TMI Tax Updates - e-Newsletter
January 21, 2013

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. ACTUAL NATURE OF USE OF VEHICLE IS IMPORTANT – lessor is entitled to higher rate of depreciation when vehicle is used for running on hire, though by lessee.

   By: DEVKUMAR KOTHARI

2. IS PAN MANDATORY for Tax Collection at Source (TCS)

   By: SPIC Ltd.

Notifications

Income Tax

1. 2/2013 - dated 14-1-2013 - IT

DTTA - AGREEMENT FOR AVOIDANCE OF DOUBLE TAXATION AND PREVENTION OF FISCAL EVASION WITH FOREIGN COUNTRIES - NETHERLANDS

Highlights / Catch Notes

Income Tax

• Court Quashes Attachment Order on Bank Accounts and Rental Income; New Order Allowed u/s 226(3).

  Case-Laws - HC : Attachment of petitioner's bank accounts and rental income u/s 226(3) - the attachment order 17.10.2012 is quashed & given liberty to pass a fresh speaking order - HC
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• Taxpayer's Land Conversion to Stock-in-Trade Upheld; Section 45(2) Applied, Section 50C Not Applicable for 2000-01 Gains.

  Case-Laws - AT : Short term capital gain arising out on transfer of land - nothing illegal about the conversion of land by the assessee into stock -in-trade - no infirmity in the order of CIT(A) in applying the provisions of section 45(2)& provisions of section 50C will not apply to computation of capital gain on conversion of land in assessment year 2000-01 - AT
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• Company Advances to Individual Deemed Dividends u/s 2(22)(e) of Income Tax Act.

  Case-Laws - AT : Deemed dividend u/s 2(22)(e) - payments made by the company towards advances to the assessee fulfils all the characteristics of 'dividend' as envisaged in S. 2(22)(e) - AT
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• Taxpayer Shifts Burden to Authorities After Proving Deduction Permissibility.

  Case-Laws - AT : Once the assessee has discharged the initial onus to prove that the deduction is allowable, the onus to prove that the deduction is not admissible, shifts to the tax authorities - AT
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• Chit dividends exempt from TDS deduction for subscribers u/s 194A of Income Tax Act.

  Case-Laws - AT : Non deduction of TDS on distributed chit dividends to subscribers - the assessee is not liable to deduct TDS under Sec. 194A - AT
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• Income Tax Act Section 68: Credits in Managing Director's Account Explained, No Additional Taxation Required.

  Case-Laws - AT : Additions u/s 68 - Even if genuineness is not accepted and consequent addition is made u/s. 68, still the sources of credits in the account of Managing Director stands explained, as they are coming out of funds treated as his income - AT
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• Netherlands and Partner Country Sign Agreement to Avoid Double Taxation and Combat Tax Evasion, Enhancing Trade Clarity.

  Notifications : DTTA - AGREEMENT FOR AVOIDANCE OF DOUBLE TAXATION AND PREVENTION OF FISCAL EVASION WITH FOREIGN COUNTRIES - NETHERLANDS - Notification
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Customs

• Differential Duty Claims on Undervalued Imports and Countervailing Duty from USA Deemed Unmaintainable.

  Case-Laws - AT : Undervaluation of imported consignments - The demand for differential duties on account of imports from other countries and differential duty on account of CVD from USA are not maintainable. - AT
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Service Tax

• Court Rules 5% Service Tax Rate Applies for Events Before May 14, 2003, Not 8% Post-Change.

  Case-Laws - HC : Service tax rate - chargeable @ 5% or @8% - Since the taxable event in the present case took place prior to 14.05.2003, the rate of tax applicable prior to that date would be the one that would apply, thus the rate of 5% and not the rate of 8%. - HC
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Central Excise

• Cenvat Credit: Revenue's Non-Receipt Claim Questions Final Product Manufacturing Process Validity.

  Case-Laws - AT : Cenvat credit of duty paid on the inputs - If the Revenue's case as regards non-receipt of inputs is accepted, a vacuum remains to be answered as to how the final product stands manufactured - AT
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• Cenvat Credit Allowed for Gardening Services When Mandated by Pollution Control Board for Plantation Maintenance.

  Case-Laws - AT : Ineligible cenvat credit - service tax on gardening services - Thus if the condition of the Pollution Control Board is to maintain adequate plantation, undoubtedly the respondent herein would require professional services of gardening service providers. - Credit allowed - AT
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Case Laws:

• Income Tax

• 2013 (1) TMI 437
  Attachment of petitioner's bank accounts and rental income u/s 226(3) - disallowance u/s 10B and 14A - Held that:- The petitioner's appeal against order dated 28.12.2011 u/s 246 wherein assessment was completed at an income of approximately four times of the returned income and tax demand including interest under Section 234B/C was raised is pending before the Appellate Authority. The petitioner had filed an application under Section 220(6) before the AO requesting that the entire demand was disputed in the appeal and since it was the first appeal, the demand may be stayed till the disposal of the appeal. It is also a matter of record and as per the case of the respondents themselves, a sum of Rs.25,00,000/- has been paid by the assessee against the said demand and a sum of Rs.44,86,414/- had also been collected. Under Section 220(6) where an appeal was pending against the assessment order, the assessee was not to be treated as an assessee in default in respect of the amount in dispute in appeal, in the discretion of the Assessing Officer on such conditions as he may think fit to impose. The Assessing Officer is, thus, required to pass a reasoned speaking order. As in the present case order passed by respondent no. 2 cannot be termed to be a speaking order in consonance with the requirements of Section 220(6), therefore the attachment order 17.10.2012 is quashed & given liberty to pass a fresh speaking order within 15 days from the date of receipt of this order.

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• 2013 (1) TMI 430
  Unexplained investments u/s 69 - CIT(A)deleted the addition - Held that:- AO was clearly wrong in holding against the assessee by concluding that the assessee had not offered any explanation. It is clear that the assessee had offered an explanation. However, there is no express finding of the CIT(A) or of the Tribunal as to whether the explanation offered by the assessee was satisfactory or not. Although, to be fair to the assessee, an inference could possibly be gathered that the CIT(A) had found the explanation to be satisfactory. But the matter cannot be decided on inferences and the authorities below have to arrive at the clear and express conclusion as to whether the explanation offered by the assessee was satisfactory or not. Also that the Tribunal is the final fact finding authority under the scheme of Income Tax Act and therefore, it is incumbent on the Tribunal to return a finding in clear and express terms. This is so, because it is only when the finding is clear that a question of law based on those findings can be examined by the High Court. Consequently it would be appropriate to remit the matter to the Tribunal to return a clear finding as to whether the explanation offered by the assessee is satisfactory or not - in favour of the revenue by way of remand - parties shall appear before the Tribunal in the first instance on 06.05.2013.

