TMI Tax Updates - e-Newsletter
January 7, 2014

Case Laws in this Newsletter:

Income Tax Customs Service Tax Central Excise Wealth tax Indian Laws

Articles

1. Tax treatment of stock of goods as on 31.12.2013 taxable at first stage under Punjab VAT

   By: AMIT BAJAJ ADVOCATE

2. CBEC WAKE UP: EXAMINED THE NEED TO REVIEW RULE 8(3A) of CER, 2002

   By: Rishi Chanan

3. No exemption of SAD on goods cleared from SEZ/FTWZ to DTA for self consumption

   By: Bimal jain

News

1. 4th India-South Korea Finance Ministers Meeting to Discuss Macro Economic Situation and Policy Responses, Cooperation Among Both Countries in Trade and Investment as Well as in Taxation and Finance Matters Among Others

2. Union Finance Minister Shri P. Chidambaram takes Initiative to Ensure that 100% of the Claims of the Farmers Affected by Drought in 2012 in Tiruvadani Taluk, Ramanathapuram District are Released as Early as Possible

3. RBI Reference Rate for US $ and Euro

4. Auction for Sale (Re-Issue) of Government Stocks

Notifications

DGFT

1. 64 (RE-2013)/2009-2014 - dated 6-1-2014 - FTP

Amendments in Chapter 3 of Foreign Trade Policy 2009-14

FEMA

2. 294/2013-RB - dated 12-11-2013 - FEMA

Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Seventeenth Amendment) Regulations, 2013

Income Tax

3. 01/2014 - dated 6-1-2014 - IT

In pursuance of sub-clause (ii) of clause (a) of sub-section (1) of Section 138 of the Income Tax Act, 1961

Circulars / Instructions / Orders

Central Excise

1. 978/2/2014-CX - dated 7-1-2014

Levy of the Education Cess and the Secondary and Higher Education Cess on other cesses- reg.

Highlights / Catch Notes

Income Tax

• Assessee Can Include Cost of Improvement in Capital Gains Calculation, Even if Contractors Didn't Perform Work.

  Case-Laws - AT : Capital gain - the assessee cannot be denied cost of improvement for the purpose of computing capital gains simply because the contractors to whom the payments were made did not carry out the work - AT
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• Back-to-Back Truck Hiring is Subcontracting: TDS Applicable u/s 194C(2) of Income Tax Act.

  Case-Laws - AT : TDS - if it is found that trucks were hired by the assessee for back to back hiring out of trucks by the assessee, it will indeed be a case of sub-contracting the work, and, to that extent, provisions of Section 194 C(2) will indeed come into play - AT
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• Completion Certificate Not Needed for Home Deduction u/ss 24(1)(vi) & 80C, Says CBDT Circulars.

  Case-Laws - AT : TDS on salary – neither Rule 26B nor the Circulars of CBDT stipulate obtaining of completion certificate of house before allowing deduction u/s. 24(1)(vi) and u/s. 80C of the Act for arriving at the TDS liability - AT
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• Expenditure on exempt income u/s 14A must be added back for book profit u/s 115JB.

  Case-Laws - AT : Expenditure relatable to exempt income as provided under sub section (1) of section 14A is required to be added back while computing book profit under section 115JB - AT
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• Contracts with design, development, and maintenance qualify for section 80IA deductions; not classified as simple works contracts.

  Case-Laws - AT : If the contracts involve design, development, operating and maintenance, financial involvement, and defect correction and liability period, then such contracts cannot be called as simple works contract to deny the deduction under section 80IA - AT
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• Penalty u/s 271G Overturned; Assessing Officer Directed to Use Sections 271AA or 271BA Instead.

  Case-Laws - AT : Penalty u/s 271G – Failure to maintain documents and accounts being audited - AO should have initiated penalty proceedings u/s 271AA/271BA – the penalty levied u/s 271G set aside - AT
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• Assessment Validity Challenged: Warrant Not in Assessee's Name; CIT(A) Deleted Addition Without Reviewing Seized Materials.

  Case-Laws - AT : Validity of Assessment made u/s 158BC – Warrant of authorization not issued in the name of assessee – CIT(A) committed an error in deleting the addition without considering the seized materials which were available on record - AT
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• Court Upholds Order: Disallowance u/s 40(a)(ia) Invalid When Tax Deduction at Source is Impractical.

  Case-Laws - AT : Disallowance u/s 40(a)(ia) - as the deduction of tax at source by the assessee was unfeasible, representing an impossibility – the order deleting the disallowance u/s. 40(a)(ia) for non-deduction of tax at source upheld - AT
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• Depreciation on Leased Buses: Determining Operating vs. Finance Lease Status Doesn't Disqualify Current Claims.

  Case-Laws - AT : Depreciation on lease buses – Nature of lease – Operating lease OR Finance Lease – merely because depreciation is allowed on the same assets (buses) to M/s. DMRC Ltd. would not ipso facto disentitle the assessee to its rightful claim - AT
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Customs

• Importing Duty-Free Goods from SEZ into Domestic Market Without Authorization Violates Customs Duty Laws, High Court Rules.

  Case-Laws - HC : Duty free goods imported in a unit of Special Economic Zone if it is brought to the domestic market without authority violating the statutory prescriptions, it is a clear case of evasion of customs duty - HC
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Wealth-tax

• Property Valuation Boosted by 20% Residential Use Conversion; Remains Non-Taxable for Wealth Tax Purposes.

  Case-Laws - AT : Valuation of property - Enhancement in valuation - Land converted from small scale industrial use to 20% residential use - still being used for business - not taxable under wealth tax - AT
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Service Tax

• Delay Condonation Denied: Change of Opinion Not Sufficient Cause for Late Appeal Filing.

  Case-Laws - AT : Condonation of delay - Change in opinion - Delay due to analysis of appeal - how a mere change of opinion could be construed as a sufficient cause warranting condonation of delay - Condonation denied. - AT
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• Tax Demand for Telephone Services u/s 73 Dismissed Due to Lack of Show Cause Notice, Best Judgment Used.

  Case-Laws - AT : Demand without issue of show cause notice - Telephone services - Demand of differential tax u/s 73 - Best Judgement Assessment u/s 72 - demand set aside - AT
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• Court Finds No Evidence of Commission on Software Invoices; Grants Stay in Case.

  Case-Laws - AT : Reimbursement of invoices paid for the licensed software downloaded of M/s. Microsoft Inc., USA - There is no evidence that while routing the payment, the group concern in USA has retained any commission/margin for the services said to have been rendered by them - stay granted - AT
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• Grass and Debris Removal Not Classified as Cleaning Under Service Tax Regulations in Townships and Residential Areas.

  Case-Laws - AT : Cutting and removal of all kind of unwanted grass, bushes, trees, weeds and removal/uprooting the roots of wild vegetation, removal of debris and garbage from the roads, streets and open space of ONGC township and residential areas of the ONGC prima facie will not fall not under the Cleaning Activities - AT
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Central Excise

• Cenvat Credit Denied Due to Non-Compliance with Rule 9(1) Format; New Cases Not Allowed at Appeal Stage.

  Case-Laws - AT : Cenvat credit on Input services – Debit notes raised by service provider not in prescribed format as per Rule 9(1) of Cenvat credit rules – A new case cannot be made by Revenue at the Appellate Stage as per the settled law - AT
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• Roop Amruta's Classification as Ayurvedic Medicine Under Chapter Heading 3004 9011 Disputed; Testing Request Denied, Stay Granted.

