TMI Tax Updates - e-Newsletter
January 6, 2014

Case Laws in this Newsletter:

Income Tax Customs Service Tax Central Excise

Articles

1. Amendments in the Cenvat Credit Rules, 2004 and the Central Excise Rules, 2002

   By: Bimal jain

2. REMOVAL AND RESIGNATION OF AUDITOR UNDER NEW COMPANIES ACT

   By: Dr. Sanjiv Agarwal

News

1. Gross direct tax collections during april-december of the current financial year 2013-14 is up by 12.33 percent and stood at rs. 4,81,914 crore as against rs. 4,29,023 crore in the same period last year

2. RBI Reference Rate for US $ and Euro

Notifications

Customs

1. 02/2014 - dated 3-1-2014 - ADD

Seeks to extend the validity of notification No.55/2009-Customs dated the 26th May, 2009 for a period of one year i.e. upto and inclusive of 20th November, 2014.

2. 01/2014 - dated 3-1-2014 - ADD

Seeks to amend notification No. 121/2009- Customs dated 30th October, 2009 so as to change the name of a producer/ exporter

Circulars / Instructions / Orders

FEMA

1. 84 - dated 6-1-2014

Issue of Non convertible/ redeemable bonus preference shares or debentures - Clarifications.

2. 85 - dated 6-1-2014

External Commercial Borrowings (ECB) Policy – Liberalisation of definition of Infrastructure Sector

DGFT

3. 45 (RE: 2013)/2009-2014 - dated 6-1-2014

Modification of SION A-1730

Central Excise

4. 977/01/2014-CX - dated 3-1-2014

Availability of excise duty exemption to the units which have already availed of exemption under New Industrial Policy for another 10 years by way of 2nd substantial expansion in the State of Jammu & Kashmir – Clarification – Regarding

Highlights / Catch Notes

Income Tax

• Employer's Contribution to Karmachari Welfare Fund Not Deductible Under Income Tax Act Section 40A(9.

  Case-Laws - AT : Disallowance u/s 40A(9) – contribution made by the appellant as an employer towards the Karmachari Welfare Fund falls within the expression 'as required by or under any other law' for the purposes of section 40A(9) - AT
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• Insurance Policy Assignment Alters Tax Status: Keyman to Ordinary, Proceeds Exempt u/s 10(10D) Income Tax Act.

  Case-Laws - AT : After assignment of the policy in favour of the assessee, it changes its character from that of a Keyman Insurance Policy to that of an ordinary policy and that once it has become an ordinary policy, the proceeds received thereunder would not be subject to tax in view of Section 10(10D) - AT
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• Income from Forex Fluctuations: Does It Count as "Derived from Exports" u/s 10A of Income Tax Act?

  Case-Laws - HC : Whether income on account of foreign exchange fluctuation is income “derived from exports” u/s 10A - Section 10A (4) is applicable when an assessee has domestic turnover/non-eligible turnover and also eligible export turnover - HC
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• Section 11 Exemption Valid Even Without Registration Under A.P. Charitable and Hindu Religious Institutions Act 1987.

  Case-Laws - AT : The exemption u/s 11 of the Act cannot be denied to the assessee merely because the assessee is not registered under the A.P. Charitable and Hindu Religious Institutions and Endowments Act, 1987 - AT
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• Assessing Officer's Duty to Refer Property Valuation to Valuation Cell Challenged by Assessee Over Stamp Duty Valuation Use.

  Case-Laws - AT : Valuation of property - assessee clearly objected before the Assessing Officer against the adoption of stamp duty valuation - It was duty of the Assessing Officer to refer valuation of the property to the Valuation Cell of the Income-tax Department - AT
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• Taxpayer's Rubber Tree Sale Proceeds Deemed Capital Receipts, Not Agricultural Income Over Three Years.

  Case-Laws - AT : Sale of rubber tress - Agricultural income or not - The amount received by the assessee on sale of old rubber trees in the three years under consideration constitutes capital receipts - AT
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• Deduction u/s 80IA on Sales Tax Entitlement Proceeds Sent for Fresh Adjudication: Capital Expenditure Focus.

  Case-Laws - AT : Whether deduction u/s. 80IA will be allowable on the sale proceeds of sales tax entitlement received - The principle aim of the scheme was to cover the capital outlay already made by the assessee in undertaking special modernization of its existing industry - The issue was restored for fresh adjudication - AT
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• Amended Rules Ensure TDS Credit to Assessees Irrespective of Deduction Year.

  Case-Laws - AT : Credit of TDS - as per the amended provisions, once the TDS was deducted, a credit of the same to be given to the assessees, irrespective of the year to which it relates - AT
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• Unexplained cash credit in books is enough to show balance cash is justified.

  Case-Laws - AT : Unexplained cash credit - the balance cash was appearing in the books, itself is sufficient evidence to show that it stood explained - AT
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• Limited Company Can't Independently Determine Speculation Loss for Investment and Trading Shares u/ss 147/148.

  Case-Laws - AT : Assessee being a limited company was holding shares as investment and also for trading, therefore cannot be subject itself to determine the speculation loss, if any, was not to be tinkered with under the provision of section 147/148 - AT
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Service Tax

• Authority's Essential Duty: Classifying Overlapping Taxable Services in Section 65 for Accurate Tax Compliance.

  Case-Laws - AT : Classification of service - This is a fundamental obligation of the authority, having regard to the fact that there is facially an overlapping between several taxable services enumerated in Section 65 - AT
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• Clinical Testing Services Abroad Exempt from Service Tax in India Under Reverse Charge Mechanism, Section 66A.

  Case-Laws - AT : Clinical testing service - since these services were wholly provided outside India, are not liable to service tax from the appellant under the reverse charge mechanism in Section 66A - AT
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Case Laws:

• Income Tax

• 2014 (1) TMI 251
  Disallowance u/s 40A(9) of the Act – Payment made to karamchari welfare fund – Held that:- Following Maharashtra State Warehousing Corpn. Versus ACIT [2011 (8) TMI 328 - ITAT, Pune] -The Service Regulations framed by the appellant Corporation for the terms and conditions of employment and services of their employees carry a statutory force - the Maharashtra State Warehousing Corporation (Staff) Service Regulations have been framed with the previous sanction of the Government of the Maharashtra in exercise of the powers conferred by section 42 of the Warehousing Corporation Act, 1962 (58 of 1962) – thus, the contribution made by the appellant as an employer towards the Karmachari Welfare Fund falls within the expression 'as required by or under any other law' for the purposes of section 40A(9) of the Act – Order of the AO and CIT(A) set aside ant the AO is directed to allow the claim of deduction made by the assessee – Decided in faovur of Assessee.

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• 2014 (1) TMI 250
  Disallowance made u/s 40a(ia) of the Act – Non-deduction of TDS on cost of television programmes – Applicability of section 194C of the Act – Held that:- Following ASSTT COMMISSIONER OF INCOME TAX Versus M/s USHODAYA ENTERPRISES PVT LTD [2012 (7) TMI 120 - ITAT HYDERABAD] - Expenses towards revenue shares are towards the agreed cost for production of TV serials/programmes - the assessee is associating itself with the producers for getting the programmes telecasted and thereby the assessee gets as source for generating advertisement revenue – thus, the assessee is making payments to various agencies on revenue sharing basis from the income generated through advertisements by way of telecasting the serials or programmes produced by the agencies - The mode of payment is nothing but a payment for contract of work and is squarely covered by explanation III to section 194C which says ‘work’ shall include programmes for such broadcasting or telecasting – Thus, the nature of payments fall within the purview of section 194C – the claim of the assessee is accepted and the order of the CIT(A) set aside – the matter s remitted back to the AO for fresh adjudication – Decided in favour of Assessee. Disallowance of prior period expenses – Held that:- Inasmuch as if an amount of Rs.2,11,34,759 out of total amount of Rs.2,38,85,000 was already offered to tax in the earlier years, the prior period adjustment made in that behalf by the assessee, on account of the concerned parties declining to make the payments due to discrepancies in the billing, the same should be allowed as deduction as bad debts – the order of the CIT(A) set aside and the Assessing Officer is directed to restrict the disallowance made – Decided partly in favour of Assessee. Applicability of Rate of depreciation to accessories of computer – Assessee claimed it to be 60% but revenue restricted at 15% - Held that:- Following Asstt. Commissioner of Income-tax, Circle 16(2), Hyderabad Versus Ushodaya Enterprises Ltd. [2012 (10) TMI 472 - ITAT HYDERABAD] – the order of the CIT(A) upheld in accepting the claim of the assessee for depreciation on computer accessories and peripherals at 60% - Decided against Revenue.