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• 2013 (1) TMI 429
  Application for settlement of cases - grievance on application of 12% gross profit rate on the ground that such gross profit rate could be applied during the course of the assessment and cannot be made part of settlement, when the same was not an issue raised by the CIT in his report submitted in terms of Rule 9 of Rules - Held that:- No doubt, the CIT in his report under Rule 9 of the Rules, has not referred to gross profit rate applied by the petitioner as an objection for the settlement but the fact remains that the Commission has found that the rate of profit adopted by the assessee was in fact leading to undisclosed income and thus made an addition on the basis of the information submitted by the assessee. In fact the order passed by Delhi High Court in M/s Godwin Steels Pvt. Ltd [2012 (3) TMI 102 - DELHI HIGH COURT] negates the arguments raised by the petitioner wherein court held that the Commission has to consider the material brought on record before it and that consideration means independent examination of the evidence and the material on record. The judgment in Brij Lal's case (2010 (10) TMI 8 - SUPREME COURT) has no applicability to the facts of the present case as there is no finding that the gross profit ration can be applied only during the assessment proceedings and not in the proceedings under Section 245-C - no interference in exercise of the writ jurisdiction of this Court as a part of the process of judicial review required.

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• 2013 (1) TMI 428
  Jurisdiction power u/s 263 by CIT(A) - AO did not examine about the change made in the method of valuation of “rejected castings” during the year under consideration - Held that:- As decided in Malabar Industrial Co. Ltd. v. CIT [2000 (2) TMI 10 - SUPREME COURT] the provision of Sec 263 “cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer” and “it is only when an order is erroneous that the section will be attracted”. As in the present case assessee has changed the method of valuation of “rejected castings” stock and the same has resulted in reduction of profit. The assessee’s argument that such kind of changes is permissible may also be right. However, the scope of tribunal while dealing appeals filed against revision orders passed u/s 263 is limited. It was not shown as the AO did make enquiry on this issue and has taken a plausible view by duly applying his mind. Also no discussion was find on the impugned issue in the assessment order. It was also not shown that the view entertained by the CIT is not sustainable in law. In fact, the CIT has only pointed out that the AO has not made proper verification of the impugned issue and the administrative Commissioner has not expressed any opinion or given any direction about specific treatment of the impugned issue. He has only directed the AO to examine the impugned issue. It is settled proposition of law that the lack of enquiry would render the assessment order an erroneous one no infirmity in the order passed by CIT u/s 263 - against assessee.

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• 2013 (1) TMI 427
  Short term capital gain arising out on transfer of land - assessee had acquired certain plots of land during assessment year 1991-92 which was converted into stock-in-trade on 31.3.2000 by passing a Board Resolution - whether on 31.3.2000 when the land had not been converted into non-agricultural land, it can be considered as a non-agricultural land and whether the conversion by the assessee into stock-in-trade was legally valid? - Held that:- Even though the land had not been converted into non-agricultural land on 31.3.2000, there is no dispute that the land was situated in the industrial zone and was meant for industrial use. As decided in CWT Vs Officer-in-charge (Court of Wards) (1976 (8) TMI 2 - SUPREME COURT), that for a land to be agricultural, it was required to be shown its connection with agricultural purpose and user and not merely possibility of usage by some future owner. Also that the entry in the revenue records though prima facie constituted good evidence but was not conclusive in determining the true nature of land. In the present case, no connection of the land to the agricultural purposes or user is established. In fact, land was not meant for agricultural purposes and had also not been used by the assessee for agricultural purposes. Thus, even though the land had not been converted into non-agricultural it remained non-agricultural land. The conversion into non-agricultural land was necessary for the purpose of usage of the land for industrial purpose and merely because the land was not converted the same could not be considered as agricultural as there was no connection of the land to the agricultural purpose and user. Argument of the DR that since land was beyond Municipal limits the same has to be considered as agricultural cannot be accepted as it is not the location of the land but its connection with agricultural purpose and user which makes it agricultural. The term “agricultural land” has not been defined either in the Income tax Act or in Wealth Tax Act, therefore, tests laid down by the Hon'ble Supreme Court to determine the true nature of land in a case relating to Wealth tax Act will be equally applicable in case of Income tax Act. Thus land was non-agricultural on the date of conversion on 31.3.2000 and, therefore, a capital asset. The conversion into stock-in-trade was supported by Board Resolution & also declared by the assessee in the return for the assessment year 2000-01. The assessee was also involved in real estate activities and therefore conversion of the non-agricultural land has to be considered as stock -in-trade of the business of the assessee. The notes to the audited accounts also mentioned this fact and differences between cost of land and market value had been credited into capital reserve. Therefore, see nothing illegal about the conversion of land by the assessee into stock -in-trade - no infirmity in the order of CIT(A) in applying the provisions of section 45(2)& provisions of section 50C will not apply to computation of capital gain on conversion of land in assessment year 2000-01 as the said provisions were effective only for assessment year 2003-04 - in favour of assessee.

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• 2013 (1) TMI 426
  Deemed dividend u/s 2(22)(e) - advances taken by assessees from a company in which they were having substantial stakes holding 18.69% of shares - reopening of assessment - Held that:- It is the case of the assessee that since it has mortgaged its property with the bank to enable the company to avail finance facilities from the bank, the advance by the company is not a gratuitous loan or advance, but in return for an advantage which the company has already availed on account of mortgaging of properties done by the assessees. However, it is a fact on record that the assessees have not produced any documents to prove the fact that the personal properties of the assessees were actually mortgaged with the bank for the sake of availing loans by the company. The letter dated 31.5.2008 of the Andhra Bank, submitted does not establish the fact that the properties were mortgaged with the bank. The assessees have also not produced any correspondence made either with the bank or with the company towards release of the properties mortgaged, as was the fact in the case of Pradip Kumar Malhotra (2011 (8) TMI 16 - CALCUTTA HIGH COURT) before the Hon'ble Calcutta High Court. In the absence of conclusive evidence to prove the fact of mortgage and also the fact that the assessee has not requested the bank for release of the mortgage, the ratio of the decision in the case of Pradip Kumar Malhotra (supra) will not apply to the facts of the present case. As the payments made by the company towards advances to the assessee fulfils all the characteristics of 'dividend' as envisaged in S. 2(22)(e),there cannot be any other conclusion excepting to consider the advances given by the company to the assessees as deemed dividend at the hands of the assessee - against assessee.

