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INSTRUCTION

F No.279/Misc/M-61/2016

Income Tax - DRS, 2016 - CBDT asks CIT(A) to create awareness about scheme while sending notice

CASE LAWS

2016-TIOL-2283-HC-AHM-VAT

M B ASSOCIATES Vs STATE OF GUJARAT: GUJARAT HIGH COURT (Dated: September 22,23, 2016)

The Gujarat Value Added Tax Act - Sections 2(10)(f), 14A(3) & 28(8)(b)(ii)(iii).

Keywords - Composition of tax - Works contract.

Whether the application u/s 14A(3) for composition of tax for an ongoing project warrants rejection if filed beyond 30 days from the commencement of the contract, when clause (iiia) nullifies the same - NO: HC

The assessee is engaged in the business undertaking works contract for construction of industrial establishment and factory buildings. The assessee applied to the Commercial Tax officer and sought permission to pay a lumpsum tax u/s 14A. The said authority however, by an order rejected such an application on the ground that the assessee had applied for composition of tax for eight works contract which had commenced during the financial year 2005-2006 and, therefore, as per the provisions, such permission cannot be granted. The assessee challenged such order before the appellate authority. The appellate authority by an order rejected the appeal by giving elaborate reasons. The assessee thereupon approached the Tribunal who upheld the decisions of the lower authorities.

The HC held that,

++ the authorities rejected the assessee's application for composition of tax on the ground that the same was beyond 30 days from the commencement of the contract. Had clause (iiia) not been added to subrule( 8) of rule 28, perhaps their view may even have been correct. It may be that when the assessee filed the application for composition of tax on 13.5.2006, clause (iiia) was not yet added to statute book. By the time, such an application was rejected on 9.11.2006, clause (iiia) was already inserted on 11.10.2006. The competent authority as well as the Tribunal both erred in not appreciating this aspect of the matter. The Tribunal in fact, went on to observe that even the amended rule would not cover the situation of the assessee, with which interpretation we have respectful disagreement. From the submissions made by the counsel for the assessee before the Tribunal, we notice that provision for composition of tax was not a new phenomena introduced for the first time in the VAT Act nor offering benefit of composition of tax to ongoing contracts a new concept. In the past under the Gujarat Sales Tax Act, similar provisions were made and were made applicable for the ongoing contracts where the work might have begun earlier.

Assessee's appeal allowed

2016-TIOL-2282-HC-AHM-IT

THAKORBHAI MAGANBHAI PATEL Vs ITO: GUJARAT HIGH COURT (Dated: September 21, 2016)

Income Tax - Sections 2(14), 143(3), 147 & 148.

Keywords: notice for reassessment - capital gain - agricultural land - municipality limits - undisclosed sale consideration - reopening of assessment.

Whether in case an assessee has forged the certificate issued by Executive Engineer certifying distance of land from the outer limit of Municipal Corporation area, the very foundation of assessee's case of the land being at a distance of more than 8 kms from the outer limit of Municipal Corporation fails - YES: HC

Whether in such case, an assessee would be able to contend that the reassessment notice issued for considering income from sale of such land is not tenable as per law - NO: HC

The assessee, an individual, is an agriculturist and held large tracks of agricultural land. On 31.3.2008, it had executed a sale deed for the lands bearing survey nos. 43, 44, 45, 46 and 65, now consolidated into block no.23 paikee of village Hanumanpura, Vadodara, in favour of Shri Jitendra Natubhai and Shri Kamlesh Natubhai Patel for a declared sum of Rs.4.98 lacs. According to assessee, since he was not liable to pay any income tax, he did not file return for the said AY. Earlier the assessment was made u/s 147 r.w.s 143(3). During such assessment, the assessee was confronted with the sale transaction of the agricultural land and the question of capital gain arising from such sale. The assessee contended that the agricultural land which he inherited was sold on 10.6.2008 but the stamp paper was purchased on 31.3.2008 and in fact, the transaction falls within the AY 2009-2010. He also relied on a certificate from one Shri K.B. Patel to contend that the land was situated beyond a distance of 8 kms. from the limit of Vadodara Municipal Corporation. Hanumanpura had a population of about 10,000. Accordingly, the said lands would be covered by the exclusion provided in section 2(14) and would therefore, be exempt from the payment of capital gain. AO rejected assessee's first contention of sale falling outside the year under consideration but accepted the second contention of the land being beyond a distance of 8 kms from the limit of Vadodara Municipal Corporation by accepting the certificate produced by assessee stated to have been issued by Shri K.D. Patel Executive Engineer, Road and Building division, District Vadodara, in this regard. AO later on found that the petitioner had deposited Rs.1.05 crores in his bank account by cash and that the distance between Vadodara Municipal Corporation limit and the lands in question was much lesser than 8 kms. Thus, AO once again issued the impugned notice seeking to reopen the assessment for the said AY 2008-2009. Assessee raised certain objections which were not disposed of and in the meantime the last date for framing the assessment was approaching. Assessee therefore, approached the Court to avoid framing of assessment without disposal of the objections.