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• 2014 (1) TMI 249
  Deletion on account of amount received from LIC on maturity of Keyman Insurance Policy u/s 10(10D)(b) of the Act – Held that:- Following Commissioner of Income-tax Versus Rajan Nanda [2011 (12) TMI 392 - DELHI HIGH COURT] - once there is assignment of the employer in favour of the individual, the character of the insurance policy changes and it gets converted into an ordinary policy; that such assignment is duly permitted by law; that even the LIC accepted the assignment, itself clarifying that on assignment, the policy no longer remains a Keyman Policy and gets converted into an ordinary policy; that as such, it is not open to the Department to still allege that the policy is a Keyman Policy and when it matures, the advantage drawn therefrom is taxable - that on maturity of the policy, it is not the employer, but the individual, who is getting the maturity value of the insurance; that no doubt, the employer as well as the individual take huge benefit by such assignment, but it cannot be treated as a case of tax evasion, rather it is a case of arranging the affairs in such a manner as to avail the state exemption as provided in Section 10 (10D) of the Act. Benefit inured owing to the combined effect of a prudent investment and the statutory exemption provided u/s 10 (10D) of the Act does not call for any bifurcation in the amount received on maturity on any basis whatsoever - nothing can be read into Section 10 (10D) of the Act, if it is not specifically provided - any such attempt would tantamount to legislation and not interpretation - after assignment of the policy in favour of the assessee, it changes its character from that of a Keyman Insurance Policy to that of an ordinary policy and that once it has become an ordinary policy, the proceeds received thereunder would not be subject to tax in view of Section 10 (10D) of the Act, due to which nothing is taxable out of the maturity value received from the insurance policy – The order of the CIT(A) upheld – Decided against Revenue.

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• 2014 (1) TMI 248
  Addition/disallowance on TDS certificate not allowed – Rectification application u/s 154 not made within four years – Held that:- The return was processed u/s.143(1) of IT Act on 30/06/1999, however both the copies of the intimation was found to be placed in the case records - the intimation u/s.143(1) remained to be served upon the assessee – thus, the intimation was not sent to the assessee, thus, the question of limitation raised by the Revenue was against the natural justice as well as unjustifiable - The law prescribes that an intimation has to be sent to the assessee specifying the sum so payable and that intimation shall be deemed to be a notice of demand u/s.156 of IT Act – thus, the issuance of such an intimation is absolutely necessary - the assessee was not aware about the adjustments and the fate of its return; stated to be filed in the due course. When it was came to the notice of the assessee that the credit of the TDS was not properly given, then the assessee moved an application before the AO - a photocopy of the impugned intimation u/s.143(1)(a) was received by the assessee in the month of March-2006 - Immediately, thereafter an application u/s.154 was moved on 20th March-2006 - where the assessee disputes and requests for correction of the figures of arrear demand, whether uploaded on CPC or not uploaded and still lying in the records of the Assessing Officer, the jurisdictional Assessing Officer shall verify the claim of the assessee on merits and after due verification of such claim, will make suitable correction in the figure of arrear demand in his records and upload the correct figure of arrear demand on CPC portal - the grievance of the assessee is well-founded - the AO is directed to entertain the rectification application dated 20/03/2006 and dispose it off as per law after verification of record as also the eligibility of the claim – Decided in favour of Assessee.

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• 2014 (1) TMI 247
  Deletion of disallowance u/s 40(A)(2) of the Act - Payment of the bus rent – Held that:- The Assessing Officer had called upon the assessee to demonstrate that the payment made by the assessee to the specified persons is not unreasonable or excessive, and it is thus failure of the assessee which has resulted in disallowance under section 40A(2) – The onus is on the Assessing Officer and the AO has failed to discharge the onus – thus, the disallowance is unsustainable in law - As regards the discrepancy in the figures of the tax audit report and the assessee, neither such a situation can be a reason enough to make a disallowance under section 40A(2) nor the onus of explaining such a variation is on the assessee - A tax auditor is an independent professional and any errors in his report cannot be put to assessee's disadvantage – Decided against Revenue. Applicability of Section 40(a)(ia) of the Act – Taxes deposited before filing of return but beyond due date – Held that:- Following CIT v. Royal Builders [2014 (1) TMI 136 - GUJARAT HIGH COURT] - amendment carried out by Finance Act 2010 can be held to be retrospective from assessment year 2005-06 - TDS from the payments disallowed were made well before the date of filing of the income tax return – the order of disallowance set aside – Decided against Revenue.

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• 2014 (1) TMI 246
  Exemption u/s 54EC - Held that:- As per Transfer of Property Act, 1882 - Registration of sale deed alone completes the transfer - Four sale deeds came to be registered, on the consideration received for the purposes of Section 45 and Section 54EC of the Act, capital gains arising on the sale under those deeds would be considered only in the assessment for the assessment year 2003-2004 - As regards the sale deeds executed between the dates, 11.04.2003 and 23.03.2004 - There are at least 12 sale deeds executed on various dates - Sale Deed Nos.13 to 16 were executed on 23.03.2004 and on the same date, the assessee admits that the capital gains arising thereon not being invested in REC 54EC bonds from 30.04.2004 onwards - Sale deeds were executed on 11.04.2003 [3 deeds]; 28.04.2003 [2 deeds]; 14.05.2003 [3 deeds]; the consideration in respect of these deeds not being invested within the time limit of six months from the date of transfer - The capital gains would fall itself within the scope of Section 54EC of the Income Tax Act, 1961 - The sale deeds executed on 23.03.2004 (4 deeds) alone would have the benefit of Section 54EC of the Income Tax Act, 1961 and not any other sale deed - For the purpose of re-computing the relief to the assessee to grant the relief in respect of the sale deeds executed on 23.03.2004 – the issue was remanded back to the Assessing Officer to re-work the liability of the assessee – Partly allowed in favour of assessee.

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• 2014 (1) TMI 245
  Whether income on account of foreign exchange fluctuation is income “derived from exports” u/s 10A - Held that:- As per section 10A - The income which is eligible for deduction must be income derived by an undertaking from the exports of articles or things or computer software - Benefit/reduction of liability on account of foreign exchange fluctuation on borrowed funds/loans is not income “derived” from exports of articles or things or computer software - Section 10A (4), is not applicable to the facts of the present case - The said sub-section is applicable when an assessee has domestic turnover/non-eligible turnover and also eligible export turnover - The entire turnover of the appellant-assessee is eligible for deduction under Section 10A - Decided in favour of assessee.