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• 2013 (1) TMI 425
  Claim of loss on sale of car rejected - assessee submitted that car is a business asset and used for the purpose of business - Held that:- It is not in dispute that the claimed loss on sale of cars was related to the sale of an imported car used as business asset for the business purpose by the assessee. It is also not in dispute that the assessee did not claim any depreciation on this imported car and he was not allowed any depreciation on it in view of prime condition attached to section 2(11). Thus CIT(A) rightly held that the loss incurred on sale of imported car was of capital loss. Hence, the same cannot be charged to P&L account because the imported car was not a part of block of asset and the same cannot be allowed as revenue loss - unable to see any reason to interfere with the impugned order in this regard - against assessee. Claim of interest rejected making reference to provisions of sec. 14A, 36(1)(iii) and 43B - Held that:- In the cases of S.A. Builders (2006 (12) TMI 82 - SUPREME COURT) and Madhav Prasad Jatia (1979 (4) TMI 2 - SUPREME COURT) it is held that the authorities should have ensured as to whether the interest free loan was given to the sister concern (which is a subsidiary of the assessee) as a measure of commercial expediency and if it was, then it should have been allowed. But in the present case, the issue of commercial expediency in advancing interest free loan to the sister concern has not been considered by the authorities below as assessee has neither submitted any details pertaining to the financial charges and interest as claimed in the Profit & Loss account nor explained the purpose of interest bearing loan and its use for commercial expediency and never furnished the source of funds of investment yielding tax free interest and dividend for the assessee. The onus is on the assessee to prove that the expenditure or loss is admissible. The assessee has to prove that the expenditure or loss claimed is an admissible deduction (Commissioner of Income Tax v Calcutta Agency Ltd. (1950 (12) TMI 4 - SUPREME COURT). If the assessee does not prove or fails to prove that the deduction is admissible, then the inference goes against him/her (Commissioner of Income Tax v Ashwani Kumar Liladhar (1996 (7) TMI 111 - ALLAHABAD HIGH COURT). However, once the assessee has discharged the initial onus to prove that the deduction is allowable, the onus to prove that the deduction is not admissible, shifts to the tax authorities (Janyantilal Kishorilal v CIT(1984 (8) TMI 54 - MADHYA PRADESH HIGH COURT). Since this fact is not in dispute that the assessee did not submit books of account and vouchers before authorities below to show that the interest bearing loans were taken for business purpose and indeed used for the same and investment which accrue tax free income were made from difference source of funds and which has no relation to interest bearing loans. At the same time, there is no material to show that the AO had an opportunity to examine the issue of claim u/s 36(1)(iii) and to determine the amount of expenditure incurred in relation to income which does not form part of total income in accordance with such method prescribed in section 14A(2) - the issue of disallowance of financial charges (interest) requires de novo adjudication thus restored back to the file of AO - in favour of assessee for statistical purposes.

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• 2013 (1) TMI 424
  Non deduction of TDS on distributed chit dividends to subscribers - assessee company is engaged in the business of running chit funds - CIT(A) deleted the order of default u/s 201 & 201(1A) - Held that:- As decided in Delhi High Court in the case of Sahib Chits(Delhi)(P)ltd. [2009 (7) TMI 75 - DELHI HIGH COURT], and CIT V/s. Bilahari Investment Pvt. Ltd.(2006 (6) TMI 59 - MADRAS HIGH COURT) as affirmed by the Apex Court [2008 (2) TMI 23 - SUPREME COURT] held that the payment of dividend to the subscribers of a chit towards dividend does not partake the character of interest and accordingly, the assessee is not liable to deduct TDS under S.194A and not liable to interest u/s. 201(1) and 201(1A) - against revenue. Following the consistent view taken by the decision in similar matters by the ratio of the decision of the Madras High Court in the case of CIT V/s. L.G.Ramamurthy and Others [1976 (10) TMI 18 - MADRAS HIGH COURT] the provisions of S.40(a)(ia) of the Act are not attracted, and accordingly the CIT(A) was justified in deleting the addition made by the assessing officer by resorting to disallowance in terms of S.40(a)(ia). Expenditure incurred on purchase of various items - whether partake the character of payments under the works contract and tax was deductible u/s 194C which was not deducted - Held that:- Relying on decision in the case of CIT Vs. Glenmark Pharmaceuticals Ltd. (2010 (3) TMI 289 - BOMBAY HIGH COURT) wherein the Bombay High Court took note of the amendment to sec. 194C (w.e.f. 01/10/2009 and held that work does not include manufacture and supply of products according to specification of customers by using materials purchased from third parties. Expenditure towards advertisement charges - demand raised by the AO u/s 201(1) - the CIT(A) deleted the same, however sustained the interest u/s 201(1A) - Held that:- CIT(A) relying on the decision of Hindustan Coca Cola Beverage (P) Ld. Vs. CIT (2007 (8) TMI 12 - SUPREME COURT OF INDIA)referring to the CBDT Circular No. 275/201/95-IT(B), dated 29/01/1997 wherein held that where deductee, recipient of income, has already paid taxes on amount received from deductor, department once again cannot recover tax from deductor on same income by treating deductor to be assessee-in-default for shortfall in its amount of tax deducted at source. The Apex Court also . However, this will not alter the liability to charge interest, therefore, confirm the order of the CIT(A) for charging of interest till the date of payment of tax by the assessee - against revenue.

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• 2013 (1) TMI 423
  Assessments u/s. 153A - search and seizure operation - items which have already been disclosed in the original return of income shall fall outside the scope of assessments u/s. 153A , if no incriminating material relating thereto was found during the course of search - addition on Gifts/loans from relatives AY 2002-03 and 2003-04 - Held that:- As per the legal position that these gifts/loans from relatives were disclosed by the assessee in the return of income filed & the department did not find any incriminating material to create any doubt about the genuineness of the same additions liable to be deleted. Gifts/loans from relatives AY 2006-07 and 2008- 09 - Held that:- AO did not discuss anything about the materials or documents that were filed by the assessee to prove the genuineness of the gifts/loans received from relatives. The CIT(A) has also confirmed the said additions without actually examining or commenting upon the documents filed by the assessee, thus passing a non speaking order - Thus the orders of tax authorities do not speak about the objective analysis, if any, carried on by them on the documents filed by the assessee. As the assessee has filed confirmation letters obtained from the donors/lenders along with the details of bank account, etc. this issue requires fresh examination at the end of the Assessing Officer. Addition of loans/gifts received from friends - Held that:- All these amounts have been assessed in the assessment years 2002-03 to 2004-05, assessment years fall in the category of concluded assessments. As noticed that the amounts received from Shri Siddique and Shri T. Mohammed find place in the balance sheet filed by the assessee and other gifts find place only in the cash flow statement. It is not clear as to whether the cash flow statements were filed along with the returns of income originally filed u/s 139 or they were filed along with the returns filed u/s. 153A. If any of the amount is disclosed for the first time in the returns of income filed u/s. 153A either in the Balance sheet or in the cash flow statement, it is susceptible for verification in the assessment proceeding carried out u/s 153A, even if the concerned assessment falls in the category of concluded assessments. Hence, the facts relating to the items listed requires verification in order to find out the fact of time of disclosure, i.e., whether they have already been disclosed to the department in the return of income filed u/s 139 prior to the date of initiation of search or not. Addition pertaining to “discrepancy/deficiency in cash flow” - assessee owned two vehicles and the income there from was offered by him as per the provisions of sec. 44AE - Held that:- The tax authorities have made the assessment of the “Depreciation amount” without properly appreciating the accounting principles. In the instant case, though the assessee has declared income from vehicles u/s 44AE, the relevant section clearly states that the depreciation shall be deemed to have been allowed. Hence, the net cash inflow from the operation of vehicles would be the amount of income computed as per the provisions of sec.44AE plus the depreciation allowable on those vehicles. Assessee was right as per the accounting principles in treating the depreciation amount as an item of cash inflow - direct the AO to delete the addition. Addition relating to sale of trees - Held that:- As per the assessee, this income was declared by him in the original return of income filed u/s 139 prior to the date of search. It is also stated that the department did not unearth any material to create any suspicion over the said income. Under these circumstances, this item of income falls outside the scope of the provisions of sec. 153A. Disallowance of Foreign travel expenses - Held that:- Though the assessee has disputed these additions yet no material was filed before us to substantiate his claim that the relevant expenses were sponsored by others. Amount received from the son of the assessee - age was barely 21 years at the time of search - Held that:- Tax authorities have not brought on record the result of objective analysis, if any, carried on by them on the documents filed before them by the assessee. From the paper book filed by the assessee, as noticed that the documents pertaining to the business carried on by assessee's son in abroad, though relating to subsequent years, have been filed. The said documents reveal about the success of the business carried on by him. Though he was of 21 years old at the time of search, yet the fact remains that he was working/doing business abroad. The tax authorities should not take adverse view by considering his age. Tax authorities have not carried out any objective analysis, but instead carried away by non-compliance of formalities under FERA Act - the addition made on this account in assessment years 2006-07 and 2007-08 requires fresh examination - restore the matter relating thereto the file of AO. Estimation of business income on account of suppression of sales - Held that:- Since the assessee himself has deposed that the sales suppression was to the tune of 8%, in our view, it would be justifiable to determine the sales suppression at 8% of the total turnover for all the years under consideration, particularly in view of the fact that the department did not seize any other material to make estimate of sales suppression in any other manner. It is pertinent to note that the very same methodology was adopted in the case of the company, M/s South Malabar Steels & Alloys Pvt. Ltd, sister concern also. Gross profit rate to be adopted for estimating the income for all the years - Held that:- It would be just and reasonable, if the Gross profit rate declared by the assessee in various years is adopted to determine the undisclosed income of the respective years. Undisclosed income set of against the additions made on account of investments - Held that:- There cannot be any dispute that the addition of income as well as the expenditure incurred out of that income would result in double assessment of same income, which is not intended by the statute. As per the sworn statement given by the assessee, the undisclosed income has been utilised for the purchase of property and also in construction. Thus, the plea of the assessee is that he has used the undisclosed income for purchase of property also. In the instant case, the AO did not make any addition towards investment made in the purchase of any undisclosed property, meaning thereby the assessee has accounted for all the properties purchased by him. The cash credits are generally introduced in the books only to bring sources for such investments. Hence, if any addition is made towards unproved cash credits, indirectly it indicates that the undisclosed income has been used as a source in the form of cash credit for making investments. Accordingly, we are of the view that the undisclosed business income can also be given set off against cash credit addition also

