TMI Tax Updates - e-Newsletter
October 13, 2012

Case Laws in this Newsletter:

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

Articles

1. PROCEDURAL CHANGES IN SERVICE TAX REGIME

   By: DR.MARIAPPAN GOVINDARAJAN

2. COURIER IMPORTS AND EXPORTS (ELECTRONIC DELCARATION AND PROCESSING) REGULATIONS, 2010

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Cochin Shipyard pays Dividend for the Fourth Consecutive Year

2. International Crude Oil Prices of Indian Basket Marginally Rises to US$ 112.60/bbl on 11.10.2012

3. IREDA presents 25 crore dividend cheque to Dr. Farooq Abdullah

4. Cooperative Movement in India Emerging as one of The Largest in the World, says MoS to Agriculture Dr. Mahant Amendment of the Constituion to Strengthen and Reinvigorate the Cooperative Sector in the Countrty

5. Migration of PAN lying in Orphan Jurisdiction to the Jurisdictional AOs by Nodal officers appointed under CsIT(CO)

6. Analysis of e-filed returns filed in the current Financial Year reveals that nearly 29,000 taxpayers - Tax payable was in excess of Rs. 50,000, have defaulted on the payments aggregating to approximately Rs. 3,770 crores.

7. PENDENCY IN PAN TRANSFER REQUEST

8. Quick Estimates of Index of Industrial Production and use-based Index for the Month of August, 2012 (Base 2004-05=100)

9. India’s Foreign Trade: September, 2012

10. Two laning with paved side shoulders of Salasar to Haryana border section on National Highway NH-65 in Rajasthan under NHDP Phase IV.

11. Four laning of Rajsamand - Bhilwara section of National Highway NH- 758 in Rajasthan under NHDP Phase IV

12. Setting up of 3,500 model schools at block level through State/UT Governments in Educationally Backward Blocks under the "Scheme for setting up of 6,000 Model Schools at Block Level as benchmark of excellence"

13. Modification in the procedure for release of fertilizer subsidy by Department of Fertilizers with the introduction of Mobile Fertilizer Monitoring System (m-FMS) for all fertilizers

14. Draft Report on Retrospective Amendments Relating to Indirect Transfer

15. JOINT STATEMENT INDIA-U.S. ECONOMIC AND FINANCIAL PARTNERSHIP

Notifications

Central Excise

1. 37/2012 - dated 11-10-2012 - CE

Extension of the notification benefit to DVD ROMs along the lines of CD ROMs under Notification no. 12/2012-Central Excise, dated the 17th March, 2012

Companies Law

2. GSR 730(E) - dated 27-9-2012 - Co. Law

Serious Fraud Investigation Officers, MCA, for the purpose of conducting inspection, under section 209A of the Companies Act, 1956

Customs

3. [F. No. 354/197/2011- TRU - dated 11-10-2012 - ADD

Corrigendum Notification No. 46/2012- Customs (ADD), dated the 4th October, 2012 - Anti-dumping duty on Imports of Cold Rolled Flat products of Stainless Steel(400 series) having a width below 600mm

4. F. No. 468/16/2012-Cus.V - dated 10-10-2012 - Cus (NT)

Corrigendum Notification No. 93/2012 - Customs (N.T.), dated 09/10/2012

5. F.No.437/04/2012-Cus.IV - dated 9-10-2012 - Cus (NT)

Appointment of Common Adjudicating Authority - In The Case of M/s Nitco Ltd., Worli, Mumbai

DGFT

6. 22 (RE-2012)/2009-2014 - dated 11-10-2012 - FTP

Amendment in ITC (HS) 2012 Schedule 1 – Import Policy with Customs Tariff Schedule-2012.

7. 21 (RE – 2012)/2009-2014 - dated 11-10-2012 - FTP

Effect of Notification No. 7 (RE – 2012)/2009-2014 dated 23.7.2012 - Incorporated the changes in the descriptions of tariff lines in Chapters 24, 26, 74, 75, 76, 78 and 79 in accordance with the changes in the Finance Bill 2012-13

VAT - Delhi

8. No. F. 7(433)/Policy-II/VAT/ 2012/767-777 - dated 12-10-2012 - DVAT

Submission of Information in Form T-2" Shall in Partial Modification to the said notification, come into force with 25.10.2012

Circulars / Instructions / Orders

Income Tax

1. F.NO. DIT(S)-I/AIS/NODAL/12-13 - dated 8-10-2012

PENDENCY IN PAN TRANSFER REQUEST

2. [F.No. DIT(S)-I/AIS/NODAL/12-13] - dated 8-10-2012

Migration of PAN lying in Orphan Jurisdiction to the Jurisdictional AOs by Nodal officers appointed under CsIT(CO)

DGFT

3. 22(RE-2012)/2009-14 - dated 11-10-2012

Certification of various documents by Cost Accountants under Handbook of Procedure Vol.I and Appendices under Foreign Trade Policy.

4. 06 (RE- 2012) /2009-14 - dated 10-10-2012

Introduction of electronic Bank Realization Certificate (e-BRC) system.

Highlights / Catch Notes

Income Tax

• Court Can Frame New Legal Questions During Hearings Under Proviso of Sub-Section 4, Section 260A.

  Case-Laws - HC : Court has right to frame new or additional substantial question of law at the stage of hearing in pursuance to power conferred by the proviso of Sub- Section 4 of Section 260A - HC
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• Income Tax Appellate Tribunal's Section 254(2) Rectification: Correcting Mistakes vs. Reviewing Decisions-Distinct Powers Explained.

  Case-Laws - HC : Rectification u/s 254(2) by ITAT - The parameters of powers for correction of mistake and for review are separate and distinct. These have to be exercised in accordance with the law. - HC
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• High Court Clarifies Capital Gains Tax Assessment Year for Share Transfers, Corrects Tribunal's Misapplication of Section 2(47)(vi.

  Case-Laws - HC : Capital gains on transfer of shares - sale versus agreement to sale - selection of assessment year - Tribunal committed error in law in holding that Section 2 (47) (vi) will be attracted - HC
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• Court Rules Interest Imposed on Assessee Valid; Litigation Time Does Not Halt Income Tax Interest Accrual u/ss 234B, 234C, 220(2).

  Case-Laws - HC : Levy of interest under Section 234B, 234C and 220(2) - assessee contested against imposition of interest as 30 days time had not expired - appellant cannot take benefit of the time spent in the litigation because for the said period the department could not utilise the amount of tax. - HC
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• Tribunal Erred by Recalling Order as Mistake Correction, Rehearing Case Like an Appeal of Its Own Decision.

  Case-Laws - HC : The Tribunal erred in law in recalling its order on the pretext of rectifying the mistake, and permitting itself to rehear the matter as if it was exercising the power of appeal over its own judgment - HC
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• Capital Gain Not Applicable for Well Water Rights Surrendered for Road Widening: Sections 45(1) & 48(1) Exempt.

  Case-Laws - AT : Capital Gain in lieu of surrender the right to lift the water from well filled for widening of road. - Sec. 45(1) r.w.s. 48(1) are not applicable - AT
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• Penalty u/s 271D Removed for Cash Share Application Belief in Good Faith u/s 269SS.

  Case-Laws - AT : Deposit U/s 269SS – Share application money receive in cash - assessee is under bonafide belief that the amounts could have been accepted by cash. - penalty levied u/s 271D deleted. - AT
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• NRIs' Gifts from Non-Resident External Accounts Classified as Undisclosed Income u/s 158B(b) of Income Tax Act.

  Case-Laws - HC : Gifts received from non Resident Indians (NRI) from their Non Resident External accounts - the non genuine gifts to the appellant was undisclosed income and covered by the definition provided in Section 158B(b). - HC
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• Taxpayer's Business Expenses Not Disallowed Even If Third Party Benefits, Says New Rule Interpretation.

  Case-Laws - HC : Expenditure incurred by the assessee in the running of his business cannot be disallowed merely on the ground that a part of the expenditure results in some benefit to a third party - HC
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• Section 194C TDS Exemption: Printed Material Purchase Classified as Contract for Sale, Not Work and Labor.

  Case-Laws - AT : Non deduction of TDS - purchase of printed material - contract for work and labour or contract for sale - provisions of section 194C are not applicable - AT
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• Court Denies Tax Exemption u/s 54 for Land Development, But Section 54F Benefits May Apply.

  Case-Laws - HC : Exemption u/s 54 - land development agreement - they are not entitled to claim benefit under section 54. - At the most they are entitled to benefit under Section 54F. - HC
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• Preference for Substantial Justice Over Technicalities in Delay Condonation Cases, Especially in Income Tax Matters.

  Case-Laws - AT : Condonation of delay - when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred - AT
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Customs

• Corrigendum Notification No. 93/2012 amends customs regulations for improved compliance and accuracy in procedures.

  Notifications : Corrigendum Notification No. 93/2012 - Customs (N.T.), dated 09/10/2012 - Notification
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• Common Adjudicating Authority Appointed for M/s Nitco Ltd. Case in Mumbai to Streamline Customs Adjudication Process.

  Notifications : Appointment of Common Adjudicating Authority - In The Case of M/s Nitco Ltd., Worli, Mumbai - Notification
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DGFT

• Cost Accountants Now Authorized to Certify Documents Under Foreign Trade Policy's Handbook of Procedure Vol.I.

  Circulars : Certification of various documents by Cost Accountants under Handbook of Procedure Vol.I and Appendices under Foreign Trade Policy. - Public Notice
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• DGFT Launches e-BRC System for Efficient Export Verification, Simplifying Procedures and Enhancing Transparency for Exporters.

  Circulars : Introduction of electronic Bank Realization Certificate (e-BRC) system. - Circular
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• DGFT Updates Tariff Line Descriptions in Chapters 24, 26, 74-79 to Align with Finance Bill 2012-13 Changes.

  Notifications : Effect of Notification No. 7 (RE – 2012)/2009-2014 dated 23.7.2012 - Incorporated the changes in the descriptions of tariff lines in Chapters 24, 26, 74, 75, 76, 78 and 79 in accordance with the changes in the Finance Bill 2012-13 - Notification
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• ITC (HS) 2012 Schedule 1 Import Policy Amended to Align with Customs Tariff Schedule-2012 by DGFT Notifications.

  Notifications : Amendment in ITC (HS) 2012 Schedule 1 – Import Policy with Customs Tariff Schedule-2012. - Notification
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Corporate Law

• Serious Fraud Officers to Conduct Inspections u/s 209A of Companies Act for Enhanced Corporate Transparency and Accountability.

  Notifications : Serious Fraud Investigation Officers, MCA, for the purpose of conducting inspection, under section 209A of the Companies Act, 1956 - Notification
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• Arbitration Clause Stands Alone: Section 16(1)(a) Confirms Validity Despite Main Contract Termination, Supreme Court Affirms.

  Case-Laws - SC : Arbitration - Section 16(1)(a) provides that an arbitration clause which forms part of the contract shall be treated as an agreement independent of the other terms of the contract - even on the termination of the agreement/contract, the arbitration agreement would still survive - SC
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Indian Laws

• Nearly 29,000 Taxpayers Default on Payments Exceeding Rs. 3,770 Crores for Current Financial Year.

