TMI Tax Updates - e-Newsletter
January 18, 2012
Case Laws in this Newsletter:
Income Tax
Service Tax
Central Excise
Articles
By: DR.MARIAPPAN GOVINDARAJAN
Summary: The article discusses the legal distinction between 'tax' and 'fee' in the context of statutory impositions, particularly focusing on 'cess.' It explains that while both tax and fee are compulsory exactions by public authorities, a tax is for public purposes without a direct service exchange, whereas a fee is for specific services rendered to the payer. The article reviews several Supreme Court cases, including the Orissa Mining Areas Development Fund Act and the Building and Other Construction Workers Welfare Cess Act, highlighting how the courts have determined whether a levy is a tax or a fee based on the presence of quid pro quo and the specific allocation of funds.
By: DEVKUMAR KOTHARI
Summary: Investing in shares is considered a business activity under the Income-tax Act, 1961, with shares being capital assets. Income from shares can include dividends, classified as 'income from other sources,' and capital gains from sales. Dividends are typically taxed at the distribution stage, not in shareholders' hands. The article argues that earning dividends is not the primary purpose of share investments, as most companies do not pay significant dividends. Section 14A, which disallows expenses related to earning exempt income, should not apply to dividends since they form part of the taxable income.
News
Summary: During pre-budget consultations with the Union Finance Minister, social sector groups emphasized the need for financial inclusion and inclusive growth in India. They highlighted issues such as malnutrition, skill development, infrastructure, health, education, sanitation, and renewable energy. The groups called for increased transparency, tax benefits, and regular consultations with the government. Suggestions included incentives for professionals in rural areas, raising NREGS wages, promoting leadership among women, and compulsory social audits for government schemes. The need for community-based planning and improved Panchayat infrastructure was also discussed. The meeting included various government officials and representatives from numerous social sector organizations.
Summary: The Finance Minister of India held pre-budget consultations with trade union groups to discuss measures for safeguarding workers' interests. The meeting addressed economic challenges such as inflation, the euro-zone crisis, and a current account deficit. Trade union representatives suggested aligning contract labor wages with regular labor, amending company laws for profit sharing, revising personal income tax ceilings, and improving the MGNREGA scheme. They also emphasized tackling issues like child malnutrition, child labor, and farmers' suicides, and proposed assured pensions for all workers. The consultation aimed to incorporate these suggestions into the 2012-13 budget to enhance worker welfare.
Summary: The Government of India announced the re-issue of three government stocks through price-based auctions: 7.83% Government Stock 2018 for Rs.4,000 crore, 8.79% Government Stock 2021 for Rs.7,000 crore, and 8.83% Government Stock 2041 for Rs.3,000 crore. The Reserve Bank of India will conduct the auctions on January 20, 2012, using a uniform price method. Up to 5% of the stocks will be reserved for eligible individuals and institutions under a non-competitive bidding scheme. Bids must be submitted electronically, with results announced the same day and payments due by January 23, 2012.
Summary: The Finance Minister expressed confidence that inflation moderation would persist in the coming months, predicting headline inflation to range between 6% and 7% by March 2012. The decline in December 2011's inflation rate to 7.47% from November's 9.11% was attributed to reduced inflation in primary articles, particularly food. Although manufactured goods' price softening might be gradual, overall macro-economic conditions showed improvement in late 2011. Despite marginal declines in manufactured and power group item inflation, these areas remain concerning. The annual inflation rate for December 2011 decreased to 7.4% from 9.11% in November and 9.45% in December 2010.
Summary: The Ministry of Corporate Affairs in India plans to establish the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT), replacing the Company Law Board and other financial reconstruction boards. These tribunals were initially included in the Companies (Second Amendment) Act, 2002, but faced legal challenges in the Madras High Court. The Supreme Court resolved the matter in a judgment dated May 11, 2010. The revised Companies Bill, 2011, introduced in Parliament, incorporates the Supreme Court's guidelines from this judgment.