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• 2013 (1) TMI 422
  Suppression of sales - additions u/s 68 - survey u/s 133A - assessee challenged the validity of initiation of proceedings u/s 153C - Held that:- It is an undisputed fact that the Managing Director of the assessee company has confessed about the suppression of purchases and sales in the sworn statement taken u/s 132(4). Besides the above, the D.R has stated that the department has seized two documents belonging to the assessee company during the course of search, viz., OPA -19, which contained details of purchase of 7.46 acres of land and another one numbered as OPA-36, which contained details of sale of rubber by the assessee company. Hence, it cannot be said that the AO has initiated the proceedings u/s 153C of the Act on the basis of sworn statement only - assessee, in fact, did not retract from the statement given by him in the sworn statement. What is stated is a general statement that the correct position of facts shall be known on verification of various records. Hence, it cannot be said that the assessee has retracted from the statement given by him u/s 132(4) - AO was right in law in initiating proceedings u/s 153C - against assessee. Violation of principles of natural justice by not confronting the documents obtained by the AO from the third parties - Held that:- There cannot be any dispute that the appellate proceedings are also considered as continuation of assessment proceedings in certain aspects, particularly in view of the fact that the powers of the CIT(A) are co-terminus with that of the AO. Hence, the assessee should not have any grievance in this regard after the completion of appellate proceedings, as the first appellate authority has duly considered the views expressed by the assessee on the documents relied upon by the assessing officer. Accordingly, we do not find any merit in the grounds raised on this issue. Correctness of estimation of suppressed business income - Held that:- CIT(A) concluded that the estimation of huge unaccounted turnover made by the AO was not supported by any specific evidence and hence the said estimates are not sustainable. AO had taken adverse views with regard to the discrepancies noticed by the Commercial taxes department & the power theft alleged by the Electricity board officials. The AO had adopted the basis of “Power consumption factor” supplied by the KSIDC, which was proved to be unreliable as the KSIDC is a financial institution and it processes the project reports submitted by the prospective borrowers. The “power consumption factor” submitted by the KSIDC is based on such project reports as the report has got the heading viz., “NORMS AND ASSUMPTIONS UNDERLYING COST OF PRODUCTION” which clearly shows that the “Power consumption factor” is an assumption/norm fixed by KSIDC for processing the project reports. There cannot be any dispute that the KSIDC, being a financial institution, cannot be considered as a technical expert and hence reliance placed by the AO on the said report, in our view, is totally wrong. By placing reliance on the deposition of sworn statement given by the Managing director Shri Ummer u/s 132(4) the CIT(A) estimated the actual turnover at 108% of the disclosed turnover. Profit to be estimated on the suppressed turnover - AO had adopted the Gross profit rate of 14.61% whereas assessee filed a revised workings according to which the Gross profit rate worked out to 9.73% - CIT(A) determined the suppressed sales at 8% of the disclosed turnover - - Held that:- The admission made by the Managing director is an important piece of evidence. If the assessee had not indulged in such kind of trade practices, there would not have been any occasion for the Managing director to give a statement about the suppression of purchases and sales. Hence, in the facts and circumstances of the case, since the managing director himself has deposed that the sales suppression was to the tune of 8%, the CIT(A) was justified in determining the sales suppression at 8% of the total turnover, particularly in view of the fact that the department has not seized any material to make estimate of sales suppression in any other manner. There cannot be any dispute that the rate of gross profit depends upon various factors like purchase quantity/rate, sales quantity/rate, variation of rates, cost of manufacture and its variation etc.. A significant increase in the selling rate would boost the rate of gross profit. This point was exactly clarified by the assessee before the CIT(A) with regard to the variation of rate of Gross profit for the assessment year 2008-09. The workings given by the assessee disclosed the fact that the sharp rise in the selling rate of finished goods has helped in the increase of Gross profit rate for the assessment year 2008-09 by 6.02%. Accordingly, CIT(A) has given a specific finding that the effect of increase in prices in the year relevant to the assessment year 2008-09 is evened out, i.e., (9.73% (-) 6.02%), the gross profit rate for that year would work out to 3.71% only. Accordingly, CIT(A) has opined that the gross profit rate of 3.71% was comparable with the gross profit declared in some of the years. Having opined so, still the CIT(A) held that the fluctuation in the GP rate in various rates are unreasonable. Thus the said decision of the CIT(A) does not have any basis. Having understood that there might be various reasons for the fluctuation in the rate of G.P, thus Ld CIT(A) should not have come to such a conclusion. Thus order of CIT(A) on this issue is modified accordingly as it would be just and reasonable, if the Gross profit rate declared by the assessee in various years is adopted to determine the undisclosed income of the respective years. To determine the total turnover at 108% of the disclosed turnover the amount of Gross Profit by applying the rate of Gross profit disclosed by the assessee for the respective assessment years on the turnover determined in first step above & from the amount computed in second step to deduct the Gross profit already disclosed by the assessee the resultant figure is the undisclosed income of the respective years. Addition u/s 68 - CIT(A)deleted the addition - Held that:- Fact remains that the cash credits sought to be assessed in the hands of the assessee herein have already been assessed in the hands of the Managing Director Shri K.P. Ummer. The assessment of very same amount both in the hands of the Managing Director Shri K.P.Ummer and also in the hands of the assessee company would lead to double assessment of the very same amount, which is against the scheme of the Act. Relying on ITO Vs. Ch. Atchiah (1995 (12) TMI 1 - SUPREME COURT), wherein observed that under the Income tax Act 1961, the ITO can and he must, tax the right person and the right person alone who is liable to taxed, according to law, with respect to a particular income. In the instant case, the sources for the credits noticed in the account of Managing Director is already explained in his individual assessment as loans/gifts. Thus, the sources of credits stand explained. Even if genuineness is not accepted and consequent addition is made u/s. 68 , still the sources of credits in the account of Managing Director stands explained, as they are coming out of funds treated as his income - no flaw in final decision of CIT(A) on this issue.

