TMI Tax Updates - e-Newsletter
October 15, 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. SHARE APPLICATION MONEY CANNOT BE TREATED AS LOANS AND ADVANCES

   By: DR.MARIAPPAN GOVINDARAJAN

2. PROCEDURAL CHANGES IN SERVICE TAX REGIME

   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)

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. F. No. 17/161/2012-CL V - dated 12-10-2012 - Co. Law

Companies (Filing of Documents and Forms in Extensible Business Reporting Language) Amendment Rules, 2012

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

VAT - Delhi

4. 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)

FEMA

3. 42 - dated 12-10-2012

Uploading of Reports in 'Test Mode' on FINnet Gateway

4. 43 - dated 12-10-2012

Uploading of Reports in 'Test Mode' on FINnet Gateway Test Their Ability to Upload the report electronically. Authorised Persons (Indian Agents) are also required to continue to submit the existing reports in CD as presently required till further notice

5. 44 - dated 12-10-2012

Foreign Exchange Management (Deposit) Regulations, 2000-Loans to Non Residents / third parties against security of Non Resident (External) Rupee Accounts [NR (E) RA] / Foreign Currency Non Resident (Bank) Accounts [FCNR (B)] Deposits

DGFT

6. 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.

7. 06 (RE- 2012) /2009-14 - dated 10-10-2012

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

Highlights / Catch Notes

Income Tax

• Taxpayer's Claim Accepted: Wooden Shuttering and Centering Expenses Classified as Revenue u/s 147 Reassessment.

  Case-Laws - AT : Reopening of assessment u/s 147 - the claim of the assessee has been accepted treating the amount incurred on wooden shuttering and centering, revenue in nature - AT
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• Penalty Upheld u/s 271(1)(c) Due to Non-Voluntary Surrender and Unexplained Income Discrepancy by Assessee.

  Case-Laws - AT : Penalty u/s 271(1)(c) - surrender was not voluntary - assessee failed to explain the difference between the assessed income and returned income - penalty confirmed - AT
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• Court Upholds Use of Notional Value and 10% Depreciation for Land Sale u/s 45(2) Income Tax Act.

  Case-Laws - HC : Conversion of asset into stock-in-trade - no error in applying Section 45(2) and by adopting a notional value for land as on 1.4.1974 for stamp duty for working out business income from the sale of land and applying the depreciated value by 10% of every year for the purposes of arriving at value in the year 1984 - HC
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• High Court Rules Loan Not Deemed Dividend u/s 2(22)(e) After Assessee Rebuts Presumption with Factual Evidence.

  Case-Laws - HC : Loan treated as deemed dividend u/s 2 (22) (e)r.w.s. 56 (2) (i) - A deeming provision can also be subject to rebuttal. In the present case from the finding of fact such deeming provision was rebutted by the assessee - HC
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• Assessee Claimed Lower Depreciation on Machinery; Section 32(1) Requires Allowance at Specified Rate Regardless of Claim.

  Case-Laws - AT : Depreciation on P&M claim at lessor rate than eligible – Assessee wrongly claim depreciation at lessor rate in 3CD - As per the provision of sec. 32(1) & 32 (1) (i) depreciation as per mention in act shall be allowed whether claim by assessee or not. - AT
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• Section 271(1)(c): Penalty Imposed Only on True Income Owner, Not Assessed Assessee.

  Case-Laws - AT : Penalty levied u/s 271(1)(c) – The penalty, if any, can be levied in the hands of the person to whom the income actually belongs and not to the assessee in whose hands the department assessed the income on protective basis. - AT
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• Appeal Delay of 458 Days Excused by Commissioner of Income Tax; Emphasizes Leniency Over Hyper-technical Rejection.

  Case-Laws - AT : Condoned the delay in filing of Appeal with CIT – Delay of 458 days – by taking a pedantic and hyper-technical view of the matter the explanation furnished should not be rejected - Delay condoned. - AT
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• Buildings as "Plant" for Tax: Qualify if Tailored for Unique Technical Needs of Taxpayer.

  Case-Laws - AT : Treatment of building as plant - when it is found as a fact that the building has been so planned and constructed as to serve the assessee’s special technical requirement, it would qualify to be treated as a plant - AT
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• 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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Customs

• Importers must return hazardous waste to origin at their expense; entitled to refund of fees paid.

  Case-Laws - HC : Import of hazardous waste - importers directed to send back the imports to the countries of origin at their own cost and expenditure immediately - importers are granted for refund of any such fee or other charges they have paid for claiming the goods. - HC
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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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FEMA

• Loans to Non-Residents Secured by NR(E)RA or FCNR(B) Deposits: Key Compliance Updates in Foreign Exchange Management.