Summary: Abu Dhabi Investment Authority (ADIA) is exploring investment opportunities in India, with a focus on infrastructure projects. A meeting between ADIA's Managing Director and India's Minister of Commerce discussed forming a Joint Working Group to expedite investment processes. India plans to invest $1 trillion in infrastructure over the next five years, presenting lucrative opportunities, particularly in the Delhi Mumbai Industrial Corridor. Both parties emphasized diversifying investments into sectors like pharmaceuticals, services, and agro-processing. They also discussed enhancing trade relations and the potential for a Free Trade Agreement between India and the Gulf Cooperation Council. Bilateral trade has significantly increased, yet remains underexploited.
Summary: India's exports from April to December 2011 grew by 25.8%, reaching $217.6 billion, according to the Commerce Secretary. During this period, imports totaled $350.9 billion, marking a 30.4% increase, resulting in a trade deficit of $133.3 billion. In December 2011, exports were $25 billion, while imports were $37.8 billion, leading to a $12.8 billion trade deficit for the month. Key export sectors included engineering, petroleum products, gems and jewelry, and pharmaceuticals. Significant import growth was seen in petroleum, gold and silver, machinery, electronics, fertilizers, and coal. The figures are preliminary and may be revised.
Summary: The Wholesale Price Index (WPI) for all commodities in India for December 2011 remained at 156.9, unchanged from the previous month. The annual inflation rate based on the WPI was 7.47%, down from 9.11% in November 2011. Primary articles saw a decline of 1.6%, with food articles dropping by 3.1%. The fuel and power index increased by 0.6%, while manufactured products rose by 0.6%. Notable price changes included decreases in fruits and vegetables and increases in non-food articles and minerals. The inflation rate for the financial year to date was 4.95%, compared to 7.12% the previous year.
Notifications
Central Excise
1.
03/2012 - dated
16-1-2012
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CE
Amends notification no. 23/2003-CE - EOUs/EHTP/STP Units – Excise Exemption on Goods Cleared to DTA .
Summary: The Government of India, through the Ministry of Finance, has issued Notification No. 3/2012-Central Excise, amending Notification No. 23/2003-Central Excise. Effective from January 17, 2012, the amendments adjust the excise duty rates for goods cleared to the Domestic Tariff Area by Export Oriented Units, Electronic Hardware Technology Parks, and Software Technology Parks. Specifically, the duty rates for items listed under serial numbers 8 and 10 in the notification's table have been revised to "in excess of 5% ad valorem" and "in excess of 6% ad valorem," respectively.
2.
02/2012 - dated
16-1-2012
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CE
Amends notification no. 05/2006-CE - Effective Rate of Duty on goods of Chapter 54 to Chapter 82.
Summary: The Government of India, through the Ministry of Finance, has issued Notification No. 2/2012-Central Excise, amending the earlier Notification No. 5/2006-Central Excise. Effective from January 17, 2012, the amendments modify duty rates on goods under Chapters 54 to 82. Specifically, gold bars from gold ore, gold dore, or silver dore bars will have a 1.5% duty, silver from similar sources a 4% duty, and certain goods from copper smelting a 2% or 6% duty. Additionally, the term "silver" is removed from a category in favor of "platinum." These changes are aimed at aligning excise duties with current economic policies.
Customs
3.
08/2012 - dated
16-1-2012
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ADD
Amends notification No.70/2010-Customs - Anti-dumping duty on Poly Vinyl Chloride Paste Resin also called as Emulsion PVC Resin (hereinafter referred to as the subject goods), falling originating in, or exported from European Union.
Summary: The Government of India, through the Ministry of Finance, has amended Notification No. 70/2010-Customs regarding the imposition of anti-dumping duties on Poly Vinyl Chloride Paste Resin, also known as Emulsion PVC Resin, imported from the European Union. The amendments involve changes to the tariff entries in the notification, specifically substituting the entries in the table for Sl. Nos. 1 and 2 with "39042110, 39042190, 1[39042210]." These changes are made under the powers conferred by the Customs Tariff Act, 1975, and relevant rules for assessing and collecting anti-dumping duties.
4.
03/2012-Customs - dated
16-1-2012
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Cus
Prescribes rate of custom duty on Import of Gold & Silver by an eligible Passenger.