  Case-Laws - AT : Correct classification of Roop Amruta – Under Chapter Heading 3004 9011 as Ayurvedic Medicine or not – The appellants request to get the goods tested by an Ayurvedic Laboratory or Drug Controller of India stands rejected - stay granted - AT
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Case Laws:

• Income Tax

• 2014 (1) TMI 319
  Rectification of mistake - Held that:- As per the amended section came into force w.e.f. 01-4-1998 - Profit upon sale of DEPB lincense shall be eligible for deduction u/s 80IB of the Act treating it as profit from industrial undertaking - Assessing Officer has passed the impugned order based on the verdict given in Liberty India [2009 (8) TMI 63 - SUPREME COURT] without considering the amended provision - Following T.S. Balaram (ITO) vs Volkart Brothers and Others [1971 (8) TMI 3 - SUPREME Court] - An error which has to be established by a long drawn process of reasoning on points where there may conceivably be two opinions cannot be said to be an error apparent on the face of the record - A decision on a debatable point of law is not a mistake apparent from the record - The allowance of deduction is not a glaring, obvious, patent and apparent from record - Decided in favour of assessee.

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• 2014 (1) TMI 318
  Validity of order passed u/s 263 - Held that:- The assessee has filed the list showing details of share capital received during the financial years 2002-03 to 2008-09 - In respect of trading results, the assessee filed the details of purchases of Rs.10 lakhs and above - The assessee explained that why its books of accounts should not be rejected, Explanation on stock valuation was given - The assessee further explained the link of sale to a particular purchase – A perusal of the material evidence brought on record show that the AO had issued summons under Section 131 of the Act to various companies, who have given share application money to the assessee - These summons show that the AO asked for the details of share application money and loans invested/given to the four companies during A.Y.2003-04 to 2009-10 - It is clear that the AO has made specific enquiries in relation to the trading loss as well as share application money to which the assessee has given specific reply with supporting documentary evidences during the course of the assessment proceedings - This clearly shows that not only the AO has applied his mind on the facts of the case but also it has been approved by his immediate superior authority, who himself must have applied his mind before according approval to the assessment order - The order of AO was not erroneous and prejudicial to the interest of Revenue - The conditions for invoking power u/s 263 was not fulfilled - Decided in favour of assessee.

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• 2014 (1) TMI 305
  Validity of Reopening of Assessment – Held that:- The assessee have never asked for the reason from Assessing Officer, cannot now say that there was no reason for such reopening - if the assessee had asked such reason, Assessing Officer was bound to give such reason to the assessee also as held in GKN Driveshafts (India) Ltd. v. ITO [2002 (11) TMI 7 - SUPREME Court] Assessing Officer was duty bound to dispose of the objection, if any raised by the assessee, before completing the assessment - A presumption cannot be taken that Assessing Officer had no reason with him when he resorted to the reopening. Provision for bad-debts not considered – Computation of book profit u/s 115JA of the Act - The assessee had claimed the amount as provision for bad and doubtful debts - though the assessee called the amount a provision, what was effectively done was only a write-off of bad debts – Following M/s. Vijaya Bank Versus Commissioner of Income Tax & Anr. [2010 (4) TMI 46 - SUPREME COURT] - where there is a debit in the Profit & Loss account as provision for bad and doubtful debts, but if a corresponding amounts stood obliterated from loans and debts on the asset side of the balance sheet, it is not necessary for the assessee to show that the write-off is effected in each and every individual account of the debtors - Even though the amendment to the Act has been made retrospectively, assessee can always claim that the provision for doubtful debts was in fact reduced from debtors account and this was no more a provision for diminution in value of assets or provision for any unascertained liability – Thus, the order for addition made u/s 115JA set aside – Decided partly in favour of Assessee.

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• 2014 (1) TMI 304
  Addition made u/s 40(a)(ia) of the Act – Liability to deduct TDS as per Section 194H of the Act – Nature of Expenditure – Commission OR reimbursement expenditure – Held that:- The payment is reimbursement of the expenses and are not the commission as the concerned party did not give any services in respect of the payment of expenditures made - Providing services is essentially requirement of the nature of transaction of a commission - Since this condition is not satisfied, thus, it is a case of reimbursement of the expenses incurred by the concerned party on behalf of the assessee – thus, the Revenue authority is not correct in taking such expenses as commission expenses - The finding of Revenue Authorities is on presumption basis, without considering the relevant agreement/documents and books of account maintained by the assessee - orders of Revenue Authorities set aside and the claim of the assessee is allowed - this is not a commission payment, thus, there is no question of deducting tax at source under Section 194H of the Act - the payment is not subject to tax deducted at source, provisions of Section 40(a)(ia) of the Act is not applicable – Decided in favour of Assessee.

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• 2014 (1) TMI 303
  Amount paid to contractors as cost of improvement of property not considered while capital gain computation u/s 55 of the Act - Held that:- The assessee made payments to sub-contractors which is not in dispute - The assessee also deducted TDS on such payments to contractors is also not in dispute - the assessee himself carried out the unfinished portion of the building without which he could not have used that property as dubbing and recording theatre - the assessee has sold the property, i.e., dubbing and recording theatre - The assessee has paid amounts to contractors deducting TDS – thus, the assessee cannot be denied cost of improvement for the purpose of computing capital gains simply because the contractors to whom the payments were made did not carry out the work – AO directed to re-compute the capital gain as cost of improvement of the asset – Decided in favour of Assessee.

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• 2014 (1) TMI 302
  Disallowance of expenditure on hiring trucks u/s 40(a)(ia) r.w section 194C of the Act – Failed to discharge tax – Held that:- The assessee is mainly engaged in the business of transporting of goods, and, in a situation in which the assessee is doing the business of transport of goods - in the course of carrying out such business, he takes the trucks on hire for transportation of goods, the truck hire is an independent and standalone contract which, though essentially an integral part of the business of transportation, cannot be said to be a sub contract - the assessee may not have any tax withholding obligation in respect of truck hire payments in the pre-amendment period - everything hinges on the findings as to whether the trucks were hired for the purpose of hiring out simplictor of trucks, or for the purpose of use of these trucks in the course of transportation of goods by the assessee. The assessee has used the hired truck in the course of carrying out his business of transportation of goods, and not that of hiring out trucks, the payments for truck hire cannot be treated as payments to sub-contractor, and, accordingly, the provisions of Section 194C(2), thus, the provisions of Section 40(a)(ia) cannot come into play - The disallowance will have to be deleted – if it is found that trucks were hired by the assessee for back to back hiring out of trucks by the assessee, it will indeed be a case of sub-contracting the work, and, to that extent, provisions of Section 194 C(2) will indeed come into play – Matter remitted back – Decided in favour of Assessee.

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• 2014 (1) TMI 301
  Amount accrue or arise in India or not as per section 5(2) r.w Section 9 of the Act – Fee paid for mibilisation/demobilization of rig to/from India – Held that:- The assessee is a non-resident company engaged in the business of offshore drilling as contractor with a fleet of mobile offshore drilling units employed for its customers to find and develop oil and natural gas reserves - The non-resident company had contracts with ONGC Ltd., and had offered the revenues from the contract in the return of income at 10 per cent. as deemed profits under section 44BB(1) of the Act - it did not offer for tax the reimbursement of expenses as well as receipt on account of mobilisation/ demobilisation of rigs attributable to voyage undertaken outside Indian territorial waters - Following Sedco Forex International Inc. v. CIT [2007 (9) TMI 196 - UTTARAKHAND HIGH COURT] - the mobilisation charges paid to the assessee by ONGC had no nexus with the actual amount incurred by the assessee for transportation of drilling units of rigs to the specified drilling locations in India - the mobilisation charges were not reimbursement of expenditure - ONGC was liable to pay a fixed sum as stipulated in the contract regardless of the actual expenditure which might be incurred by the assessee for the purpose – thus, the Assessing Officer was right in adding the amount received by the assessee towards mobilisation charges for the purpose of imposing income-tax and the Commissioner of Income-tax (Appeals) and the Tribunal were also right in upholding the order of the Assessing Officer – Decided against Assessee. Reimbursement of expenses to be included in gross receipts u/s 44BB or not – Held that:- Following CIT v. Halliburton Offshore Services Inc. 2007 (9) TMI 230 - UTTARAKHAND HIGH COURT] - all the amounts either paid or payable (whether in India or outside India) or received or deemed to be received (whether in India or outside India) are mutually inclusive - This amount is the basis of determination of deemed profits and gains of the assessee at 10 per cent - The amount paid or received refers to the total payment to the assessee or payable to the assessee or deemed to be received by the assessee, whereas income has been defined under section 2(24) of the Income-tax Act and section 5 and section 9 deal with the income and accrued income and deemed income – Decided against Assessee.