  News : Analysis of e-filed returns filed in the current Financial Year reveals that nearly 29,000 taxpayers - Tax payable was in excess of Rs. 50,000, have defaulted on the payments aggregating to approximately Rs. 3,770 crores.
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• Transferring Orphan PANs to Correct Jurisdictions for Better Tax Management and Compliance Under CsIT Coordination.

  News : Migration of PAN lying in Orphan Jurisdiction to the Jurisdictional AOs by Nodal officers appointed under CsIT(CO)
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Wealth-tax

• High Court Rules Receipts Classified as Assets Not Income for Wealth-Tax, Affecting Financial Statement Preparation.

  Case-Laws - HC : Receipts are to be treated as Asset as on the valuation date and are not be treated as Incomet - HC
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Service Tax

• Service Tax Implications for Imported Services from 2006: Show Cause Notice u/s 65(55b) of Finance Act, 1994.

  Case-Laws - HC : Import of services - SCN dated 21.10.2011 relates to the period 18.4.2006 onwards on the services under Section 65(55b) of the Finance Act, 1994 - against assessee - HC
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• CENVAT Credit Rules, 2004: No Guidelines for Segregating Input Services in Manufacturing or Output Services.

  Case-Laws - AT : Cenvat Credit - there is no provision in CENVAT Credit Rules, 2004, for segregation of input services utilized in manufacture or to provide output service. - AT
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• Court Rules Intermediaries' Involvement in Installation Services is Taxable, Rejecting Appellants' Claims of Non-Taxable Activities.

  Case-Laws - AT : Erection Commissioning and Installation – - no merit in the argument of the appellants that they were only an intermediary and not doing the work themselves and hence their activities did not amount to any service - AT
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Central Excise

• Excise Duty Benefits Extended to DVD ROMs, Aligning with CD ROMs Under Notification No. 12/2012-Central Excise.

  Notifications : Extension of the notification benefit to DVD ROMs along the lines of CD ROMs under Notification no. 12/2012-Central Excise, dated the 17th March, 2012 - Notification
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• Court Allows Cenvat Credit Due to Lack of Evidence Against Assessee Beyond Transporter's Goods Registers.

  Case-Laws - HC : Denial of cenvat credit – except for the goods registers maintained by the transporter, there is no other evidence on record to indicate that the assessee has in fact not received the goods in question – cenvat credit allowed - HC
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VAT

• Court Rules No Error by Dealer in Interstate Sale; Full Sales Tax Paid, Punjab Tax Not Applicable.

  Case-Laws - HC : Inter state sale - CST - there was no error on the part of the dealer as full sales tax on the transaction being inter state sale had been paid and the element of tax in Punjab State was not involved. - HC
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Case Laws:

• Income Tax

• 2012 (10) TMI 332
  Purchase of catalyst of Plant & Machinery - Revenue v/s capital - whether Court has right to frame new or additional substantial question of law at the stage of hearing? - Held that:- A plain reading of sub-section (3) of Section 260A shows that at the time of hearing for admission of appeal in case High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question. Sub-section (4) further provides that appeal shall be heard only on the question so formulated and the respondent be allowed to argue the case, be permitted to argue the case that no such substantial question of law is involved. In the present case, language of both substantial question of law framed on 20.4.2010 seems to be different than what has been used by the appellant which reveals that after considering the pleading on record the substantial question of law was formulated by the court itself. The first question relates to capital expenditure incurred in catalyst of enduring nature. However, the appellant during the course of hearing argued that expenditure incurred on catalyst as capital expenditure co-relate with the expenditure of machinery spares etc, which requires consideration under the proviso. Needless to mention that the CIT (Appeal) Lucknow in its order dated 22.3.2007 observed that to quote, “Furthermore the extent to which such spares & catalysts were utilized year to year, or were carried forward is unspecified. Yearly consumption and the circumstances leading them to be declared obsolete is not brought on record. Nor the manner in which the inventory is accounted. There is no sound logic for keeping catalysts ammonia etc. for so many years without use/disposal. The entire claim is without evidence. Catalysts & spares are specialized items and the writing off of such items after 18-5 years is irrational.” Thus, there is co-relation with the issue pertaining to the catalyst and spares. Now the proposed portion pertaining to spares may be admitted. Argument advanced that power may be exercised during the course of hearing carries weight. As per the proviso of sub-section 4 of Section 260 A High Court has got ample power to frame new or additional substantial question of law during the course of hearing if it is satisfied on its own or on the pointing out of either of the parties for the reasons recorded. The provision contained in sub-section 1,2,3 or sub-section 4 of Section 260 A shall not come in the way of the High Court to exercise power conferred by the proviso of Subsection 4. Thus the objection raised by assessee is overruled and rejected. Court has right to frame new or additional substantial question of law at the stage of hearing in pursuance to power conferred by the proviso of Sub- Section 4 of Section 260 A - list the present appeal immediately after three weeks for further hearing so that after hearing parties and subject to satisfaction and reasons recorded, additional substantial question of law may be framed - against assessee.

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• 2012 (10) TMI 331
  Increase in profit rate - 4.72% v/s 8% - Held that:- The Tribunal has not found any good reason to increase the profit rate on the grounds that the assessee had disclosed a net profit rate of 4.72% for the immediately preceding year. The nature, and the customer profile of its business were essentially the same. The comparable profit rates disclosed by the other operators and adopted by the revenue in such cases was 4% to 8% and thus the disclosed profit rate of 4.72% was found to be a reasonable estimate of the assessee's profit for the year in question, subject to deductions on account of depreciation allowance as well as interest and salary to partners.On the question of deductions of material and interest the matter has been remanded and therefore, there is no final opinion of ITAT. As AO did not give any reasons, which have been given by the ITAT in restoring the profit rate of 4.72%. The absence of signatures on some of the vouchers and non-maintenance of stock - register by itself could not be a ground to increase the profit rate - no substantial questions of law arise for consideration in this appeal.

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• 2012 (10) TMI 330
  Rectification u/s 254(2) - ITAT held no mistake found on record - Held that:- The Tribunal has clearly found from the documents in its original order, that the tax was paid on the consignment on 4.4.2001, which falls in the next assessment year. In order to support the application for correction of mistake the appellant did not file the transporter's bill with the Invoice No. 132323, nor filed the Customs Clearance Certificate of the consignment, which according to the appellant, was transported through the bill of the transport company on which it is stated that the tax was paid on 4.4.2001 either in the Tribunal, or even in this appeal. The parameters of powers for correction of mistake and for review are separate and distinct. These have to be exercised in accordance with the law. Thus Tribunal committed no error in recording findings that there was no mistake in its order, which could be corrected under Section 254 (2) - against assessee.

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• 2012 (10) TMI 329
  Activity related to Bardana and advances to farmers and charging of interest - Held that:- The pages of Paper Book referred by the assessee at the time of hearing requires necessary reconciliation. It has also been noticed that there is no consolidated reconciliation on record based on which it can be said that the transaction relating to Bardana and interest has been the entries for amounts which were considered for calculation of peak amount. In the absence of complete reconciliation of details in this regard that the transaction relating to Bardana and interest were included in the consolidated cash book on which basis a peak amount has been calculated. In the absence of complete facts, the issue pertaining to Bardana and interest cannot be decided at this stage the order of CIT(A) is not in accordance with section 250(6) & send back to decide the issue afresh - in favour of assessee for statistical purposes.

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• 2012 (10) TMI 328
  Capital gains on transfer of shares - sale versus agreement to sale - selection of assessment year - Held that:- The agreement clearly stipulated that though the transfer deeds will be executed and the shares will be transferred in the name of the buyer in the records of the company, the actual delivery of scripts had to await the full payment. The physical custody of the share certificate was to remain with the solicitors until full payment namely the payment of third installment was made by 30.4.1997. Since these shares were to be physically transferred to the buyer company only after payment of the full price, it cannot be said that there was any transfer in the property as contemplated under Section 2 (47) (vi). The enjoyment of the immovable property even after the date of payment of first installment was not in pursuance to the transfer of the shares and controlling interest in the company but as a tenant, under the agreement of tenancy. Tribunal committed error in law in holding that Section 2 (47) (vi) will be attracted, and that immovable properties were transferred with the agreement of sale of shares, which were actually an agreement of sale of immovable properties. - in favour of the assessee.

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• 2012 (10) TMI 327
  Levy of interest under Section 234B, 234C and 220(2) - assessee contested against imposition of interest as 30 days time had not expired - Held that:- The original notice of demand under Section 156 creating a demand of Rs.3,29,371/- dated 31.3.1995 on the assessed income of Rs.5,23,020/- was duly served upon the assessee on 8.5.1995. As per provisions of Section 220(1), the assessee was required to satisfy the demand within 30 days from the date of service of notice of demand. Admittedly, the assessee did not deposit the said amount of tax of Rs.3,29,371/-. The appellant cannot take benefit of the time spent in the litigation because for the said period the department could not utilise the amount of tax. The rational behind the provisions of Section 220(2) to levy interest on delayed payment of tax is not to penalise the party but to make a provision for compensation for the department, on the failure of the assessee to make payment on the first notice of demand. The notice of demand dated 3.1.2003 cannot be said to be a first notice of demand because first notice of demand has already been issued to the assessee after completing the original assessment completed by the Dy. CIT(A), Gorakhpur. In these circumstances, there was no requirement in law to grant a further period of 30 days, after the service of the notice and thus it cannot be said that the demand has been raised for the first time on 3.1.2003. In these circumstances, no substance is found in the argument of assessee that interest under Section 234B, 234C and 220(2) could not have been charged before expiry of 30 days of serving the notice of demand - against assessee.

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• 2012 (10) TMI 326
  Reopening of assessment - undisclosed income of minor child - Held that:- Reopening powers are available to the AO only when he had reason to believe on the material available before him that part of the assessee's income had escaped assessment. The Tribunal found that the minor children of the assessee had filed their returns, before the notice u/s 148 was issued and thus the assessee had placed all material on record including the income of the minor children. Unexplained deposit in saving bank account - Held that:- The Tribunal did not commit any error in holding that these additions were in respect of assessment year 1989-90, in respect of which the remedy was available to the revenue to file appeal against the assessment order of the assessment year 1989-90 - AO did not have any material on which he could have recorded his satisfaction that any part of the income of the assessee had escaped assessment to initiate proceedings under Section 147/148 - in favour of assessee.

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• 2012 (10) TMI 325
  Scope of powers of Tribunal - Recalling of order - rectification - Held that:- The power of recall cannot be exercised in substitution to the powers of review or rectification of mistake. In the present case, it is found that there is no indication in the order dated 30.5.2008 that any ground, other than the grounds considered by the Tribunal, was pressed. - The Tribunal erred in law in recalling its order on the pretext of rectifying the mistake, and permitting itself to rehear the matter as if it was exercising the power of appeal over its own judgment - in favour of revenue.