Summary: The Government of India issued Notification No. 3/2012-Customs, effective January 17, 2012, prescribing reduced customs duty rates for eligible passengers importing gold and silver. Gold bars and coins with at least 99.5% purity are subject to a 2% duty, other gold forms at 5%, and silver at 6%. Conditions include payment in convertible foreign currency, limits of 10 kg for gold and 100 kg for silver, and importation within 15 days of arrival. Eligible passengers must be of Indian origin or hold a valid passport, with a minimum six-month stay abroad. The notification was later rescinded by Notification No. 22/2012-Customs.
5.
02/2012-Customs - dated
16-1-2012
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Cus
Prescribes rate of custom duty on Import of Gold & Silver when imported other then through post, courier or baggage.
Summary: The Government of India, through the Ministry of Finance, issued Notification No. 02/2012-Customs on January 16, 2012, prescribing customs duty rates for gold and silver imports not made through post, courier, or baggage. The notification supersedes a previous 2004 notification and exempts specified goods from excess customs duty. Gold bars with specific markings and gold coins with less than 99.5% gold content are subject to a 2% duty, other forms of gold to 5%, and silver with at least 99.9% content to 6%. This notification took effect on January 17, 2012.
6.
01 /2012-Customs - dated
16-1-2012
-
Cus
Prescribes rate of custom duty in Respect of diamonds, Platinum, Gold and Silver.
Summary: The Government of India, through the Ministry of Finance, has amended the customs duty rates for certain precious materials effective January 17, 2012. Non-industrial diamonds, including lab-grown diamonds, and platinum are now subject to a 2% duty. Semi-processed or broken diamonds are exempt from duty. Gold dore bars with less than 95% gold content and silver dore bars with less than 95% silver content are exempt from duty but subject to 1% and 3% duties, respectively, under specific conditions. These conditions include direct shipment, proper documentation, and intended use for refining to higher purity bars.
7.
03/2012 - dated
16-1-2012
-
Cus (NT)
Amends notification no. 36/2001-Cus (N.T.) - Palm oil, Palmolein, Soyabean Oil (Crude) and Brass Scrap (all grades) - Traiff Values.
Summary: The Government of India, through the Ministry of Finance, has amended Notification No. 36/2001-Customs (N.T.) to fix new tariff values for certain imported goods, effective from January 17, 2012. The amendment specifies the tariff values for gold and silver, setting them at $526 per 10 grams and $953 per kilogram, respectively. This adjustment follows the trend of the values of such goods and is issued under the authority of the Customs Act, 1962. The notification was published in the Gazette of India and is part of ongoing revisions to customs tariffs.
Circulars / Instructions / Orders
Customs
1.
02/2012 - dated
16-1-2012
Refund of 4% CVD (SAD)-Extension of time upto 31st March 2012, for using re-credited 4% CVD (SAD) amount in DEPB-Regarding.
Summary: The circular issued by the Ministry of Finance, Department of Revenue, extends the deadline for using re-credited 4% CVD (SAD) amounts in DEPB scrips until March 31, 2012. This extension follows requests from trade and industry stakeholders who were unable to utilize the re-credited DEPB/Reward Scheme scrips by the previous deadline. The circular emphasizes that no further extensions will be granted and instructs relevant authorities to issue public notices and standing orders to guide the trade and staff accordingly.
Highlights / Catch Notes
Income Tax
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Interest Expense and Income Linked, Not Separate for Tax Purposes, Says Revenue Decision.
Case-Laws - HC : Dis-allowance of interest expense from allegadly interest income by Revenue – The interest paid to the power procurement utilities on commitment advances was capitalized. Interest paid and interest received were inextricably linked and have a commonality about their nature and character. They cannot be treated differently..... - HC
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Assessee Penalized for Not Reporting Interest from Converted Loan in Previous Years; Failed to Inform Assessing Officer.
Case-Laws - HC : Though assessee furnished the director’s report, the actual write off, filing of balance sheets, memorandum and articles of association, letter to DISL etc. however, the assessee did not bring to the notice of the A.O. that no interest from the converted loan had been offered and assessed to income tax in any of the earlier previous years. - Penalty confirmed.... - HC
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Share application money isn't a loan or deposit u/s 269SS; no penalties u/s 271D apply.