  Circulars : Foreign Exchange Management (Deposit) Regulations, 2000-Loans to Non Residents / third parties against security of Non Resident (External) Rupee Accounts [NR (E) RA] / Foreign Currency Non Resident (Bank) Accounts [FCNR (B)] Deposits - Circular
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• Authorized Parties to Use 'Test Mode' on FINnet Gateway for Electronic Report Submissions; CDs Still Required.

  Circulars : Uploading of Reports in 'Test Mode' on FINnet Gateway Test Their Ability to Upload the report electronically. Authorised Persons (Indian Agents) are also required to continue to submit the existing reports in CD as presently required till further notice - Circular
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• FINnet Gateway Circular: Use 'Test Mode' for Trial Report Submissions to Ensure Accuracy and Compliance Before Final Reporting.

  Circulars : Uploading of Reports in 'Test Mode' on FINnet Gateway - Circular
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Corporate Law

• Amendment Rules 2012: Streamlined XBRL Filing for Companies Enhances Transparency and Compliance in Corporate Reporting.

  Notifications : Companies (Filing of Documents and Forms in Extensible Business Reporting Language) Amendment Rules, 2012 - Notification
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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

• Tax Classification Shift: Alcoholic Beverages Company Categorized Under Franchisee Services, Not Management Consultancy Services.

  Case-Laws - AT : Assessee is getting the branded alcoholic beverages manufactured from different contract bottling units on contracts basis is Franchisee service and not Management Consultancy Services - AT
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• 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

• No Penalty for Not Accounting Non-Cenvatable Goods Under Central Excise Rules.

  Case-Laws - AT : No accounting of non cenvatable goods – there is no provision for maintaining account of non-cenvatable inputs in the Central Excise Rules - no penalty - AT
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• Central Excise Duty Case Returned for New Adjudication After Allowing Cross-Examination of Objections.

  Case-Laws - AT : Demand of duty - cross examination - matter set aside and restored to adjudicating authority for de novo adjudication after permitting the cross objection - AT
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• Brand Rate Drawback Rejected for Not Availing Duty Exemption u/s 5A(1A) of Central Excise Act, 1944.

  Case-Laws - CGOVT : Fixation of brand rate of drawback – availment of duty exemption was mandatory in terms of Section 5A (1A) of the Central Excise Act, 1944 - application rightly rejected - CGOVT
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• Department Can't Reopen Points in Other Cases if Tribunal's Unappealed Order is Final.

  Case-Laws - HC : 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. - HC
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• 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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Case Laws:

• Income Tax

• 2012 (10) TMI 369
  Addition on account of provisions of warranty expenses - CIT(A) deleted addition - Held that:- The assessee provided for the warranty expenses based on technical evaluation and past experience, warranty stood attached to the sale price of the product and a reliable estimate of the expenditure towards such warranty is allowable. Moreover, the ITAT have allowed a similar claim in the AYs 2001-02,2003-04 & 2005-06 - as the Revenue have not placed before us any material controverting the aforesaid findings of the ld. CIT(A) nor brought to our notice any contrary decision, so as to enable us to take a different view in the matter, no reason to interfere - in favour of assessee. Trading addition - assessee failed to adduce evidence in support of reasons for increase in expenses - CIT(A) deleted the addition - Held that:- The AO nowhere recorded any findings that the books of account maintained by the assessee were incorrect, rendering it impossible to deduce the profit and despite that he proceeded to estimate the profit and turnover , invoking the principles of best judgment. The CIT(A)on the other hand, concluded that the action of the AO to make estimated trading addition without pointing out any defects in the books of accounts, is totally unjustifiable and therefore, deleted the addition - The mere fact that the percentage of loss or gross profit is high or low in a particular year does not necessarily lead to inference that there has been suppression - in favour of assessee. Disallowance of capitalization of advertisement expenses - AO allowed only 1/5th claim treating the expenditure as deferred revenue - Held that:- The benefits arising therefrom are expected to be derived over a period of time, stretching sometimes over several accounting years, the assessees have been amortising the same over the expected time period over which the benefits are likely to accrue therefrom. Accordingly, only a proportion of such expenditure is amortised in the Profit and Loss Account. The expenditure which is treated as deferred revenue in the books, almost in all cases comprises of items, the benefits derived wherefrom are ephemeral and transitory in nature in as much as these are incurred as a part of a continuous process and need to be expended in order to generate and increase the brand recall and sustain it in the minds of customers. Moreover, the deferred revenue expenditure is essentially revenue in nature and the decision to treat the same as deferred revenue only represents a management decision taken in view of the magnitude of the expenditure involved - in favour of assessee. Addition on account of service charges received in advance - CIT(A) deleted the addition - Held that:- The assessee provided annual maintenance service to its customers in respect of their products for a time span of one year or six months & the time span for such service sometimes fell in between two financial years, accordingly, the services charges received were classified between current year fees and the fees received for next year, and the latter were accordingly, shown as income for the relevant financial year - there is nothing to suggest that the assessee has fully contributed to its accruing by rendering services so as to entitle him to receive the entire amount in the year under consideration. In view of the foregoing, especially when the Revenue have not placed any material nor brought to a contrary decision so as to enable us to take a different view in the matter not inclined to interfere - in favour of assessee. Purchase of stamp papers, stamp duty and registration charges for stores taken on lease - revenue or capital expenditure - Held that:- Following the view taken in Gobind Sugar Mills Ltd.Gobind Sugar Mills Limited Versus Commissioner Of Income-Tax, Central I, Calcutta [1978 (8) TMI 65 - CALCUTTA HIGH COURT ] that the expenditure incidental to the acquisition of the lease would also be an expenditure of capital nature - primary and dominant object of the assessee in incurring the said expenditure was to acquire benefits of a right to property under leaseholds no hesitation in upholding the findings of the CIT(A) - against assessee.