Held that,

++ for two reasons, the contention of the petitioner, that for the purpose of this petition, the outer limit of Vadodara Municipal Corporation as on 6.1.1994 should be reckoned, cannot be accepted. First, it is question of interpretation of above noted explanation. Whether by this explanation, the intention was to freeze the outer limit of various urban agglomeration and Cantonment Board included in the notification as on the date of notification without taking into account the future expansion of such urban agglomeration, an issue we would be well advised not to go into while examining the challenge of reopening of the assessment. Secondly, whether 6.1.1994 was the last of the notifications issued by the Union of India or were there later notifications either expanding the boundaries or refixing the distances, depend on the development of various urban agglomeration, is also not clear on record. We may therefore, for prima facie consideration, accept the stand of the Revenue that it would be the outer limit which would be relevant for ascertaining the distance. It is well settled at the stage of reopening of assessment the Assessing Officer must have reason to believe that income has escaped assessment. The reason to believe cannot be equated with final proof. Coming to the central issue of distance being less or more than 8 kms between the outer limits of Vadodara Municipal Corporation and land in question, we notice that during the previous assessment, the petitioner had relied on a certificate stated to have been issued by one Shri K.D. Patel, Executive Engineer, Road and Building division, District Vadodara, on 16.1.2013 in which it was stated that the distance between the limit of Vadodara Municipal Corporation and the Hanumanpura village is more than 8 kms. Income Tax authorities however, later on obtained a certificate dated 12.7.2013 from Deputy Municipal Commissioner, Vadodara, in which shortest aerial distance between various blocks of land and Vadodara Municipal Limit was noticed. This is in addition to statement of Additional Assistant Engineer, which was recorded on oath on 10.7.2013 in which he stated that the land in question is situated not more than 2 kms from the outer limit of Vadodara Municipal Corporation. Intrigued by such major discrepancy between the certificate of Shri K. D. Patel, Executive Engineer, produced by the petitioner before AO during the original assessment and the materials collected by the revenue authority later on, in our order dated 10.8.2006, we issued notice to the Secretary, Road and Building division, Government of Gujarat and called for certain information;

++ it can thus be seen that there is serious doubt about genuineness of the certificate dated 16.1.2013 of the Executive Engineer certifying that the land in question was situated beyond 8 kms from the outer limit of Vadodara Municipal Corporation, upon which the petitioner heavily relied. Shri K.D. Patel who is supposed to be the author of the certificate has since retired from Government service but has filed an affidavit stating that he has never issued the said certificate and the document does not carry his signature. The Road and Building division contends that a copy of said certificate is not found in their official records. A strong case is built up against the petitioner of having produced a document which was not genuine. For the purpose of this petition, atleast, we must proceed on the basis of declaration of official of Road and Building division that no copy of such document is found on the record and Shri K.D. Patel, retired Executive Engineer, who has gone on oath stating that he had never issued said certificate. If that be so, the very foundation of the petitioner's case of the land being at a distance of more than 8 kms from the outer limit of Vadodara Municipal Corporation fails. This would also match with the present information which Revenue collected after the assessment was over in form of statement of Shri Sohan M. Patel and certificate issued by the Deputy Collector of Vadodara Municipal Corporation, both indicating that the distance between the two limits is much shorter. In fact, the Executive Engineer of Road and Building division also in the latest affidavit has confirmed this aspect. In view of such facts, we are not inclined to quash the notice for reopening. However we clarify that the assessment may be carried out on the basis of evidence that may be brought on record including by the petitioner, unmindful of the observations made hereinabove. Petition is dismissed.