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• 2014 (1) TMI 244
  Unexplained cash credit - Held that:- The assessee has given detailed explanation in respect of the amount received from each creditor on each and every date - The CIT(A) has found that the assessee has duly discharged the onus to prove the cash credit lying in its books of account - The assessee has explained the source of each and every amount paid by the creditor - Most of the amounts paid by the creditor were after receiving the same from Karush Auto Pvt.Ltd. and from the maturity of LIC policy except one amount which is received out of the sale consideration of the commercial property sold by Rahul Kumar Marwah - The assessee had also produced the evidences of the amount received by the creditor from M/s Karush Auto Pvt.Ltd. and also from maturity of LIC policies of the creditors - The assessee has proved the identity and creditworthiness of the creditor as well as the genuineness of the transaction - Decided against Revenue.

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• 2014 (1) TMI 243
  Penalty u/s 271(1)(c) - Held that:- The assessee has furnished the affidavit of the creditors - The creditors were also produced before the Assessing Officer. They have admitted to have advanced the money to the assessee - They have also produced evidence with regard to the source of income in their hands -Merely because the Assessing Officer or appellate authorities were not satisfied with the source of income, it cannot be said that the assessee either furnished inaccurate particulars or concealed the income - The assessee's case does not fall within the mischief of Explanation (1) to Section 271(1)(c) because the assessee offered an explanation with regard to cash credit which was not found to be false by the Assessing Officer or the learned CIT(A)- The assessee also substantiated the explanation by producing the creditors who admitted having advanced the money to the assessee - Decided against Revenue.

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• 2014 (1) TMI 242
  Validity of reassessment u/s 143(3) - Held that:- During the course of verification proceedings the assessee furnished re-audited accounts, and which were found to be at wide, unexplained variation with that submitted earlier - The assets, along with their nature and source, stand disclosed by the assessee per its revised balance-sheet, no addition could be validly made - The ld. CIT(A) has rightly restricted the addition to the admitted increase in the opening capital, toward which no satisfactory explanation stands furnished by the assessee - There is no basis for not accepting the revised trading result. The same could only be unacceptable where the accounts are shown to exhibit some fundamental defect - Decided against Revenue. Disallowance u/s 40(a)(ia) - Held that:- Following CIT vs. Crescent Export Syndicate [2013 (5) TMI 510 - CALCUTTA HIGH COURT] - The expenditure are disallowed if tax required to be deducted at source was either not deducted or, if deducted, not deposited by the due date - The word payable u/s. 40(a)(ia) is not defined - There is nothing to restrict the word payable to the sum outstanding as at the year-end, so that the provision would stand to be attracted where the principal sum was payable at any time during the year - Decided against assessee.

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• 2014 (1) TMI 241
  Whether profit on the sale of the DEPB be considered as income u/s 80HHC - Held that:- The decision by the hon'ble jurisdictional High Court in the case of CIT vs. Kalpataru Colours & Chemicals [2010 (6) TMI 63 - BOMBAY HIGH COURT] has been reversed by the hon'ble Supreme Court in the case of Topman Exports vs. CIT [2012 (2) TMI 100 - SUPREME COURT OF INDIA] - The issue was restored for fresh adjudication to be decided in the light of the decision of apex court. Deduction u/s 80HHC - Held that:- The issue was decided with reference to CIT vs. Kalpataru Colours & Chemicals [2010 (6) TMI 63 - BOMBAY HIGH COURT] - The said decision has been reveresed - The issue is restored for fresh adjudication.

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• 2014 (1) TMI 240
  Charitable trust - exemption u/s 11(1) - Expenditure incurred towards attendance of international conferences and training - Held that:- It is neither necessary nor required as per the statute that for availing exemption u/s 11 of the Act a particular charitable activity has to be notified in a circular issued by the CBDT - The expenditure was incurred on behalf of the Society for attending international conferences and seminars and for the purpose of advancing the objects of the Society - It is not for the personal benefit of the Secretary - It cannot be said that the expenditure incurred in that behalf is not for charitable purpose. Addition on account of refund of loan - Held that:- The assessee has incurred the expenditure towards implementation of the project relating to Prevention and Control of HIV/AIDS - The project is a Government promoted project and the grant has been specifically for implementing the said project - If amount received is treated as grant then corresponding expenditure incurred by the assessee is also to be allowed. Non registration of the assessee society under A.P. Charitable and Hindu Religious Institutions and Endowments Act, 1987 - Held that:- The exemption u/s 11 of the Act cannot be denied to the assessee merely because the assessee is not registered under the A.P. Charitable and Hindu Religious Institutions and Endowments Act, 1987 - When there is no such restriction put u/s 11,12, and 13 of the Act or any other provision under the Act the Assessing Officer cannot deny exemption to the assessee. Grant received for repair to the houses - Held that:- The grant received from the donor agency is to be utilised for a specific purpose i.e., repair of houses of Tsunami victims in three districts - The assessee has supplied relief materials for construction of houses as well as cash distribution under certain mechanism adopted by the assessee is not disputed by the Assessing Officer - The assessee had participated in a programme of government for the benefit of Tsunami victims by providing help for construction of their houses - The Assessing Officer has not brought any material on record to show that the amount has not been actually distributed by the assessee to Tsunami victims - Decided against Revenue.

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• 2014 (1) TMI 239
  Valuation of property - Held that:- As per section 50C(2) of the Act - Where the assessee claims that the value adopted or assessee for stamp duty purposes exceeds the Fair Market Value (FMV) of the property as on the date of transfer, and he has not disputed value so adopted or assessed in any other appeal or provision or reference before any authority or Court, the Assessing Officer may refer the valuation of the relevant asset to a Valuation Officer in accordance with Section 55A of the Income-tax Act - The assessee clearly objected before the Assessing Officer against the adoption of stamp duty valuation - It was duty of the Assessing Officer to refer valuation of the property to the Valuation Cell of the Income-tax Department - The issue was restored to the file of the Assessing Officer with the direction that the Assessing Officer to refer the property to the Valuation Cell of the Income-tax Department for the purpose of valuation of property and, thereafter, adopt the valuation for working out capital gains.

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• 2014 (1) TMI 238
  Disallowance of interest on interest free loan - Held that:- The assessee has not placed any documents to establish the fact that the interest bearing funds from financial institutions were not taken during the year and was not utilised for interest free advances given to the sister concern - There is nothing on record to show that the entire term loan taken was utilised for the construction of the house property - The issue was restored for fresh adjudication - If the assessee is able to establish with supporting evidence the fact that the loan taken from the bank on which interest was being paid was utilised for the purpose of construction of the house property and has no nexus with the interest free advances made to sister concerns then no disallowance should be made from the interest payment.

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• 2014 (1) TMI 237
  Sale of rubber tress - Agricultural income or not - Held that:- Following Harrisons Malayalam Limited. Versus Assistant Commissioner Of Income-Tax [2012 (9) TMI 510 - ITAT, COCHIN] - Rule 7A of Income tax Rules has no application to the income derived on sale of old rubber trees - No material change has been brought about by introduction of Rule 7A because Rule 7A is applicable only when the grower of rubber trees himself carries on manufacturing activity on latex or coagulum sourced from rubber trees grown by him - Rubber trees are not grown for the purpose of selling the trees but for generating income from the trees in the shape of latex. The rubber trees constitute capital asset of rubber estate and dominant purpose of growing rubber trees is to create source for supply of liquid latex - The rubber trees therefore constitute capital asset of agricultural operations. There is no manufacturing activity involved either at the stage of cultivation and growing of rubber tree or at the time of its felling on trees becoming old and unyielding - Income derived from sale of old and unyielding trees do not include any element of income derived from sale of centrifuged latex or senex or latex based crepes - The amount received by the assessee on sale of old rubber trees in the three years under consideration constitutes capital receipts - Decided in favour of assessee.