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• 2012 (10) TMI 324
  Unaccounted capital gains on sale of the plots - search - Instruction issued by Board dated 09.02.2001 that the tax effect does not exceed the monetary limit is prospective or retrospective? - Held that:- considering Clause 11 of the instruction No.3/11 dated 09.02.2011 issued by the Board, specifically says that it will be applicable to the cases filed on or after 9.2.2011, the courts holding that it is applicable to the pending cases is against the provision under Section 268A. Therefore upholding the contention of the revenue that the Instruction No.3 dated 09.02.2011 has no retrospective effect and issue decided in favour of the Revenue. Credit of Rs. 10,00,000/- to Smt.Sumangala Devi, assessee, seized from late B.B.Swamy,close associate which was also adjusted against the tax liability of B B Swamy - Held that:- The money seized was already adjusted towards tax liability of Sri. B.B.Swamy and there is no material on record to show that the money seized in the hands of B.B.Swamy belongs to the assessee. Further, there is no finding by the First Appellate authority that the money seized in the hands of Sri. B.B.Swamy belongs to the Assessee and under such circumstances the direction issued by the CIT(Appeals) to give credit to the assessee to the extent of Rs. 10,00,000/- which was seized from late Sri.B.B.Swamy is not sustainable in law - in favour of the Revenue.

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• 2012 (10) TMI 323
  Activity of Horse racing - ad-hoc dis-allowance on ground that assessee has not maintained any separate vouchers/receipts for payments made to winning punters - AY 08-09 - Held that:- Issue is covered by the order of the ITAT, in assessee’s own case for AY 2007-08 wherein such ad hoc dis-allowance was deleted on ground that looking to the nature of activity of assessee, it is difficult to maintain complete details about all the persons. The entire payment was through computerized system. The payment was made to the person holding the winning ticket and Department has not brought to notice of any instance of payment when there was no winning ticket. Following the aforesaid, addition made is deleted Dis-allowance u/s 40A(3) - payment in excess of Rs. 20000/- in cash made to winning punters - Held that:- Issue is covered by the order of the ITAT, in assessee’s own case for AY 2007-08 wherein it was held that considering the nature of activity of the Assessee and the necessity for them to pay cash to the winners immediately, condition under Rule 6DD for exemption viz., transactions should have taken place on Bank Holidays should be read down in the case of the Assessee. If the transaction took place beyond the normal Banking Hours on working days and transaction which took place on Sundays and Holidays, it would not attract the provisions of sec 40A(3). Hence in view of aforesaid, matter remitted back to file of AO to re-compute the disallowance u/s 40A(3) as per the above disallowance and the Assessee shall furnish the particulars about the timings of the payment of the winnings to punters Dis-allowance u/s 40(a)(ia) - commission - Held that:- Issue is covered by the order of the ITAT, in assessee’s own case for AY 2007-08 wherein matter was restored to file of AO to give another opportunity to the assessee to present its case and establish that there is no principal agent relation ship between the two Clubs and amount paid by the assessee to other Race Clubs is only sharing of the profit and not in the nature of collection. same direction given for current year - Decided in favor of assessee for statistical purposes

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• 2012 (10) TMI 322
  Capital Gain in lieu of surrender the right - Agricultural land of assessee was acquired by State Gov. in 1986-87 - Compensation for the same also received in the same year - Further in AY 2003-04 the assessee claimed exemption in respect of amount received on surrendered his right to use water from well – Assessee contended that Sec. 45 were not attracted and consequently no capital gain arise because there was no cost of acquisition for which rights - AO of the view that State Gov. has primarily acquired the Agricultural land and the well on it was a part and parcel of such land covered under capital asset within the meaning of Sec. 2(14) and liable to tax u/s. 45 – Held that:- Following the decision in case of B.C. Srinivas Shetty (1981 (2) TMI 1 - SUPREME COURT) that right of lifting of water was acquired by assessee without any cost. Hence no capital gain could be worked out since Sec. 45(1) r.w.s. 48(1) are not applicable in respect of payment made to assessee in lieu of surrender the right to lift the water from well filled for widening of road. Appeal decides in favour of assessee

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• 2012 (10) TMI 321
  Application for rectification of order - mistakes apparent from record u/s 254 - existence of permanent establishment (PE) - segregation of consideration of equipment and software - held that:- The assessee may or may not have grievance with this decision, but the decision cannot be said to be suffering from any mistake apparent from the record. Thus there is no reason to rectify this part of the order. Tribunal has decided the matter in the way it thought proper, looking to the fact that the computation of income itself restored to the file of the AO. - There is no mistake in this part of the order also.

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• 2012 (10) TMI 320
  Rebuttal of presumption u/s 68 - Onus to prove cast by sec. 68 is on the assessee – To establish the identity, creditworthiness of the creditor and genuineness of the transaction – Held that:- As assessee produced sales note of shares & sale proceeds were received through banking channels. Assessee also submit the death certificate of purchaser therefore, the production of purchaser was beyond possibility. Rebuttal does not carry effective meaning to dislodge assessee’s explanation and discharged his burden following the decision of Delhi High Court in case Medshave Health Care Ltd. (2010 (2) TMI 120). Decision in favour of assessee.

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• 2012 (10) TMI 319
  Addition u/s 68 on account of share capital received from alleged six parties - Revenue opined such share applicants to be entry operator - Held that:- Assessee issued share capital to 25 different share applicants and AO chose to add amount in respect of six applicants. It has not been denied that PAN & ITR, balance-sheet, confirmation and addresses of the share applicants were furnished by the assessee. Though assessee could not file bank statements in respect of six share applicants, it cannot be the sole reason for making the addition u/s 68 ignoring the other evidence which establishes the identity, creditworthiness and genuineness of transactions. It is undisputed that Rs 14 lacs have been received by banking channels in earlier year i.e. A.Y. 2004-05 and the remaining Rs. 1 lac in one year. Since assessee has discharged its onus cast by S68 in establishing the identity and creditworthiness of share applicants and genuineness of the transaction. Mere fact of cash deposits for withdrawals in the hands of the share applicants cannot justify the addition - Decided against Revenue

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• 2012 (10) TMI 318
  Penalty u/s 271D – Share application money receive in cash - U/s 269SS it's deposit or not - Assessee accepted share application money in cash from director – AO initiated penalty proceeding considered it as deposit - Prohibition contained in sec. 269SS - Held that:- As the provisions of sec. 269SS were brought on statute to curb the practice of black money in cash transaction. Though the provisions are attracted that it may be lawful to impose penalty, but in case of technical or venial breach with bonafide belief, observation comes to assessee’s rescue as decided by Hon’ble Supreme Court’s in case of Hindustan Steels Ltd.(1969 (8) TMI 31). Therefore assessee is under bonafide belief that the amounts could have been accepted by cash. Accordingly, the penalty levied u/s 271D is deleted. Decision in favor of assessee.

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• 2012 (10) TMI 317
  Addition on account of loss in business from sale of flats – Assessee has sold the flats at a loss – Held that:- As the figure of sales are not disputed, the opening balance on account of completed flats also is not doubted. Assessee has demonstrated that the flats were sold in this year at a price more than previous year, the loss whereof is accepted. Assessing Officer himself has allowed similar loss on sale of flats due to business exigencies. Therefore appeal decides in favour of revenue Addition on account of bank loan processing charges – Assessee has claimed the processing charges over the period for which sanction of the loan – Rollover charges also paid for re-schedulement of loans after giving credit/ incentive for early repayment of some loan - Held that:- As these charges were paid to HDFC bank for rescheduling of loans already taken, which were costly due to higher rate of interest. Therefore, treating the move of the assessee to reduce interest burden and being a business decision. The bank charges are held to be allowable expenses. Decided in favour of assessee Additions in respect of building maintenance charges, water and electricity charges – These expenses were paid by the assessee in respect of flats held as stock in trade – AO made addition that these are to be set off against the income from house property – Held that:- As ITAT has allowed similar expenditure which is referred to by CIT(A) in his earlier case . Therefore, respectfully following the same. Decided in favour of assessee Share Registrar Expenses, capital or revenue in nature – These are the routine recurring professional and services charges for maintenance of secretarial records, redressal of investors grievance, postage there allowability has also been recognized by CBDT. Decided in favour of assessee Disallowance of interest expenditure on ad-hoc basis – The AO has not disputed the fact that expenditure incurred was for the purpose of business. He has disallowed 40% of interest on ad hoc basis by holding it as of “Capital” nature - Held that:- Disallowance made was not sustainable as the projects of the company are “stock in trade” and not the capital projects. Therefore, holding the interest expenditure to be revenue/ business in nature and there is no element of payment of interest on capital account. Appeal decided in favour of assessee.

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• 2012 (10) TMI 316
  Sale of Scrap – Assessee contended that a sum of Rs.20,10,947/- on account of sale of scraps was integral part of export business and therefore could have to be excluded from the export turnover. - The next contention of assessee is that the Tribunal should have accepted that the assessee obtained unsecured loan of Rs.57 Lakhs from the HUF of Major General (Retired) P.P. Subherwal. - held that:- Tribunal was perfectly justified in remanding the matter on these questions of facts.

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• 2012 (10) TMI 315
  Interest on TDS - Payment made to Joint Venture - ITAT held that it is not an Association of Persons and TDS is required to be deducted - held that:- at least till the Advance Ruling Authority passed an order, the Department itself did not deem it fit to reject the assessee's claim that the payments were made under Section 194C, treating the joint venture as Association of Persons. In the background of these circumstances, we hold that the reliance placed on the decision of the Apex Court in CIT v. British Airways [2010 (1) TMI 114 - SUPREME COURT] in almost similar circumstances, comes to the aid of the assessee herein. - [Commissioner of Income-tax, New Delhi Versus Eli Lilly & Company (India) Pvt. Ltd. 2009 (3) TMI 33 - SUPREME COURT] It is a matter of record that the foreign company had remitted tax as per Section 44BBB at 4.8% and had also sought for refund therein. In the light of the said decision, we hold that the assessee cannot be mulcted with any liability by way of interest to be charged under Section 201(1A). Thus, applying the decision in British Airways (supra), considering the consistent stand taken by the assessee and the parties to the agreement that the status of the joint venture was only Association of Persons, we hold that there could be no case for levying interest under Section 201(1A).