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• 2014 (1) TMI 300
  Deletion on account of short deduction of tax from salary u/s 201(1) of the Act – Alowability of Deduction on House Building Advance u/s. 24(1)(vi) and on principal amount of House Building Advance u/s. 80C of the Act – Completion Certificates of the houses not taken – Held that:- The assessee obtained verification of particulars of loss under the head income from house property from the employees - The assessee company has also obtained interest certificate from the bank before allowing deduction u/s 24(1)(vi) for arriving at the TDS – the Observation of CIT (A) that neither Rule 26B nor the Circulars of CBDT stipulate obtaining of completion certificate of house before allowing deduction u/s. 24(1)(vi) and u/s. 80C of the Act for arriving at the TDS liability upheld – following C.I.T. vs. Semiconductor Complex Ltd. [2007 (1) TMI 155 - PUNJAB AND HARYANA High Court] – Decided against Revenue. Deletion of Interest u/s 201(1A) of the Act – Disproportionate deduction of tax from salary – Held that:- Following The Commissioner of Income Tax Versus M/s Enron Expat Services Inc. [2010 (8) TMI 201 - UTTARAKHAND HIGH COURT] - Section 192(3) permits the assessee to make adjustments during the financial year and once the assessee has deducted the tax u/s. 192(1) by making adjustments during the financial year it cannot be held that the assessee was in default u/s. 201(1A) of the Act - there is no infirmity in the action of the Ld. Commissioner of Income Tax (A) in holding that the action of the Assessing Officer in deleting the interest u/s 201(1A) for the default in not deducting tax on average basis is not proper – Decided against Revenue.

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• 2014 (1) TMI 299
  Jurisdiction u/s 147 - Held that:- Income tax authorities were unaware of the fact that the assessee is being assessed with authorities at Rohtak and not Delhi - income tax authorities at Delhi were well within their rights to issue notice under Section 148 after compliance of provisions of Section 147 regarding disclosing of reasons and in issuance of notice under Section 142(1) of the Act - The moment it was disclosed by the assessee that she was being assessed to income tax at Rohtak and had furnished particulars thereof, on her request, the matter was transferred to Rohtak. Whether notice under Section 148 as also Section 142(1) of the Act was to be re-issued by the Assessing Officer at Rohtak - Held that:- Though judicial consistency is always aspired for and should be maintained, merely because the impugned order is inconsistent with an order rendered by another Bench of the Tribunal, sanctity would not be lent to the said another order and the said order by no means would be taken to be eclipsing the validity and legality of the impugned verdict - Decided against assessee.

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• 2014 (1) TMI 298
  Exemption u/s 54F - Held that:- A residential plot cannot be included in the definition of a residential house property as it cannot be used for residence. Therefore, section 54F was applicable to the appellant's case - A plot in a residential colony can be a residential plot but cannot be said to be a residential house - Property No.805, Barakhamba Road, Connaught Place which is let out by the assessee to M/s Privy Consulting Pvt.Ltd. and used for commercial purposes by them cannot be presumed to be a residential house - The Assessing Officer has not given any basis or evidence for treating property No.805, Barakhamba Road, Connaught Place to be a residential house - The appellant had only one residential house property - Decided against Revenue.

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• 2014 (1) TMI 297
  Depreciation - Held that:- Following Plastblends India Limited Vs. CIT [2009 (10) TMI 39 - BOMBAY HIGH COURT] - The quantum of deduction under section 80-IA is not dependent upon the assessee claiming or not claiming depreciation, because, under section 80-IA the quantum of deduction has to be determined by computing total income from business after deducting all deductions allowable under sections 30 to 43D of the Act - For the purposes of deduction under Chapter VI-A, the gross total income has to be computed, inter alia, by deducting the deductions allowable under sections 30 to 43D of the Act, including depreciation allowable under section 32 of the Act, even though the assessee has computed the total income under Chapter IV by disclaiming the current depreciation - Decided against assessee. Interest income on fixed deposits - Held that:- Following CIT Vs. Pandian Chemicals Ltd [2003 (4) TMI 3 - SUPREME Court] - Incentive u/s.80IB is given to encourage industrial activity, hence deduction is given on income from industrial activity not on interest income from mere depositing the amount with bank or any other institution - interest income from fixed deposits being not the income from industrial activity is not eligible for deduction under section 80IB of the Act. The assessee has claimed set off of the interest expenditure against the interest income pleading that the said expenditure has direct nexus with the interest income - The said contention of the assessee has not been adjudicated by the authorities below - The issue has been restored for fresh adjudication. Whether disallowances made u/s 14A be added to compute book profits u/s 115JB - Held that:- Following Godrej Consumer Products Ltd [2013 (11) TMI 1245 - ITAT MUMBAI] - On combined reading of section 14A with clause (f) of the explanation to section 115JA or clause (f) of the explanation (1) to section 115JB - It can be observed that they do not have any type of conflict with each other. What has been provided under sub section (1) of section 14A is that the expenditure incurred for exempt income is not allowable as a deduction whereas under sub section (2) a method of computation of such expenditure has been provided and in sub section 3 to section 14A it has been mentioned that such method would be applicable even in cases where the assessee claims that no expenditure has been incurred by him in relation to exempt income - Under clause (f) of the explanation (1) of section 115JB it has been provided that the amount of expenditure relatable to exempt income is to be added back in the book profits while computing tax under section 115JB - On perusal of the provisions of section 14A along with section 115JB, it becomes clear that the expenditure relatable to exempt income as provided under sub section (1) of section 14A is required to be added back while computing book profit under section 115JB - Decided against assessee.

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• 2014 (1) TMI 296
  Exemption u/s 10AA - Held that:- Following Scientific Atlanta India Technology (P) Ltd V/s ACIT [2010 (2) TMI 658 - ITAT, CHENNAI] - Section 10A deduction has to be computed before computing the gross total income - Brought forward losses and unabsorbed depreciation cannot be set off against the total income while computing the deduction u/s 10AA - Decided in favour of assessee.

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• 2014 (1) TMI 295
  Whether the investment made by the assessee form part of SLR or current investment or long term investment - The assessee was prevented by sufficient cause in not placing the evidences before the lower authorities and in the interest of justice the additional evidence are admitted for adjudication – Following National Thermal Power Co. Ltd. vs. CIT [1996 (12) TMI 7 - SUPREME Court] - There may be several factors justifying raising of a new plea in an appeal and each case has to be considered on its own facts - The appellate authorities must be satisfied that the ground raised was bona-fide and that the same could not have been raised earlier for good reasons -The appellate authorities should exercise their discretion in permitting or not permitting the assessee to raise an additional ground/ additional evidence in accordance with law and reasons - There should be reasonable cause for furnishing additional evidence belatedly - The additional evidences filed by the assessee are admitted for adjudication - The issue is restored for fresh adjudication.