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• 2013 (1) TMI 421
  India-USA DTAA - non deduction of TDS on payments/remittances - proceedings under section 201(1) - assessee contested that the services rendered were not in the nature of royalty as contemplated in the provisions of section 9(1)(vi) also not in relation to development or transfer of any technical plan or technical design or Technical Services - Held that:- From a perusal of the order of assessment, it is found that all the submissions of the assessee before the AO and his findings thereon are only in respect of whether the payment made by the assessee to the consultant M/s. IBM Corporation, USA was or was not taxable in India as royalty under Article 12(3) of the India-USA, DTAA or as Fees for included services under Article 12(4) of the India-USA, DTAA. There was no submission by the assessee or examination by the AO as to whether or not the payment made to the consultant M/s. IBM Corporation, USA for services rendered to the assessee pursuant to their agreement dt.20.3.2006 are not in the nature of royalty as contemplated by the provisions of section 9(1)(vii) is exigible to tax in India as per domestic law thereby attracting the provisions of TDs under section 195. In this factual matrix, the fundamental issue of whether the said payments to M/s. IBM corporation, USA by the assessee for services rendered are in the nature of royalty as per the provisions of section 9(1)(vii) and exigible to tax there under in India requires to be examined and therefore remit the same issue to the file of the AO for examination and finding thereon after affording the assessee adequate opportunity of being heard in the matter - in favour of assessee for statistical purposes.

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• 2013 (1) TMI 420
  Assessment proceedings u/s. 153C - search & seizure operations - no search warrant in the name of M/s. Global Estate (appellant firm) has been served on it therefore assessment proceedings u/s 153A are without jurisdiction and illegal - Held that:- The provisions contained u/s 158BD are more or less similar to provisions contained in sec. 153C except “undisclosed income” which is mentioned in sec. 158BD, however, in sec. 153C, it is mentioned any money, bullion, jewellery or other valuable articles or things or books accounts or documents seized or requisitions. The conditions precedent for invoking provisions u/s 158BD as decided in Manish Maheshwari case (2007 (2) TMI 148 - SUPREME COURT OF INDIA) are therefore same as are provided u/s 153C. It is admitted fact that no search warrant was executed in the case of the present assessee u/s 132(1), therefore, provisions of sec. 153A were not applicable. The AO has, therefore, proceeded against the assessee u/s 153C. This view is further strengthened in the case of Vijaybhai N. Chandrani vs. ACIT [2010 (3) TMI 770 - GUJARAT HIGH COURT] in which it was held that under section 153C notice can be issued only where the money, bullion, jewellery or other valuation article or thing or books of account or documents seized or requisitioned belong to such other person, whereas under section 158BD if the AO was satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 or whose books of account or other documents or assets were requisitioned under section 132A, he could proceed against such other person under section 158BC. Considering the facts recorded the assessee in the present case had a case for quashing of proceedings u/s 153C. No material is produced to prove that the AO in the case of person searched was satisfied that any money, bullion, jewellery or other valuable articles or things or books accounts or documents seized or requisitioned belongs to or belong to a person other than the person referred to in sec. 153A. No material is produced to show if any satisfaction was recorded by the AO in that case that the seized material belongs to any person other than the person with respect to whom search was made u/s 132 - no satisfaction as required u/s 153C was recorded by the AO in the case of person searched - no infirmity in the order of the CIT(A) in quashing the proceedings u/s 153C. CIT(A) quashed the assessment order for want of issue of statutory notice u/s. 143(2) before completion of the assessment proceedings - Held that:- This issue is squarely covered against the assessee by the decision of Ashok Chaddha vs. ITO [2011 (7) TMI 252 - DELHI HIGH COURT] considering the decision of Hotel Blue Moon [2010 (2) TMI 1 - SUPREME COURT OF INDIA] wherein held that No specific notice was required under section 143(2) of the Act when the notice in the present case as required under Section 153 (A) (1) (a) was already given - in favour of revenue. Addition on account of unexplained capital introduced in the assessee firm by the partners - CIT(A) deleted the addition - Held that:- CIT(A) found that both the partners, Smt. Honey Arora and Smt. Neeru Wadhwa introduced capital in the assessee firm and both are assessed to tax and have proved the fact of capital introduction. Therefore, the issue is covered by the judgments of Jaiswal Motor Finance [1983 (2) TMI 47 - ALLAHABAD HIGH COURT] and Sundar Lal Jain vs. CIT, [1978 (8) TMI 54 - ALLAHABAD HIGH COURT] with Metachem Industries [1999 (9) TMI 21 - MADHYA PRADESH HIGH COURT] & DR has relied upon the decision of ITAT, Hyderabad Bench, thus in view of the decision of jurisdictional High Court above, the decision of the Tribunal cannot be given preference - against revenue. Addition on account of concealed work in progress - CIT(A) deleted the addition - Held that:- As found that the assessee maintained complete details of work in progress and that when the addition is made in assessment year under appeal, the benefit should have been given in the next assessment year 2004-05 which is not given in the case of the assessee. CIT(A) was satisfied with the complete details filed by the assessee and, therefore, held that the addition is made on surmises and presumption and cannot be sustained - against revenue. Addition on account of disallowance of 60% of expenses by rejecting book results u/s. 145(3) - CIT(A) deleted the addition - Held that:- As the assessee had made purchase of 90% through cheques which are reflected in the bank statement also and addition is made by relying upon the observations of ADIT(Inv.). The addition was accordingly deleted - against revenue. Addition on account of difference in market price and sale - Held that:- the land is owned by the Society, Sanatan Grah Nirman and the assessee only acted as construction agency and has not made any sales. Therefore, the addition is deleted - against revenue. Addition on account of current liabilities - CIT(A) deleted the addition - Held that:- In assessment year under appeal, i.e., 2003-04, only Rs.30,000/- has been received in advance whereas full amount of Rs.2,00,000/- has been received and credited during the assessment year 2004-05. The CIT(A) on examination of the documents accepted the contention of the assessee and deleted the addition - against revenue. Addition on account of unconfirmed unsecured loan - CIT(A) deleted the addition - Held that:- The CIT(A) accepted the contention of the assessee because the opening balance as on 01.04.2007 (PB-44) was Rs.5,56,880/-, which is closing balance of the last year. During the year under consideration, only quarterly interest of Rs.54,289/- was credited in the books of account along with confirmation. The addition was, accordingly, deleted - against revenue. Addition on account of unconfirmed advances - CIT(A) deleted the addition - Held that:- Considering the explanation of the assessee in the light of material on record, it is clear that substantial amount was old balances and rest of the amounts were received through banking channel for booking of flats, which is also confirmed by the parties - against revenue.