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• 2012 (10) TMI 314
  Validity of re-opening of Assessment - supply of information by the Investigation Wing - Unexplained Cash Credits - held that:- As decided by Court in the case of [AGR Investment Ltd. V Addl. CI T 2011 (1) TMI 48 - DELHI HIGH COURT] It was open to the assessee to participate in the re-assessment proceedings and put forth its stand in detail to satisfy the AO that there was no escapement of taxable income. It is evident that mere communication of information emanating from the investigation and not interpretation thereof, is not the same thing. If there is an information from the investigation, on which AO has acted, as is in the present case, then AO has jurisdiction u/s 147 r.w.s. 148 of the Act - findings of the CIT(A) are upheld and C.O. of the assessee is dismissed. Unexplained Cash Credits - issue of new share capital - held that:- The appellant has discharged onus, within the meaning of Section 68 of the Act and also in consonance with the general principles of law. The AO made the impugned addition, primarily on the ground of non-production of the persons, who subscribed to the share capital, as is evident from the extracts of findings of the AO. - onus shifts on the AO, to bring credible material on record to show the non-existence of such subscribers and non-genuineness of such transactions. - Addition deleted - decided in favor of assessee. Decision of Apex Court in CIT V Steller Investment Ltd. [2000 (7) TMI 76 - SUPREME COURT] followed

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• 2012 (10) TMI 313
  Stay of Recovery proceedings - DCIT stated that the mere filing of an appeal cannot be a ground for withholding the tax demand and directed the petitioner to pay fifty per cent of the demand immediately and stayed the balance demand till the disposal of the appeal. He further stated that if the petitioner failed to deposit the amount within one week of the receipt of the letter, coercive measures would be taken for the recovery of the demand, without further notice. - Held that:- stay granted with direction t protect the interest of the revenue.

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• 2012 (10) TMI 312
  Capital gains - Agreement of Sale vs. Agreement to Sell - determination of date of sale - Question is whether the transfer of the shares by the assessee took place on 22nd December, 1992 as contended by the Tribunal, or on 3rd January, 1992 as contended by assessee. - held that: - Permission of the Central Government under section 372 of the Companies Act was granted by the Central Government only on 9th July, 1992. It was only thereafter on 22nd December, 1992 that the respondent effected a transfer of the shares to ATCL and received the balance consideration in respect thereof. The respondent declared the capital gain in respect of the transaction in the assessment year 1993-94. Transfer of shares took place on 3-1-1992 and not on 22-12-1992 as Agreement of Sale was completed on 3-1-1992 - assessee entitled to the benefit of the provisions of section 47(v) of the Act. - in favour of appellant.

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• 2012 (10) TMI 300
  Disallowed of expense - Lack of proper documentary evidence – AO disallow contract fees – Held that:- There is no dispute that such expenditure is required to be incurred for the purpose of assessee’s business but the disallowance was made mainly for the lack of supporting evidence to support the claim of the assessee. The factum of deduction of TDS by the assessee from the said payment is sufficient to fill this gap and relying on the same. Issue decides in favour of assessee Ad-hoc disallowance of non-verified expense – Assessee has paid cash expense on self-made vouchers in relation to port expense – AO made disallowance to the extent of 50% of the total expenses due to unverifiable element involved - Held that:- As such expenses are required to be incurred at ports keeping in view the very nature of its business. The disallowance so sustained by the CIT(A) is on the higher side keeping in view the nature of the expenses incurred by the assessee which are essentially required to be paid in cash by way of self-made voucher. We, therefore, find it fair and reasonable to restrict the disallowance made on this issue to 25% of the total expenses. Issue partly allowed Ad-hoc disallowance bulk survey material expenses - Absence of proper documentary evidence – Held that:- As concluding from facts and ledger book, bulk survey expenses shows that most of the payments appearing therein were made by cheques and even TDS was also deducted from the said payments. Assessee firm had earned income of about Rs.22 lakhs from the survey activity, there was no reason for the authorities below to make any disallowance out of bulk survey expenses. Issue decides in favour of assessee Disallowance of professional expense – Held that:- As the onus is on the assessee to establish that expenses incurred on professional fees paid were wholly and exclusively for the purpose of its business and this onus cannot be said to be discharged merely by showing that such professional fees was paid by cheque and TDS was also deducted from such payment. Upheld the disallowance and issue decides in favour of revenue Disallowance of telephone & conveyance expense – Nature of expense official or personal – FBT has been paid on said expense - Held that:- Once FBT is levied on such expenses, it follows that the same are treated as fringe benefits provided by the assessee as employer to its employees and the same have to be appropriately allowed as expenses incurred wholly and exclusively incurred by the assessee for the purpose of its business. Issue decides in favour of assessee

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• 2012 (10) TMI 294
  Addition u/s 68/69 - CIT(A)restricted the addition - Held that:- The CIT(A) found that the assessee himself has disclosed Rs.12,50,000/- in the return of income. Therefore, this amount was also required set off and adjustment in the addition of Rs.1,31,70,346/- is required to be reduced. Even this amount of Rs.12,50,000/- is reduced from Rs.1,31,70,346/- and balance comes to Rs.1,19,20,346/-. In the light of above discussion the assessee was entitled to relief of set of Rs.12,50,000/- amount which has been already incurred in the return of income. Therefore, the relief to that extent was required to be granted but the CIT(A) allowed only Rs.11,70,346/- on the ground that the assessee himself has surrendered the amount at the time of assessment proceedings in the light of fact we do not think that the Revenue should have any grievance against the order of CIT(A) - against revenue. Addition under section 14A - Held that:- The CIT(A) has correctly appreciated the facts and found that entire funds of group has been channelised through Vijay Kumar Agarwal. There is an interest receipt of Rs.2,60,684/-. Therefore, interest pertaining to diversion of borrowed fund in share application is required to be restricted only in respect of net amount of interest. Thus the CIT(A) has rightly allowed relief of Rs.2,60,684/- and has correctly confirmed the addition to the extent of Rs.34,167/-. Activity related to Bardana and advances to farmers and charging of interest - Held that:- The pages of Paper Book referred by the assessee at the time of hearing requires necessary reconciliation. It has also been noticed that there is no consolidated reconciliation on record based on which it can be said that the transaction relating to Bardana and interest has been the entries for amounts which were considered for calculation of peak amount. In the absence of complete reconciliation of details in this regard that the transaction relating to Bardana and interest were included in the consolidated cash book on which basis a peak amount has been calculated. In the absence of complete facts, the issue pertaining to Bardana and interest cannot be decided at this stage the order of CIT(A) is not in accordance with section 250(6) & send back to decide the issue afresh.

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• 2012 (10) TMI 293
  Non deduction of TDS - payment for purchase of three bedroom residential flat in the land at a multistoried residential complex - assessee in default u/s 201(1) - Held that:- From a plain reading of section 195(1) it is clear that the assessee was liable to deduct tax at source at the specified rates (i.e. 20% plus surcharge 10% and education cess 2%) from out of the sale consideration paid by him to the seller of the said flat purchased by him as she was an NRI. If the assessee (i.e. the person responsible for paying such sum to the NRI seller) was of the view that the whole or part of such sum viz. the sale consideration, would not be income chargeable in the hands of the recipient (i.e. in this case the seller, an NRI), Section 195(2) required him to make an application to the Assessing Officer under section 197 r.w.s. 195(2) to determine the amount chargeable and upon such determination deduct tax on such sum so determined. A plain reading of the provisions of section 201 of the Act clearly indicate that it is consequential and gets activated the moment an assessee liable to deduct tax under the Act fails to either deduct or pay the same at source - As decided in CIT Versus Samsung Electronics Co. Ltd. [2009 (9) TMI 526 - KARNATAKA HIGH COURT] the Assessing Officer is competent to quantify and raise demand under section 201 and issue notice of demand under section 156 the moment the assessee failed to deduct tax at source at the specified rate from the sale consideration before making payment of the same to the seller who is an NRI in the relevant period. The action of the AO in charging the assessee, interest under section 201(1A) is consequent to the quantification of tax demand under section 201(1) r.w.s. 195 and is chargeable in respect of any person who has failed to deduct the whole or part of any tax at the rates and period specified therein. Therefore, uphold the Assessing Officer's action of charging of interest under section 201(1A). The CIT (Appeals) has already addressed issue of quantification of interest in which he has directed the Assessing Officer to verify the assessee's claim of payment of taxes to the extent of Rs. 2,61,764 on 24.10.2009 out of demand of Rs. 13,82,820 and rework the interest chargeable under section 201(1A) of the Act. As no submissions have been made with regard to any error by the learned CIT (Appeals) in his order, the assessee's grounds on this issue are dismissed as infructuous - appeal decided against assessee.

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• 2012 (10) TMI 292
  Undisclosed Income - gifts received from non Resident Indians (NRI) from their Non Resident External accounts - Held that:- In the present case the confirmatory letters addressed by the donors to the assessee were identically worded, typed on the same typewriter, the donors seemed were not related to the assessee, the aggregate gifts received by the family of the appellant was over Rs.35 lacs and all gifts were made allegedly out of love and affection for the appellant and/or her family members. Further, no circumstances have been indicated by the appellant before the authorities or during the hearing before us as to what was the occasion for apparent strangers to advance an amount aggregating Rs.35 lacs to the appellant's family as gifts. There is a concurrent finding of fact by the AO and the Tribunal that the amounts shown as gifts were not genuine gifts, but were mere credits taken so as to evade payment of income tax. Further, as gifts are not income being a capital receipt and not subject to income tax its disclosure or non disclosure is of no consequence for the purpose of the Act. It is only on account of search that documents were unearthed / found which showed that the gifts were not genuine, but only a method to convert the appellant's unaccounted money into regular income. Therefore, the non genuine gifts to the appellant was undisclosed income and covered by the definition provided in Section 158B(b). Consequent to the amendment in 2002 to Section 158BB documents and/or information available with the assessing officer and relatable to evidence found during the search is certainly evidence which can be used to compute the undisclosed income for the block period - In fact Parliament realizing the difficulty for the Revenue to prove its case to the hilt provided under Section 158BB(3) of the Act that the burden of proving to the satisfaction of the Assessing Officer that any income had already been disclosed is on the assessee. Further, sub section (2) of section 158BB in terms provided that section 68 relating to cash credits would apply to block assessment and in such cases also it is for the assessee to satisfactorily explain to the AO, the source of the credit found in the books of an assessee - against assessee.

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• 2012 (10) TMI 291
  Admission of additional evidence under Rule 46A - revenue appeal that CIT(A) has not recorded any reason for admission of additional evidence & taking recourse to the provisions of Section 144 - Held that:- Revenue was unable to justify ex parte assessment under Section 144 except to urge a technical plea that the conditions specified in Rule 46A of the Rules were not complied with in letter and spirit while allowing permission to the assessee to lead evidence. According to the revenue, it was the assessee who had not appeared before the Assessing Officer and not that AO had failed to provide sufficient opportunity but no merit in the contention of revenue found as assessee was prevented by sufficient cause in not appearing before the AO while framing the assessment under Sections 143(3) r.w.s. 144 due to confusion relating to the jurisdiction of the AO. Also the revenue was unable to substantiate on merits that the additions made in the original assessment order were justified - against revenue.