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• 2014 (1) TMI 294
  Recall of ex-parte oredr - Held that:- The Tribunal is empowered to set aside its order and restore the appeal only if the assessee satisfies the Tribunal that there was sufficient cause for non-appearance when the appeal was called on for hearing - The only reason given by the assessee for non-appearance on hearing date was demise of the senior counsel appointed by it - The juniors of the advocate did not give advice to the assessee with regard to the appeals pending before the Tribunal - From the order sheet of the record – It can be observed that the Counsel of the assessee had filed adjournment petition on 03.12.2008, i.e, before his death and the appeals were then adjourned to 11.3.2009 - The assessee also holds equal responsibility to pursue the appeals - The assessee has simply shirked away from its responsibility by stating that the junior lawyer did not give advice to the assessee which cannot be accepted - All other explanations given by the assessee relate to the events that happened subsequent to the receipt of the order, which cannot be considered as a reasonable cause for non-appearance in terms of the proviso to Rule 24 and Rule 25 of the Tribunal - The assessee has failed to show that there was a reasonable cause for non-appearance on the date of hearing of the appeal as prescribed in the proviso to Rule 24 and Rule 25 of the Appellate Tribunal Rules, 1963 – Decided against assessee.

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• 2014 (1) TMI 293
  Recall of order - Held that:- The scope of section 254(2) is very limited under which an order can be amended or rectified by the Tribunal where there is a mistake apparent on the record of the order - From the perusal of the impugned order, there appears no mistake apparent on the record - The ground that the assessee could not produce the relevant documents relied upon by the assessee before the lower authorities is not a ground which can be considered to be a mistake apparent on the record - It was the discretion of the Tribunal either to accept or reject the adjournment application and when it is the case of the assessee itself that the same was rejected and even the ld. representative of the assessee was duly heard on merits, under such circumstances it cannot be said that there was any mistake committed by the Tribunal which is apparent in the order - If the representative of the assessee had not filed the documents relied upon by it before the date of hearing itself, then he himself is responsible for the lapse or lack of due diligence - It cannot be said to be a case of any mistake apparent on the record. The shareholder would have independent right to contest such additions if so made by the AO but so far the assessee company is concerned, it has no locus-standi to contest the same - The assessee has sought the recalling of the order by way of seeking the review of the order passed on merits, but not for any rectification of mistake apparent on record which otherwise is beyond the scope of provisions of section 254(2) of the Income Tax Act - Decided against assessee.

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• 2014 (1) TMI 292
  Whether deduction u/s 80IA available to work contractor - As per the explanation substituted to section 80IA by Finance (No. 2) Act, 2009 with retrospective effect from 01.04.2000 - Section 80IA is not applicable for the persons who executes a works contract with any undertaking or enterprises - Following GVPR Engineers Ltd. -vs.- ACIT [2012 (4) TMI 149 - ITAT HYDERABAD] - Mere works contract would not be eligible for deductions under section 80IA - The purpose of the tax benefit has all along been to encourage investment in development of infrastructure sector and not for the persons who merely execute the civil construction work - Section 80IA is available to developers who undertakes entrepreneurial and investment risk and not to the contractors, who undertake only business risk - The assessee clearly demonstrated that it has undertaken huge risk in terms of development of technical personnel, plant and machinery, technical know-how, expertise and financial resources - Prior to amendment the 'or' between the activities was not there, after the amendment 'or' has been inserted with effect from 1.4.2002 by Finance Act, 2001 - If the contracts involve design, development, operating and maintenance, financial involvement, and defect correction and liability period, then such contracts cannot be called as simple works contract to deny the deduction under section 80IA - The contracts which contain above features to be segregated, this deduction under section 80IA have to be granted and the other agreements which are pure works contracts hit by the Explanation to section 80IA(13 ), those work are not entitled for deduction under section 80IA - The order of CIT was quashed - Decided in favour of assessee.

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• 2014 (1) TMI 291
  Employees contribution to provident fund - Held that:- Following CIT Vs Alom Extrusion Ltd [2009 (11) TMI 27 - SUPREME COURT] - if the amount is deposited before filing the return of income, the same has to be allowed - Decided in favour of assessee. Disallowance of bed debts - Held that:- The assessee has not brought any material evidence on record to show the nexus of advances with his nature of business - The issue was restored to the files of AO for fresh adjudication. Deduction u/s 80IB - Interest received on fixed deposits - Held that:- The assessee could not bring any evidence to substantiate his claim of direct nexus between the fixed deposits and the business of the assessee - Following Liberty India Ltd [2009 (8) TMI 63 - SUPREME COURT ] - In respect of interest earned on fixed deposits as it cannot be said to have been derived from the business of the industrial undertaking - Decided against assessee. Disallownace of interest - Held that:- The assessee has claimed to have capitalized the interest up to the date of conversion of capital work in progress into capital asset - The AO has categorically verified that the entire interest has been charged to profit and loss account - This needs to be further verified being a factual matter - The issue was restored to the files of AO for fresh adjudication. Unaccounted production - Held that:- The assessee has shown total production of finished goods at 60,96,408 Kgs during the year under consideration - The AO further observed that the assessee has used 3,52,313 kgs of material for home consumption - The assessee has not filed the report of expert - The issue was restored for fresh adjudication. Whether commitment charges are eligible for deduction u/s. 80IB(4) - Held that:- The commitment charges are in the nature of interest on delayed payments received from the customers which is directed related with the sales of the assessee - Following Nirma Industries Ltd. [2006 (2) TMI 92 - GUJARAT High Court] - There is a direct nexus between the commitment charges and the business of the assessee - The commitment charges are derived from the business of the industrial undertaking and therefore eligible for claim of deduction u/s. 80IB(4) of the Act - Decided against Revenue.

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• 2014 (1) TMI 290
  Validity of reassessment proceedings under Section 147 - Held that:- The assessee has sub-let the premises of which he was not the owner - The lessee has not vacated the premises at tyhe end of the lease period for which it paid to assessee mesne profits (i.e. amount for illegal possession of property) in addition to rent - Since the rental income was taxed under the head business the compensation cannot be taxed u/s 22 - The reason recorded by the A. O for reopening the assessment are based on no tangible material - The A. O could not have reason to believe that income chargeable to tax has escaped assessment - To initiate proceedings as per the provisions of section 147 - Recording of reasons, obtaining prior approval of the competent authorities, supply of a copy of the recorded reasons to the assessee, passing an order if objections are filed by the assessee against initiation of reassessment are some of the compulsory things to be done by the AO - AO had issued notice on the basis of the reasons that were not existent - Decided in favour of assessee.

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• 2014 (1) TMI 289
  Validity of invoking assessment u/s 263 - Held that:- The AO had made detailed enquiry in respect of share application money and also in respect of trading activities of the assessee. The assessee had filed necessary details with supporting evidences to discharge its onus - After considering the reply of the assessee and after verifications and enquiries made by the AO, the AO finally came to the conclusion that no addition was required in respect of share application money - The conditions for invoking power u/s 263 was not fulfilled as the order passed by AO was not erroneous - It has been further observed by the Tribunal that the scope of interference under section 263 is not to set aside merely unfavourable orders and bring to tax some more money to the treasury, nor is the section meant to get at sheer escapement of revenue which is taken care of by the other provisions of the Act - There was neither incorrect assumption of facts nor there was incorrect application of law by the A.O. while passing the assessment order - Under such circumstances the invocation of jurisdiction under section 263 of the Act by the CIT was not justified - Decided in favour of assessee.

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• 2014 (1) TMI 288
  Exemption u/s 10(10C) - Held that:- provisions of s.10(10C) are to be interpreted liberally in a manner which is beneficial to retired employees - Following CIT vs. Nagesh Devidas Kulkami [2007 (4) TMI 205 - BOMBAY High Court] - The assessee is entitled to the exemption under s.10(10C) of the Act and also rebate under S. 89 of the Act in respect of the amount received in excess of Rs.5,00,000 on account of voluntary retirement - Decided in favour of assessee.

