Writ Petitions are allowed on the above terms : HIGH COURT [para 8, 9, 11]
Matter remanded
2018-TIOL-2503-HC-MUM-IT
PR CIT Vs PETER SAVIO PEREIRA: BOMBAY HIGH COURT (Dated: November 26, 2018)
Income tax - Section 54
Keywords - allotment of flats - exemption benefit - investment in residential property
The assessee is an individual. He owned 75% share in a residential property called "Violet Valley" situated at Bandra, Mumbai, and remaining 25% share was that of his sister. During the relevant year in question, the said property was sold for a consideration of Rs.3.05 crores in cash. The purchaser additionally agreed to provide three flats of specified carpet area and three parking spaces in the same scheme which was part of the consideration that the sellers would receive from the purchaser. Thereafter, in his return, the assessee adopted the fair market value of property as on 1st April, 1981 at Rs.35,00,000/- and also claimed exemption u/s 54 pointing out that the allotment of the flats was in the nature of investments in new residential property. The AO however did not accept the assessee's claim noticing that the assessee had not included the value of flats towards the total sale consideration received by the assessee. Upon being so pointed out, the assessee had also agreed to include the price of flats as part of the sale consideration received by him upon sale of the immovable property. The issue eventually reached the Tribunal, where it was held that the exemption could not be denied to the assessee.
On appeal, the HC held that,
Whether allotment of flats out of the sale consideration received from sale of old property, amounts to investments in new residential property, for the purposes of exemption u/s 54 - YES: HC
++ the Tribunal notices that the assessee had received sale consideration partly in cash and partly in form of new flats to be constructed and to be allotted to the assessee. The Tribunal, therefore, correctly came to the conclusion that the assessee's investment in such new flats amounts to investment for acquisition of new residential house. The Tribunal, therefore, correctly held that the AO was not justified in disallowing the exemption u/s 54. No question of law arises.
Revenue's appeal dismissed
2018-TIOL-2502-HC-MAD-IT
LS BHIKAM CHAND JAIN Vs ITO: MADRAS HIGH COURT (Dated: November 13, 2018)
Income tax - cost of construction - fixation of quantum - reasoned decision
The assessee company had filed its return claiming expenditure incurred on cost of construction to the tune of Rs.38,00,000/-. The AO however fixed the cost of construction at Rs. 89,64,700/- while completing the assessment. On appeal, the CIT(A) reduced it to Rs.55,99,821/-. When the matter reached Tribunal, the cost of construction was fixed at Rs.70,00,000/-.
On appeal, the HC held that,
Whether the Tribunal being a quasi judicial authority, must assign reasons while determining quantum of an expenditure, rather than simply stating it to be fair & reasonable - YES: HC
++ it is found that CIT(A) has worked out the cost of construction, taking into consideration the valuers report as well as the cost mentioned in the agreement entered into between the assessee and the contractor and ultimately after granting rebate for self supervision and procurement of materials at 5%, estimated the cost of construction at Rs.55,99,821/-, as against the cost admitted by the assessee at Rs.38,00,000/-. However, the Tribunal without assigning any reasons has fixed the cost of construction at Rs.20,00,000/- by stating that it would be fair and reasonable to determine the value at that rate. The Tribunal failed to consider the correctness of the order passed by CIT(A) but faulted the AO;
++ in the considered view of this Court, the Tribunal ought to have assigned reasons as to why it was of the opinion that Rs.70,00,000/- should be fixed as the construction of the hotel building. It is not sufficient to just state that it would be fair and reasonable. Why such value is fair and reasonable should be disclosed and it should be manifest on the face of the order. Faced with this situation, the appeals filed by the assessee are partly allowed and the cost of construction fixed by the CIT(A) is rounded off and fixed at Rs.60,00,000/-.
Assessee's appeal partly allowed
2018-TIOL-2501-HC-MAD-IT
THE KODUMUDI GROWERS CO-OPERATIVE BANK LTD Vs ITO: MADRAS HIGH COURT (Dated: November 01, 2018)
Income Tax - Sections 80-P(2) & 80- P(2)(c)(ii)
Keywords - Income from sale of PDS - Fair price shop - Co-operative credit society
The assessee is a co-operative society providing credit facilities to its members. The assessee filed its income returns for the relevant AY claiming deductions u/s 80 P (2) (a) from the sale of public distribution system. The AO on assessment disallowed the deductions claimed holding that the income earned from the fair price shops could not be treated as income from banking activities.