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• 2014 (1) TMI 236
  Validity of revision order u/s 263 - Whether sale of immovable properties constitute business income - Held that:- The Ld CIT appears to be under the impression that if the gains are assessed as "Business income", the assessee would be disclosing the value of "Closing stock" of immovable properties and it will increase the profit amount declared by the assessee – Whether the gain arising on sale of immovable properties is assessed as "Business income" or as "Short term Capital gain", what is required to be deducted is the cost relatable to the portion of land sold by the assessee - The closing stock is credited to the Profit and Loss account only for the purpose of matching the "cost relatable to sales" under Revenue - Cost matching Principle - The closing stock value will not increase the profit from business as presumed by the Ld CIT - Since no prejudice is caused to the revenue on assessing the gain arising on sale of immovable properties, one of the twin conditions does not get satisfied, in which case, the revision order passed by Ld CIT on this issue shall fail – The order was set aside on this issue. Peak fund Deficiency - Held that:- For A.Y. 2008-09 - The amount of deficiency assessed by the AO was Rs. 12,48,040 for this year, whereas the Ld CIT has worked out the deficiency at Rs. 20,85,111 - There is difference between the two figures, which needs to be reconciled. For A.Y. 2007-08 - The Ld CIT has worked out the peak fund deficiency at Rs. 37,92,295/-, where as the AO has made addition to the extent of about Rs. 20.00 lakhs - The reasons for the difference were not spotted by both Ld CIT and the assessee - The excess portion of the cash outflow requires examination at the end of the AO - The order of Ld CIT was justified on this issue to the extent of items of cash outflow, which were not considered by the AO - The issue was restored to AO with a direction that the AO should examine the above said issue in both the years independently without being influenced by the observations or workings made by the Ld CIT.

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• 2014 (1) TMI 235
  Estimation of net profit - Held that:- The assessee did not produce books of accounts and complete relevant bills and vouchers before the Assessing Officer - The Commissioner of Income Tax(A) proceeded to estimate the net profit of the assessee on the basis of 15% of total receipts of the assessee during the year under consideration - The Commissioner of Income Tax(A) was justified in estimation of NP rate on the basis of total receipts - There was a substantial increase in the receipts of the assessee during the year and at the same time, some fixed expenses like rent and fixed salary etc. do not inflate in proportion to increase in receipts - The Commissioner of Income Tax(A) adopted a balanced view in adopting 15% of total receipts for estimation of net profit of the assessee. The other comparables are not relevant when the assessee herself is declaring higher percentage of NP during earlier and subsequent years of assessment - Decided against Revenue as well as against the assessee. Service charges - Held that:- The Commissioner of Income Tax(A) held that the undeclared income cannot be considered on the basis of TDS certificate - The Assessing Officer could have verified the same from ICICI Bank (the payer) and only after finding that the same was found undeclared by the assessee, the additions could have been made and the Commissioner of Income Tax(A) deleted the additions - The Assessing Officer should have been given an opportunity to verify the amount shown by the assessee and shown in the TDS certificate issued by the payer ICICI Bank but the Commissioner of Income Tax(A) has decided the issue in favour of the assessee without any verification - The issue was restored for fresh adjudication. Interest u/s 234B - Held that:- The issue was restored for fresh adjudication with a direction to AO to decide the issue of levy of interest on the assessee u/s 234B of the Act by considering the result of above ground.

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• 2014 (1) TMI 234
  Deduction u/s 80IA - Held that:- As per Section 80IA(5) - The quantum of deduction under section 80IA, for the assessment year immediately succeeding the initial assessment year or any subsequent assessment year to be computed as if the eligible business is the only source of income - The eligible business is the only source of income and the deduction would be allowed from the initial assessment year or any subsequent assessment year - In view of the amendemnt to section 80IA w.e.f. 01.04.2004 - The assessee exercises the option of choosing the initial assessment year from which it chooses its 10 years of deduction out of 15 years, then only the losses of the years starting from the initial assessment year alone are to be brought forward as stipulated in section 80IA(5) - It is only when the loss have been incurred from the initial assessment year, then the assessee has to adjust loss in the subsequent assessment years and it has to be computed as if eligible business is the only source of income and then only deduction under section 80IA can be determined. Following CIT v/s Emerald Jewel Industry (P) Ltd. [2010 (8) TMI 648 - Madras High Court] - Sub-section (5) of section 8oIA will come into operation only from the initial assessment year or any subsequent assessment year. The option of choosing the initial assessment year is wholly upon the assessee in the post amendment period i.e., after 1st April 2000 by virtue of section 80IA(2) - The initial Assessment Year in the case of Jivraj Tea & Industries Ltd. is the Assessment Year 2004-05 and in the case of Jivraj Tea Ltd. is Assessment Year 2007-08 - The assessee has not suffered any loss in the said year, no brought forward loss or depreciation could be reduced for determining the amount in which the deduction is to be allowed u/s. 80IA of the Act - Decided in favour of assessee. Whether deduction u/s. 80IA will be allowable on the sale proceeds of sales tax entitlement received - Held that:- Following CIT Vs. Birla VXL Ltd [2013 (7) TMI 655 - GUJARAT HIGH COURT] - The scheme was framed as a part of Government's initiative to encourage modernization of existing industries in underdeveloped areas - The main purpose of the scheme was to accelerate the industrial development and to disperse industries to under-developed areas as well as to provide additional employment - The scheme was primarily concerned with the modernization of the existing industries - It was not a scheme either for development of new industries in specified areas, or for mere expansion of the existing production capacities of the industries - The main purpose of the resolution was to modernize industries, which ordinarily would come at a considerable cost, particularly when such industries were located in under-developed areas - The industries will find it difficult without Government's incentive to undertake large-scale modernization with the use of modern technology.the benefit, though computed in terms of the Sales Tax liability in the hands of the recipient, the same was not mean to give any benefit on day-to-day functioning of the business, or for making the industry more profitable - The principle aim of the scheme was to cover the capital outlay already made by the assessee in undertaking special modernization of its existing industry - The issue was restored for fresh adjudication. Disallowance u/s 40A(2)(b) - Held that:- Following assessee's own case for A.Y. 2006-07 - The yard stick adopted by the Assessing Officer was average purchase price of Tea without ascertaining the price prevailing in the market on the date when purchase was made from sister concerns with that from outside party and without comparing the exact quality and the transactions of purchases from the sister concerns were not the sham transactions - Decided in favour of assessee. Disproportionate increase in sales promotion expenses - Held that:- Following assessee's own case for A.Y. 2006-07 - the payments were made through account payee cheques and bank draft and none of the parties were related to the assessee company or its director and details and vouchers were maintained verifiably and genuineness of the expenditure was not in doubt - Decided in favour of assessee.