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• 2012 (10) TMI 290
  Disallowance of Depreciation u/s 32(1) - Held that:- A plain reading of the Explanation 5 of section 32(1)inserted by Finance Act, 2001 w.e.f. 1.4.2002 that depreciation shall apply wherever the assessee may or may not have claimed deduction in respect of depreciation in computing the income - AO is duty bound to allow depreciation even without there being claim by the assessee wherever the same is admissible to the assessee - in favour of the assessee. Allowance is mandatory u/s 40 (a)(ia) - Held that:- Observations recorded by the Tribunal at the time of hearing that the assessee fairly stated that the assessee was statutorily obliged to deduct tax at source out of rent paid by him but it was not deducted at source by the assessee and, therefore, the provisions of section 40(a)(ia) were applicable and as no material is presented to come to a different conclusion from what has been recorded by the Tribunal or to put it differently, it cannot be said that the Tribunal had recorded the observations noted above erroneously - against assessee.

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• 2012 (10) TMI 289
  Writ of certiorari - quashing an assessment order dated 29.2.2012 u/s 143(3) as it varies a draft assessment order dated 29.12.2011 u/s 143(3) r.w.s. 144C - disallowances of deduction u/s 80IC - Held that:- No intend of exercising jurisdiction under Article 226 for this matter as it involves several points, some of which require a detailed consideration on disputed questions of fact including as to whether the petitioner had made false statements as indicated earlier. It would serve no purpose and would indeed be cumbersome to have these issues decided in different proceedings. There also arises the issue raised by the learned Advocate General to the effect that the petitioner had abandoned the right to proceed under section 144C and had chosen instead to proceed to a regular assessment. Whether such a course is permissible in view of section 144C or not is another matter. If it is permissible, it may well involve a further disputed question viz. whether the petitioner had in fact done so viz. chosen to proceed to a regular assessment and not under section 144C, therefore it is not considered appropriate to deal with these questions in this writ petition. this Writ Petition on this hypothetical basis need to be rejected - leave it to the CIT(A) to use his discretion and judgment in this regard keeping in mind, of course the exigencies of his board and the nature of the other matters before him. It is desirable that the appeal is disposed of within six months from today.

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• 2012 (10) TMI 288
  Entertainment expenditure incurred on employees - ITAT allowed the claim - Held that:- Order of the Tribunal shows that it has considered the claim of the assessee that 35% of the expenditure incurred on entertainment is attributable to the entertainment of the employees while they were entertaining the assessee's customers to be reasonable and therefore such portion of the expenditure has to be excluded at the threshold and the limits prescribed by Section 37(2) have to be applied only on the balance of expenditure. This is not an unreasonable view of the section. The question as to how much is to be attributed to the entertainment of the employees is a matter of esteem, therefore, answer the question in the affirmative - in favour of the assessee. Depreciation on increase in cost of fixed assets due to fluctuation in the foreign exchange rate - ITAT allowed the claim - Held that:- As decided in CIT Versus M/s Woodward Governor India P. Ltd. & M/s Honda Siel Power Products Ltd. [2009 (4) TMI 4 - SUPREME COURT] that the increase on account of fluctuations in the rate of foreign exchange prevailing on the last day of the financial year is not notional or contingent and has to be adjusted in the actual cost of assets in terms of Section 43A, in the year in which there is variation in the exchange rate, irrespective of the date on which it is paid - in favour of the assessee. Payment to the UP State Electricity Board for laying electric transmission lines in the premises - Revenue v/s Capital - Held that:- As decided in CIT Vs. Saw Pipes Ltd.[2007 (1) TMI 101 - DELHI HIGH COURT] that expenditure was incurred by the assessee for laying of electricity transmission lines, which did not become the property of the assessee. It was held that the expenditure did not bring in any enduring benefit and was deductible as revenue expenditure - in favour of the assessee. Addition towards value of the closing stock - CIT (Appeals) deleting the addition - Held that:- The revenue has accepted similar claims in the assessment made for the assessment years 1996-97 and 1997-98. A consistent method of valuing the stock has been adopted by the assessee. It was also accepted by the revenue. It would, therefore, be improper to allow the revenue to change its position only for one year, which would upset the method of valuation of the stock for a particular year thereby resulting in a distorted version of the profits. The method of valuation of closing stock can be disturbed only if it is found that the method followed is such that true profits and gains cannot be deduced therefrom - in favour of assessee. Disallowance of the brand building and dealer loyalty expenditure - ITAT confirming the decision of the CIT(A) in deleting the addition - Held that:- The finding of the Tribunal that a part of the advertisement expenditure is reimbursed by the parent company is not under challenge. This itself should settle the issue in favour of the assessee because even if it is assumed that a part of the expenditure inured for the benefit of the parent company, the assessee is getting compensated for it. The view that in any case, expenditure, the benefit of which inures partly to the assessee and partly to another person, cannot be allowed as a deduction, is not the correct view to take in law since it has been settled by a long line of cases that expenditure incurred by the assessee in the running of his business cannot be disallowed merely on the ground that a part of the expenditure results in some benefit to a third party - in favour of the assessee

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• 2012 (10) TMI 287
  Non deduction of TDS - purchase of printed material - contract for work and labour or contract for sale - default u/s 201(1)- Held that:- As decided in Associated Cement Co. Limited Versus Commissioner of Income-Tax And Another [1993 (3) TMI 1 - SUPREME COURT] provisions of section 194C are not applicable in the case of sale of goods The sample invoices and in many cases M/s Fair Deal Printing Press has charged even VAT/CST. The Revenue has at no point alleged or proved that the assessee had supplied paper or ink to the printer. Therefore, it is simple case of contract for sale/purchase as the assessee has purchased printed material though made according to the specification of the assessee. Therefore, in our humble opinion the provisions of section 194C are not attracted in this case and the assessee is not liable to deduction of tax u/s 194C. Accordingly we set aside the order of the ld. CIT(A) and hold that the assessee is not in default u/s 201(1) and further not liable to pay interest u/s 201(IA) - in favour of assessee.

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• 2012 (10) TMI 286
  Computation of long term capital gain - Exemption under Section 54 - actual cost of construction reported by the Developer v/s market value of the property as on the date of development agreement - Held that:- In respect of the property situated at Aga Abba Ali Road, the assessee and his brothers entered into a Joint Development Agreement with M/s.Embassy Investments and the said property was handed, over to the Developer on 06-05-1995 itself for construction of the residential apartment. As per the Development Agreement, 50% of the apartment shall be handed over to the owners of the property. In that the assessee is entitled to 1/3 share. Hence, the fair market value as on 01-04-1981 has to be adopted though the construction of the apartment was completed in the year 2000. As per the Development Agreement, the value of the apartment was fixed at Rs. 66,00,000/-. Taking into consideration 50% of the cost of construction, the Assessing Authority has arrived at the capital gain, which is totally incorrect - in favour of assessee. The exchange value in consideration of 50% of the land was agreed to be conveyed to the Developer and/or his nominee/s valued at Rs. 1,16,70,000/-. The fair market value as on 01-04-1981 as per the Sub-Registrar valuation has to be taken into consideration. However, the Assessing Authority has not taken into consideration this aspect of the matter. Taking into consideration the project cost incurred by the developer on the basis of their letter dated 01-02-2004, which includes all expenditure connected with the construction of the Residential Apartment. The exchange value as specified in the project development agreement can be taken as the basis for computation of the construction in joint development. The consideration specified in the said document represents the market value on the date of entering into the agreement. The assessment made by assessing authority is contrary to law - against the Revenue. Claim benefit under section 54 - Held that:- As per the Development Agreement entered into between the parties, the assessee and his brothers have demolished this existing residential building and handed over the vacant space to an extent of 16800 sq.ft. to the Developer for construction of the apartment they are not entitled to claim benefit under section 54. At the most they are entitled to benefit under Section 54F. The order passed by the Appellate Authority directing the Assessing Authority to allow the deduction under Section 54 is contrary to law and the same cannot be sustained - against the assessee.

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• 2012 (10) TMI 285
  Transfer pricing adjustment - whether the provisions of sec 92A are applicable to the transactions of the assessee in their service activity ? - M/s Sanchez Computer Associates Inc., USA holds 20% shares in the assessee company & remaining 80% is held by Peninsula Capital Services Private Limited India - Held that:- Assessee has been filing form No.3CEB as an abundant precaution admitting the other two enterprises as associated enterprises. However, just because assessee has been filing Form No.3CEB it cannot be stated that these two are associated enterprises unless provisions of section 92A are satisfied - As far as the conditions in 92A(2) are concerned, assessee has given detailed explanation how these provisions are not applicable so as to hold the two companies as associated enterprises. However, it is not clear on record whether there is any relationship as prescribed u/s 92A(1)(a)(b) which specify that an associated enterprise in relation to another enterprise. Since inquiries are pending before the TPO to examine whether there is any direct or indirect participation of Sanchez in Zenta Private Limited, Mumbai holding 1005 shares of Peninsula Capital Services Pvt. Ltd India, or otherwise and share holding pattern of 80% share holder also has any direct or indirect control in Sanchez, we do not propose to give any finding at this juncture whether there is any relationship of associated enterprise between the parties involved herein. Therefore without adjudicating on this issue the order of the DRP as well as TPO is set aside and restore back to TPO to decide afresh whether there is any associated enterprise relationship between the parties and whether provisions of section 92A are applicable - in favour of assessee for statistical purposes.

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• 2012 (10) TMI 284
  Penalty u/s 271(1)(c) - additions, forming the basis of levy of penalty itself have been set aside - Held that:- Where an order of assessment or reassessment on the basis of which penalty has been levied on the assessee, has itself been finally set aside or cancelled by the Tribunal or otherwise, the penalty cannot stand by itself and the same is liable to be cancelled - Decided in favor of assessee

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• 2012 (10) TMI 283
  Difference of opinion between two members - Reference to Third member to decide whether matter in relation to Charitable Trust is required to be restored back to the file of CIT(A) for a fresh decision - Held that- It is observed that assessee has produced its books of accounts along with names and complete addresses of the donor along with original receipt book of corpus fund before the AO. AO has chosen not to make further inquiry. Additional evidences in form of declaration from donors to the corpus fund had been admitted before the CIT(A). Revenue has not taken any ground of appeal in relation to violation of provision of Rule 46A. In the absence of any specific ground of appeal to the effect, it is held that JM was justified in not restoring back the issue to the file of the CIT(A) for a fresh decision - Decided in favor of assessee. Whether any inquiry was still required to decide the nature of the said “corpus fund” - Held that:- It was for the AO to make or not to make further inquiry in the facts and circumstances of the case with regard to the genuineness of the donation claimed by the assessee-trust to have received by it towards its “corpus fund”. The Tribunal as a second appellate authority could not direct the AO to make detailed inquiry for the reason that the issue of “inquiry” is not before the Tribunal - Decided in favor of assessee

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• 2012 (10) TMI 282
  Dis-allowance of expenses on adhoc basis without pinpointing any item which is of personal in nature - vehicle expenses, motor car expenses, depreciation on motor car - Held that:- Assessee failed to establish that the entire vehicle expenses and motor car expenses were incurred wholly and exclusively for business purpose. The possibility of the assessee for use of non business purposes cannot be ruled out. However, dis-allowance sustained in appeal by CIT(A) is on a higher side, and dis-allowance is restricted to 10% of the claim. Addition made on ground of low household expenses - Held that:- The undisputed fact is that the A.O. has made an estimation of household expenses, which is not based on any evidence or material on record. In view of these circumstances we direct the A.O. to delete the addition. Dis-allowances on account of shortage in material - Held that:- It is evident that assessee has submitted evidences before the A.O. that the vendor does not entertain the claim of the assessee whether the shortage is less than 100 kg. This is also a fact that the assessee has to buy the material in bulk and sell it in retail. It is not denied that the shortage/ deficit in the case of the assessee is less than 0.5% of the total purchases. It is also not denied that the explanation of the assessee that the shortage/deficit has been accepted in the earlier years in the order passed u/s. 143(3). There cannot be any thumb rule that no shortage will be allowable to the assessee - A.O. is directed to delete the addition - Decided partly in favor of assessee.