The Assessee appeal before the CIT (A) was dismissed. The appeal was brought before the ITAT which confirmed the order passed by the AO and the CIT (A).
On assessee's appeal, the HC held that,
Whether income from the sale of PDS under the direction of the state government by a credit society is deductible u/s 80-P(2)(c)(ii) of the Income Tax Act, 1961 – YES: HC
++The assesse set up the fair price shops pursuant to the direction issued by the Government of Tamil Nadu. Therefore, the activity of the assessee in the sale of items under the PDS to its members falls within the ambit of a 'credit society' defined under Section 2(13) of the TNCS Act, 1983. Further, on perusal of the clauses (a) and (b) of by-law No. 3 of the assessee dealing with the activities of the society, the activity of establishing a fair price shop falls within the scope of By-law No.3(b)(2) and the directives issued by the Tamil Nadu Govt., were binding on the assessee. Hence, it cannot be said that the appellant carried on an activity, which was not authorized to be conducted by a credit society,
Assessee's Appeal Allowed
2018-TIOL-2500-HC-KAR-CUS
KELSI KATTE MAHAMMED SHAKIR Vs SUPERINTENDENT OF CUSTOMS: KARNATAKA HIGH COURT (Dated: September 26, 2018)
Narcotic Drugs and Psychotropic Substances Act, 1985 [NDPS Act] - Petition filed by the petitioner-accused under section 439 of Cr.P.C. praying to release him on bail for the offences punishable under sections 9 and 23 of NDPS Act and under sections 114 and 135 of the Customs Act, 1962.
Held: At this pre-mature stage, it cannot be held that the accused-petitioner was not having any mens-rea at the time, when he was carrying the bag - it is well settled principle that no mini trial be held while considering bail application - the Standing Instruction 1.18 of the Narcotics Control Bureau mandates that the Narcotics Control Bureau should have the chemical examination done within 15 days from the date of submittal of the sample - in the absence of chemical analysis test as contemplated under the Instruction, though the seized article is considered to be Hashish as per the kit report, it cannot be considered and in that light, the accused-petitioner is having a right to be enlarged on bail by imposing some stringent conditions - due to lapse on the part of the department in not getting the report, the benefit of bail has to be extended to the accused-petitioner and in that light, the petition is allowed - the accused-petitioner is enlarged on bail subject to the following conditions (1) t he accused-petitioner shall execute a personal bond for a sum of Rs.5 lakhs with two local sureties for the like sum to the satisfaction of the jurisdictional Court (2) he shall not leave the country and he should surrender his passport if it is not already surrendered to the jurisdictional Court (3) he shall not tamper with the prosecution evidence in any manner (4) he shall not indulge in similar type of criminal activities and (5) he should be regular in attending the trial - if he fails to attend the trial, prosecution is having liberty to apply for cancellation of bail : HIGH COURT [para 10, 16, 17]
Criminal Petition allowed
2018-TIOL-2499-HC-MUM-IT
HDFC BANK LTD Vs ACIT: BOMBAY HIGH COURT (Dated: November 22, 2018)
Income tax - Writ - adjustment of refund - income tax dues - undue delay in rectification
The assessee, a banking company, had preferred the present petition pointing out that the bank's refund for the A.Y 2010-11 was adjusted in part against the alleged tax dues of the bank principally for the A.Ys 2008-09 and 2012-13. The bank pointed out to the Competent Authority that High Court by an order, had stayed the assessment for the A.Y 2008-09. A few months later the adjustment of dues for the assessment year 2008-09 came to be dropped by the Authority. With respect of A.Y 2012-13, case of the assessee was that the CIT(A) had already granted substantial reliefs to the assessee and therefore, tax demand for the said year would not survive. The AO gave effect to the appellate order after a long time. Pursuant to such order, even the demand for the A.Y 2012-13 which was sought to be adjusted against the assessee's refund came to be wiped out. Consequentially, the assessee's main grievance no longer survived. The counsel for assessee however, submitted that the authorities had taken unduly long time to correct the position.