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• 2014 (1) TMI 287
  Disallowance in respect of Training expenses – Held that:- For the preceding years also, the matter is restored to the AO – Thus, for this year also the same is remitted to the AO for fresh adjudication - This will ensure consistency of approach by the Department, as well as enable the assessee to plead its case along the same lines for this year as well. Disallowance u/s 14A of the Act r.w. Rule 8D of Income Tax Rules – Held that:- The initial onus is on the assessee to exhibit, with reference to its accounts, that it has not incurred any expenditure, as being claimed by it - the volume of borrowed funds is a mere fraction of the assessee's capital - Rule 8D, only seeks estimation of the disallowance in respect of the expenditure incurred, separately qua its various parts, by prescribing a uniform method for the same - until and unless the assessee is able to factually establish that no part of the borrowed funds has been utilized for investment in tax-free securities, disallowance qua the interest expenditure incurred would follow, given the mandate of r. 8D(2)(ii). The services of a portfolio manager would have been availed, while in others the investment may be managed by the assessee's own staff, which may include finance professionals, who would advise it in the matter - The assessee having failed to exhibit its stand of no such expenditure having been incurred, there was no infirmity in the estimation of following the dictate of rule 8D – Relying upon CIT vs. Hero Cycles Ltd. [2009 (11) TMI 33 - PUNJAB AND HARYANA HIGH COURT] and CIT v. Rajendra Prasad Moody [1978 (10) TMI 133 - SUPREME Court] – the expenditure incurred may not have any one to one correspondence with the income, so that basing the disallowance of the expenditure with reference to the tax-exempt income is essentially flawed. - The disallowance u/s 14A is qua expenditure, the purpose of incurring which is for earning income, which does no form part of total income, and may not lead to the same (income), or even in a fixed ratio – Thus, the order of disallowance u/s 14A upheld – the matter restored to the AO for limited purpose of quantifying the correct amount of disallowance under Rule 8D – Decided partly in favour of Assessee.

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• 2014 (1) TMI 286
  Levy of Penalty u/s 271G – Penalty for failure to furnish information or document under section 92D or Penalty for failure to furnish report under section 92E - Held that:- Failure to maintain documents and accounts being audited - The AO had not issued notice of the default committed by the assessee - it was unaware as which are the provision of the Act that he has not observed with regard to international transaction - Penalty order could have been quashed only on this basis - But, FAA has discussed the merits of the case also - he has given a clear finding that for the failure of the assessee penalty u/s 271G should not have been levied - while initiating penalty proceedings u/s 271G, AO satisfied himself to the effect that the assessee had failed to maintain documents and information as required u/s 92D(1) and it had failed to get its accounts audited, as required u/s 92E - For the defaults , AO should have initiated penalty proceedings u/s 271AA/271BA – Thus, the penalty levied u/s 271G of the Act set aside – Decided against Revenue.

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• 2014 (1) TMI 285
  Validity of Assessment made u/s 158BC of the Act – Warrant of authorization not issued in the name of assessee – High Court remanded the matter back to tribunal – Held that:- A bare reading of the assessment order clearly shows that the assessing officer placed his reliance not only on the seized materials but also on the admissions made by the partners regarding suppression of sales - the CIT(A) is not justified in saying that the assessing officer has not used any evidence found during the course of search operation - the CIT(A) ought to have reappreciated the seized materials found on record which were relied upon by the assessing officer - The CIT(A) committed an error in deleting the addition without considering the seized materials which were available on record – the matter remitted back to the CIT(A) and the CIT(A) has to reconsider the issue afresh in the light of seized material and the statement recorded during the course of search operation – Decided in favour of Revenue.

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• 2014 (1) TMI 284
  Reopening of Assessments u/s 147 of the Act – Regular Return filed or not – Remittances made to father – Both Revenue and Assessee made appeal - Held that:- The entire net turnover, after deducting the expenses was remitted to the assessee's father, Shri E Shamsuddin at Edappallykotta - If the entire net turnover was remitted after deducting the expenses, then what is the profit element left in the hands of the assessee - Whether the assessee is transferring the profit to his father as application of funds or he is conducting the business as an agent of his father - Thus, it has to be ascertained whether Shri E Shamsuddin was doing business at different places through his sons and relatives - If that is so, the profit has to be assessed only in the hands of Shri E Shamsuddin – the Tribunal could not decide the issue in the absence of any material on record - The material found during the course of search operation and the statement recorded u/s 132(4) of the Act is not available on record - on the basis of mere oral and written submission, the Tribunal is not in a position to determine at whose hands the profit has to be assessed. The CIT(A) has restricted the turnover ignoring the seized material which discloses huge remittances by the assessee - the seized material and the statement recorded u/s 132(4) of the Act in the course of search operation in the premises of Shri E Shamsuddin are relevant factors to be considered - It is also necessary to confront the assessee with material found during the course of survey and search operation and the statements recorded during the course of those proceedings – the matter remitted back to the AO for fresh adjudication – decided in favour of Assessee and Revenue.

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• 2014 (1) TMI 283
  Deletion of disallowance u/s 40(a)(ia) of the Act - Applicability of section 194J of the Act - Held that:- The assessee's contention, even as observed by the Bench during hearing, that no tax could possibly be deducted at source by it as the 'payment' stood effected only by way of deduction by ZTL - Even assuming liability to TDS, the obligation for the same would lie with the payer-ZTL, as it is only it who has under the circumstances made the payment (to itself) by expropriating a liability outstanding for payment - That is, even if the said payment is liable to TDS, it is only ZTL who was required to deduct tax at source thereon, and deposit the same to the credit of the central government, and not the assessee, who could not be charged with the non- deduction of tax at source - with the said liability, much less the consequence/s - This is as the deduction of tax at source by the assessee was unfeasible, representing an impossibility – the order deleting the disallowance u/s. 40(a)(ia) for non-deduction of tax at source upheld – Decided against Revenue.

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• 2014 (1) TMI 282
  Deletion on account of business development expenses – Supporting evidences not filed for proving the veracity of the expenses – Expenses u/s 37 of the Act or not – Held that:- The onus is on the assessee to prove the genuinity of the expenditure incurred by him and also to prove that the expenses are not personal expenses or capital expenses and have been incurred wholly and exclusively for the purpose of the business of the assessee - the expenses has been incurred in respect of the visit being undertaken by Mr. Rajiv Behal to China and payment made through his credit card and has been treated by the assessing officer to be a personal expenses of Mr. Rajiv Behal - Except the ledger account of business development expenditure being submitted, no other evidence was brought by the assessee on record to prove that the expenses were not the personal expenses and has been incurred wholly and exclusively for the purpose of the business – Order of the CIT(A) set aside and the matter remitted back to the AO – Decided in favour of assessee. Deletion made u/s 40A(2)(b) of the Act – Held that:- This is an undisputed fact that Shri Rajiv Behal who was paid salary and consultancy charges, was director of the company, till 20.12.2008 and till that he got remuneration at the rate of 2,00,000/- p.m. that is at the rate at which he was paid remuneration during the assessment year 2008-09 – later on, the company entered into agreement with Shri Rajiv Behal for rendering the professional services at the rate of 50,00,000/- p.a. and accordingly Shri Rajiv Behal was paid up to 31st March, 2009 - So far as the payment up to 20.12.2008 is concerned since the remuneration was found to be reasonable during the assessment year 2008-09, therefore, if the remuneration was paid at the same rate up to 20.12.2008 the remuneration paid cannot be regarded to be excess than the fair market value -the professional charges paid after 20.12.2008 till 31.03.2009, the provision of Section 40A(2)(b) are not applicable as Shri Rajiv Behal does not fall within the definition of the person referred to clause B of section 40A(2) – Decided against Revenue.