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• 2012 (10) TMI 368
  Reopening of assessment u/s 147 - whether wooden shuttering and centering were capital in nature - Held that:- During the course of original assessment proceedings, issue had been examined by the AO in para 4 of the assessment order after raising queries and amount was allowed as revenue expenditure. - the AO, following his orders of earlier years has consistently been treating the expenditure on wooden centering and scaffolding as revenue in nature on consumption basis and capitalizing the expenditure of steel shuttering & centering while allowing depreciation thereon - thus AO reopened the assessment in relation to wooden shuttering and centering expenses merely on the basis of change of opinion and no ‘tangible material ’ was brought on record before initiating act ion u/s 147 - in favour of assessee. Wooden shuttering and centering - Revenue v/s capital - Held that:- As in the preceding years starting from AY 1998-89 until assessment year 2003-04, the claim of the assessee has been accepted treating the amount incurred on wooden shuttering and centering, revenue in nature, thus following the principles of consistency, the CIT(A) allowed the claim for deduction of expenditure on wooden shuttering and centering on consumption basis as revenue expenditure - in favour of assessee.

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• 2012 (10) TMI 367
  Penalty u/s 271(1)(c) - difference after reconciliation of opening and closing balance of creditor - Held that:- Admittedly, the assessee did not reconcile the accounts of the year under consideration in the light of information received u/s 133(6) in the form of copy of account of the assessee from the two parties vis-a-vis assessee’s books and accordingly, vide his letter dated 7.12.2009 surrendered the two amounts as income of the year under consideration to purchase peace of mind. Subsequently, in response to a showcause notice before levy of penalty, the assessee reiterated that amount of Rs. 1 lac in the a/c of NK Jain & Co/was brought forward while difference in the a/c of GTM Sales Corporation remained irreconcilable. Apparently, the assessee did not improve upon his case in the penalty proceedings - the assessee did not reconcile the difference either at the assessment stage or even in penalty proceedings. Apparently, only when the assessee was cornered, the assessee surrendered the amount, thus it is to be concluded that the surrender was not at all voluntary - A very heavy onus was placed on the assessee to explain the difference between the assessed income and returned income and the assessee in the instant case did not discharge the said onus. - no hesitation in upholding the order of the CIT(A) in confirming the penalty imposed by the AO under s. 271(1)(c) - against assessee.

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• 2012 (10) TMI 366
  Reassessment proceedings u/ 147 - assessee challenged validity of service of notices - Held that:- The validity of service of notice issued under sec. 148 was raised by the assessees both before the AO and CIT(A) who have not bothered to dispose of such legal objection before proceeding further on merits of the case. The AO has not whispered a word on the issue whereas the CIT(A) has disposed of the issue in single line as “the issue regarding objection by the appellant for issuing notice u/s 148 is deemed to have been met by the AO in view of the assessment order passed.” Thus under these circumstances it fit to set aside the matter back to the file of the CIT(A) to decide the issue afresh after considering the submissions of the assessees and verifying the material available on record before the AO - in favour of assessee for statistical purposes.

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• 2012 (10) TMI 365
  Rectification of order u/s. 200A/154 - Held that:- As there is direction/ advice by the CIT(A) to file correct statement before the AO(TDS), after providing due opportunity of being heard to the assessee, the Revenue should not feel aggrieved, as the ultimate purpose is to do justice. Even otherwise, no person should be condemned unheard and the CIT(A) has merely remanded the issue back to the file of AO, therefore, there is no justification to interfere with the order, the same is upheld. AO is directed to decide the issue afresh in accordance with law after providing due opportunity of being heard to the respective assesses. The assesses are at further liberty furnish evidence, if any, to substantiate their claim. Since the assesses have been granted fair opportunity, therefore, the time limit of completion within two months, as directed by the Ld. Commissioner of Income Tax (A), is withdrawn - against revenue.