On Writ, the HC held that,
Whether it is expected from the Revenue Officers to not delay the refunds payable to the taxpayers without any justifiable reasons - YES: HC
++ this Court is conscious that the Revenue Authorities are under considerable pressure of work and time limits staring at the face. This Court also understand that the Government machinery and the Government Officers need to be cautious when the question of large amount of refund arises. Internal checks and verifications must be unbuilt in the system. Nevertheless it is expected that the Officers do not act insensitively and without justifiable reasons delay the refunds giving rise to dissatisfaction and at times need less litigation. However, in the affidavit in reply, the Dy CIT has in addition to explaining the reason for some delay in correcting position vis-a-vis the A.Y 2008-09, has tendered apology to the Court and also to the assessee. Therefore, this case stands disposed of accordingly.
Case disposed of
2018-TIOL-3628-CESTAT-DEL
JV INDUSTRIES PVT LTD Vs CCE: DELHI CESTAT (Dated: May 25, 2018)
CE - Appellants are in appeal against O-i-Os confirming the proposed demand along with penalty, arising from the same set of investigation on the allegation mainly that the appellants M/s.J.V.Industries (P) Limited [JVIPL], Delhi and M/s.Ganpati Rolling Pvt. Limited [GRPL], Delhi have diverted copper cathodes (inputs) to M/s.JMW India Pvt. Limited [JMWIPL], Jammu during the period in dispute being 2006-07 and 2007-08 - further, copper scrap purchased from market without bills was utilised by JVIPL for their own use and further JMWIPL obtained fake purchase invoices of copper scrap from various scrap dealers to balance their records and the said purchase transaction was rejected by the Commissioner - based on the aforementioned allegation, different SCNs were issued and the demands were confirmed
Per : Member (Judicial)
Held: Revenue has relied on both the statements of Shri Shivji Gupta [SG], Production Manager of JVIPL, dated 26.3.2008 and 30.8.2010 (both are RUD) - in his subsequent statement as well as during cross-examination, SG has stated that JVIPL have used copper cathode for manufacture of ingots - this statement of fact prevails in view of the provisions of section 9D of the Central Excise Act - the Commissioner has selectively relied upon the statement of SG, which is against the provisions of law - in the facts and circumstances, no reliance can be placed on the uncorroborated statement of SG dated 26.3.2008 [para 28]
Whether JVIPL was having the necessary infrastructure to manufacture copper ingots or rods from copper cathode - SG, in his statement dated 30.8.2010, has explained the manner in which the copper cathode was cut to 2-3 pieces before feeding the same in the furnace - the Commissioner has relied upon the statement of one Shri V.K.Mittal-Partner of M/s.Veekay Gen. Industries, who, in his statement dated 8.9.2010, has stated that copper cathodes cannot be cut into pieces by using hand Cutter or through hand operated scissors because of its thickness and hardness - the said statement of Shri Mittal cannot be relied upon, as both JVIPL and GRPL had requested for cross-examination of Shri Mittal and the Revenue failed to produce their witness for cross examination - as regards the allegation of less burning loss at JMWIPL-Jammu and comparatively more burning loss at JVIPL-Delhi, it is noticed that it is admitted fact that JMWIPL-Jammu have a closed furnace, whereas the furnace of JVIPL- Delhi is an open furnace - it is an admitted fact that burning loss is bound to be more in open furnace - thus, the allegation in the SCN, regarding capacity to utilize copper cathode by JVIPL is not tenable [para 29]
The next ground/contention of the Commissioner for denying cenvat credit on copper cathode is that the trading unit of JMWIPL, at Delhi had shown fake purchase of non-duty paid rejected copper scrap and copper cathode during the period, from six firms located in the State of Rajasthan and two firms located at Delhi - there is no co-relation with regard to copper scrap/cathode purchased from the trading firms by JMWIPL, with availing of cenvat credit by JVIPL and GRPL on the copper cathode sourced from Hindalco and Sterlite - the Commissioner, Jammu, vide enquiry report dated 24.5.20110, has given a detailed report stating that the Jammu unit was having instruments/machinery to melt copper scrap, copper ingots and copper cathode - it is further stated that Jammu unit had purchased and received copper scrap from open market and the same was also/transferred from JMWIPL - trading unit Delhi - the receipt of copper scrap is also certified by entries in the goods received register/import register maintained by the Jammu unit - the Commissioner, Delhi, has ignored the factual report received from Commissioner, Jammu, for no good reason only based on the earlier statement dated 26.3.2008 of SG [para 30]