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• 2012 (10) TMI 281
  Validity of reassessment proceedings u/s 263 - reassessed on ground that assessee had not included the unutilized CENVAT credit while valuing the closing stock of raw materials and WIP - refund of excise duty not included while computing the total income - wrong claim of “additional depreciation on windmills - AY 2007-08 - Held that:- A bare reading of S263 makes it clear that to justify exercise of jurisdiction by CIT, the order of the A.O. is to be erroneous in so far as it is prejudicial to the interest of the Revenue. In present case, assessee submitted the method of accounting employed consistently followed by it for accounting of Excise duty and CENVAT, and exclusive method of accounting for sales, purchase and closing stock and by following either of the method there is no impact on P/L A/c. The assessee also submitted that the depreciation has been allowed to the assessee before examining the relevant details. The A.O. in the instant case had examined the issue of stock valuation and depreciation on windmills and we are satisfied that the A.O. had made necessary inquiries and the assessee had provided an explanation in that regard. Thus, it can be said the A.O. on being satisfied did not make any addition and dis-allowance. Therefore, we are of the view that the stand taken by the A.O. was not an unsustainable in law so as to render the order as prejudicial to the interest of Revenue. Therefore the order of the A.O. cannot be considered either to be erroneous or prejudicial to the interest of the Revenue. Order of CIT quashed - Decided in favor of assessee

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• 2012 (10) TMI 280
  Penalty u/s 271(1)(c) - profit on sale of land offered as capital gain instead of business income - assessee on realizing the mistake had suo moto offered the income as business income, taxed as same by AO without any change - Held that:- It is clear that the assessee had offered explanation by furnishing necessary details and also substantiated it. The explanation of the assessee was not found to be false by Revenue in view of the fact that the computation as submitted by assessee was accepted by Revenue. Thus, it is clear that no material was found by Revenue to hold that the explanation offered by assessee was false. Therefore, assessee’s case does not fall within the ambit of Part-A of Explanation. So far as Part-B is concerned, it is found that assessee offered an explanation and also substantiated it. Therefore, Part-B is also not applicable. In view of above, assessee’s case does not fall within the ambit of Explanation 1 to Sec. 271(1) (c) and no penalty can be levied by merely disbelieving explanation given by the assessee - Decided in favor of assessee

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• 2012 (10) TMI 279
  Dis-allowance u/s 40(a)(ia) on ground of failure to pay TDS within prescribed time - Civil contractor - assessee contended that amount has been paid before the due date of filing of the return and words used in section 40(ia) were “payable” and not “paid” - Held that:- On perusal of records it is observed that there was no amount payable at the end of the year and although the amounts were paid to the sub-contractors during the entire FY under consideration on different dates but finally the entire payment of TDS to the Government Exchequer was paid before the due date of filing of the return. Hence, dis-allowance directed to be deleted. Addition on account of unexplained and unverifiable expenses - Revenue contended that though the account payee cheques were issued by the assessee but whether that payment had reached to the hands of the said parties was not affirmed by filing other corroborative evidence - Held that:- Apprehension of Revenue is ill-founded because two substantial evidences, i.e. payments made through account payee cheques evidenced through bank statements and second, deduction of tax at source have conclusively proved that the assessee has in fact incurred the expenditure exclusively for the purpose of the business, therefore allowable u/s.37(1) - Decided in favor of assessee

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• 2012 (10) TMI 278
  Dis-allowance on account of payment of bogus purchases made - Held that:- Though assessee has recorded bogus purchases in the books of account based on accommodation bill received, however in view of the maintenance of quantitative details having followed the practice of purchasing goods from the grey market but sales have duly been recorded; would be with the intention to gain some benefit. By adopting this illicit practice the traders have managed to save few percentage of cess/tax being levied on the purchases if made through registered dealers. Keeping that fact in mind that ultimately a reasonable percentage of profit is to be taxed on the sales executed, the Respected Coordinate Benches have arrived at a conclusion to disallow 12.5% of the purchases. Direction given to restrict the disallowance at 12.5% of the impugned purchases - Decided partly in favor of assessee

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• 2012 (10) TMI 277
  Condonation of delay in filing appeal against order of CIT(A) - non-payment of tax on the returned undisclosed income - inordinate delays of more than 2491 - held that:- the assessee has discharged the huge tax liability - Thus, it would be totally unfair for not providing an opportunity to him for disputing the additions made by the AO on merit. Decision in [J.T. (India) Exports v. Union of India [2001 (9) TMI 10 - DELHI HIGH COURT] followed. Curable defect - section 249(2) - held that:- appeal filed in violation of Section 249(4) would be termed as a defective one and the moment defect is cured then those can be disposed of on merit subject to limitation. The Courts and the quasi-judicial bodies are empowered to condone the delay if a litigant satisfies the Court that there were sufficient reasons for availing the remedy after expiry of limitation. Scope of the term "sufficient cause or reason" - held that:- The Hon'ble, Supreme Court in Mst. Katiji (1987 (2) TMI 61 - SUPREME COURT) has observed that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have a vested right in injustice being done because of a non-deliberate delay. - Delay condoned.

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• 2012 (10) TMI 276
  Claim of 100% deduction u/s 80P from profits - The dispute was only with regard to the deposits which the appellant accepted from non-members. - Held that:- Acceptance of deposits from non-members on which the assessee bank was under obligation to pay interest does not, in any way, affect the revenue generated by the appellant in providing credit facilities and supply to the members – No income is generated by Society from funds received from non-members – Deduction is allowed – in favour of Assessee.

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• 2012 (10) TMI 275
  Benefit of Tax Deduction in respect of profits retained for export business - Held that:- The assessee is a non-resident in India and is a citizen of Canada as he do not have any Permanent establishment in India - assessee is not a tax resident of Canada, he cannot claim benefits of the Canada DTAA - Benefits under sec.80HHC were claimed by making a wrong claim of being a resident of India - Benefits under sec. 80HHC are now no longer available to assessee - in favour of Revenue. No useful purpose would be served by adjourning the matter, as there is no possibility of getting the notices served on the assessee when the duly constituted Power of Attorney holder acknowledges the receipt of notice but refused to co-operate for the reasons specified in the letter. - Decided against the assessee.

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• Customs

• 2012 (10) TMI 311
  CHA - forfeiture of the security - violation of Regulation 13(a) and (d). The allegations are that they did not have an authorisation from M/s. Nelcast Ltd., the importers and they did not advise the importers that the impugned goods were required to be re-exported within a period of six months – Held that:- There is nothing to indicate that the appellant-CHA has acted mala fide in any manner. It is usual in international trade these days for logistic companies to act as agents of the importers and exporters and engage CHAs on their behalf - appellant-CHA did not act mala fide and they had the tacit authorisation of the importers M/s. Nelcast Ltd., to deal with the goods for Customs clearance purposes. It is also clear that M/s. Nelcast Ltd., did not take any action to receive the impugned goods in their own premises and to re-export the same within the required six month period. After giving the required documents and bonds, they cannot claim to be unaware of the clearance of the impugned goods from the Customs. Even after a lapse of nearly a year, they are seen to be threatening the suppliers and M/s. DAMCO that the latter should not attempt to re-export the cargo even though they themselves had executed the Customs bond to re-export the cargo within six months - Strangely the Customs authorities have not taken any action against the importers but have acted against the appellant-CHA in this case, without there being sufficient reason for such action - appeal is allowed.

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• 2012 (10) TMI 310
  Conversion of shipping bill - appellants applied for conversion of free shipping bill to a drawback shipping bill which has been rejected by the jurisdictional Commissioner – Held that:- Goods were taken straight away from the dealer for export and they were not at all manufactured and hence there was no question of claiming of excise duty rebate under ARE-1 procedure when goods were produced abroad - It is also apparent that even if such a conversion is allowed, it would be a futile exercise as no drawback can be sanctioned unless the identity of the imported and export goods can be established - conversion not allowed - Accordingly, the appeal is dismissed

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• 2012 (10) TMI 309
  Penalty - misdeclaration in respect of description and value - Commissioner while imposing the penalty on the partner ARM Faiyaz has imposed 114A and 112 of the Customs Act, 1962 – Held that:- Under Section 114A of the Customs Act, penalty can be imposed only on the person who is liable to pay duty and penalty under Section 114A can be imposed, no penalty shall be imposed under Section 112 or 114 of the Customs Act - no penalty can be imposed on the partner

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• 2012 (10) TMI 274
  Writ of certiorari for quashing demand notice - Held that:- As the petitioner has not approached the concerned authority by presenting a representation projecting the points as raised in the present petition, he is directed to do as advised. On moving such a representation to the concerned authority who will decide the same by passing a speaking order in accordance with law expeditiously.

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• 2012 (10) TMI 273
  Search - seizure of the documents – alleged that search of its premises has been conducted by the respondents without there being any “reason to believe” for issuance of authorisation for search that any goods liable for confiscation or any documents or things which in the opinion of the authorising officer will be useful for or relevant to any proceedings under the Act are “secreted” in any place – Held that:- It cannot be said that the authority which had issued the warrant of authorisation, was not having enough material to form opinion about reason to believe that any goods liable to confiscation, or any documents or things which in his opinion will be useful for or relevant to any proceedings under the Customs Act are secreted in any place as contemplated under Section 105(1) of the Customs Act or that the said authorisation was issued without application of mind - no case is made out to interfere in the matter at this stage of seizure – seizure upheld

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• 2012 (10) TMI 272
  Drawback claim – re-export - Held that:- Applicant imported Injection Mould EPAS 14 way (9622) with associated accessories at concessional rate of duty under EPCG Scheme, which was re-exported - applicant as importer cleared the goods at concessional rate of duty under EPCG Scheme on execution of Bond, imposing upon themselves the obligation to pay duty along with interest in case they failed to fulfil condition of the Notification. The applicant after importation found their goods defective and paid the differential duty along with interest before re-export of the goods - as the applicant paid the whole duty along with interest, they are eligible for drawback under Section 74 of the Customs Act, 1962

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• Corporate Laws

• 2012 (10) TMI 308
  Scheme of Arrangement - In view of the chart and written consents/NOC given by all the Equity Shareholders of the Transferor Companies and Transferee Company, the requirement of convening their meeting is dispensed with. - There is no secured creditor of the Transferor Company no.1 as well as Transferor Company No.2. There are two Unsecured Creditors of Transferor Company No.2; they have given written consents/NOC; the convening of meeting of unsecured Creditors of Transferor Company No.2 is also dispensed with. However, as no consents have been filed on record on behalf of Unsecured Creditors of Transferor Company No.1 and Transferee Company as well as of Secured Creditors of Transferee Company, their meetings are directed to be convened.