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• 2014 (1) TMI 233
  Deduction u/s 80IA - Held that:- The assessee had set up Udaipur Undertaking and Viramgam Undertaking in AY 2003-04 - The assessee incurred losses from these two eligible Units for deduction u/s.80-IA - No deduction was claimed in the said AY u/s.80-IA of the Act - In the AY 2005-06, the assessee earned profit from these projects and accordingly claimed deduction u/s.80-IA by treating the AY 2005-06 as initial assessment year - The AO while computing the deduction for AY 2005-06 u/s.80-IA reduced the deduction claimed by the assessee by adjusting the losses of previous assessment years 2003-04 & 2004-05 from the eligible profit from the undertakings. As per section 80IA - The eligible business is the only source of income and the deduction would be allowed from the initial assessment year or any subsequent year - It nowhere defines as to what is the initial assessment year - Prior to 1st April 2000, the initial assessment year was defined for various types of eligible assessees under section 80IA(12) - After the amendment brought in statute by the Finance Act, 1999, the definition of “initial assessment year” has been specifically taken away – If the assessee exercises the option of choosing the initial assessment year as culled out in sub-section(2) of section 80IA from which it chooses its 10 years of deduction out of 15 years, then only the losses of the years starting from the initial assessment year alone are to be brought forward as stipulated in section 80IA(5) - The loss prior to the initial assessment year which has already been set off cannot be brought forward and adjusted into the period of 10 years from the initial assessment year as contemplated or chosen by the assessee - It is only when the loss have been incurred from the initial assessment year, then the assessee has to adjust loss in the subsequent assessment years and it has to be computed as if eligible business is the only source of income and then only deduction under section 80IA can be determined - No brought forward loss or depreciation could be reduced for determining the amount for which deduction is to be allowed u/s.80-IA of the Act – Decided in favour of assessee. Whether loss of various loss making units be allocated to various units earning profits for deduction u/s 80IA - Held that:- The AO computed the claim for deduction allowable u/s.80-IA to the assessee by allocating the losses of other units against the profits of the eligible units in proportion to the turnover of the assessee - Following M/s. Shriram Properties Pvt.Ltd. vs. ACIT [2013 (9) TMI 446 - ITAT CHENNAI] - The profit derived from a particular eligible Industrial undertaking is qualified for deduction u/s.80IA without reduction of loss suffered by any other eligible industrial undertaking, subject to gross total income of assessee – Decided in favour of assessee. Whether the gross interest expenditure be allocated in place of net interest expenditure – Held that:- When deposit in FDRs is made with the borrowed funds, then, only net income can be said to be the interest income derived from FDRs - The assessee has brought no material before him to show that borrowed funds were utilized for making the FDRs - The assessee could not bring any material to show that there was any nexus between the interest expenditure and the interest income earned on FDRs by the assessee – Decided against assessee. Employees Contribution to PF – Held that:- Following CIT vs. Alom Extrusion Ltd [2009 (11) TMI 27 - SUPREME COURT] - If the employees’ PF contribution was deposited by the assessee before the due date of filing of return of income u/s.139(1) of the Act, then the same should be allowed while computing the income of the assessee - Decided in favour of assessee. Disallowance u/s.40(a)(ia) – Held that:- Following Virgin Creation [2011 (11) TMI 348 - CALCUTTA HIGH COURT] - If the TDS was deposited to the credit of the Central Government before due date of filing of return of income u/s.139(1) of the Act, then no disallowance shall be made u/s.40(a)(ia) of the Act – The issue was set aside for fresh adjudication. Non-allowance of credit for tax deducted at source on mobilization advance received – Held that:- As per amended provisions of section 199, in sub-section 1, it has been stated that any deductions made in accordance with the foregoing provisions of this chapter and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made. Therefore, as per the amended provisions, once the TDS was deducted, a credit of the same to be given to the assessees, irrespective of the year to which it relatesDecided in favour of assessee. Penalty u/s 271(1)(c) – Held that:- The penalty for concealment cannot be levied in the case of the appellant merely on the basis of addition made which had been confirmed by the CIT(Appeals) - Full particulars of the claim have been disclosed being fully supported by audit report and claim of netting of income u/s.80IA and applicability of section 80IA(4) r.w.s.(5) being debatable issue, there being two views, no malafide intention can be attributed to the appellant – Decided in favour of assessee.

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• 2014 (1) TMI 232
  Unexplained cash credit - Held that:- There was no physical cash available with the assessee on the date of survey - Various payments and remittances, including bank deposits were not incorporated in such books, resulting in the abnormal cash balance - Assessee had filed reconciliation and documents in support of cash balance - Assessing Officer had offered no comments on the reconciliation given by the assessee - Section 68 can be roped in to fasten a tax liability on an assessee, only when no explanation regarding source of the credits has been offered - Even if it is presumed that cash balance of Rs.3,79,65,399/- was indeed there on 04.03.2008 there is no case for the Revenue that the said amount, appearing in the books was not explained - That the balance cash was appearing in the books, itself is sufficient evidence to show that it stood explained - Assessing Officer has not been able to point out why any of the entries in such cash book resulting in such cash balance could not have been believed - Decided against Revenue.

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• 2014 (1) TMI 231
  Whether transactions in shares be considered as trading activity - Held that:- Assessee filed a complete details of long term capital gains on sale of shares and short term capital gains on sale of shares for the relevant years - Holding period is from 1 year to 10 years in some cases and even in some cases it is 15 years - The accounting treatment given by assessee has never been disturbed by revenue - In earlier years and in future years assessee's contention for all along been accepted - The systematic investment is nothing but investment not trading - Following CIT Vs. Gopal Purohit [2010 (1) TMI 7 - BOMBAY HIGH COURT] - When the factual position is very clear in the case that the assessee is holding the shares as an investment and the profit arising out of sale of shares is capital gains either long term or short term - The gains on account of transfer of shares shall be treated as capital gains as against business income assessed by the A.O - Decided against Revenue. Disallownace u/s 14A - Held that:- The CIT(A) was not justified in not directing the assessing officer to recompute disallowances as the calculations made by him under Rule 8D (2) (ii) and (iii) were erroneous as he computed these disallowances on the entire amount of investments appearing in the balance sheet instead of taking the average of value of those investments, the income from which does not/ shall not form part of the total income, as provided in Rule 8D - Decided in favour of assessee.

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• 2014 (1) TMI 230
  Non-deduction of TDS - Assessee in default u/s 201(1) - Held that:- Following Hindustan Coca Cola Beverages Pvt Ltd Vs CIT [2007 (8) TMI 12 - SUPREME COURT OF INDIA] - In order to hold the assessee is liable for deducting tax at source under section 194H of the Income-tax Act, 1961, whether the relationship between the assessee and its franchisees created by the agreement is of a principal and agent has to be gathered from the nature of the contract, its terms and conditions, and the terminology used by the parties is not decisive of the relationship - The court is to examine whether after delivery of the goods to the buyer, the seller has retained the control or right of regulation in any form with regard to the mode of dealings of the buyer, in other words, whether the buyer has substantially unfettered choice to deal with the property purchased in any manner he likes - Sometimes the seller under the contract or enactment prescribes certain regulatory measures to prevent abuse of the rare articles and goods even after sale but such measure cannot be ascribed to be attributes of the relationship of principal and agent - Once the recipients have paid tax on income embedded in these payments then the tax cannot once again be recovered from the assessee by treating the assessee in default for non deduction of TDS - The issue was restored for fresh adjudication.

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• 2014 (1) TMI 229
  Disallowance of Expenditure – Share trading expenses taken as 50% of total expenses in place of 96.11% - Expenses calculated without any actual calculation basis - Reopening of Assessment u/s 147 of the Act - Held that:- Following ACIT Mumbai and Ors. Vs ICICI Securities Primary Dealership Ltd. [2012 (8) TMI 754 - SUPREME COURT] - the assessee has furnished a copy of the order which directly goes to the root of the question raised by the Revenue whether for determining the income on the basis of the share trading could the loss be disallowed on finding the speculation loss which could be allowed in accordance with the provision of section 73 whether would be for re-assessment of finding of income having escaped or disallowance of expenditure claimed for earning such income - The assessee being a limited company was holding shares as investment and also for trading, therefore cannot be subject itself to determine the speculation loss, if any, was not to be tinkered with under the provision of section 147/148 of the Act. The appeal of the Revenue does not have legs to stand on and has to be dismissed - However, on the issue raised by the assessee-appellant as Cross Objection regarding the validity of reopening Relying upon SC’s decision brought on record as of now was to be considered, in so far as, the ld. CIT(A) did not distinguish another Apex Court’s decision in the case of CIT vs Kelvinator of India Ltd. [2010 (1) TMI 11 - SUPREME COURT OF INDIA] - which was brought to the notice of the CIT(A) by the assessee that the law is settled that the change of opinion cannot be the basis for a reason to believe and review of the order u/s 147 of the Act - the CIT(A) has erred in not holding the assessment u/s 147 of the Act – Decided against Revenue and in favour of Assessee.