Another reasoning which has been given by the Commissioner is that the plant and machinery installed at JMWIPL-Jammu was capable for operating on copper cathode of LME grade A alone for manufacture of Oxygen free copper wire rods - it was, therefore, established that JMWIPL-Jammu was using illegally diverted copper cathodes purchased by JVIPL and GRPL during 2006-07 and 2007-08 - the Bench does not agree with these findings rendered by the Commissioner - firstly, there is no evidence except for uncorroborated statement of SG to this effect, the evidentiary value of which has already been discarded - secondly, the enquiry report of Commissioner of Central Excise, Jammu, clearly states that appropriate machinery was installed in the factory of JMWIPL-Jammu to melt copper scrap, copper ingots and copper cathode - thirdly, the department did not prove that if JVIPL and GRPL had diverted copper cathode, how they were able to manufacture their finished goods [para 31]
The Bench, is, therefore, of the view that findings of the Commissioner on the above issues are not sustainable - it is further found that JVIPL had purchased copper cathodes from Hindalco and Sterlite during the disputed period for which they had paid through banking channels - most of the copper cathodes was used in the manufacture of copper ingots - similarly, GRPL had purchased copper cathode from the same suppliers for which they have made payments through banking channels during the disputed period - this quantity was sent for conversion into copper ingots on job work basis - no evidence has been brought on record to prove that there has been any flowback of cash to them - no evidence has been brought on record that both JVIPL and GRPL had procured some alternative raw material, in order to manufacture finished goods - it has never been the case of Revenue, that the copper scrap which was purchased by JMWIPL-Jammu, was diverted to either JVIPL or GRPL - no statement of any of the drivers of the vehicles who had transported the copper cathodes, were recorded to find out the place where the copper cathode was unloaded - the entire quantity of copper cathodes was entered in the statutory records of both JVIPL and GRPL - there is nothing on record to show that these statutory records were false or incorrect in any manner - there is no dispute on the quantum of manufacture of finished goods by JVIPL on their own behalf or on behalf of GRPL, and/or quantum of payments of Central Excise duty, on the said finished goods - no credible evidence has been brought on record to prove that JVIPL and GRPL had diverted the copper cathode to JMWIPL-Jammu - consequently, the duty demand and penalty confirmed by the Commissioner both against JVIPL and GRPL are set aside - since the entire duty demand has been set aside, penalties against the other appellants are also set aside - both JVIPL and GRPL have also raised the issue, that the duty demand in the present case is barred by time - since the appeals are allowed on merits, the issue of time bar is kept open [para 32, 33, 34, 35, 36]
JMWIPL
In the SCN issued to the JMWIPL, it has been alleged that the appellant had indulged in receipt of copper cathode which were diverted by JVIPL and GRPL, by showing the same as copper scrap in their records, only to avoid taking of cenvat credit on the said copper cathodes with an intent of availing of erroneous refund under notification no.56/2002-CE dated 14.11.2002 - the Commissioner, vide impugned order, has confirmed the demand and imposed equal amount of penalty
Per : Member (Judicial)
Held: It has already been held while dealing with the appeal filed by JVIPL and GRPL and others, that there was no credible evidence on record that JVIPL and GRPL had diverted the copper cathode to JMWIPL-Jammu - the Commissioner of Central Excise, Jammu in his enquiry report dated 24.5.2010 had categorically observed that during investigation it was found that JMWIPL-Jammu had the necessary infrastructure/machinery to melt copper scrap/copper ingots and copper cathodes - this portion of the enquiry report has not been doubted or questioned by the Commissioner in the impugned order - the Commissioner has recorded adverse findings with respect to the purchase of copper scrap and rejected copper cathode by holding that the said purchases were shown to have been made from non-existent parties - however, it is found that the copper scrap/copper cathode was received by JMWIPL-Jammu on the strength of invoices of suppliers, which bore TIN (Sales - Tax) numbers of the said suppliers - in face of this documentary evidence it cannot be held that JMWIPL-Jammu never received any copper scrap in their unit and instead received diverted copper cathodes - from the cross examination of Shri P.K.Saxena, General Manager of JMWIPL- Jammu, it is evidently clear that plant and machinery installed at JMWIPL-Jammu was capable to melt copper scrap apart from use of copper cathode - evidence on record clearly supports that plant and machinery installed by JMWIPL-Jammu was duly equipped to use copper scrap as one of their raw material and that they have actually received and used the quantities of copper scrap as reflected in their statutory records - it has already been held that JMWIPL-Jammu had duly received copper scrap in their factory during the financial year 