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• Service Tax

• 2012 (10) TMI 336
  Import of services - Intellectual Property Services - assessee contested as no demand can be raised in respect of services rendered by non-residents prior to 18.4.2006 - Held that:- The services by different notice relating to service tax on services classifiable under Section 65(55a) of the Finance Act, 1999, were made taxable w.e.f. 10.9.2004 by Finance Act, 2004 & the present show cause notice dated 21.10.2011 relates to the period 18.4.2006 onwards on the services as classified and defined under Section 65(55b) of the Finance Act, 1994.- against assessee.

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• 2012 (10) TMI 335
  Cenvat Credit - utilization for payment of duty of excise as well as payment of service tax - Held that:- No need for one to one co-relation of CENVAT credit availed on input services towards payment of output services.- As decided in case of [FORBES MARSHALL PVT. LTD. Versus COMMISSIONER OF CENTRAL EXCISE, FUNE 2010 (6) TMI 230 - CESTAT, MUMBAI], there is no provision in CENVAT Credit Rules, 2004, for segregation of input services utilized in manufacture or to provide output service. - in favour of assessee.

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• 2012 (10) TMI 334
  Erection Commissioning and Installation – Imposition of Penalty - sub contractors were paying service tax - Held that:- For providing service in relation to civil and electrical work and LAN cabling work as per the specific requirements for installing computers and other electronic gadgets registration under Service Tax has to be taken separately - no merit in the argument of the appellants that they were only an intermediary and not doing the work themselves and hence their activities did not amount to any service. - prima facie in favor of revenue - Stay granted partly.

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• 2012 (10) TMI 307
  Payment of 25% of the tax amount towards the penalty - Held that:- The service tax itself was concededly paid on 3.3.2009, i.e., before the show cause notice which was issued on 12.3.2009. The Order in Original confirmed the said demand for Rs. 3,54,37,986/- which had been so deposited. Having regard to these, prima facie, the provisions of the first proviso to Section-78 was attracted and the Commissioner could not have demanded any amount in excess of 1/4th of the service tax liability, as penalty. The directions to pay Rs. 3,54,37,986/- as penalty is therefore incorrect. Since the primary liability to pay service tax was discharged even before the issuance of show cause notice this is an appropriate case where the amount of pre-deposit should be reduced, in the interest of justice. This Court had directed payment of Rs. 25 Lakhs treated as satisfying the requirement of pre-deposit for the purpose of hearing the appeal.

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• 2012 (10) TMI 298
  Man Power Recruitment & Supply Agency - service tax demand - Stay Petition for waiver of pre-deposit - Held that:- As the appellant during the pendency of the investigation, has deposited an amount of Rs.10 lakhs and has also not filed any defence reply due to his illness and the adjudicating authority has gone through the Show Cause Notice and the statements to come to conclusion that the appellant is to be saddled with the Service Tax liability of Rs.55,49,649/-, interest thereof and various penalties. Thus as adjudicating authority should have given another chance to the appellant for filing the reply before taking up the matter for disposal the appellant is hereby directed to file the reply to the Show Cause Notice within a period of six weeks from this Order date - in favour of assessee by way of remand.

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• 2012 (10) TMI 297
  Cenvat Credit - Input Service - Held that:- Cenvat credit can be availed on Service tax paid on outward freight of final goods cleared from the factory to the premises of the customer.As decided in case of [COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX, BANGALORE Versus M/s ABB LTD. and others 2011 (3) TMI 248 - KARNATAKA HIGH COURT], Outward Transportation can be treated as Input Service - in favour of assessee.

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• 2012 (10) TMI 296
  Power of remand - Commissioner (Appeals) - refund – Held that:- Original authority sanctioned refund of the service tax paid on some of the input services which were found to have nexus with the output service - assessee approached the Commissioner (Appeals) and the latter found nexus between the input services (barring Air Travel Agency Service) and the output service exported by the party - matter was sent back to the original authority for quantification of the amount for refund in respect of the input services which were found to have nexus with the output service - this was not a remand

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• Central Excise

• 2012 (10) TMI 306
  CENVAT Credit on 700 HP Diesel Locomotive - Commissioner (Appeals) allowed the credit - revenue appeal - Held that:- Commissioner (Appeal) has given clear and cogent findings that the transportation of molten iron from blast furnace conarc furnace and thereafter to the pig casting machine is an essential part of manufacturing process. Without carriage of such molten metal from one place to another, the manufacturing cannot take place - Recording the concern of the appellant in this regard that the locomotive engines are used usually for pulling the passenger/goods trains that Diesel Locomotive torpedo ladle car carrying molten metal up to 300-350 MT is not only enhances the effectiveness, but without it the handling, and in turn production of finished goods would not be possible. Thus the view of Commr. (A) holding Diesel locomotive as accessory of capital goods is upheld. No merit in the appeal filed by department - in favour of assessee.

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• 2012 (10) TMI 305
  Demand of credit along with the interest and imposition of penalty – Held that:- Education Cess was payable @ 2% of Central Excise duty, whereas due to system error in the computer, the same was paid @ 4% resulting in excess payment of Rs. 70,046.00. On detection of the error, the same was rectified by the Appellant suo motu by taking credit of the said amount - show cause notice was issued on 20-12-2007, which is beyond the normal period provided under Section 11A of the Central Excise Act, 1944 and suppression of facts etc. was not alleged against the Appellant - demand raised is hit by limitation of time

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• 2012 (10) TMI 304
  Application for recall of order – Criminal Miscellaneous Case – Condonation of delay – Held that:- Sri Virendra Bhatia (counsel) died in 2010 while the petition was dismissed seven years ago in the year 2003 - no explanation as to why the petitioner did not contact his counsel during seven years - Delay has not been satisfactorily explained - Court has specifically observed that it is not a case of abuse of the process of any court and not a fit case for exercising inherent jurisdiction under Section 482 Cr.P.C. As such it cannot be said that Court has dismissed the case for non-prosecution - finding recorded by the Tribunal is not binding upon the criminal courts. As such it cannot be said that the order passed by the Appellate Tribunal has the effect of wiping out the prosecution - this Court is not competent to recall the same. Consequently, both the applications are liable to be dismissed.

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• 2012 (10) TMI 303
  Rebate claim – export – Notification No. 24/2003-C.E., - Held that:- when an exemption under sub-section 5A(1) from payment of duty of excise is granted absolutely, the manufacture has no option to pay the duty - duty paid erroneously cannot be called as duty of excise but it becomes mere a deposit with Government as the applicant was not required to pay any duty in the instant case - erroneously paid duty is not rebatable under Rule 18 of Central Excise Rules, 2002. Since, Govt. cannot retain any amount which is not due to it, the amount so collected is allowed to re-credited in Cenvat Account

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• 2012 (10) TMI 302
  Dutiability of sample – Held that:- There is already a decision in their favour by the Commissioner (Appeals) earlier and the subsequent decision has gone against them - If excisability and dutiability itself are required to be considered then what emerges is that the issue is debatable and both views are possible - pre-deposit waived

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• 2012 (10) TMI 301
  Whether tea fortified with vitamins is liable to tariff under Chapter 21 of the Customs Tariff Act, 1975 or under Chapter 9 of the Customs Tariff Act, 1975 – Held that:- power tea fortified with vitamins, produced by the petitioner company, was assessed to duty under Chapter Heading 2101. However, the Appellate Commissioner on appeal passed an order holding that power tea with vitamins manufactured was not classifiable under sub-heading 2101.20, but was classifiable under Chapter 0902 - The demand of Central Excise was dropped. The aforesaid decision has assumed finality, there being no further appeal therefrom. A different stand cannot now be taken. - Decided in favor of assessee. Since no appeal was preferred against the order passed by the Tribunal in one case and the same has become final, the Department is not entitled to raise the same point in other cases. Decisions in Indian Oil Corporation Limited v. Collector of Central Excise, Baroda, [2006 (8) TMI 8 - SUPREME COURT OF INDIA] and J.K. Synthetics Ltd. & Anr. v. Union of India & Ors., [1981 (4) TMI 96 - HIGH COURT OF DELHI] followed. Decision in Commissioner of Customs and Central Excise, Goa v. Phil Corporation Limited [2008 (2) TMI 3 - SUPREME COURT OF INDIA] distinguished.

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• 2012 (10) TMI 269
  Dismissal of Appeal – Appeal is not maintainable because the Review Order authorizing for filing of the said appeal, has not been signed by the Chief Commissioner appointed by Gazette Notification as required under the law – Held that:- Following the decision in case of T.R.F. Limited (2010 (2) TMI 211 - SUPREME COURT) that appeal of the revenue being is allowed and the impugned dismissing order is set aside. Appeal allowed. Issue remand back & decides in accordance with law on merits.

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• 2012 (10) TMI 268
  Clearances on principal to principal basis v/s job workers to principal basis - duty demand on differential value with interest & penalty - Held that:- Definition of job worker incorporates the words "on behalf of". In the market no one knows the OEMs (five appellant firms). Air Coolers are recognised as of Symphony only. There is no sale to Symphony nor to anyone else. In such a situation, what the OEMs are doing is nothing but manufacturing on behalf of Symphony. The fact that in this case Symphony used their clout and capacity to market the products and their reputation to ensure that the profits made by OEMs was always limited and had nothing to do with the demand for products in the market. While there is a cap for the profit and the earnings of job workers based on Symphony's market, there is no cap for the earning of Symphony, who has exercised total control over every aspect of the transaction with the OEMs and the transaction of the OEMs with the Vendors. Under these circumstances, it would be appropriate to require Symphony also to deposit a portion of the penalty since they are the main party and main beneficiary of the whole arrangements and the transactions. Moreover when the law was amended Symphony had the responsibility to change the system of Valuation being the driving force behind the whole operation. It would be totally unfair and unjust to require only job workers to make pre-deposit of duty and allow Symphony to go scot free without requiring any deposit in spite of the fact that maximum profit accrued to Symphony and not the job workers in this case. Thus the OEMs are required to deposit 10% of the duty demanded within eight weeks from today & M/s. Symphony Comfort Systems is required to deposit an amount of equal to 20% of the penalties imposed on them in various orders within eight weeks from today. Subject to such pre-deposit of the amounts detailed above, the requirement of pre-deposit of balance dues from all the appellants, is waived and stay against recovery of the same is granted during the pendency of appeals.