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• 2014 (1) TMI 228
  Disallowance of administrative and general expenses – Earning of exempt dividend income u/s 14A – Application of Formula provided under Rule 8D of IT rules – Held that:- The assessee has incurred a total expenses of Rs.49,85,000/- towards staff cost, operating and administrative expense; establishment/general expenses of MIS department which is handling the investment apart from the activity of accounts and banking operations – Thus, a reasonable estimate and allocation of expenses for the purposes of investment activity would be the 1/3 of the total expenses incurred on MIS department - the investment activity also includes investment in the foreign companies and the dividend of which is taxable as well as the investment which are not yielding dividend income - but some fixed maturity plans of mutual funds, then the same would be excluded while considering apportionment of the expenses incurred for earning the dividend income – Decided partly in favour of Assessee.

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• 2014 (1) TMI 227
  Disallowance u/s 40(a)(ia) of the Act – CBDT’s circular No.715 nor considered – Applicability of TDS on payments of actual reimbursements – Held that:- Nothing is brought to support that the payments contain the profit element passed on to the payee - There is no doubt that the circular apply to the payments which contains the income element – Following CIT vs. Siemens Aktiongesellschaft [2008 (11) TMI 74 - BOMBAY HIGH COURT] - when there is no element of income and the payment is only the reimbursement of expenses then no disallowance can be made u/s 40(a)(ia) of the Act – Decided against Revenue. Disallowance on account of Electricity expenses – Held that:- The expenditure was incurred by the assessee solely in respect of the properties used by the assessee for business purposes - nothing is brought to our notice that the facts require any changes - Considering the business nature of the expenditure, the assessee entitled to claim the same as an allowable deduction - No disallowance is called for - the direction given by the CIT (A) for deletion of the addition on account of electricity charges, does not call for any interference – Decided against Revenue.

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• Customs

• 2014 (1) TMI 225
  Release of bank guarantee - Confiscation of goods - Provisional release of goods - Held that:- where the goods are provisionally released subject to security, awaiting adjudication the security including the bank guarantee, the security cannot be released, until the adjudication is concluded. Sub-section (2) of Section 110 is not applicable where the provisional release has been made conditionally either in exercise of Section 110 (1A) or Section 110A of the Customs Act - bank guarantee was submitted on a specific condition to safeguard fine and penalty arising in adjudication proceeding. The condition no.3 clearly provided that the bank guarantee shall remain valid upto finalization of the case and should have a self renewal clause. In the circumstances when the notice issued with an extended period of limitation, is not under challenge, and the adjudication is pending, there is no question of release of bank guarantee at this stage - Decided against assessee.

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• 2014 (1) TMI 224
  Validity of summons issued - Power to investigate - Held that:- as per the settled legal position in exercise of the writ jurisdiction under Article 226 of the Constitution this Court is not inclined to interfere with the investigation. It is for the Investigating Officer to decide who should be called for investigation - Mr. Nansi has already shown to have produced voluminous record before the Deputy Director on 20 November 2013 i. e. after the letter dated 18 November 2013 of the Deputy Director that the petitioner has been summoned to appear because Mr. Nansi was not cooperating in investigation, the Deputy Director would certainly consider the said record and thereafter decide whether presence of the petitioner is still necessary. However, in case the Deputy Director is of the view that the petitioner's presence is necessary for making enquiries then it is open to the Deputy Director to summon the petitioner. However, having regard to the petitioner's health, it is hoped that the petitioner would not be made to unduly wait after he makes himself available for investigation by the Deputy Director. However, the duration of wait would depend upon the facts and circumstances as they emerge during investigation but we trust that Deputy Director would not make the petitioner wait unduly in view of his health condition - Decided against assessee.

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• 2014 (1) TMI 223
  Fixation of Brand Rate under Rule 6(1) (a) of the Customs and Central Excise Duties and Service Tax Drawback Rules, 1995 - Held that:- during the year 2008-09 that the applicant requested and the department took up the issue of re-open and re-consideration of such rejected claims for fixation of Brand Rate. Relevant show cause notices were issued and after providing due opportunity to the applicant, the case matter was adjudicated with the conclusion that the applicant herein should have filed the relevant and due appeals before the Commissioner (Appeals) only and there is no provision in the law to re-consider and re-open these cases after a period of 4 years - applicant failed to exercise his legal and proper right and their plea to re-open their drawback claims for the purpose of fixation of Brand Rates is not admissible and orders of the original adjudicating authority under reference are upheld. After due consideration of all the facts on record including the above said original rejection letter dated 15-12-2003 thereby acknowledging, considering in detail and then finally rejecting the impugned claims for the reasons stated therein is of the considered opinion that such communicated decision may not be in the form of a formal detailed adjudication order, but is very much covered within the statutory provisions of wordings of Section 128 of the Customs Act, 1962 - applicant should have exercised his right of legal remedy of filing proper appeals before the jurisdiction (Commissioner (Appeals) within the prescribed period of 60 days which the applicant have failed to do - application of the applicant and the impugned Order-in-Appeal is upheld for being perfectly legal and proper - Revision petition dismissed.

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• 2014 (1) TMI 222
  Valuation of goods - Enhancement in value - Demand of differential duty - Mis declaration of goods - Held that:- The value has been ascertained on the basis of the contemporary imports of similar goods, its also observed that lower value i.e. $ 460 USD PMT shown in NIDB data, was considered as basis. It seems there is no justification or the reasons given in respect of the grade of the impugned goods and country of origin - contemporary reports relied upon by the departments does not match as regards to the country of origin and the grade of the impugned goods. Thus the comparison cannot be defined as an identical or similar goods as defined in Rule 2 of the Customs Valuation Rules, 2007 - Perusal of NIDB data revealed that there is no consignment imported from Finland and having the same grade of the impugned goods, hence, comparison with identical or similar goods cannot stand - Decided in favour of assessee.

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• Service Tax

• 2014 (1) TMI 262
  Classification of service - Service of ACP cladding and coil cutting - Business Auxiliary Service - Held that:- Where a facially taxable service is classifiable under more than one taxable service and Revenue assumes that the service provided falls into one taxable service, (namely BAS in the present case), and the assessee asserts that the service falls generically within another taxable service (CICS), it becomes the non-derogable obligation of the adjudicating authority to deal with the dispute as to classification and he must record a finding that the service provided falls within a specified taxable service; and for reasons recorded for such conclusion. This is a fundamental obligation of the authority, having regard to the fact that there is facially an overlapping between several taxable services enumerated in Section 65 of the Act - The order of the adjudicating authority clearly fails to deliver upon this obligation, of resolution of a dispute as to classification. Even the show cause notice dated 16.11.2010 does not specify the particulars of the service allegedly provided by the appellant, in relation to ACP cladding work executed in favour of the recipient and thus fails to provide adequate notice to the appellant - Decided in favour of assessee.

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• 2014 (1) TMI 261
  Refund of CENVAT Credit - Refund under Rule 5 of the Cenvat Credit Rules read with Notification No. 5/2006 - Credit lying unutilized in books - Commissioner partly allowed refund claim - Invoices do not contain the PAN based registration number - Held that:- rule does not stipulate mentioning of PAN based registration number and in absence of any other deficiency in the invoices in question, there is no fault in the finding of the Commissioner (Appeals) in allowing the credit in respect of this amount also - even if appellant was not eligible for refund under Notification No. 9/2009 dated 3.3.2009, the appellants were certainly eligible for refund under Section 11B of the Act - Following decision of Tata Consultancy Services Ltd. Vs. CCE [2012 (8) TMI 500 - CESTAT, MUMBAI] - Decided against Revenue.