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• 2013 (1) TMI 419
  Deduction u/s 80-IB(10) - Whether a deduction original claimed in the return of income filed could be revised in the course of assessment proceedings? - Held that:- CIT (Appeals) was justified in considering the revised computation as a valid one for the purpose of claiming deduction u/s 80-IB(10). There is a clear finding by the CIT (Appeals) that assessee had made a claim u/s 80-IB(10) in the original return itself. This position has not been disputed. Revised computation was filed by the assessee whereby it re-worked the quantum of the claim considering each of the project separately or in other words, by omitting out those projects which resulted in a loss. This, cannot be construed as a fresh claim - against revenue. Prorata deduction u/s 80-IB(10) for the housing projects - Whether deduction u/s 80-IB(10) could be given to an assessee even where some of the dwelling units in a project exceeded built-up area 1500 sq.ft.? - Held that:- As decided in Sanghvi & Doshi Enterprise v. ITO [2011 (5) TMI 597 - ITAT, CHENNAI] that the assessees are entitled for deduction under s. 80-IB(10) in respect of flats having built-up area not exceeding 1,500 sq.ft. and not entitled for deduction in respect of those flats having their built-up area exceeding 1,500 sq.ft - against revenue. Whether each of the project could be considered independently for the purpose of working out deduction u/s 80-IB(10) - whether such deduction could be calculated ignoring the losses in some of the projects subject to the limitations placed by Section 80-AB - Held that:- Assessee admittedly was having only one homogenous business activity that was construction and selling of flats. No doubt, it was having five projects, but the question is whether each of the projects were forming part and parcel of one unit or part of one industrial undertaking. There is no claim for the assessee that each of these projects were separate and there was no interlacing, interconnection or interdependence. Assessee was only doing housing project development which is a homogenous business and vis-à-vis the five projects, there was no demarcation of identity, in such a manner that each of the project could be considered as independent units. There is nothing in this sub-section 10 of Section 80-IB which would require each of the housing projects to be considered by itself as independent undertaking while working out the deduction. Here, there is nothing on record to show that each of the projects were independent, with no interlacing, interconnection or interdependence of various units. Therefore, all these projects together had to be considered as a single unit for the purpose of working out deduction under Section 80-IB(10) and the methodology adopted by the assessee in the revised computation filed by it, cannot accepted - in favour of the Revenue. Non deduction of TDS on contract amounts paid - invoking Section 40(a)(ia) for disallowing the claim - Held that:- Whether the amounts were fully paid or payable at the end of the relevant previous year, is not clear from the record. Special Bench of this Tribunal in the case of Merilyn Shipping & Transport v. Addl. CIT [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] has held that Section 40(a)(ia) would be applicable only to amounts standing payable at the end of the relevant previous year. Therefore, the matter requires a fresh look by the AO - in favour of assessee for statistical purposes.

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• Customs

• 2013 (1) TMI 438
  Undervaluation of imported consignments - Appellants were importing zinc skimming and zinc ash for using it as a raw material – Declared the value of such goods to be US$ 380 per MT – DG Revenue Intelligence got information that the actual value paid by the appellants for such goods were much higher than the value declared at the time of import for paying customs duty - Penalty challenged is imposed u/s 112 of Customs Act - Penalty u/s 114A of Customs Act. Held that:- Goods imported from USA there is clear evidence of mis-declaration of value and for that reason the goods were liable for confiscation and penalties were to be imposed on the importer for that reason. In favour of revenue Prices for zinc skimming imported from USA cannot be applied for prices of such goods or zinc ash imported from other countries because value of these goods depends on the percentage of zinc contents in this material. Basically the items in question are goods of which quality can vary and therefore it is difficult to agree to any addition in value, based on the fact that the appellants have suppressed value of goods imported from another country. There is no reason to adopt a different standard for the appellant in cases where clear evidence of remittance of extra consideration is not adduced by Revenue. Therefore, imports from countries other than USA the benefit of doubt should go to the appellants. In favour of assessee Their contention that they should not be asked to pay any additional Countervailing duty or consequent SAD element, is to be accepted. However, the plea that Countervailing duty and SAD initially paid should be adjusted against shortfall in other types of customs duty paid at the time of import is not maintainable. There is a mechanism for getting relief of CVD and SAD paid through Cenvat credit. Therefore we not able to agree with the contention that the excess CVD and SAD paid should be adjusted against Customs duty short paid at the time of import. In favour of revenue We uphold the demand for differential customs duty (other than CVD and consequent difference in SAD) on account of value difference demanded in respect of consignments imported from USA. The demand for differential duties on account of imports from other countries and differential duty on account of CVD from USA are not maintainable. Differential SAD will have to be calculated on the basis that CVD is not leviable. So the question of differential duty on this count is not likely to arise. In favour of assessee Adjudicating authority had confiscated goods which were not available for confiscation. Even the bond executed for another reason namely to wait for test reports, had been discharged prior to adjudication. So we hold that the confiscation of goods and consequent redemption fine to be not maintainable

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• 2013 (1) TMI 418
  Penalty orders Rs. 50,000/- set aside - revenue appeal - Held that:- As decided in Stovec Industries Limited case [2013 (1) TMI 72 - GUJARAT HIGH COURT] & Circular No. 390/Misc/163/2010-JC dated 20.10.2010 issued by CBEC directs the lower authorities not to file an appeal where the duty and/ or penalty amount is less than Rs. One lakh - I dismiss the appeal filed by the Revenue.

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• 2013 (1) TMI 417
  Writ of Certiorarified Mandamus - change in constitution of the Custom House Agent licence from a firm to a limited company - declining to accept the appointment of Shri S.Suryanarayana as power of attorney agent of the Custom House Agent in the place of late Abdul Khader on the ground being not a person qualified under Section 8 of the CHALR, 2004 to be appointed as POA - Held that:- Proviso to Regulation 8 clearly states that examination of the applicant will not be necessary, if he has already passed the examination referred to in Regulation 8. Further, Regulation 15 only speaks about change in the constitution of the firm or company for which fresh application should be made. That cannot be confused with the eligibility of a particular candidate to be appointed as power of attorney agent if he is otherwise qualified. The authority has confused himself with application under Regulation 15 with the status of a candidate for appointment as power of attorney in the place of late Abdul Khader. Thus clubbing of two issues appears to be inappropriate As decided in SUNIL KOHLI & ORS Versus UNION OF INDIA & ORS [2012 (10) TMI 638 - SUPREME COURT]t under the 2004 Regulations read with proviso to Clause 8(1), candidates who have already passed the examination under the 1984 Regulation should be considered for grant of licence under the 2004 Regulation. The POA in this case is qualified under the 1984 Regulation thus the respondent is not justified in denying the approval of appointment of Shri Suryanarayana as power of attorney of CHALR only on the ground that he has not qualified under 2004 Regulations - in favour of petitioner - assessee.