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• 2012 (10) TMI 267
  Waiver of pre-deposit - Denial of cenvat credit wrongfully availed on the exempted inputs - iron ore concentrate is exempted fully from payment of duty in terms of Notification No. 4/06-C.E., Held that:- Duty was paid by the assessee’s supplier despite exemption Notification - supplier was unaware of such notification or it may be that some condition of the notification was not complied with but, nevertheless, the fact remains that duty was paid by the assessee’s suppliers - assessee’s supplier in fact paid the duty on raw materials supplied to assessee and the department accepted this excise duty. The concept of modvat is that if the raw material suffered duty then relief should be given so far as excise duty on the final product is concerned - raw material supplier has already paid duty with the Government Exchequer. Therefore, the department shall not suffer irreparable loss - 100% waiver of demand of duty, interest and penalties allowed

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• 2012 (10) TMI 266
  Rebate claim – alleged that goods were exported under claim of rebate under Rule 18 of Central Excise Rules, 2002 and also simultaneously under claim of duty drawback under Customs, Central Excise Duties [and Service Tax] Drawback Rules, 1995 – Held that:- As per Condition No. 12 of Notification No. 68/2007-Cus. (N.T.), dated 16-7-2007, drawback can be claimed only on the condition that no cenvat credit facility has been availed for any of the inputs used in the manufacturer of the export product and another condition is that if the goods are exported under bond or claim of rebate of duty of Central Excise it should be certified that no cenvat facility has been availed for the goods under export - applicant has violated the condition 12(ii) of Notification No. 68/07-Cus. (N.T.), dated 16-7-2007 as he has availed cenvat facility for goods under export in as much as duty on exported goods was paid from the cenvat credit account. Despite this violation, applicant has availed drawback claim for both excise and customs portion. In such a situation extending the benefit of rebate under Rule 18 of Central Excise Rules, 2002 will definitely amount to double benefit - revision application is rejected

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• 2012 (10) TMI 265
  Recall of the order – alleged that appellant was not afforded an opportunity to argue the appeal inasmuch as the matter was heard on the question of stay – Held that:- Petitioner permitted to file an application for review/recall/modification that they were not granted any opportunity to put forth contentions for the purpose of adjudication of the appeal on merits. This is an aspect which has to be gone into by the Tribunal - writ petition is, accordingly, disposed of

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• 2012 (10) TMI 264
  Rebate claims for the duty paid in respect of the inputs and packing materials used in the manufacture of the export products – alleged that applicant failed to file correct declaration and the declaration was not got verified from Assistant Commissioner of Central Excise before export – Held that:- As far as procedural compliance is concerned, applicant has complied the procedural requirement substantially as the declaration was filed - other procedural requirement were duly complied - substantive benefit cannot be denied for procedural infractions/lapses - core aspect or fundamental requirement for claiming rebate is payment of duty on materials and their use in the manufacture of exported goods. Since there is no dispute about this fulfilment of fundamental requirement, the rebate claim cannot be denied - input rebate claim is admissible to the applicant and the same may be sanctioned as per the input output norms approved by the department subsequently - revision applications are allowed

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• 2012 (10) TMI 263
  Denial of cenvat credit – alleged that duty paid raw material as shown in the duty paying documents were not physically received in its factory – Held that:- Merely reliance placed upon the report of the transporter for the purpose of holding that the assessee had in fact not received the goods referred to in the invoices - all documentary evidence on record supported the assessee’s case about the receipt of inputs, whereas there was no independent corroborative evidence produced on record by the revenue in support of its case - except for the goods registers maintained by the transporter, there is no other evidence on record to indicate that the assessee has in fact not received the goods in question – cenvat credit allowed

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• CST, VAT & Sales Tax

• 2012 (10) TMI 337
  Fruit pulp based drink known as “Slice” - common parlance test - whether classifiable as a “food article” under Entry 47 of the First Schedule OR under the residuary entry under Section 4(1)(d) of the Delhi Sales Tax Act, 1975 - Held that:- The pre-dominant contents of the mango pulp drink, in this case, is water (70%). The mango pulp content is 17%. This product does not claim to be a fruit juice and, therefore, the Revenue cannot urge that it has even a minimum modicum of nutritive properties. Arguably, if the product was entirely milk based, the considerations might have been different - However, the mango pulp based drink, in this case, is at best an instant energy giver and in all cases a thirst quencher & by no stretch of imagination can it be called a “food article” at least not within the contemplation of the statute, by an application of the common parlance test. Thus it is held that the impugned order classifying the concerned product, i.e., mango pulp based drink, is not classifiable in Entry 47 of First Schedule and would be taxed in residuary entry, at the rate mentioned in Section 4(1) (d) of the Delhi Sales Tax Act, 1975. Decision in THE STATE OF BOMBAY Versus VIRKUMAR GULABCHAND SHAH [1952 (5) TMI 9 - SUPREME COURT] followed.

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• 2012 (10) TMI 299
  Import by unregistered dealer - detention of goods - Held that:- Tribunal concluded that there was no error on the part of the respondent-dealer as full sales tax on the transaction being inter state sale had been paid and the element of tax in Punjab State was not involved. It was also noticed that there was voluntary reporting at ICC and the goods were accompanied by proper and genuine documents complete in all respects. Also payments for the transactions were made through the banking channels i.e. by cheques and were not kept out of the books of account. There is nothing on the record to infer or conclude that the goods were meant for resale or use of manufacturing activity of the purchasing party. If the department had produced evidence in proof of the fact that M/s Aerens Entertainment Zone Limited has agreed to sell this project after its completion to a third party, then the matter would have been examined from that angle. In the absence of such evidence, there can be no escape from the finding that the goods were meant for self-consumption as these were to be installed by the consignee in the Festival City, Ludhiana Project. These goods having been made specifically for the project could be hardly sent by way of stock transfer to Punjab Branch. This may be the reason for paying full CST on this interstate sale, thus Tribunal have not been shown to be perverse or illegal - in favour of assessee.

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• Wealth tax

• 2012 (10) TMI 338
  Income received in advance is an Asset or not – Assessee is running a tutorial institute. As regards the fee received from students, it is stated that the assessee charged the full fee for the entire course of study which ran to different years. Question is whether Fee receipts are to be treated as Income or Asset. Held that:- Method of maintaining the account on cash or mercantile system has no bearing on the issue. In this case the assessee had maintained the account only on cash system has no bearing on the issue. The asset as on the valuation date would have to be taken into consideration in the matter of assessment under Wealth Tax Act. Thus when the fee for the course was collected from students each as on the registration date, Contention of assessee that he had held the sums in trust which were actually due for the future is not tenable. Fees received has to be treated as Asset and not Income. As decided by Court in case of of [Vysyaraju Badreenarayana Moorthy Raju 1985 (3) TMI 2 - SUPREME COURT ] Receipts are to be treated as Asset as on the valuation date and are not be treated as Income – Appeal is allowed in favour of Revenue.

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• Indian Laws

• 2012 (10) TMI 333
  Judicial - Suspicion of unfairness and bias – It is apparent that the fact of earlier recusal of the case at the trial by learned Shri Justice S.N. Dhingra himself, was not brought to his notice in the revision petition before the High Court by either of the parties to the case. Therefore, Shri Justice S.N. Dhingra, owing to inadvertence regarding his earlier recusal, has dismissed the revision petition by the impugned Judgment. In our opinion, the impugned Judgment, passed by Shri Justice S.N. Dhingra subsequent to his recusal at trial stage for personal reasons, is against the principle of natural justice and fair trial. - matter restored before High Court.

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• 2012 (10) TMI 295
  Off-set price of property was not valued before the conduct of auction - Offer afresh the benefit of One-Time Settlement Scheme (OTS) - No opportunity for repayment of loan after auction as per Court's direction - non compliance of State Financial Corporation Act (SFC) - Held that:- The procedure laid down under Section 29 of SFC Act has been followed by the Corporations. The independent valuer submitted his report on 17.09.2010 and the off-set price of the unit was fixed after getting it valued by an independent valuer. It was based upon the valuation report that the off-set price of the unit was fixed at Rs. 1,77,45,000/- on 17.09.2010. Sale notice was published in the News Papers on 18.09.2010 and the auction was conducted on 29.09.2010. Thus the High Court has committed an error in holding that off-set price of property was not valued before the conduct of auction and that there was no due publication of auction. Sale notice, it is seen, was published in the "Samaj" a vernacular paper and also in the "New India Express" a widely circulated English newspaper on 18.09.2010 and the Corporation had received nine offers and after protracting negotiations with all the bidders, the offer of the appellant was accepted being the highest. The Corporation before putting the appellant in possession again issued a notice dated 21.9.2010 to 1st respondent enquiring whether he would match the offer. 1st Respondent did not avail of that opportunity as well. It is under such circumstances that sale letter dated 1.10.2010 was issued to the appellant with a copy to all the Directors/Promoters/Guarantors of 1st respondent company. The appellant paid the balance consideration of Rs. 5,65,20,000 on 11.10.2010 and the Sale Memo was extended on that date and the property was also delivered. Thus no illegality in the procedure adopted by the Corporation, since 1st respondent had failed to comply with the directions issued by the co-ordinate Bench of the Orissa High Court which gave liberty to the Corporations to proceed in accordance with Section 29 of SFC Act - Section 29 of the State Financial Corporation Act, 1951 - Rights of Financial Corporation in case of default - Respondent-hotel failed to repay loan to Orissa State Financial Corporation (OSFC) repeatedly according to order of High Court - On writ, High Court directed respondent to deposit stipulated amount and on its failure gave liberty to OSFC to take action under Act - Division Bench of High Court had overlooked vital facts as well as binding judgment of a coordinate Bench in writ petition and had wrongly reopened a lis and issued wrong and illegal directions, decision of Division Bench was to be set aside

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• 2012 (10) TMI 271
  Refund of Earnest Money - Held that:- The bids had been closed and accepted on October 13, 2011. In any case, the applicant had participated in sale/auction proceedings knowing fully well the terms and conditions of the sale and therefore, the applicant is bound by the terms and conditions and cannot be permitted to contend to the contrary at this stage. - Tender/Bids binding down the second highest bidder in the event of default by the auction purchaser would be rendered futile - Application is dismissed with costs of Rs. 25,000/- to be paid to the official liquidator within a period of four weeks.

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• 2012 (10) TMI 270
  Application for appointment of the Arbitrator - Memorandum of Understanding for the marketing of the cars of the petitioner – alleged that respondent did not have in place the necessary resources to build the brand of the petitioner – termination of contract - plea of the respondent that the MOU relate to a test and trial period which came to an end on 31st December, 2007, after which the parties decided to enter into a distribution agreement which was sent by the petitioner to the respondent on 15th November, 2007, i.e., 15 days prior to the expiry of the MOU. Therefore, the arbitration clause relied upon by the petitioner does not cover any disputes/claims that relate to any period beyond 31st December, 2007 – Held that:- Section 16(1)(a) of the Arbitration and Conciliation Act, 1996 provides that an arbitration clause which forms part of the contract shall be treated as an agreement independent of the other terms of the contract - even on the termination of the agreement/contract, the arbitration agreement would still survive - disputes raised by the petitioner needs to be referred to arbitration - Since the parties have failed to appoint an arbitrator under the agreed procedure, it is necessary for this Court to appoint the Arbitrator

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