Case-Laws - HC : Treatment of Share Application money as loans & Advances(269SS) - Penalty under 271D - Share application monies received by a company, pending allotment of shares, do not amount to loan or deposit..... - HC
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Capital Gains Cannot Offset Carried Forward Business Losses u/s 72 of the Income Tax Act.
Case-Laws - AT : Only the business loss can be carried forward u/s 72 of the Act and it can also be set off only against the business income of the assessee. In present case, assets sold were capital assets and capital gains on sale of capital assets is not to be set off against the brought forward loss of earlier years. .... - AT
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Transaction's Validity Not Solely Based on Written Agreement; Sham Document Conclusion Overturned.
Case-Laws - AT : Whether a transaction is shame - held that:- The existence or non-existence of written agreement would not be fatal to claim deduction on account of expenditure on account of commission. - the finding of the AO with regard to the agreement being a sham document cannot be sustained.... - AT
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High Court Upholds Reassessment After AO's Oversight on Unconfirmed Creditors in Income Escaping Assessment Case u/s 41(1.
Case-Laws - HC : Income escaping assessment - Where AO in the original assessment order,made an addition u/s 41(1) but not in respect of other unconfirmed creditors - This was a factual lapse, which was pointed out in the audit objection and then examined by the authorities. - reassessment upheld .... - HC
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Appellate Authorities Can Stay Tax Recovery During Appeals u/s 246/246A of Income Tax Act.
Case-Laws - HC : First appellate authority, namely; DCIT (Appeals) or CIT (Appeals) have inherent, implied and ancillary powers to grant stay against the recovery of disputed demand of tax while seized of the appeal filed before them in accordance with Section 246 or 246A of the Act. .... - HC
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Gift from Non-Resident Indian Deemed Bogus u/s 68 Due to Lack of Donor Verification, Classified as Undisclosed Income.
Case-Laws - HC : Undisclosed income u/s 68 - genuine or bogus gifts - The assessee failed to produce the donor as also his bank statement to prove that gift was actually given by the assessee. - NRI gift from a stranger was held to be bogus.... - HC
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Assessee Exempt from Advance Tax Due to Source Taxation; No Interest u/s 234B Applicable.
Case-Laws - HC : Assessee had no liability to pay advance tax in view of the fact that his entire income was subject to tax at source. Thus, no interest is chargeable u/s 234B..... - HC
Customs
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Petitioner Eligible for Brand Rate Drawback on Copper Under Customs Act Section 75; Copper Deemed Imported Material.
Case-Laws - HC : Drawback under Section 75 of the Customs Act - petitioner though applied for drawback at 'Brand Rate' is eligible for drawback on the copper used by them in the manufacture of the imported goods in view of the notification in which copper has been declared as deemed imported material under Section 75(1A) of the Customs Act..... - HC
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Unjust Enrichment Rule: Refunds of Customs Fines and Penalties Exempt from Unjust Enrichment Claims.
Case-Laws - AT : Applicability of unjust enrichment on refund of fine and penalty - in the case of refund of fine and penalty unjust enrichment is not applicable.... - AT
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Duty Drawback Claim Denied for Re-Exported Parts Not Detailed at Import u/s 74 of Customs Act.
Case-Laws - CGOVT : Revision application - Duty drawback claim under Section 74 of the Customs Act - re-export of goods - goods being usable parts/attachments of the main equipment which were never specifically and separately mentioned in detail at the time of claimed import any benefit of doubt cannot be extended..... - CGOVT
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India Sets Customs Duty Rates for Diamonds, Platinum, Gold, and Silver in 2012 Notification No. 01/2012-Customs.
Notifications : Prescribes rate of custom duty in Respect of diamonds, Platinum, Gold and Silver. - Ntf. No. 01 /2012-Customs Dated: January 16, 2012
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Customs Duty Rates for Gold & Silver Imports Clarified in Notification No. 02/2012-Customs, Excluding Post, Courier, or Baggage.
Notifications : Prescribes rate of custom duty on Import of Gold & Silver when imported other then through post, courier or baggage. - Ntf. No. 02/2012-Customs Dated: January 16, 2012
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Customs Duty Rates for Gold and Silver Imports by Passengers Set in Notification No. 03/2012-Customs.