2006-07 and 2007-08 - admittedly, no cenvat credit was available to JMWIPL on the quantities of copper scrap which they had purchased from the open market - once it is found that no cenvat credit was available to the quantities of non-duty paid copper scrap, JMWIPL-Jammu did not violate any condition of para 1A of notification no.56/2002-CE - the impugned order proceeds on the basis that JMWIPL-Jammu had used the said diverted quantities of copper cathodes, and the benefit of notification no.56/2002-CE has been denied on the said reasoning - once it is held that there was no diversion of copper cathodes, the findings of the Commissioner can't be sustained - JMWIPL-Jammu have also contended that they were granted refund, as self credit of duty, under notification no.56/2002-CE by the jurisdictional Assistant/Deputy Commissioner of Central Excise by passing appealable orders - the jurisdictional Assistant/Deputy Commissioner sanctioned/determined the amount of refund to be taken by way of self credit, after proper application of mind and by passing adjudication order - the Bench, therefore, agrees with the submission of JMWIPL-Jammu that the said orders had attained finality as these orders were never reviewed - hence, the department could not issue SCN for the recovery of the same for which appealable refund orders were passed - in view of the above, impugned order set aside and appeal allowed - JMWIPL has raised the issue of demand being hit by time bar - since the appeal is being allowed on merits, this Court is not required to go into the issue of time bar [para 42, 50, 52, 53, 54, 57, 58, 59, 60]
To sum up : (i) both the impugned orders are set aside (ii) all the appeals allowed (iii) ground of limitation (invocation of extended period) is left open [para 61]
Per : Member (Technical)
Held - (i) the various statements and the deposition during cross-examination of SG formed the main basis in the submissions made by the appellants as well as analysis of the Member (Judicial) - it is not a general rule that if a person gives a different version at the time of cross-examination the same shall automatically over-rule the earlier statement given by the same person - the Original Authority has to examine the full basis starting from the first statement up to the outcome of cross-examination and also collate the facts revealed in such deposition with corroborative evidence in order to arrive at a finding (ii) a clear finding on the capacity or infrastructure of JVIPL to manufacture copper ingots/rods using copper cathode has to be arrived at independently even without reliance on the statement of Shri V.K. Mittal (iii) one of the serious allegations in the proceedings against the appellants is regarding bogus purchase of copper scrap by the Delhi trading unit of JMWIPL - perusal of appeal records and the impugned order reveals enough evidence regarding such improper documentation, non-existing sellers/vehicles and other corroborative evidences (iv) enquiries made with the commercial tax check post, Lakhanpur on the route to Jammu revealed that one of the consignments were physically verified by the authorities and found to be not copper scrap but actually copper cathodes (v) while there are serious allegations of diversion of Cenvat credit availed raw materials and substitution of items by scrap, it is necessary for a careful analysis the evidences and contest made by the appellants on such evidences - what is required is a more comprehensive and detailed finding by the Original Authority on each one of the points raised by the appellant - the evidences collected with reference to various transport vehicle/ transporters also require for close examination and a detailed finding - the issue of burning loss also requires a clear analysis and finding - there is a prima facie case against the appellants and the matter requires re-adjudication by the Original Authority after considering all the submissions, pointwise, made by the appellants on various issues - it is found fit and proper to set aside the impugned orders and remand the matter to the Original Authority for a more comprehensive appraisal of all the evidences and to give findings on all points raised by the appellants - as such, the matter requires to be remanded to the Original Authority for a fresh decision
In view of the different findings recorded by the Member (Judicial) and Member (Technical) in this appeal, the point of difference as emerges is that:
"whether the appeal can be allowed as held by the Member (Judicial) or the matter should be remanded back to the Original Authority for a fresh decision, as held by Member (Technical)"
The following questions arise by way of difference of opinion to be considered by Third Member:-
1. Whether, Member (Judicial) have rightly held that the statement of Mr. Shivji Gupta dated 26.3.2008 (RUD) is not reliable, as the same was not freely given and did not stand the test of cross examination and subsequent statement dated 30.8.2010 (RUD) is reliable, as it stood the test of cross examination and is also in compliance with the provisions of Section 9D of the Central Excise Act.