Assessee's appeal dismissed

2016-TIOL-2281-HC-AHM-IT

ONGC LTD Vs ACIT: GUJARAT HIGH COURT (Dated: September 15, 2016)

Income Tax - Sections 10(14)(i), 17 & 194 - Income Tax Rules, 1963 - rule 2BB.

Keywords: uniform allowance - deduction of TDS - employer employee relationship - post retirement benefit - survey - washing allowance - dress code - circular.

Whether in case the employer has granted allowances to meet the expenditure incurred by the employee on the purchase or maintenance of uniform for wearing during performance of duties of an office or employment of profit, the same can be considered exempt u/s 10(14)(i) - YES: HC

Whether when it is true that a internal circular issued by assessee, did not cover the period under consideration, but the same was produced on record and relied upon by the assessee, would this mean that the Tribunal could not have held the issue against the assessee, even if it applied during a period post the financial year in question - NO: HC

Whether if the Revenue has collected materials to suggest that there was no uniform prescribed, statement of senior officer of assessee suggested that prescription for uniform made in the past has been withdrawn long back, if the assessee desired to rebut such material, it had to produce necessary evidence in this respect - YES: HC

Whether the dress code at the work place would qualify as uniform, even if it is clear that there is nothing on record to suggest that there was any such dress code prescribed before the issue of circular regarding 'compulsory wearing of uniform' - NO: HC

The assessee is a Public Sector Undertaking. The issue in this case pertains to requirement of deducting TDS by the assessee as an employer on the payments made to the employees under the heading of uniform allowance. During the FY 2008-09, a survey operation was carried out by the Revenue at the premises of ONGC, during which, certain materials were collected concerning lapses in uniform allowance and the employees not wearing such uniforms if so sponsored by the employer. For the AY 2010-11, AO confronted the assessee with the assessee not having deducted tax at source on such benefits given to the employees. During the FY relevant to the said AY, according to AO, there was no uniform prescribed by the employer and that therefore the payment of allowances under the heading of uniform allowance would not fall within the exemption clause of section 10(14)(i). AO recorded a statement of senior finance and accounts officer of ONGC, who had appeared before him in response to a letter written to ONGC to file monthly details on various payments. AO noted that in such statement, he had contended that the ONGC had prescribed uniform upto 16.11.1995,. The employees were issued cloth for the dress and the employees would get it stitched themselves, the stitching charges would be reimbursed. However, after 11.11.1995, the uniform prescribed by the ONGC for the employees was discontinued. It was decided by the company in a meeting between the management and association and the unions that such uniform be discontinued, but the benefit of uniform allowance would continue. 70% thereof would be paid as uniform allowance, 20% as canteen subsidy and 10% as washing allowance. The amount of such allowances was adjusted towards additional contribution to post-retirement benefit scheme. Thus, AO held that the employer had not prescribed any uniform and that the payment made to the employees as uniform allowances would not be covered by the exemption clause contained in section 10(14)(i). AO referred to the dictionary meaning of term 'uniform' as to conclude that unless there was a precise dress code with colour patterns, the same would not qualify as a uniform. AO held that the assessee was liable to deduct TDS, had failed to do so in terms of section 194. AO disallowed the expenditure incurred by the employer in paying such allowances.

On appeal before CIT, assessee contended that the employees did wear uniforms to maintain decorum at the office. The finding of AO that during survey, many employees were found not wearing the uniform, would be a matter of disciplinary action. Recording the statement of senior finance and accounts officer, it was merely stated that 'he was not aware HR policy of assessee company. Further, merely because the same amount equivalent to uniform allowance was envisaged in PRBS, could not lead to adverse inference'. The AAC confirmed the view of AO, observing that if the assessee's interpretation of term 'uniform' were to be accepted, in every office any dress worn by the employees would qualify as uniform. It had also noted that the assessee had not disputed the fact that prescribed uniform was done away by ONGC since the year 1995. On further appeal, Tribunal at one stage, the Tribunal dismissed the appeal. The assessee, however, persuaded the Tribunal to revive the proceedings on the ground that certain important documents could not be placed before the Tribunal. In the second round before the Tribunal, the assessee produced a circular dated 29.03.2010 pertaining to reimbursement towards cost of purchase, stitching and maintenance of uniform, 'compulsory wearing of uniform'. The Tribunal however, was of the opinion that the said circular did not prescribe any uniform. It merely prescribed a dress code. The payment was therefore not exempt u/s 10(14)(i).