Notifications : Prescribes rate of custom duty on Import of Gold & Silver by an eligible Passenger. - Ntf. No. 03/2012-Customs Dated: January 16, 2012
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Amendment to Tariff Values: Palm Oil, Palmolein, Crude Soybean Oil, and Brass Scrap Under Notification No. 03/2012-Customs.
Notifications : Amends notification no. 36/2001-Cus (N.T.) - Palm oil, Palmolein, Soyabean Oil (Crude) and Brass Scrap (all grades) - Traiff Values. - Ntf. No. 03/2012 - Customs (N.T.) Dated: January 16, 2012
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Anti-dumping duty update on PVC Resin from the EU under notification No. 08/2012-Customs.
Notifications : Amends notification No.70/2010-Customs - Anti-dumping duty on Poly Vinyl Chloride Paste Resin also called as Emulsion PVC Resin (hereinafter referred to as the subject goods), falling originating in, or exported from European Union. - Ntf. No. 08 /2012 – Customs (ADD) Dated: January 16, 2012
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Customs Extends Deadline for Utilizing Re-credited 4% CVD (SAD) in DEPB Scheme to March 31, 2012.
Circulars : Refund of 4% CVD (SAD)-Extension of time upto 31st March 2012, for using re-credited 4% CVD (SAD) amount in DEPB-Regarding. - Cir. No. 02/2012-Customs Dated: January 16, 2012
Service Tax
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Cenvat Credit Valid for Service Tax on GTA Services for By-Product Disposal Used in Sugarcane Cultivation.
Case-Laws - AT : Cenvat Credit of service tax paid on GTA for disposal of by product - sugarcane is definitely is a raw material for sugar and Press Mud and Ash are used as manure for growing sugarcane and therefore utilization of Press Mud and Ash are used for production of raw material which can be definitely said to be related to manufacture itselfu.... - AT
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Appellant's Agreement Shows Business Relationship, Not C&F Agent Status, Despite Being Labeled Consignment Agent by Principal.
Case-Laws - AT : Terms and conditions of the agreement clearly shows that though the appellant has been termed as consignment agent by the principal, the relation between them is business relation. Therefore, assessee cannot be treated as C&F agent.... - AT
Central Excise
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Mixing Polymers with Bitumen Isn't Manufacturing a New Product; No New Identity or Use Created.
Case-Laws - SC : Whether the addition and mixing of polymer and additives to base bitumen results in the manufacture of a new marketable commodity - The said process did not result in transformation of bitumen into a new product having a different identity, characteristic and use. It is well settled that mere improvement in quality does not amount to manufacture..... - SC
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'Consumer' in Note 11 of Chapter 29, Central Excise Tariff Act, 1985, includes all consumers, not just retail.
Case-Laws - AT : The word 'consumer' in the said Note 11 of Chapter 29 of the Central Excise Tariff Act, 1985 means any consumer including an industrial consumer and the said word is not related exclusively to retail consumer..... - AT
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Marketability Test Met for Ion Exchange Resins with Similar Products; Copolymer Beads Proven Marketable.
Case-Laws - AT : Manufacture of Ion Exchange Resins – it was not necessary that identical product should be marketable. Even if similar product is proved to be marketable, the test of marketability is satisfied. - copolymer beads are marketable. .... - AT
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Cenvat Credit Available for Paints Used in Factory Equipment Maintenance Under Central Excise Regulations.
Case-Laws - AT : Cenvat credit - Cenvat credit on the goods, i.e., paints, used for repair and maintenance of various equipments and the pipes and machines - goods which are used as paint within the factory of production are eligible for availing Cenvat Creditt.... - AT
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Education Cess Credit on Invoices from 100% Export Oriented Units Confirmed as Admissible Under CENVAT Credit Rules.
Case-Laws - AT : Admissibility of CENVAT Credit of Education Cess in respect of invoices issued by 100% EOU - The issue is no longer res-integra and credit of Education Cess is admissible.... - AT
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Revenue Must Consider All Depot Sale Rates for Fair Excise Valuation, Not Just Higher Priced Goods.