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• 2014 (1) TMI 260
  Demand of service tax - Denial of refund claim - Notification No.41/07-ST dated 6.10.2007 - Notification No.17/2009-ST - Notice not issued - Held that:- assessee did not receive any notice of personal hearing at the adjudication stage, the appellate authority was required to set aside the adjudication order on that singular ground and remand the matter for de novo adjudication, from the stage of issuing a fresh notice for personal hearing. The appellate authority has adverted to this grievance of the assessee but failed to deal with it. The adjudicating authority rejected the refund claim on the ground that neither was the claim for refund presented in Form A - 1, as required by Notification No.17/2009-ST nor the relevant documents, in particular as mandated by the Notification were furnished. The appellate authority does not deal with this finding of the adjudication order except stating that requisite documents of the details of export invoices of transporter etc. are on record - The matter is remanded to the appellate authority for de novo appellate disposal - Decided in favour of Revenue.

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• 2014 (1) TMI 259
  Demand of service tax - Jurisdiction of Commissioner (Appeals) - Power to reject appeal - Held that:- There is no provision either in Chapter V of the Finance Act, 1944 nor provision of the Central Excise Act, 1944 which accommodates a power in the Commissioner (Appeals) (or for that matter in this Tribunal) to review an order of predeposit passed, even if there be some error in such order. In the circumstances, the Commissioner (Appeals) had no jurisdiction to entertain an application for review which is presented either as a letter or even a formal application. An application for review of an order of predeposit, in whatsoever phraseology such an application is couched must be summarily rejected as without jurisdiction; unless such order (directing predeposit) is itself a nullity for any reason of lack of inherent jurisdiction of the officer passing the order or like circumstances - Commissioner (Appeals) ought to have rejected the appeal solely on the ground of failure of predeposit, one of the grounds adverted to in the impugned order. The impugned order, to the extent it proceeded to reject the appeal on merits as well, is however unsustainable; as the jurisdiction of the Commissioner to decide upon merits of the appeal is contingent upon predeposit - However the order rejected the appeal for failure of predeposit, is impeccable and sustained.

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• 2014 (1) TMI 258
  Clinical testing service - Classification of service - scientific or technical consultancy or technical testing and analysis - Held that:- The ambit of "scientific or technical consultancy" on one hand and "technical testing and analysis" on the other, is thus very clear. The overseas companies were providing service pertaining to clinical testing of the appellant's formulations and analysis of its samples, clearly an activity falling within the ambit of "technical testing and analysis" and outside the ambit of "scientific or technical consultancy". The taxable services were provided outside the Indian territory. The services provided by the overseas companies thus fall within ambit of Section 65(105)(zzh); and since these services were wholly provided outside India, are not liable to service tax from the appellant under the reverse charge mechanism in Section 66A of the Act, in view of clause (ii) of Rule 3 of the 2006 Rules - Decided in favour of assessee.

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• 2014 (1) TMI 257
  Services in relation to Continental Shelf of India (C.S.) and Exclusive Economic Zone of India (EEZ) - reverse charge - Notification 16/2010-ST dated 27.2.2010 - activities pertaining to construction of installations, structures and vessels for the purposes of prospecting or extraction or production of mineral oil and natural gas and supply thereof - pre-construction services - Held that:- The reading of Notification 14/2010-ST extended the provisions of the Finance Act to the whole of CS and EEZ for all activities pertaining to construction of installations, structures and vessels for the purposes of prospecting or extraction or production of mineral oil and natural gas and supply thereof - Notification No. 16/2010-ST dated 27.2.2010 is issued under Sections 93 and 94 of the Finance Act read with Section 66A of the Finance Act. We find that the provisions of Section 93 of the Finance Act empowers the Central Government to issue exemption notifications. In the provisions of Notification 14/2010-ST, the provisions of the Finance Act are extended in respect of the areas specified in column 2 to the Notification in the CS and EEZ for the purposes as mentioned in column 3 of the Notification. The provisions of the Notification were extended to whole of the CS and EEZ at serial No. 1 in respect of any service provided for all activities pertaining to construction of installations, structures and vessels for the purposes of prospecting or extraction or production of mineral oil and natural gas and supply thereof. At serial No. 2, the provisions of the Finance Act were extended to the installations, structures and vessels within the continental shelf and the exclusive economic zone of India, constructed for the purposes of prospecting or extraction or production of mineral oil and natural gas in respect of any service provided or to be provided by or to such installations, structures and vessels and for supply of any goods connected with the said activity. Appellant had not provided any service regarding which the appellant had paid service tax on reverse charge mechanism in respect of any service provided or to be provided by or to such installations, structures and vessels or for supply of any goods connected with such activity to installations, structures and vessels within the continental shelf and the exclusive economic zone of India - Decided in favour of assessee.

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• 2014 (1) TMI 256
  Waiver of pre deposit - Stay application - Demand of service tax - Construction of Complex Services - whether Service Tax is applicable to construction of such houses for the benefit of low income group of people - Held that:- appellant rendered the service of construction of residential buildings to the Housing Corporation and received consideration for the same - residential complex comprising more than 12 dwelling units would attract Service Tax under the aforesaid Head but individual residential units could not be considered as residential complex hence its construction would not attract the levy. This view was followed in the case of Vinod Kumar Goyal [2011 (3) TMI 436 - CESTAT, NEW DELHI] also. It is not in dispute in the present case that the residential units were constructed as two-storeyed blocks, each consisting of less than 12 units. It is debatable as to whether these complexes can be considered to be residential complexes for the purpose of levy of Service Tax - Stay granted.

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• 2014 (1) TMI 255
  Demand of service tax - Construction of industrial & commercial complexes - Construction activity for self benefit - Held that:- clarifications issued by C.B.E. & C. to the effect that when construction is done in one’s own land for sale of constructed flats such activity will not be subjected to service tax. Case of G.S. Promoters was in the context of explanation added in Section 65(105)(zzzh) to make it clear that in such situation also, service is involved if advances are taken from prospective customers. This explanation was added by Finance Act, 2010 - The decision of Hon’ble High Court in the case of G.S. Promoters reported in [2010 (12) TMI 34 - PUNJAB AND HARYANA HIGH COURT] only upheld the amendment made by Finance Act, 2010. The decision did not examine the issue whether the explanation would have retrospective validity. Therefore, we waive any pre-deposit of dues arises out of impugned order and there shall be stay for recovery of the same during the pendency of the appeal - Stay granted.

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• 2014 (1) TMI 254
  Demand of service tax and equivalent penalty - Sub-agents services of corporate agent - Classification under Business Auxiliary Services - Held that:- classes are being conducted by him for his own workers who work as agents for him. The said services are not being provided to the general public at large as such they would not be covered by the definition of the said commercial coaching and training centre services - Following decision of Popular Vehicles & Services Ltd. v. CCE [2010 (2) TMI 650 - CESTAT, BANGALORE] - Stay granted.

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• 2014 (1) TMI 253
  Availment of CENVAT Credit - reversal of CENVAT Credit - Whether assessee is eligible for CENVAT Credit when they were not required to pay Service Tax - Held that:- during the relevant time, Revenue was of the view that Service Tax was to be paid. There was no dispute that the impugned services were input services and then in such circumstances, the credit taken under Cenvat Credit Rules cannot be disputed for the reason that later it was decided that the appellant need not have paid the Service Tax. Therefore, I am of the view that the Cenvat credit taken by the appellant is proper and demand for reversing such Cenvat credit is not maintainable - Decided in favour of assessee.