AO noted principally two things, one that during the survey operation, the employees were not wearing any uniform, two; in his statement, the senior finance and accounts officer of ONGC stated that though previously uniform was prescribed by the ONGC, with effect from 16.11.1995, such prescription was done away with. AO in fact, went on to state that despite discontinuance of uniform at work place, ONGC continued to pay uniform allowance, which was later on adjusted towards employees' contribution to the pension fund. The CIT(A) noted that though, the ONGC tried to turn down the statement of Shri R.P.Bhatt by suggesting that he was not a HR person, the ONGC nowhere contended his statement that after 16.11.1995, prescription of uniform was done away with was an incorrect statement. It was noticed the stand of ONGC before the CIT(A) in which, it was suggested that if a matching amount was deposited towards the employees' contribution to the pension fund, the same would still not mean that no uniform was prescribed. It would therefore appear that ONGC also did not dispute the later portion of Shri R.P.Bhatt's statement that such allowance was adjusted towards employees' liability to pension fund. The Tribunal was of the opinion that this circular did not prescribe what can be categorized as uniform and resultantly dismissed the appeal.

Held that,

++ it is true that the circular dated 29.03.2010 did not cover the period under consideration. However, we cannot find fault with the Tribunal in referring to such circular. Firstly, the circular was produced on record and relied upon by the ONGC. This would not however mean that the Tribunal could have held the issue against the assessee on the basis of such a circular if it applied during a period post the financial year in question. But, if we eliminate this circular from record, there was nothing else suggesting that the ONGC did prescribe any uniform for its employees, at least for the period under consideration. If the stand of the ONGC was that the circular dated 05.12.1987 held the field, it ought to have produced such circular on record. As noted, the Revenue had collected materials to suggest that there was no uniform prescribed. Statement of senior officer of the ONGC suggested that prescription for uniform made in the past was withdrawn since 1995. If the assessee desired to rebut such material, it had to produce necessary evidence in this respect. Having failed to do so, ONGC cannot criticize the Tribunal for referring to the circular dated 29.03.2010, which the ONGC itself desire to rely upon;

++ an alternative submission was made to the effect that the dress code at the work place would qualify as uniform. We find two difficulties in accepting this submission. Firstly, there is nothing on record to suggest that there was any such dress code prescribed before the said circular dated 29.03.2010 was issued. In absence of any evidence, it is not possible for us to ascertain the nature of dress code and its effect. Even if we proceed on the basis, for the sake of argument that the dress code as referred to in circular dated 29.03.2010 or similar was prescribed during the period under consideration, we do not find that the same would qualify as prescription of a uniform. We have reproduced the relevant portion of the circular dated 29.03.2010. Under this circular, the employer prescribed a dress code for male employees insisting that they must wear shirt which may be half or full sleeve. It should be buttoned and ironed, though stripe would be permissible, loud checks or printed shirts should be avoided. The employees would wear trousers of formal size and would not be permitted to wear cargo trousers. If ties are worn, they should match with the shirts and trousers, belts should be sober and footwear should be formal. Under certain circumstances, however, employees could wear sandals instead of shoes. For women, it was prescribed that they should wear ironed sarees of appropriate colors or traditional salwar kameez or ironed western business suits or formal ladies shirts with tailored dress or formal trousers;

++ these specifications, undoubtedly fit the common parlance meaning of "dress code" which is often referred to as the minimum standard of dressing depending on the place or occasion and can carry a wide range of choices at the command of the person concerned, of course, within certain parameters which would essentially exclude a certain dressing which is considered too informal or inappropriate for the occasion rather than to specify a precise set of clothes. The term 'uniform' in the context of dressing carries a vastly different connotation and would necessarily include precise instructions as to the dress, design, and also colours which will achieve a uniformity in dressing at a work place or at the place of study or some such collection of group of persons belonging to by and large a common class. The term uniform has been explained in the Webster's Third New International Dictionary (unabridged) as: marked by lack of variation, diversity, change in form, manner, worth or degree; marked by complete conformity to a rule or pattern or by salient detail or practice; marked by unvaried and changeless appearance. In the context of dressing, the term 'uniform' has been described in this dictionary as dress of a distinctive design or fashion adopted by or prescribed for members of a particular group (as an armed service, an order, or a social or a work group) and serving as a means of identification. It can thus, be seen that the term 'uniform' in the context of dressing carries a precise meaning and a meaning which is entirely different from a far more broader concept of a general dress code. We have noticed, the counsel for the assessee had also requested for remand so that the circular dated 05.12.1987 could be produced on record. In the past, the Tribunal had granted such opportunity, despite which this circular was not produced. No further opportunity need to be given now. Under the circumstances, we find no merits in these appeals. The same are dismissed. Before doing so, we may clarify that our observations are confined to the materials on record. If the ONGC produces any other evidence in this respect in the assessment proceedings which may be pending at different stages, the authorities would take a view on the basis of evidence that may be brought on record.