Case-Laws - AT : Valuation - central excise - The Revenue cannot pick only those matters where the goods were sold at higher rates from the depot and ignore the clearances which were ultimately sold at a lower value, though the duty was paid at the higher assessable value - Hence , that such excess payment and short payment have to be neutralised.... - AT
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Amendment Expands CENVAT Credit Eligibility for Services Related to Manufacturing per Notification No.7/2010-CE(NT) Clarification.
Case-Laws - AT : Notification No.7/2010-CE(NT), dt.27.2.10, replaces the words 'used in' by the words 'used in or in relation to' by amending Notification No.5/2006-CE(NT). Therefore, the services which have been used in relation to manufacture, the admissibility of CENVAT Credit cannot be disputed. .... - AT
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Central Excise Duty Amended: New Rates for Goods in Chapters 54-82 Effective January 16, 2012.
Notifications : Amends notification no. 05/2006-CE - Effective Rate of Duty on goods of Chapter 54 to Chapter 82. - Ntf. No. 02/2012-Central Excise Dated: January 16, 2012
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Excise Duty Amendment for EOUs, EHTP, STP Units on DTA Sales in Notification No. 03/2012-Central Excise.
Notifications : Amends notification no. 23/2003-CE - EOUs/EHTP/STP Units – Excise Exemption on Goods Cleared to DTA . - Ntf. No. 03/2012-Central Excise Dated: January 16, 2012
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Flexible Plastic Films Used in FandS Machines Qualify for Modvat Credit as Manufacturing Inputs Under Central Excise Rules.
Case-Laws - SC : Cenvat / Modvat Credit - the flexible plastic films used for testing the FandS machines are inputs used in relation to the manufacture of the final product and would be eligible for Modvat credit.... - SC
Case Laws:
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Income Tax
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2012 (1) TMI 25
Dis-allowance of interest expense from allegadly interest income by Revenue – assessee, wholly owned subsidiary of Power Finance Corporation (PFC) was incorporated as a special purpose vehicle (SPV) for inviting bids for construction and building of an ultra mega power project - Commitment Advance received from Power Procurement Utilities of the States concerned transferred to PFC - PFC paid interest on the unutilized Commitment Advance - interest paid to the Power Procurement Utilities on the Commitment Advance reduced from interest income received from PFC credited to the capital work in progress - Held that:- CIT (Appeals) and Tribunal have specifically held that the interest income & interest expense, both were on capital account. This is not a case of surplus funds, which were available and investment were made in fixed deposits to earn interest. The interest paid to the power procurement utilities on commitment advances was capitalized. Interest paid and interest received were inextricably linked and have a commonality about their nature and character. They cannot be treated differently. - Decided against the Revenue
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2012 (1) TMI 24
Penalty for concealment u/s 271(1)(c) – Business of money-lending – share application money deposited converted into loan in A.Y. 98-99 – non-acknowledgement of debt by receiver company(DISL) – no interest charged on such converted loans – wrote off loan as bad debts – deduction of bad debts disallowed by Department – Held that:- Though assessee furnished the director’s report, the actual write off, filing of balance sheets, memorandum and articles of association, letter to DISL etc. however, the assessee did not bring to the notice of the A.O. that no interest from the converted loan had been offered and assessed to income tax in any of the earlier previous years. If no interest was charged the amount cannot be considered as a money lending advance since the essence of money lending business is the charging of interest. When one of the important conditions for the allowability of bad debt u/s 36(2)(i) was not satisfied and the same was within the knowledge of the assessee, it was duty bound to disclose the same in order to show its bonafide. The particulars furnished by the assessee were thus not complete, and were, therefore, inaccurate. Order of the Tribunal restoring the penalty is upheld. - Decided against the Assessee.
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2011 (12) TMI 162
Whether the brought forward loss from the earlier years can be set off against the income from "capital gains" u/s 72 – land, building and bore well used for business purposes being sold – assessee claiming it to be business assets - Held that:- Only the business loss can be carried forward u/s 72 of the Act and it can also be set off only against the business income of the assessee. In present case, assets sold were capital assets and capital gains on sale of capital assets is not to be set off against the brought forward loss of earlier years. Case is posted before the Division Bench to give effect to the order of the special Bench - Decided against the assessee.