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• 2014 (1) TMI 252
  Waiver of pre deposit - Availment of CENVAT Credit - Reverse charge mechanism - Applicability of sub-rule (5) of Rule 3 of Cenvat Credit Rules, 2004 - Held that:- inputs necessary for providing output service can be removed from the factory without reversing the credit taken on the inputs - appropriate provision in this case is sub-rule (5) of Rule 3 of Cenvat Credit Rules, 2004. There is no dispute that input in question was required for providing output service on which the appellants were paying Service Tax - Stay granted.

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• Central Excise

• 2014 (1) TMI 264
  Penalty under Rule 25 OR Rule 27 - Held that:- Revenue's Petitions against the decision of HC [2010 (9) TMI 422 - GUJARAT HIGH COURT] wherein it HC has observed that, "duty could not be paid in time and as soon as liquidity was available, duty was paid along with interest - penalty could not be levied under Rule 25 of the Rules and for the alleged default, the penalty was restricted to Rs. 5,000/- in each matter under Rule 27 of the Rules", dismissed because of delay - Decided against revenue.

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• 2014 (1) TMI 263
  Amount paid for BCD and Education cess through Cenvat credit debit – Recoverability of amount as per Rule 8(3A) of the Central Excise Rules 2002 - Payment of amount equal to cenvat credit utilized for payment - Penalty under Rule 27 of Central Excise Rules 2002 - Held that:- Following Solar Chemferts Pvt. Ltd. vs. Commissioner of Central Excise, Thane-I [2011 (6) TMI 640 - CESTAT, MUMBAI] - The entire amount of duty for the period of default was apparently paid in full from PLA and, for the month of April 2007, the duty was paid within the prescribed time and hence there was no default – Following Commissioner of Central Excise and Customs vs. Saurashtra Cements Ltd. [2010 (9) TMI 422 - GUJARAT HIGH COURT] – thus, the assessee is liable to pay Rupees five thousands as penalty – Decided partly in favour of Assessee.

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• 2014 (1) TMI 221
  Rectification of order – Held that:- The Revenue had not considered during the pendency of the SLP against Amrit Lal’s case could not be treated as a mistake apparent on the face of the order – Following Commr. of Central Excise, Belapur, Mumbai Vs. RDC Concrete (I) Pvt. Ltd.[ 2011 (8) TMI 25 - SUPREME COURT OF INDIA ] Supreme Court had laid down the circumstances under which the mistake could be rectified by the Tribunal - The issue of applicability of the ratio of Judgment when the SLP is pending before Hon’ble Supreme Court is debatable one and accordingly cannot be considered as a mistake apparent on the face of the order – Decided against assessee.

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• 2014 (1) TMI 220
  Condonation of delay – Delay of more than 4 years – Held that:- The claim of the Applicant was already mentioned in their application filed with this Tribunal on 18.10.2010 - they have filed an affidavit in support of the applicant that the order was never received by them prior to 14.07.2010 - the Revenue could not establish that the order was communicated to the applicant prior to 14.07.2010 - there was no reason to keep the Miscellaneous Application pending awaiting report from the Commissionerate – Delay condoned – Decided in favour of Assessee.

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• 2014 (1) TMI 219
  Under valuation of Aviation Turbine Fuel - Waiver of Pre-deposit – Held that:- The provisions of Rule 7 of Central Excise Valuation Rules very clearly indicate that the excise duty is to be discharged on the excisable goods from where they are stored, after their clearance, from the place of removal - The appellant has not made out prima facie case in their favour – appellant has already deposited an amount of Rs. 6.56 Crores - Appellant is directed to deposit Rupees two crores and fifty lakhs as pre-deposits – upon such submission rest of the duty to be stayed till the disposal – Partial stay granted.

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• 2014 (1) TMI 218
  Process amounts to manufacture or not – Waiver of Pre-deposit – Held that:- The applicants are engaged in the manufacture of Biris without the aid of power except the process of packing of Biris into pre-printed blastic sheets with the aid of power – Following CCE, Bolpur vs. Hindustan Biri Mfg.Co.[2007 (3) TMI 106 - CESTAT, KOLKATA] – the process of packing with aid of power could not result into ‘manufacture’ of Biris with the aid of power - The implication of the amendment would be considered at the time of disposal of the Appeal - the applicant are able to make out a prima facie case for total waiver of pre-deposit of duty – Duty waived and recovery stayed till the disposal – Stay granted.

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• 2014 (1) TMI 217
  Denial of Cenvat credit – Goods used as structural support - Waiver of Pre-deposit – Held that:- The Tribunal has been consistently taking a view and allowing the stay application wherever Cenvat Credit were demanded on items like Angles, Channels, beams etc. which were being used in the manufacture of plant and machinery and also as structural support involving extended period of limitation, but directed pre-deposit for normal period of limitation - the applicant has already deposited an amount of Rs.10.00 Lakhs and they made a fair offer to deposit another Rs.10.00 Lakhs - The offer is accepted and the applicant is directed to deposit – upon such submission rest of the duty to be stayed till the disposal – Stay granted.

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• 2014 (1) TMI 216
  Shortage of goods – Comparison of Figures mentioned in ER-1 – Waiver of Pre-deposit – Held that:- Except the shortage, there is no other evidence to indicate that the goods were cleared without payment of duty from the factory - The applicant had already deposited an amount of Rs.4,65,299/- during the course of investigation – the applicants could able to make a prima facie case for total waiver of pre-deposit till the disposal – Stay granted.

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• 2014 (1) TMI 215
  Shortage of stock – Physical verification conducted - Waiver of Pre-deposit – Held that:- The case is one of appreciation of evidence relating to the stock of goods - Prima facie, there is no sound basis as to how the stock position as on 20.09.2007 could be adopted by the department - some shortages were noticed in the physical stock during the joint verification exercise carried on 06.12.2007 - the actual shortage or otherwise could be determined only at the time of disposal of the Appeal by analysing the evidences adduced by both sides – Assessee directed to deposit Rupees Twenty Five Lakhs as pre-deposit – upon such submission rest of the duty to be stayed till the disposal – Partial stay granted.

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• 2014 (1) TMI 214
  Classification of Goods – Heading 8437 10 00 as NIL rated OR 9406 00 99 – Waiver of Pre-deposit – Held that:- The entire demand of duty is within the normal period of limitation - The assessee claims to CENVAT credit on inputs - the appellant directed to pre-deposit an amount of Rupees One crore as pre-deposit – upon such submission rest of the duty to be stayed till the disposal – Partial stay gratned.

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• 2014 (1) TMI 213
  Denial of SSI exemption under Notification No.8/2003 – Waiver of Pre-deposit – Held that;- Prima facie, the aggregate value of clearances taken by the authorities pertains to clearances of new egg trays manufactured by the SSI unit - the appellant’s claim for SSI benefit is not supported by any acceptable evidence and they are liable to pay the duty demanded – assessee directed to submit Rupees ten lakhs as pre-deposits – upon such submission rest of the duty to be stayed till the disposal – Partial stay granted.

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• 2014 (1) TMI 212
  Interpretation of eligibility of cenvat credit on capital goods/inputs - Applicability of Vandana Global Ltd. Vs. CCEx., Raipur [2010 (4) TMI 133 - CESTAT, NEW DELHI (LB) ] – Waiver of Pre-deposit - Held that:- The Tribunal has been taking a consisting view by allowing the stay petition of the assessee where extended period of limitation is involved but directed deposit where the notice is for normal period - two show-cause notices were issued for normal period of limitation - assessee has made a fair offer to deposit the entire amount of cenvat credit relating to normal period of limitation – Thus, applicant is direct to Submit Rs.2,43,357/- and Rs.1,68,434/- as pre-deposit – upon such submission rest of the duty to be stayed till the disposal – Partial stay granted.

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