Assessee's appeal dismissed

2016-TIOL-1715-ITAT-COCHIN

MUTHOOT FINANCE LTD Vs ADDL CIT: COCHIN ITAT (Dated: September 26, 2016)

Income Tax - Sections 9(1)(i), 36(1)(va), 40(a)(ia) & 195.

Keywords: reimbursement of expenses - TDS - PE in India - Branding Expenses - Radio License Fee - demerger - staff welfare scheme - overseas entries - deemed income.

Whether when in order to market the money transfer business abroad to a foreign entity, who has no PE in India, if certain expenses are incurred by the Indian assessee, provision of tax deduction at source were not applicable in view of the Board Circular in this regard - YES: ITAT

Whether if the radio licence has been exploited, income thereof has been taken into account, the expenses attributable to earn such income should also be taken into account - YES: ITAT

Whether if the sale proceeds of gold ornaments would reduce the principal amount of loan, any interest realizable on that, such amount would have to considered as repayment of loan, the same can be treated as income of the assessee - NO: ITAT

The assessee, a financing concern, had incurred an amount of Rs.1,02,29,239/- as Branding Expenses paid to overseas entries. It had also been carrying on money transfer business. In order to market the money transfer business in UK expenses under this head had been incurred. This was purely incurred for services rendered outside the taxable territory of India. The recipient company was an overseas company and they do not have any PE in India. Consequently, the provision of tax deduction at source were not applicable in view of the Board Circular in this regard. In fact, income if any earned by these companies were taxable in UK. According to the officer the recipient entity was a Non-resident one and as per the provisions of the Act with specific reference to section 9(1)(i) certain income shall be deemed to accrue or arise in India directly or indirectly through or from any business connection in India or through or from any property in India or through or from any asset or source of income in India. According to the officer, in the case of a business of which all the operations were not carried out in India, the income of the business deemed under this clause to accrue or arise in India, the income of the business deemed under this clause to accrue or arise in India shall be only such part of the income as is reasonably attributable to the operations carried out in India. AO held that the above description clearly states that income of the business relatable to such part of the income as reasonably attributable to the operations carried out in India. Thus, it held that there was business connection. It had further opined that Circular quoted by assessee was no longer in existence and had invoked the provisions of section 40(a)(ia) for failure to comply with section 195. The officer also did not appreciated the fact that the recipient company did not have any income accruing or arising in India. As stated earlier they do not have any establishment in India and they had been registered under the laws of UK and also assessable to tax there. Out of the Branding Expenses, an amount of Rs. 36,72,000/- payable to M/s. Muthoot Global Money Transfers P Ltd. was only a provision which has been paid subsequently. According to AO the provision created in the books were not an allowable expenses since the liability had not crystallized in the F.Y. 2009-10.

Disallowance made on account of Radio Licence fee

During the year, the assessee had written off an amount of Rs. 70,51,200/- being F.M. Radio License Fee amortized in the earlier year. This amount was for a period of 9 months during which time the assessee company had exploited the F.M. Radio License. The Radio business carried on by the assessee company was demerged under a scheme of arrangement approved by the Kerala HC. This business was taken over by another company M/s. Muthoot Broadcasting P. Ltd. as a going concern. According to the officer, the licence fee of the Radio business had to be claimed by the other company M/s. Muthoot Broadcasting P. Ltd. following the demerger. Accordingly the amount of Rs.70,51,200/- had been treated as not relatable to the income earned by the assessee company and disallowed.