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• 2012 (10) TMI 364
  Adjustment made by the TOP/AO - computation of Arms Length Price in respect of international transactions entered with Associated Enterprises - CIT(A) deleted the addition for AY 2004-05 - Held that :- The assessee has worked out its margin of 8.85 per cent and TPO has worked out the margin at 13.30 per cent, and as is evident from the proviso to Section 92C(2) of the Act that if the variation between the ALP and the actual transaction price does not exceed 5 per cent of the latter , the transaction price is to be accepted and no adjustment is required to be made. Since the difference in the Arm's length margin as determined by the TPO and the actual transaction price does not exceed five per cent, we hold that no adjustment is required to be made as it is within 5 per cent range of ALP - against revenue. CUP method as adopted by the assessee is not justifiable - Deletion of addition by CIT(A) for ALP in AY 2005-06 - Held that:- Assessee in its transfer pricing study to TPO stated that it has selected CUP method as the primary method in AL analysis & that assessee charged higher rate from its AEs that what it charged from third party. The department has also not brought any evidence on record to controvert the submissions of assessee that the services rendered to the AEs and third parties are of similar type and operate in the same geographical region - assessee has submitted before the TPO as well as before the authorities below that AEs as well as third party are located in the same region and availing similar services and the department has not brought any evidence on record to controvert the same contention of assessee. Hence, ld D.R. has no merit to find fault with the order of CIT(A) that CUP method as adopted by the assessee is not justifiable. In view of above facts, we hold that ld CIT(A) has rightly held that AO/TPO has not brought out a case for making any adjustment on account of ALP - in favour of assessee. Disallowance of set off the loss from one 10A unit against the taxable profits from the other 10A units and non-10A unit - Held that:- As decided in Hindustan Unilever Ltd v. Dy. CIT [2010 (4) TMI 206 - BOMBAY HIGH COURT] assessee had all the four units of the assessee were eligible under Section 10B. Three units had returned a profit during the course of the assessment year, while the Crab Stick unit had returned a loss. The assessee was entitled to a deduction in respect of the profits of the three eligible units while the loss sustained by the fourth unit could be set off against the normal business income - it is plain and evident that the deduction under section 10A has to be given at the stage when the profits and gains of business are computed in the first instance - in favour of assessee.

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• 2012 (10) TMI 363
  Computation of capital gain - treatment of conversion of asset into stock-in-trade and realization of profits was not acceptable - Held that:- Revenue have applied the principles of law and have arrived at the finding that the land in urban area for which the Zamindari was abolished on 1.7.1961 was partly inherited by the assessee from his father. The remaining part was purchased by him by sale deeds dated 16.12.1958 and 16.5.1959. The assessee along with his co-partners had filed suit for declaration, which was decreed on 5.6.1968. The sons of Shri Narain Rao Sapre had filed suits for cancellation of sale deeds and for possession. The suit was decreed cancelling the sale deed to the extent of 2/3rd share but claim for possession was not allowed. In the circumstances, the stand taken by the assessee that the property was inherited as H.U.F., was rightly disbelieved. No agricultural operations were carried on - the assessee had evened out the land with the help of tractor and had sold the plot after leaving the roads and drainage system and thus in view of the provisions of Section 45 (2) of the Act the profits and gains arising out of transfer by way of conversion by the owner of capital asset into, or its treatment by him as stock-in-trade of business carried on by him is for and from the assessment year 1985-86 be charged to tax under the head capital gains in the previous year in which such stock-in-trade is sold or otherwise transferred by him. The income tax authorities committed no error in applying Section 45 (2) for the purposes of assessment and by adopting a notional value for the purposes of fixing the price for land as on 1.4.1974 for stamp duty for working out business income from the sale of land and applying the depreciated value by 10% of every year for the purposes of arriving at value in the year 1984 - against assessee.

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• 2012 (10) TMI 362
  Exemption u/S 80IB(10) - date of completion of project - Held that:- In section 80IB(10) it has been made emphatically clear that if the housing project is approved before 1st April, 2004 and is completed before 31.3.2008, the assessee would be entitled for deduction under section 80IB(10) and through its Explanation (i) it has been made clear that the date of completion of construction of housing project shall be taken to be date on which completion certificate in respect of such housing project is issued by the local authority. Therefore, there is no iota of doubt in the interpretation of Explanation below section 80IB(10) and according to the said Explanation, the date of completion of the project in the instant case shall be taken to be the date of issuance of completion certificate by the local authority i.e. 23.10.2009. Since the housing project was completed after 31.3.2008, the assessee has not fulfilled the second requisite condition for claiming deduction under section 80IB(10) and therefore the assessee is not entitled for deduction under section 80IB(10). Instruction No. 4 of 2009 dated 30.6.2009 of the Board, through which it has been clarified by the Board that deduction under section 80IB(10) can be claimed on year-to-year basis where the assessee is showing profit from partial completion of the project in every year. It was also further clarified that in case it is late found that the condition of completing the project within the specified time limit of four years, as stated in section 80IB(10) has not been satisfied, deduction granted to the assessee under section 80IB(10)in earlier years should be withdrawn - Thus the Revenue is at liberty to take action with respect to the earlier years as provided in the law - against assessee.