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• 2013 (1) TMI 416
  Custom Duty on vessel - Ocean going vessel – Breaking up of vessel - Excise duty was paid when vessel was built in 1975 and cleared - The appellant had purchased the vessel in an auction in 1993 - on “as is where is” basis - Whether the vessel should be assessed and levied to duty as the vessel imported for breaking up or not – Vessel has to be considered as of Indian origin or imported - Question of payment of customs duties at the time of breaking up does arise – Notification No. 162/65 - Notification No. 133/87-Cus Held that:- Following the decision in case of JALYAN UDYOG (1993 (9) TMI 108 - SUPREME COURT OF INDIA) considered the exemption Notification No. 162/65 and observed - “the principle of the notification is “no duty on import of such vessels but when after plying for a number of years, they are scrapped, pay duty on the supposition that it is imported for breaking-up on the date it is broken-up”. (date of grant of permission for breaking up, for DG shipping). The notification shifts the date of import in the case of a ship which is imported as an ocean going vessel but subsequently broken up - from the actual date of import to the date of breaking up by creating a legal fiction. The vessel is an Indian origin and therefore cannot be levied to duty at the time of breaking up cannot be accepted. Section 2(25) of the Act when the vessel was purchased by the appellant, importation had not taken place. Importation took place subsequently when the appellant decided to beach the vessel and took permission for the same. Beaching the vessel was for the purpose of breaking it up. Therefore the appellant was advised to file a bill of entry which he filed and this series of events would show clearly that appellant was the owner as well as the importer at the time of filing bill of entry. Therefore appellant has to be held as the importer. In favour of revenue

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• Corporate Laws

• 2013 (1) TMI 415
  Order of conviction challenged - Revision petition filed by 2nd accused - prosecuted for an offence punishable under section 162 of Companies Act - the revision petitioner/appellant has failed to furnish the correct address of the company of which she is the Managing Director - Held that:- Revision petitioner submission that the first accused company, who is the 2nd respondent in the revision petition, has already wound up long back and the present address is not known is unable to be sustained. No convincing explanation is forthcoming from the part of the revision petitioner in not taking steps at appropriate time and stage. Thus, though about 10 years are over, so far, the notice to the 2nd respondent is not completed and therefore the Registry has noted the defect and posted the matter in the defect list. In the result, no reason to grant further time and also found no reason to interfere with the order of the appellate court as well as the trial court - revision petition dismissed for non-prosecution and particularly when there is no merit in the challenge raised against the judgment of the lower appellate court.

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• 2013 (1) TMI 414
  Refund claim of advance payment made for procuring an immovable property - not able to purchase the flat by making the payment within the given time - submitted by the company that since Clause 11 permitted the cancellation to be effected by the end of August, 2012, the liability of the company, could arise only after August 30, 2012 - both the statutory notice and the institution of the present proceedings are premature - Held that:- Clause 11 of the agreement only stipulated the time within which the entire consideration in terms of the agreement was to be paid. Such clause did not disentitle the buyer from terminating the agreement prior to August 30, 2012. In this case, the agreement was entered into between the parties on July 1, 2012 and by the mail of July 4, 2012, the petitioner evinced her desire not to go ahead with the transaction. Indeed, the petitioner unilaterally offered the deduction in terms of Clause 11 of the agreement though it would have been understandable for the petitioner even to require a reconsideration of the matter since the termination followed within the days of the execution of the agreement. The company has no defence to the claim and none has been indicated either in the reply to the statutory notice or in the affidavit filed on its behalf - the principal sum of Rs. 9 lakh together with interest thereon at the rate of 15% per annum from July 5, 2012 till payment to be paid over by the company to the petitioner within a week from date, the petition will remain permanently stayed.

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• Service Tax

• 2013 (1) TMI 435
  Short payment of service tax on Erection, Installation and Commissioning Services - claim of the assessee that they have already paid service tax and produced some records before the first appellate authority - Held that:- The factual matrix as to whether the assessee has discharged the service tax liability on the entire gross value of the amount received by them for the services rendered, needs to be factually verified, which, is better to left to the adjudicating authority. Thus without expressing any opinion on the merits of the case, the matter back remanded back to the adjudicating authority to reconsider the issue afresh and come to a conclusion after following the principles of natural justice.

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• 2013 (1) TMI 434
  Service tax rate - chargeable @ 5% or @8% - services provided prior to 14.05.2003 in respect of which payments were received on or after 14.05.2003 - Held that:- In the present case, the relevant period is April, 2003 to September, 2003 therefore, none of the above provisions of Rule 5B of the Service Tax Rules, 1994 will apply as same came into effect on 01.04.2011. Moreover, even Rule 4(a)(i) of the Point of Taxation Rules 2011 is not applicable because those Rules came into effect on 01.03.2011. The taxable event as per the Finance Act, 1994 is the providing of the taxable service. In the present case, as found that not only were the services admittedly provided prior of 14.05.2003 but also the bills have been raised prior to 14.05.2003. The only thing that happened after 14.05.2003 was that the payments were received after that date. That, would not change the date on which the taxable event had taken place. Since the taxable event in the present case took place prior to 14.05.2003, the rate of tax applicable prior to that date would be the one that would apply, thus the rate of 5% and not the rate of 8%.

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• 2013 (1) TMI 433
  Service tax paid on GTA services and the export commission services on reverse charge basis refund claim of the same under Notification No.41/2007-ST, dtd. 06.10.07 - claim rejected on being filed after a period of expiry of 60 days from the end of the relevant quarter - Held that:- Admittedly the present case relates to refund of duty paid on the excisable materials used in the manufacture of goods ultimately exported, the date on which the ship or aircraft has left India is the relevant date, in terms of sub-section B(a)(i) of section 11B. The appellant's contention that in terms of sub-section (f), the date of payment of duty would be relevant, cannot be accepted in as much as the said sub-section is residuary provision as is clear from the use of expression in any other case. As the specific date stands provided in respect of goods exported, the same has to be adopted for the purpose of limitation. It is not the appellant's plea that the goods were exported on a later date and the refund claims were filed within the period of 60 days from the quarter during which the said exports were made, no infirmity in the views adopted by the authorities below - Accordingly, the impugned orders are upheld.

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• 2013 (1) TMI 432
  Service Tax on GTA services - assessee contested against availing of any services of GTA - Held that:- Undisputedly during the period from 01.01.2006 to 31.03.2008, the appellant had availed the services of transporters for transporting their goods from the factory and also bringing the raw materials into their factory who were owners of the vehicles as supported by producing the payment vouchers made to individual truck owners. From the said documents it is clear that they had not availed the services of goods transport agency(GTA) during the said period. See Bellary Iron & Ores Pvt.Ltd. vs. Commr. of C.Ex., Belgaum [2009 (12) TMI 150 - CESTAT, BANGALORE] - in favour of assessee.