OR
As held by Member (Technical), the re-appraisal of evidence, i.e., the statement of Shri Shivji Gupta is required with regard to other corroborative evidences and as such the matter needs to be remanded.
2. Whether Member (Judicial) has rightly held that JVIPL had cutter available in their factory and have used copper cathodes in manufacture after cutting, further the statement of One Shri V.K. Mittal is not reliable, as the same has been recorded behind the back of the assessee and further Mr. V.K. Mittal was not produced for cross examination. Hence, statement/evidence of Shri V.K. Mittal is not admissible, being hit by the provisions of Section 9D of the Act, also the Principles of Natural Justice.
OR
Whether as held by Member (Technical), the statement of Shri V.K. Mittal is admissible as evidence by way of corroborative evidence, even in absence of cross examination.
3. Whether it has been rightly held by Member (Judicial) that no adverse inference can be drawn due to difference in burning loss in the factory of JVIPL, Delhi, as compared to JMWIPL, Jammu, as the furnace of JVIPL is an open furnace whereas the furnace of JMWIPL is a closed furnace, thus burning loss will naturally be more in view of the open furnace of JVIPL.
OR
As held by Member (Technical) that the issue of burning loss in support of the allegation of diversion of copper cathode, needs reappraisal.
4. Whether as held by Member (Judicial), in view of undisputed report of Commissioner, Jammu dated 25.05.2010, based on Plant Based Checks', JMWIPL, Jammu have also used copper scrap in addition to copper cathode, hence allegation of Revenue as to diversion of cathode by JVIPL & GRPL does not stand, and appeals are rightly allowed.
OR
As held by Member (Technical) that the appeals need to be allowed by way of remand for a comprehensive and detailed finding.
Per : Third Member
Held: First Question - In the facts and circumstances of the case, the statement of Shri Shivji Gupta dated 26.3.2008, which has been alleged to have been obtained under duress, cannot be relied to support the allegations against JVIPL as well as GRPL - I agree with the findings of Member (Judicial) in this regard
Second Question - In the facts and circumstances of the case, Shri Mittal's statement cannot be admitted as evidence at face value since he is a partner of a competitor - the statement does not appear to have been admitted by the adjudicating authority as per the provisions of Section 9D and since the appellants were not extended the opportunity of cross examining him, the statement is not admissible as held by Member (Judicial)
Third Question - Burning loss in the case of an induction furnace arises for a variety of reasons and differences in burning loss cannot ipto facto support the allegation of diversion of copper cathode - the argument advanced that the burning loss is more in respect of JVIPL since they have an open furnace appears to be reasonable - hence, I tend to agree with the observations of Member (Judicial)
Fourth Question - The Commissioner (Jammu), who is the Jurisdictional Commissioner in respect of JMWIPL, has sent his report dated 25.5.2010, in which, after investigating into the affair of JMWIPL, has recorded the fact that JMWIPL have used both copper scrap as well as copper cathode - he has based the report on the observations recorded in the records of JMWIPL by Jurisdictional Central Excise Officers as well as the officers of District Industries Centre who have attested the receipt of various raw materials in the said unit - in view of the comprehensive report of the Commissioner (Jammu), I am inclined to support the observations of Member (Judicial)
I am in agreement with the view expressed by Member (Judicial) on all the questions referred to me
Majority Order
In view of agreement with the decision of Judicial Member by the third Member, the impugned orders are set aside and appeals are allowed
Appeals allowed