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• 2012 (10) TMI 361
  Loan treated as deemed dividend u/s 2 (22) (e)r.w.s. 56 (2) (i) - Held that:- As decided in CIT v. Universal Medicare Private Ltd. [2010 (3) TMI 323 - BOMBAY HIGH COURT] payments by way of dividend have to be taxed in the hands of the recipient of the dividend namely the shareholder, . The effect of clause (e) of section 2 (22) is to broaden the ambit of the expression "dividend" by including certain payments which the company has made by way of a loan or advance or payments made on behalf of or for the individual benefit of a shareholder. The amount was not paid by way of as loan in advance, but for the job work, which was done by the partnership firm for the company and for which the amount was outstanding. - As in the present case also even assuming requirement of the first part of the Section has been complied with, and that advance could be treated as dividend, it had to be taxed not in the hands of the assessee but in the hands of the shareholder - in favour of assessee. A deeming provision can also be subject to rebuttal. In the present case from the finding of fact such deeming provision was rebutted by the assessee and that findings to that effect have been accepted by the ITAT, which we do not find to be either illegal, arbitrary or perverse.

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• 2012 (10) TMI 360
  Claim of deduction u/s 10-B - re computation by allocating proportionate Managing Director's remuneration debited to non-eligible units of the assessee company to the eligible unit - Held that:- Under the provisions of section 10B the deduction is to be allowed on such profits & gains of business which are derived by 100% export oriented undertaking and in order to determine the profits & gains of the eligible units, all expenditure relatable to such units are to be deducted for computing the eligible profits. The remuneration paid to the Managing Director being common expenditure between the eligible units and the non-eligible unit run by the assessee company need to be allocated in order to determine the eligible profits of business under section 10B - against assessee.

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• 2012 (10) TMI 359
  Addition on account of unexplained investment u/s 69 – Assesse made a payment to builder against booking of flats - Assessment of the assessee was reopened u/s 147 on the basis of unexplained finding found in the case of builder – Later, identity and creditworthiness of the builder was established by ITAT - Whether AO has authority to dispute the correctness of assessment in respect of transactions in the books of another person on basis of which case of assessee was opened, when such transactions are found to be explained subsequently in case of said another person by Tribunal - Held that:- In light of findings of the ITAT in the case of builder, when Revenue have not placed any material, controverting the aforesaid findings. Therefore we are unable to take a different view in the matter. Appeal decides in favour of assessee

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• 2012 (10) TMI 358
  Depreciation on P&M claim at lessor rate than eligible – Assessee wrongly claim depreciation at lessor rate in 3CD - AO had also disallowed the claim on the basis of Tax audit report – CIT(A) upheld the same on the basis of Goetze (India) Ltd and state that assessee had to alter its claim, he should have filed a revised Form 3CD, which was not done:- Held that:- As per the provision of sec. 32(1) & 32 (1) (i) depreciation as per mention in act shall be allowed whether claim by assessee or not. Since the assessee had only sought to claim a higher rate of depreciation then claimed, no revised return of income was required to be filed. Therefore grievance of the assessee in this regard is justified and is accepted as such. Appeal allowed in favour of assessee Trial production v/s commercial production – Matter decided on the basis of relevant books of accounts and production records which are not produced by assessee – Held that:- As the matter has not be examined by the lower authorities in its proper perspective, Therefore, restore the matter to the file of the AO for deciding the issues raised. Decision case remand back to AO

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• 2012 (10) TMI 357
  Penalty u/s 271(1)(c) – Assessee has borrowed money & partly invest in shares – Assessee claim deduction of interest - AO disallowed the interest by invoking the provisions of Sec. 14A - He also levied the penalty u/s 271(1)(c) – Held that:- As assessee correctly disclosed the money borrowed by it and its utilization which was partly for the purchase of shares in his return. It is not the case that the assessee furnished either any inaccurate facts or wrong facts. Therefore, merely because the AO disallowed part of interest, it would not amount to either concealment of income or furnishing of inaccurate particulars. Following the decision of SC in Reliance Petro Products Pvt. Ltd. (2010 (3) TMI 80) & Delhi High Court in Zoom Communication Pvt. Ltd. (2010 (5) TMI 34). Decision in favour of assessee

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• 2012 (10) TMI 356
  Penalty levied u/s 271(1)(c) – Whether penalty levied u/s 271(1)(c) on person on whom protective assessment made by AO - Directors admits they were carrying on the business of issuing accommodation entries – AO state that income is to be assessed in the hands of directors on substantive basis, but to protect interest of revenue, commission income earned in respect of these transactions is being assessed in the hands of the assessee, on protective basis – AO raised penalty u/s 271(1)(c) on assessee – Held that:- Even as per the Revenue, the income does not belong to the assessee, therefore, the assessee cannot be held to be guilty of concealment of income for which penalty u/s 271(1)(c) can be levied. The penalty, if any, can be levied in the hands of the person to whom the income actually belongs and not to the assessee in whose hands the department assessed the income on protective basis. Decision in favour of assessee