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• 2013 (1) TMI 431
  Rent-a-Cab service - penalties u/s.76, 77 & 78 - Held that:- Appellant is a proprietary firm and circumstances are similar to that of Bharat Travels Co. [2010 (7) TMI 203 - CESTAT, AHMEDABAD] where also tax which was not due was collected and not paid, and appellant did discharge the liability to service tax with interest as soon as the same was pointed out, therfore a lenient view can be taken in this case and benefit of Sec.80 can be extended to waive penalty U/s.76 & 77. In the result, penalties under Sec.76 & 78 are waived and penalty under Sec.77 is upheld. The amount of service tax with interest paid to the department and appropriated is also upheld.

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• Central Excise

• 2013 (1) TMI 413
  Interest on seized currency returned back - Currency of Rs.3,20,000/- seized from the Appellant in 15.01.1996 & after litigating for a decade finally succeeded to get back the amount on 29.07.2008 - Held that:- Agreeing with the finding of the Commissioner(Appeal) that in absence of a specific provision under the Central Excise Act and the Rules made thereunder the interest for the period the currency was retained by the department, cannot be granted. It is needless to mention, even though the Tribunal has all the trappings of a court, but it cannot considered as a court and continue to remain a creature of statute and has to exercise its power within the limits prescribed by the statute - prayer for interest on seized currency, even if it is held that the seizure is contrary to law, cannot be granted by this Tribunal. Appeal dismissed.

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• 2013 (1) TMI 412
  Cenvat credit of duty paid on the inputs - said inputs were received from two registered dealers who inturn received the inputs from M/s Haryana Steel & Alloys Ltd(HSAL) - investigations conducted at HSAL - issuance of invoices without actual supply of the goods as per statement of Executive Director of HSAL - Held that:- The said statement of Executive Director of HSAL does not stand agreed upon by the two dealers who have clearly deposed that they were receiving the goods from HSAL along with the invoices. It is not the Revenue's case that HSAL was not manufacturing the raw material or were clearing/diverting their final product to other persons. It is also seen that all the payments were made to the dealers by cheque and there is no allegation much less any proof of flow back of the money from dealers to the appellant. Revenue has also not made any enquiries from the transporters as regards the transportation of the goods in question. As such the denial of Cenvat credit on the sole statement of manufacturer of the inputs, without taking into consideration the statement of the first stage dealer as also the statement of the manufacturing unit is not justified. It is further seen that manufacturing unit has entered all the inputs in their records which stands shown to have been used in the manufacture of their final product and cleared on payment of duty. If the Revenue's case as regards non-receipt of inputs is accepted, a vacuum remains to be answered as to how the final product stands manufactured by M/s J.L.Autoparts as revenue has not shown any alternate procurement of the raw material. As decided in PRACHI POLY PRODUCTS LTD. case (2005 (3) TMI 249 - CESTAT, MUMBAI) where the appellants have taken all reasonable steps to ensure that duty has been paid on inputs received by them and on which they took credit - Credit cannot disallowed on account of denial by manufacturer as regards payment of duty. Also VARANASI DOMESTIC APPLIANCES (P) LTD.case [2007 (2) TMI 484 - CESTAT, NEW DELHI]stated that manufacturer were party to fraud or misrepresentation by supplier of inputs, denial of credit not justified - no reasons to deny the credit, confirmation of demand against them along with penalty also upon the two dealers imposed is set aside.

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• 2013 (1) TMI 411
  Utilization of Cenvat credit in basic excise duty for discharge of liability of Education Cess and Senior and Higher Education Cess - Held that:- As decided in Madura Industrial Textiles case [2013 (1) TMI 352 - GUJARAT HIGH COURT] the benefit of utilization of credit of basic excise duty for payment of education cess is allowed relying on CCE Vapi Vs. M/s Balaji Industries [2008 (7) TMI 215 - CESTAT AHEMDABAD] - in favour of assessee.

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• 2013 (1) TMI 410
  Remission of duty on the raw materials/ inputs/ packing materials rejected - Held that:- When this matter was remanded in 2008 the adjudicating authority i.e. the Commissioner did not find time till 31.01.2011 to call the appellant for hearing and considering his case on merits despite such a clear direction. Suffice it to say that this would tantamount to serious violation of principles of natural justice and is judicial indiscipline, thus constrained to set-aside the impugned order on this ground itself - assessee submitted the issue may be decided here only as the division bench of this tribunal in the case of Aditya Industries 2009 (2008 (10) TMI 561 - CESTAT,AHMEDABAD) has taken a view which is in favour of the assessee - appeal of assessee allowed by way of remand.

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• 2013 (1) TMI 409
  Ineligible cenvat credit - service tax on gardening services - Held that:- The first appellate authority has relied upon the various judgments to come to a conclusion to hold that appellant is eligible to avail cenvat credit & also taken note of the NOC issued by the Gujarat Pollution Control Board issued vide No. GPCB/CTE/SRT-2030/25604 dated 20.11.2009 specifically laying down the condition that adequate plantation shall be carried out all along the periphery of the industrial premises in such a way that the density of the plantation is at least 1000 trees per acre of the land and a green belt of ___ metres is developed Thus if the condition of the Pollution Control Board is to maintain adequate plantation, undoubtedly the respondent herein would require professional services of gardening service providers. Hon'ble High Court of Karnataka in the case of Millipore India Pvt. Limited [2011 (4) TMI 1122 - KARNATAKA HIGH COURT] has held that cenvat credit cannot be denied to the appellant on the service tax paid on the Gardening Services - in favour of assessee.

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• 2013 (1) TMI 408
  Cenvat credit of service tax paid on services rendered by CHA - denial as services rendered by them for clearance of goods for export - Held that:- Held in favour of the appellant by relying upon the decisions in the case of Rolex Rings Pvt. Limited 2008 (2008 (2) TMI 770 - CESTAT, AHMEDABAD), Adani Pharmachem Pvt. Limited 2008 (2008 (7) TMI 102 - CESTAT AHMEDABAD), Excel Crop Care Limited 2007 (2007 (4) TMI 15 - CESTAT, AHMEDABAD), Rawmin Mining and Industries Limited (2008 (10) TMI 79 - CESTAT, AHMEDABAD) and Colour Synth Industries Pvt. Limited (2009 (1) TMI 130 - CESTAT AHMEDABAD) wherein held that in case of export on CIF/FOB basis, place of removal is load port hence service tax paid on CHA services is admissible as credit in view of the fact that the place of removal has to be considered as the port where the goods are put on board the ship or the aircraft as the case may be - in favour of assessee.

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• CST, VAT & Sales Tax

• 2013 (1) TMI 436
  Condonation of delay - Filing the restoration petition - Held that:- The petitioner has not shown sufficient cause or reason to grant the relief. It is noted from the available records, that the petitioner has been filing several petitions, one after the other, for the condonation of the delay and for the restoration of the petitions. No proper reasons have been shown by the petitioner for non-appearance of the petitioner and its authorized representative, during the hearing of the matter. No party can sleep over its rights and thereafter, make an attempt to establish its rights, without having proper reasons to do so. It is clear that the petitioner had not shown acceptable reasons for granting the relief, as prayed for by the petitioner. In favour of revenue

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