Bad debts written off

The next issue pertains to disallowance of a sum of Rs. 61,88,642/- representing gold loans which have become fully bad during the financial year 2009-10. These loans were advanced against the security of stolen gold pledged by thieves by cheating the company and later seized by the police as property of crime during the year. The company will not get insurance cover on these loans, so also repayment/recovery from the borrowers is also not possible in these cases. There was no likelihood of recovering the gold seized by the police. Even if the ultimate owners of the gold were found, this will have to be returned as most of them would have filed criminal cases against the theft. Therefore, this loss was incidental expenditure to the business activities and do not get covered by insurance claim. Money or money's worth as far as financing company was concerned, was stock in trade and loss of stock in trade due to theft has been rightly claimed as revenue expenditure.

Amount realized from borrowings on sale of gold in public auction

AR contended that the CIT(A) should have at least sustained the interest on loan collected on sale of ornaments. As rejoinder, DR submitted that in the assessment made the AO had taken the entire sale proceeds on auction of gold ornaments as income of the assessee. According to him, since the auctioned gold were very old it did not fetch the market value or at least the value to the extent of gold loan advanced. The assessee had already offered the interest on such loans year after year on mercantile basis and they were not able to realize any portion of interest. According to him there was no surplus realized on auction over and above what was advanced on the pledge of gold. In fact the auction had resulted in a loss to the assessee. It was the stand of the department that the entire sale proceeds was assessable and now they had come down to the point of sustaining interest portion.

Having heard the matter, the Tribunal held that,

++ by our order of even date in the case of another group company Muthoot Exchange (P) Ltd., Kochi in I.T.A. No. 91/Coch/2015, we have held that the said company is not liable to deduct tax on the payment made under the head branding expenses. Following the findings in the said order in the case of that assessee and also in our considered view the same principles apply. Accordingly, we hereby delete the disallowance of Rs.1,02,29,239/-. Further we also hold that there is no jurisdiction in disallowing Rs.36,72,000/- being the provisions made in the accounts especially when the assessee has been consistently adopting mercantile system of accounting;

Disallowance made on account of Radio Licence fee

++ by a scheme of demerger the F.M. Radio License neither to be exploited by the assessee was transferred to another company by name of M/s. Muthoot Broadcasting (P) Ltd. For a period of 9 months, during this financial year the assessee has exploited the license and has included the income thereof. This has been mentioned by the Assessing Officer at page 5, para 5 of assessment order. The reason stated by the assessee for demerger was that the assessee company approached SEBI for public issue and as per their requirement this radio business was to be demerged from the company. Up to a period of 9 months, since the license has been exploited and income thereof taken into account, we are of the considered view that once income of a particular business carried on by the assessee is taken into account the expenses attributable to earn such income should also be taken into account. The fact being so, we hereby delete the addition made of Rs.70,51,200/-;

Bad debts written off

++ the last issue in assessee's appeal is with regard to disallowance of Rs.61,88,642/- representing gold loan which has become bad during the year. This loan was stated to have been advanced against stolen gold pledged by thieves and later seized by police as property of crime during the year. The Representative drew our attention to the guidelines issued by RBI who is the apex body for governing the functions of NBFC. The paper book filed contains copy of guidelines from page 8 to 23. He drew our attention to page 10 which defines loss assets that is an asset which is an advance affected by a potential threat of non-recovery due to either erosion in the value of security or non availability of security or due to fraudulent act or omission on the part of the borrower. Again at page 14 the provision requirement is given, whereas under loss assets it is prescribed that the entire assets shall be written off. As stated by the assessee money or money's worth is stock in trade as far as the assessee company is concerned, any loss or diminution in its value has to be written off and claimed as loss. Having regard to this principal and respectfully following the guidelines of RBI, we are of the considered view that the assessee company is entitled to claim the loss of Rs.61.88 lakhs in this regard. Thus all the grounds of the assessee are allowed. Accordingly, the appeal filed by the assessee is allowed;

Amount realized from borrowings on sale of gold in public auction

++ it is common knowledge that in any auction the value which would be realized would be much less than the market value. The revenue has not made a case that the assessee has realized interest/arrears of interest on the auction. CIT(A) in para 10.3 at page 18 of her appellate order has come to the finding that the gold loans and stagnant advances which were not recoverable for long, the gold was put to auction to recover the value of loan. Since the sale proceeds of such gold ornaments would basically go to reduce the principal amount of loan and any interest realizable on that. Such amount would be basically repayment of loan and hence the same cannot be treated as income of the assessee. In view of this, we uphold the findings of the Ld. CIT(A) on this issue also. Thus all the grounds of the Revenue are dismissed. In the result, the appeal of the Revenue is dismissed.