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• 2012 (10) TMI 355
  Condoned the delay in filing of Appeal with CIT – Delay of 458 days – Held that:- Following the decision in case of Ram Nath Sao & Ors Vs. Gobardhan Sao & Ors. (2002 (2) TMI 1280 - SUPREME COURT) that acceptance of explanation furnished should be the rule and refusal an exception more so when no negligence or inaction or want of bonafide can be imputed to the defaulting party. However, by taking a pedantic and hyper-technical view of the matter the explanation furnished should not be rejected when stakes are high and /or arguable points of facts and law are involved in the case, causing enormous loss and irreparable injury to the party against whom the lis terminates either by default or inaction and defeating valuable right of such a party to have the decision on merit. - Delay condoned.

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• 2012 (10) TMI 354
  Revision Order by CIT(A) u/s 263 – Whether revision order u/s 263 sustainable in law, where two views are possible and AO has taken one view with which the CIT does not agree – Held that:- The order of AO cannot be treated as erroneous order prejudicial to the interest of the Revenue, unless the view taken by the AO is unsustainable in law. In this case treatment of depreciation may be erroneous but certainly not prejudicial to the interest of the Revenue, as the benefit of depreciation has not been claimed by both the companies at the same time. The depreciation statement placed on record by the assessee shows that both the companies have claimed benefit of depreciation on pro-rata basis. - Appeal decides in favour of assessee

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• 2012 (10) TMI 353
  Addition on account of difference in P&L – Difference of Gross profit between audited P&L and seized P&L account by Excise department – AO made addition on the basis of difference amount – Held that:- As the net profit disclosed in the return of income is more than the net profit revealed by the seized P&L. Either the complete P&L as per the seized document is to be accepted or completely rejected as unreliable. It was not open to the Revenue to accept only the manufacture account from the seized paper as correct and to ignore the expenses revealed by the seized paper. No material has been brought on record by the AO to show that the expense revealed by the seized document under the heads conversion charges, furnace expenses and others are not tenable while computing the total income as per IT. Act. It also reveals that the expenses revealed by the seized P&L Account also contain certain expenses which were not allowable u/s 28 to 44AC. Issue decides against revenue. Addition on account of out of books of accounts - Purchase of land & building and P&M prior to commencement of production – Addition made by AO on the basis of MoU’s found during search – Vendor admitted receipt of Rs. 2.59 Crores from the assessee – Whereas Balance Sheet of the assessee reveals that the assessee has paid Rs. 2.42 Crore - Held that:- As concluding from the facts purchase has been made in in earlier previous year. MoU itself records the various dates on which various payments were made by the assessee. Revenue has brought no material, that the assessee has paid any amount more than Rs. 2.42 crores before 31.3.2004 against the purchase of assets. Issue decides in favour of assessee GP ratio on unrecorded sales – Whether AO can apply higher % of GP rate than the rate of % of GP accepted by revenue on sale already recorded in books of accounts - Held that:- The rate of gross profit of the current year is very relevant than the gross profit rate of the earlier year unless it is shown that the profit earned on the unrecorded sales were actually more than the profit earned on recorded sales of the relevant year. Ground of appeal decides in favour of assessee. Addition on account of unaccounted sale – AO argued that assessee has removed 135.110 MT of by- product, waste and scrap on the basis of seized documents by Excise department – Assessee contended that what was sold was re-rollers which was written as “RR” in the seized documents – Held that:- The assessee has also not brought any material before us to show that sale of re-rollers were recorded in the books of account of the current year. In the absence of any seized document and the order of the CESAT, we are not in a position to adjudicate this issue completely. Issue remand back to AO. Addition on account of difference in opening stock – AO found difference between closing stock as per the seized P&L Account of the preceding year, which was found correct by the CESAT and the opening stock which was as per the closing stock disclosed by the assessee in the immediately preceding year – Held that:- As found that the closing stock of Rs. 1,83,30,146/- as disclosed in the P&L Account filed alongwith the return of income of the immediately preceding year on the basis of which taxable income of the assessee was arrived as the opening stock of the current year. No addition required. Issue decides in favour of assessee Addition on account of unaccounted income earned from suppressed production - Central Excise Authorities worked out the average consumption of power per MT at 725 units as against 1150 units per MT shown in the production records of the assessee – On basis of this AO work out suppressed production of 2903.54 MT – Calculate GP rate on the basis of average of two earlier years instead of current year - Held that:- As concluded from the facts that the Revenue has accepted that the gross profit in respect of disclosed sales achieved by the assessee in A.Y. 2004-05 was 11.21%, A.Y. 2005-06 was 9.81% and in the year under consideration was 0.79%. In such a situation the gross profit rate found for the disclosed sales of the current year is a better parameter to estimate the gross profit on undisclosed sales than the gross profit secured by the assessee in earlier years. Issue decides in favour of assessee Disallowance u/s 40(a)(ia) for non-deduction of TDS on contract payments u/s 194C - Assessee has claimed deduction for transport charges on which TDS was not deducted – Assessee contended Sec. 40(a)(ia) were applicable only to expenses covered u/s 30 to 38 and that the freight charges paid by the assessee for bringing the material to the factory of the assessee were part of the purchase cost and were deductible u/s 28 – Held that:- Whom the transporters had the contract for transporting of the goods, whether with the assessee or with the suppliers. Hence, the same needs to be verified from the purchase bills of the assessee and other connected documents. Since both the parties have not filed the relevant materials before us, we are unable to adjudicate the issue completely. Issue remand back to AO.