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2011 (12) TMI 161
100% EOU – software development – sale of software to its subsidiary company - computation of Arm Length Price in respect of interest free loans given to its wholly owned subsidiary in USA - Revenue charging notional interest on the loan – TNMM method vs CUP method - deduction u/s 10(B) – assessee claiming positive income of profitable units as deduction & carrying forward the loss of other units – Held that:- The international transaction of interest free loan to the AE is an independent transaction, requiring determination of ALP. Since neither the assessee nor TPO/AO and CIT(A) have examined the applicability of CUP method as the most appropriate method in order to determine ALP of the international transaction of interest free foreign currency loan to its subsidiary by the assessee, the matter is restored to the file of the AO for fresh adjudication and to recompute the ALP of the aforesaid international transaction following CUP method. In respect of deduction u/s 10B, order of CIT(A) providing total income arrived at by setting off loss of units against profits of other units allowed as deduction is set aside and matter is restored back to the file of the AO for deciding the issue afresh. - Decided in favor of assessee for statistical purposes.
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Service Tax
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2012 (1) TMI 28
Whether service provided to the assessee by a non-resident prior to insertion of Section 66A of the Finance Act, 1994, is exigible to service tax – The provision was introduced on 18.4.2006 - period involved 9.7.2004 to 18.1.2006 - Held that:- Any service provided to the assessee by a non-resident prior to insertion of Section 66A of the Finance Act, 1994, was not exigible to service tax. See Commissioner of Central Excise v. Bhandari Hosiery Exports Ltd. (2009 - TMI - 35335 - Punjab And Haryana High Court ) and Indian National Ship Owners Association v. Union of India (2008 -TMI - 32013 - HIGH COURT OF BOMBAY) – Decided against the Revenue.
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Central Excise
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2012 (1) TMI 27
Whether the addition and mixing of polymer and additives to base bitumen results in the manufacture of a new marketable commodity and as such exigible to Excise duty – assessee engaged in the supply of Polymer Modified Bitumen (PMB) & Crumbled Rubber Modified Bitumen (CRMB) – Revenue contended that such process carried out amounted to manufacture – Held that:- In this case, neither in the Section Note nor in the Chapter Note nor in the Tariff Item do we find any indication that the process indicated is to amount to manufacture. Thus, it is evident that the said process of adding polymers and additives to the heated bitumen to get a better quality bitumen, viz. PMB or CRMB, cannot be given an extended meaning under the expression manufacture in terms of Section 2(f) (ii) of the Act. The said process did not result in transformation of bitumen into a new product having a different identity, characteristic and use. It is well settled that mere improvement in quality does not amount to manufacture. Thus, PMB or CRMB cannot be treated as bituminous mixtures falling under CSH 27150090 and shall continue to be classified under CSH 27132000 pertaining to tariff for petroleum bitumen. - Decided against the Revenue.
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2012 (1) TMI 19
Whether the glass bottles and crates which are used for selling beverages and were re-usable would be exigible to excise duty or not – Section 35 G of the Central Excise Act - Held that:- Once there is a pure finding of fact that beverage alone are sold without selling of bottles and crates then it would be obvious that no excise duty would be chargeable on the bottles and crates. No question of law much less a substantive question of law within the meaning of Section 35G of the Act would arise. - Decided against the Revenue.
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2012 (1) TMI 17
Cenvat / Modvat Credit - plastic films/poly paper used for testing machines - for forming commercial/technical opinion as to their marketability/ excisability - whether plastic films/poly paper would be eligible for credit - whether use of plastic films/poly paper used for testing machines would be held as used in the manufacture of or use in relation to the manufacture of the final products - held that:- the process of testing the customised FandS machines is inextricably connected with the manufacturing process, in as much as, until this process is carried out in terms of the afore-extracted covenant in the purchase order, the manufacturing process is not complete; the machines are not fit for sale and hence not marketable at the factory gate. - the manufacturing process in the present case gets completed on testing of the said machines and hence, the afore-stated goods viz. the flexible plastic films used for testing the FandS machines are inputs used in relation to the manufacture of the final product and would be eligible for Modvat credit under Rule 57A of the Rules. - Decided in favor of assessee.
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