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• 2014 (1) TMI 281
  Disallowance of Depreciation on lease buses – Nature of lease – Operating lease OR Finance Lease – Held that:- It is clear from the terms of the contract that M/s. DMRC Ltd. has facilitated the finance of the buses and to secure repayment of the cost of the buses with interest, the buses would remain in the name of M/s. DMRC Ltd. till the entire repayment is made in 60 instalments - The period of repayment of the cost with interest in instalement and period of agreement is the same i.e. 05 years so that after successful completion of the agreement at the end of tenure of 5 years and full payment of the cost of the buses, the ownership of the buses will be transferred in the name of the assessee - what is material is the substance and contents of the documents which exhibits the intention of the parties and not nomenclature and form of the document - in order to determine the real intention of the parties on the question whether the agreements in question are in substance of operating lease or finance lease, various features have to be tested – in Association of Leasing and Financial Services Companies vs. Union of India [2010 (10) TMI 4 - SUPREME COURT OF INDIA ] various tests has laid down for determination of the real nature of the lease whether finance lease or operating lease. The lessor would fully recover the investment in buses with interest during the lease period itself - The primary object and interest of lessor is for recovery of his investment with interest during the lease period and not in the assets for its use - This fact is clear from the term of lease agreement where all precautionary measures are taken for recovery of the investment made by the lessor on completion of the tenure of lease period and full recovery of the investment and then the asset in question will be transferred to lessee - the assessee has to bear the cost of insurance, maintenance, repairs and other related cost of expenses for buses - The assessee has also paid the taxes etc. in relation to the buses as per agreement – thus, the risk and rewards incidental to the ownership of the assets vests with the assessee - M/s. DMRC Ltd. is simply having the title of the buses as a security against finance till the entire investment and interest there upon is recovered – thus, the nature of lease / arrangement between the parties is finance lease and ownership / title of the buses was retained by M/s. DMRC Ltd. only with a view to secure the repayment of cost of the buses alongwith interest - the assessee is entitled for the depreciation on the buses for the period it has operated the buses - merely because depreciation is allowed on the same assets (buses) to M/s. DMRC Ltd. would not ipso facto disentitle the assessee to its rightful claim – Decided in favour of Assessee.

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• Customs

• 2014 (1) TMI 280
  Condonation of delay - Non receipt of order - Held that:- There is proof of dispatch of the adjudication order by way of extracts of the register maintained by the office of the Commissioner of Central Excise in the ordinary course of business and the extract from the register is supported by a letter from Department of Post at Coimbatore which has confirmed that the letter was not claimed by the addressee - Section 153(b) cannot have application where notice is sent by post and it is not claimed by the address. Therefore I am of the view that this is not a case where it can be considered that there was no delay. I also note that appellant is actually a Customs House Agent and the impugned order is in a matter imposing penalty under Customs Act. Since he is a person who deals with customs authorities on a regular basis, it is surprising that he has not followed up to see the outcome of the adjudication proceedings for a very long time. In this background, the plea taken that he was ill also seems to be an after-thought and not a genuine reason which cannot be a reason to condone such inordinate delay. Therefore, I hold that there is no ground to condone the delay in this case - Condonation denied.

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• 2014 (1) TMI 279
  Confiscation of goods - Attempt to smuggle gold - Discharge of burden of proof - Held that:- there is a seizure specifically effected under the said Act of 1962. Hence, special rule of evidence under Section 123 of the said Act of 1962 will certainly apply and the burden will be on the appellant to prove that the said articles are not smuggled goods. As far as discharge of burden of proof is concerned, the case of the petitioner is that one Shri Kolekar had handed over old ornaments weighing 148.00 grams to the petitioner for making of new ornaments and that the said gold along with the gold of 52.00 grams available with the petitioner was used for making the said articles. The authorities below have noted that the statement of the said Shri Kolekar was recorded who denied to have given any such ornaments. Before the Collector, the petitioner did not appear. The petitioner did not lead any evidence to show that the said articles were made up from the gold ornaments weighing 148.00 grams supplied by Shri Kolekar. Therefore, the concurrent finding is that the petitioner could not explain as to how he came into custody of the said articles - Decided against assessee.

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• 2014 (1) TMI 278
  Confiscation of goods - Imposition of redemption fine - Penalty u/s 112A - Tribunal reduced redemption fine - Held that:- Tribunal has erred in law in reducing the amount of redemption fine and to set aside the penalty in view of the order passed in respect of the previous import by the respondents - matters remitted back to the Tribunal to decide the appeals afresh to examine the question as to whether, the consignments in question were the stray imports warranting concession in the fine and penalty or not - Decided in favour of Revenue.

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• 2014 (1) TMI 277
  Smuggling of gold - Arrest on the basis of seizure - Rejection of anticipatory bail - Penalty u/s 112 - Held that:- any argument canvassed with respect to provisions under Section 104 of the Customs Act, before and after amendment, that previously the offences were bailable and now some of them are non-bailable cannot come to the assistance of petitioner to contend that whatever offences continuously carried out by him in relation to the evasion of duty which was detected later after amendment has to be considered separately constituting only bailable offence. When all such transactions could be reckoned together for determining the quantum of value of goods where an offence over evasion of duty is detected after the amended act, there is no merit in the plea made for treating the earlier transactions as constituting only bailable offences. Duty free goods imported in a unit of Special Economic Zone if it is brought to the domestic market without authority violating the statutory prescriptions, it is a clear case of evasion of customs duty, and, then, penalties covered by the Customs Act would apply with all force - it is a clear case having enough ground to suspect complicity of petitioner in the offence alleged, and this is not a fit case where petitioner can be extended the discretionary relief of pre-arrest bail. Conduct of petitioner also disentitle him to seek the discretionary relief as it is noticed that he had moved applications twice before the Sessions court. After the first application moved by him was dismissed, he moved another application before the same court. Strangely enough that was entertained and later disposed on merits by the learned Sessions Judge without taking note that the relief under Section 438 of the Code is purely discretionary and in the absence of an exceptional case showing that miscarriage of justice would follow if second application is not entertained, no party is entitled to move successive applications for such discretionary relief before the same court - Appellant not entitled to relief - Decided against appellant.

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• 2014 (1) TMI 276
  Barges were sold without debonding and without permission by proper officer - confiscation of the barges – Imposition of redemption fine - Held that:- barges are a cause of environmental issues, likely to be scrapped by the Gujarat Board Yard Works and are not covered by Insurance, it becomes necessary to consider this application. The impugned order does hold that there is no dispute that the owner M/s. DOSA had sold the barges. The impugned order of the Tribunal allows redemption of the barges by M/s. DOSA. However, M/s. DOSA are not coming forward as they have sold the Barges and now have no interest in them. In the circumstances, if the barges are not allowed to be redeemed, the same would not be available either to the appellant or the respondent as the Gujarat Board Yard Works would scrap the same. The interest of respondent is being protected inasmuch as the applicants are paying the entire redemption fine in respect of the said barges as well as the duty on the barges. It is made clear that in case the applicant fails in their appeal, they would not seek refund of the redemption fine and duty paid by them. The granting of this relief becomes necessary as the respondent has not taken charge of the barges and allowed it to remain with the applicants even after confiscation - upon the applicant paying the redemption fine and the applicable duties, the Commissioner of Customs (Imports) will allow the clearance of the four barges - Decided in favour of assessee.

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• 2014 (1) TMI 275
  Power of Superintendent - Interpretation of proper officer - Power to pass final order - Held that:- Order dated 8-3-2013 passed by the Superintendent (I/E), Customs Division, Ratnagiri, the Respondent herein, under his signature is bad in law & a nullity as being without jurisdiction, for the reason it is not signed by the Proper Officer & the Respondent, who is not “assigned” any “function of assessment” either by the Board/Commissioner cannot claim to be “Proper Officer”, or “Authority competent” to pass any decision or Order, especially when the Section 18(2) talks about “the proper Officer”. Superintendent of Customs is not the proper officer to do final assessments under Section 18(2) of the Customs Act, 1962. Hence, I the impugned order dated 31-1-2013 is set aside and the consequential order of the Superintendent dated 8-3-2013 as illegal and bad in law - prima facie it appears that the order for levy of interest and grant of suo motu refund has not been examined in accordance with law. The Lower Authority should ensure that quasi-judicial orders issued are compliant with the provisions of the Act - Appeal allowed.