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• 2012 (10) TMI 352
  Rejection of Books of accounts – Calculate profit on the basis of GP rate, of other similar line of business @ 8.12% - AO has observed that the assessee has not maintained proper books of accounts – Held that:- As the CIT(A) adopted a G.P. rate of 5%, being the average of 2.57% + 7.52% for the GP rate of earlier years. No infirmity in the order passed by the CIT(A). Issue decides in against of revenue Addition on account of cash credit u/s 68 – Assessee received security deposit from another party against supplying the fabric to two parties – AO made addition on the basis of Only his objection is that there is no entry in the books of accounts of such another person in respect of two parties – Held that:- When the assessee received payments from a limited company and the payment also received through a bank, i.e. cheque payment and also filed a confirmation from the company, in our opinion the assessee has discharged onus cast upon him. Issue decides in favour of assessee Addition on account of difference in books of accounts – Assessee first produce provisional books - Subsequently audited books of accounts were furnished before AO after rectify the discrepancy – AO’s ground was that only after these discrepancies are pointed out and subsequent changes were made – Held that:-The entire explanation of the assessee has held that section 68 can be invoked only if some amount of money credited and there is no explanation or the explanation of the assessee is false. No amount was credited to the account of the assessee. The assessee submitted audited books of account subsequent to the mistake pointed out by the AO. Therefore invoking of section 68 by the AO is not correct. Issue decides against revenue

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• 2012 (10) TMI 351
  Depreciation on windmill - treatment of building as plant - – Held that:- The assessee is entitled to entire amount claimed as depreciation on windmill. Expenses relating to the land and foundation specially incurred with a view to serve the technical requirements would also become a part of the plant in a case that of a wind mill. As decided by Court in case OF [Commissioner Of Income-Tax Versus Karnataka Power Corporation 2000 (7) TMI 72 - SUPREME COURT] whether a the building can be treated as a plant was a question of fact and when it is found as a fact that the building has been so planned and constructed as to serve the assessee’s special technical requirement, it would qualify to be treated as a plant – in favour of Assessee. Disallowance of Expenses - The Assessing Officer disallowed 2% of such expenses claimed on the vouchers directly without supported by any bill. The assessee claimed weaving, tailoring, samples and packing charges to the tune of Rs. 3.36 crores in its profit and loss account. The Assessing Officer disallowed 2% of such expenditure amounting to Rs. 6,72,089/-. The ld. CIT(A) confirmed the addition. It was submitted that for the Assessment Year 2005-06 on identical facts the Assessing Officer disallowed 1% for such expenses on estimate basis on a turnover of Rs. 4.04 crores. Held that:- Having regard to the nature of business it is not possible to maintain all the bills and vouchers. However, the assessee maintained meticulously all the records and the expenses were duly recorded in the internal debit vouchers disallowance of 1% of such expenses would meet the ends of justice. - Decided in favor of assessee.

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• 2012 (10) TMI 350
  Protective Assessment – Profit on sale of Land - increased from Rs. 1,38,789/- (as per original return) to Rs.12,71,430/. - Assessee contended that Profit from sale of land as questioned by Revenue has already been assessed in the hands of the real owners of the property and he submitted that he had no concern whatsoever with the property in question. - the additions made in the total income of the assessee on account of protective assessment deleted. Unexplained Investment - Assessee contended that he had clarified amount of unexplained investment as Rs.1,70,000/-. However, the assessee has not been able to explain remaining difference. Therefore, Rs.3,27,095/- is considered as unexplained investment. This ground of assessee is partly allowed. Interest disallowed u/s 14A - The said amount is reflected from the bank statements and hence proved. Held that:- CIT(A) has erred in coming to the conclusion that the Assessing Officer wanted to disallow the interest for want of proof. - Appeal be allowed in favour of assessee.