Assessee's appeal allowed

2016-TIOL-2552-CESTAT-MUM

DECO TUBES Vs CCE: MUMBAI CESTAT (Dated: August 17, 2016)

CX- Benefit of SSI exemption notification denied on the ground that the brand name "()Gprecision()" used by the appellant is not registered in the appellant's name and is similar to the one allotted to one M/s Navin Bharat Industries Pvt. Ltd. - appeal to CESTAT. Held: Appellant has produced the certificate of registration of Trade Mark issued by the statutory authority which is effective from 2 nd December 1997 in respect of conduit pipes and tubes and conduit fittings and also produced the certificate of registration of Trade Mark given to M/s Navin Bharat Industries Pvt. Ltd. - It is very clearly visible to the naked eye that the brand name which is registered in the appellant's name is definitely different than the Trade Mark registered in the name of M/s Navin Bharat Industries Pvt. Ltd.- on this ground itself, the impugned order is unsustainable and liable to be set aside - Appeal allowed with consequential relief: CESTAT [para 9, 11]

Appeal allowed

2016-TIOL-2551-CESTAT-MUM

CCE Vs G AND Y SOAP WORKS: MUMBAI CESTAT (Dated: August 24, 2016)

CX – Revenue case is that the respondent had affixed the logo "Swadeshi" of the marketing company M/s Swadeshi Trading & Network Marketing Co. and, therefore, not entitled for the SSI exemption under notifications 8/2001-CE, 8/2002-CE, 8/2003-CE – Commissioner(A) allowing benefit and, therefore, Revenue in appeal before CESTAT. Held: Commissioner(A) has observed that the SCN does not disclose any evidence to hold that word ‘Swadeshi' was in fact a brand name; that use of word ‘Swadeshi' on the wrapper cannot by itself establish any connection between the goods and the buyer company marketing it; that use of the word by itself would indicate that the product is indigenous i.e. made in India and not imported; that the word cannot be held to be a brand name by itself without anything else – these findings have not been controverted by the Revenue and, therefore, the appellate authority was correct in coming to a conclusion of setting aside the o-in-o – Revenue appeal is rejected: CESTAT [para 5, 7]

Appeal rejected

2016-TIOL-2550-CESTAT-MUM

NILA BAURAT ENGINEERING LTD Vs CCE: MUMBAI CESTAT (Dated: August 16, 2016)

CX - Valuation - Audit report dated 04/08/1999 contains a specific reference to the contract and on that basis it has arrived at the conclusion that the value of gunniting needs to be included in the assessable value - DGCEI in the impugned SCN dated 01/01/2004 has also primarily relied on the contract and has sought to recover duty on the basis of value of the goods shown in the contract - as the documents on the basis of which the demand has been raised, i.e., the contract, was produced before the audit and examined by them and having failed to raise this issue at the material time, it cannot be said that the appellants had suppressed or mis-declared anything to evade payment of CE duty - it is not open to the Revenue to invoke extended period of limitation - appeal allowed without going into merits of the case: CESTAT [para 6]

Appeal allowed

2016-TIOL-2549-CESTAT-MUM

PANCHMAHAL STEEL LTD Vs CC: MUMBAI CESTAT (Dated: August 31, 2016)

Cus - Valuation - Appellant imported unwrought, unalloyed electrolytic nickel cathodes - proper officer of Customs disregarded the declared price of USD 7055 per MT and enhanced it to USD 8420 per MT by adopting the London Metal Exchange price on date of shipment with the addition of a premium - Appellant submitting that the contract is based on the LME price as on 8th October 1999 and the same should be adopted for assessment - lower authorities not accepting the claim of appellant, hence appellant before CESTAT. Held: Decision of Supreme Court in Eicher Tractors - 2002-TIOL-06-SC-CUS requires rejection of declared value with valid reasons to be a pre-requisite for sequential application of rule 5 to 8 before arriving at AV - as impugned order has not followed the prescriptions laid down in the prevailing Rules as detailed in the decision in Eicher Tractors for enhancement of assessable value, upward revision is without authority of law - order set aside - appeal allowed with consequential relief: CESTAT [para 8, 9]

Appeal allowed