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• Service Tax

• 2014 (1) TMI 316
  Disallowance of CENVAT Credit - Goods Transport Agency - Reverse charge - Authorised Service Station - Business Auxiliary Service - Nexus between GTA and BAS - Held that:- appellant does service two wheelers manufactured by the Company and that the tax on GTA service was remitted for the transport of two wheelers and spares from the manufacturer to the appellant's show room - there is a sufficient and a proximate nexus for availment of cenvat credit earned on remittances of tax on GTA services, for utilization in its output service as authorized service station and provider of BAS - Following decision of Sri Venkanna Motors Pvt. Ltd. vs. Asstt.Commr. of C. Ex. & ST., Hyderabad - [2009 (3) TMI 877 - CESTAT BANGALORE] and C.C.E., Tirupathi vs. Shariff Motors - [2009 (3) TMI 155 - CESTAT, BANGLORE] - Decided in favour of assessee.

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• 2014 (1) TMI 315
  Condonation of delay - Change in opinion - Delay due to analysis of appeal - Held that:- there had been an inordinate delay of around 905 days in filing the present Appeal against the Order-in-Original dated 15.10.2008. It is not in dispute that the said Order was communicated in time i.e.on 25.10.2008 to the Applicant and there was no ambiguity in the direction of the confirmation/appropriation of service tax and also imposition of penalty with an option to pay 25% of the penalty amount, if paid within one month from the date of the impugned Order - Applicant chose not to file any appeal against the imposition of the penalty. Later, they had changed their opinion and sought to file the present Appeal against the imposition of penalty - Applicant is a public sector undertaking having full-fledged legal department and they could not properly analyze and understand the simple order of the ld. Commissioner imposing penalty, resulting into the bona fide mistake, in not filing the present Appeal - how a mere change of opinion could be construed as a sufficient cause warranting condonation of delay - Condonation denied.

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• 2014 (1) TMI 314
  Demand without issue of show cause notice - Telephone services - Demand of differential tax u/s 73 - Best Judgement Assessment u/s 72 - Held that:- Central Excise Officer, after taking into account all the relevant material which he has gathered, shall make the assessment of the value of taxable service to the best of his judgement and determine the sum payable by the assessee or refundable to the assessee on the basis of such assessment. If the assessee fails to disclose wholly and truly all material facts necessary for assessment to the assessing officer or there is failure or omission to make return under Section 70, the assessing officer is required to issue notice for the purpose of assessment or reassessment of value of taxable service - adjudicating authority has not issued show cause notice even after the direction of Commissioner (Appeals) and demanded duty under Section 73(a) of the said Act and compliance with the statutory requirement has not been made and the demand is not sustainable on this ground alone. Apart from that, Commissioner (Appeals) has given a finding that demand was made only on the amount shown in the invoice and not on the amount realized. It is also noted that Revenue is not in possession of any documentary evidence whatsoever in respect of demand - demand of tax under Section 73(a) of the Act without any notice cannot be sustained - Decided in favour of assessee.

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• 2014 (1) TMI 313
  Demand of service tax - commercial training or coaching - club or association - business support - renting of immovable property - benefit of exemption Notification No. 24/2004 - Held that:- On business support service and renting of immovable property services, while it is contended before us that part of the consideration received under these categories is not liable to tax, these contentions are raised only in the appeal. In case of support service of business or commerce, the contention of the appellant is that out of the total amount of Rs.35,08,886/- received under this head Rs.9.32 lakhs represents receipts from individuals who are recipients of the service provided by the petitioner and only Rs.25.7 lakhs is attributable to receipts from corporate entities. In so far as renting of immovable property is concerned, the petitioner contends that Rs. 50,81,391/- out of the total income of Rs.98,31,391 is liable to be taxed on receipts from renting of auditorium and gallery of the petitioner. An amount of Rs.47,50,000/- being receipts from a German non-commercial non-business entity to which space was provided by the petitioner for cultural and educational promotional activities of the German entity viz. DAAD, this amount would be outside the tax net, qua the definition in Section 65(105)(zzzz) read with Section 65(19a) - Conditional stay granted.

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• 2014 (1) TMI 312
  Waiver of pre-deposit of service tax - Partial payment made by assessee - Reverse charge mechanism - Held that:- as per the International Finance Corporation (Status, Immunities and Privileges) Act, 1958, the duties and taxes are exempted. In view of this, we find that the amount already deposited is sufficient for hearing of the appeal. Pre-deposit of the remaining dues is waived and recovery of the same is stayed during the pendency of the appeal - Stay granted.

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• 2014 (1) TMI 311
  Demand of service tax - Reimbursement of invoices paid for the licensed software downloaded of M/s. Microsoft Inc., USA - Demand raised under Business Auxiliary Service - Held that:- payment to be made by Dell India Pvt. Ltd. stands paid by group concern based in USA and the said amount stands reimbursed by the appellant. There is no evidence that while routing the payment, the group concern in USA has retained any commission/margin for the services said to have been rendered by them. In these circumstances, we, prima facie, are in agreement with the learned advocate that the services rendered by the group concern based in USA to the appellant is not taxable under the head ‘Business Auxiliary Service’. In view of the above, there shall be waiver of pre-deposit of the dues as per the impugned order and stay of recovery thereof till the disposal of the appeal - Stay granted.

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• 2014 (1) TMI 309
  Waiver of pre deposit - Cleaning activity services - whether the activities hereinabove mentioned by us would fall under the definition of ‘Cleaning Activities’ or not - Held that:- cutting and removal of all kind of unwanted grass, bushes, trees, weeds and removal/uprooting the roots of wild vegetation, removal of debris and garbage from the roads, streets and open space of ONGC township and residential areas of the ONGC prima facie will not fall not under the Cleaning Activities - appellant has made out a prima facie case for the waiver of pre-deposit of the amounts involved - Stay granted.

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• 2014 (1) TMI 308
  Demand of service tax of duty, interest and penalty - Works contract - Site formation - Benefit of composition scheme - Held that:- activities of construction of Ash Dyke cannot be treated as falling under ‘site formation’ but the said activities will fall under Commercial/Industrial Construction service and, therefore, no differential tax is payable - Assessee directed to make a pre deposit - Partial stay granted.

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• 2014 (1) TMI 307
  Stay application - Waiver of pre deposit - Receipt of facilitation fee, i.e. “commission from various shops and emporia” for providing services of promoting or marketing or selling of goods provided or belonging to the emporia/shops is liable to Service Tax under the category of ‘Business Auxiliary Service’ in terms of clause 19(i) of Section 65 of Finance Act, 1994 - Held that:- Prima facie, the activity of the appellant is covered by the definition of ‘Business Auxiliary Service’. As such it is not the case for complete waiver of pre-deposit. However, taking into account the appellant’s contention that the demand is barred by limitation and considering that the issue involved is of bona fide interpretation, we deem it fit to direct the appellant to deposit an amount of pre deposit - Partial stay granted.

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• Central Excise

• 2014 (1) TMI 310
  Waiver of pre deposit - Valuation - Penalty u/s 11AC - Held that:- On a perusal of the show-cause notice, it is noticed that the consignment agents have claimed the extra collection as due to LC charges and other bank charges and interest for delayed payments. This claim of the consignment agents appears to have not been investigated. Further, the appellant’s claim that they are selling the final products ex-factory to various parties in addition to selling the goods through consignment agents has not been refuted. In view of the above, it appears that the extra collections (which according to the learned advocate, is in the range of 0.84% to 2.35%) are attributable to banking charges and interests on delayed payments. Therefore the same may not be includible in the assessable value - Stay granted.

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• 2014 (1) TMI 274
  Storage loss of molasses - Benefit of Cenvat credit on duty paid on molasses - Entitlement of full duty paid on the quantum of the molasses or the credit is required to be reduced to the extent of molasses lost on account of storage – Held that:- The loss had occurred on account of natural phenomena and was within the prescribed limit of 2% as laid down by the Board Circular dated 6/2/82 – Following India Glycols Ltd. and Shri V.M. Tiwari vs. CCE [2004 (4) TMI 534 - CESTAT, New Delhi] – there was no justification for denial of Cenvat credit in respect of the molasses lost during storage when admittedly the duty stands paid by the manufacturer on the full quantum of the molasses – order set aside – Decided in favour of Assessee.

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• 2014 (1) TMI 273
  Amount received as cum-duty price or the same as assessable value – Waiver of pre-deposit – Held that:- No bifurcation of the amount collected from the customer attributable to value and the duty, payable have been mentioned - The price charged to the customer be treated as cum-duty price - the applicants are able to make out a prima-facie case for total waiver of duty – pre-deposits waived till the disposal – Stay granted.

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• 2014 (1) TMI 272
  Availment of cenvat credit on capital goods/inputs - Waiver of Pre-deposit of duty and penalty under Rule 173Q of the Central Excise Rules, 1944 read with Section 11AC of the Central Excise Act, 1944 – Held that:- This is a case for appreciation of documents/evidences relating to input invoices and its eligibility to modvat credit during the relevant period - the detailed scrutiny of these documents/evidences on the eligibility of modvat credit against these documents and the eligibility of various items as capital goods/inputs would be decided at the time of disposal of appeal - the applicant failed to make out a prima-facie case in their favour – Following Commr. of Central Excise, Guntur Vs. Shri Chaitanya Educational Committee [2011 (1) TMI 356 - HIGH COURT ANDHRA PRADESH] – assessee directed to deposit 50% of the cenvat credit 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 271
  PCS sleepers sold at lower value to others – Goods rejected by Indian railways - Waiver of Pre-deposit – Held that:- The applicant had sold around 100 pieces of PCS Sleepers at the transaction value to buyers other than Indian Railways - Prima-facie, after 1.7.2000, the transaction value is the basis for assessment of goods - the goods were sold at the transaction value, on which duty was paid by the applicants - the applicants are able to make out a prima-facie case for their favour – Pre-deposits waived till the disposal – Stay granted.

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• 2014 (1) TMI 270
  PSC Sleepers supplied at rate lower than the approved rate - Waiver of Pre-deposit – Held that:- The approval of price list has been dispensed with w.e.f.1.4.94 and the clearance documents like, invoices/gate passes were accepted on the basis for determination of assessable value - the price at which the goods were sold after 1994, would be relevant for determination of the assessable value under Section 4 of the Act in view of the amendment to Rule 173C of erstwhile Central Excise Rules, 1944 - the applicants are able to make a prima-facie case in their favour – Pre-deposits waived till the disposal – Stay granted.

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• 2014 (1) TMI 269
  Denial of Cenvat credit on Input services – Debit notes raised by service provider not in prescribed format as per Rule 9(1) of Cenvat credit rules – Waiver of Pre-deposit – Held that:-Following CCE Vs Grasim Industries Ltd [2011 (7) TMI 944 - CESTAT, NEW DELHI] - debit notes can be considered to be eligible modvatable documents – after examining the debit notes which give the essential particulars - Even if some of the debit notes are not mentioning the address of service recipient, the case can be covered by Rule 9(2) - the ground was not the basis for issuance of show cause notice and was not taken by the Commissioner in the order - A new case cannot be made by Revenue at the Appellate Stage as per the settled law – Prima facie appellants have established a case in their favour – Pre-deposits waived till the disposal - stay granted.

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• 2014 (1) TMI 268
  Correct classification of Roop Amruta – Under Chapter Heading 3004 9011 as Ayurvedic Medicine or not – Waiver of Pre-deposit – Extended period of limitation - Held that:- ER-I clearly disclosed that the classification of the applicant goods is under Chapter 30 - The appellants request to get the goods tested by an Ayurvedic Laboratory or Drug Controller of India stands rejected by the adjudicating authority on the sole ground that the Revenue is very sure about the classification as contained under Chapter 33 - invocation of extended period was not justified - tooth powder attracts nil rate of duty whereas the appellant was paying duty on the Daant Pari - This fact reflects the appellant’s understanding of the dispute and their plea that their products are nothing but medicines – Pre-deposits waived till the disposal – stay granted.

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• 2014 (1) TMI 267
  Goods cleared to DTA – Assessee being 100% EOU – Waiver of Pre-deposit – Held that:- Following COMMISSIONER OF CENTRAL EXCISE, CHENNAI Versus ORCHID HEALTH CARE [2009 (8) TMI 931 - CESTAT CHENNAI] - the applicant cleared the damaged containers - thus, the duty demand is not sustainable - Prima facie, the demand of duty is not sustainable on such clearance – Pre-deposits waived till the disposal – Stay granted.

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• 2014 (1) TMI 266
  Delay in deposit cenvat credit - Default of duty liability under Rule 8 of Central Excise Rules – Waiver of Pre-deposit – Held that:- Relying upon Solar Chemferts Pvt. Ltd. vs. CCE, Thane [2011 (6) TMI 640 - CESTAT, MUMBAI] payment of duty through Cenvat credit account during the period of default will earn only interest liability and there is no requirement of payment of duty through PLA – and in CCE vs. Saurashtra Cement Ltd. [2010 (9) TMI 422 - GUJARAT HIGH COURT] - for penal liability the provisions of Rule 27 get attracted and Rule 25 has no applicability – the appellant has deposited the entire duty through Cenvat credit account therefore condition of pre-deposits waived till the disposal – stay petition allowed unconditionally upon submission of Rs. 5000 as penalty – Stay granted.

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• 2014 (1) TMI 265
  Separate accounts not maintained – Demand under Rule 6(3) of CENVAT Credit Rules, 2004 – Bagassee and press mud disposed without duty payment - Waiver of Pre-deposit – Held that:- Following Balrampur Chini Mills Ltd. & Others Versus Union of India and others [2013 (1) TMI 525 - ALLAHABAD HIGH COURT] - bagasse which was generated in the course of manufacture of sugar was a waste and the same was not excisable - the press mud emerging during the manufacture of sugar is also not excisable - bagasse/press mud was not a manufactured product though marketable - the bagasse and press mud removed by the appellant without payment of duty during the material period are not to be considered as ‘exempted goods’ for purposes of Rule 6(3) – Prima facie pre-deposits waived till the disposal – Stay granted.

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• Wealth tax

• 2014 (1) TMI 317
  Valuation of property - Enhancement in valuation - Land converted from small scale industrial use to 20% residential use - Whether converted land is liable for wealth tax - Held that:- there is no need to tax 20% of the property as taxable asset. Admittedly, the land owned by Assessee company admeasuring 29015.77 sq.mts. is not free land and it consisted of 18 buildings, which are being utilized by Assessee for its offices/ business purposes for many years. Just because, Assessee obtained permission from Govt. of Karnataka for change of land use and subsequently entered into agreement for development cannot be considered as change in nature of property. Obviously till the old buildings are demolished or any new buildings came up on the land, Assessee was continuing to use the building and the land for the purposes of office/business purposes. Therefore, considering 20% of the proposed conversion of land use cannot be taken as an asset under the definition of 'asset' in the Wealth Tax Act. Since the property is being used for Assessee's business, it is certainly exempt from Wealth Tax - agricultural land being used for Assessee's business operations cannot be brought to tax as only unused urban land can be brought to tax for the Wealth Tax purposes as per the Explanation (1)(b) of section 2(ea) of the WT Act - Decided against Revenue.

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• Indian Laws

• 2014 (1) TMI 306
  Right to information - Personal hearing - Held that:- every public authority is required to take steps in accordance with the requirements of clause (b) of sub-Section 4(1) to provide as much information suo motu to the public at regular intervals through various means of communication, including internet, so that the public have minimum resort to use the Act to obtain information. Accordingly, the First Appellate Authority directed the CPIO to place information regarding incumbency position in the website and update the information periodically - Decided in favour of appellant.

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