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• 2012 (10) TMI 349
  Applicability of AS-7 - project completion method – The change in accounting method - Assessee contended that the authorities below are not justified in adopting the percentage completion method for recognition of revenue on year to year basis, on the ground that the percentage completion method is not acceptable under the Income Tax Act, 1961, particularly when the same has not been denied under the Act. Held that:- CIT(A) misdirected himself to hold that the assessee was not a developer of real estate but merely a contractor. This fact was never observed by the Assessing Officer when he readily agreed to the proposition that a contractor cannot be subjected to tax on percentage method and the estimation was an advance against sales. Therefore, having contradicted their own findings the respective authorities have brought to tax the incomes which otherwise would have been rendered to tax by the assessee in respective AYs in accordance with the provisions of the I.T.Act that could not require any interference. - The impugned orders of the learned CIT(A) are set aside and Assessing Officer has to accept the returns as filed by the assessee in the respective AYs under consideration - Appeals of the assessee are allowed - in favour of assessee.

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• 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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• Customs

• 2012 (10) TMI 347
  Dismissal of appeal as time-barred - Held that:- As both sides seem to be contending that the order was sent by post from the office of the Additional Commissioner and received by the appellant by post Tribunal has to presume that Section 153(a) of the Customs Act was followed by the Additional Commissioner. If it be assumed that the order-in-original was despatched on 19.8.2011 from the Additional Commissioner's office in Hyderabad, the postal article must have been received by the addressee located in Bhatkal, Karnataka on some date after 19.8.2011, in which event the question of delay of the appeal filed on 20.10.2011 does not arise - set aside the impugned order and allow this appeal by way of remand with a request to the Commissioner (Appeals) to decide it afresh.

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• 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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• Corporate Laws

• 2012 (10) TMI 346
  Contempt of court - Winding up petition against the respondent company - sale by respondent company without the permission of this Court - respondent's contention that sale transactions were not intentional but to clear off the liability of the respondent No.4. - Held that:- Order dated 15.9.2006 gave a clear mandate to the respondent no.4 to seek permission of the court before entering into any sale transaction but the respondents no.1 to 4 in utter disregard and blatant defiance of the said injunction order kept on selling its lands to various buyers. Undoubtedly, the respondents no. 1 to 4 could have approached this court to seek leave for the sale of its properties if at all the respondents no. 1 to 4 felt the necessity of paying off their financial liabilities towards various creditors, but in any case, these respondents could not have sold their properties in violation of the said stay order granted by this court. The respondents no. 1 to 4 by selling the said properties have clearly disobeyed the said injunction order dated 15.9.2006 passed by this court and therefore, the respondent no.4 and its Directors are held guilty of committing contempt of this court. Since the principal amount was paid by the respondent in various instalments, therefore, so as to ascertain what exact amount would be payable by the respondent, so far the pendente lite interest is concerned, that requires proper calculation. Before this court is called upon to take further decision to award sentence against the respondents no. 1 to 3, it is deemed appropriate and in the interest of justice to offer an opportunity to the respondents no. 1 to 4 to pay amount of the interest i.e. pre-suit amount @18% p.a which would be on the principal amount of Rs. 5,75,00,000/- and the interest @6% p.a. on the principal amount as is found outstanding based on the aforesaid discussion, after giving an adjustment of the payments made by the petitioner through the said 16 cheques - Direction to clear off the entire outstanding dues within a period of three months from the date of this order and necessary orders on the sentence as well as on the fate of Sale Deeds which were executed after the passing of the interim order shall be passed by this court after completion of three months period.

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• 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 373
  Short payment of service tax - Goods Transport Agency Service - penalties u/s 77 and 78 - Held that:- It is true that the appellant has short-paid the service tax on inward transportation but on pointing out by the Department, had immediately paid the service tax which was available to them as credit and not disputed the payment of service tax. Thus the benefit of Section 80 be given to the appellants by waiving the penalties imposed.- in favour of assessee.

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• 2012 (10) TMI 372
  Management Consultancy Services vs Franchisee services - Held that:- Appellants are engaged in the manufacture of brand owners of Indian made foreign liquor and are getting the said branded alcoholic beverages manufactured from different contract bottling units on contracts basis is Franchisee service and not Management Consultancy Services - Appellants are entitled to unconditional dispensation with the pre-deposit of duty and penalty.

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• 2012 (10) TMI 341
  Penalty under Sections 76 and 77 – Held that:- No case of suppression of facts - they are small businessman and not in a position to appoint Accountant and other staff to look after the day to day work of Service Tax and due to this the payment was made late - appellant is a small businessman and proprietary concern and first time in the business, and paid the Service Tax on its own before being pointed out. Therefore, it is a reasonable ground for not imposing any penalty under Sections 76 and 77 - in favor of assessee

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• 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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• Central Excise

• 2012 (10) TMI 345
  Confiscation of the excess found material - Held that:- As regards the excesses, there is no evidence showing that the appellant was in the process of removing the goods without entering the same in the records. The appellant at the time of seizure itself had taken a categorical stand that the said excess found wire was received by them from their job worker on the date of visit of the officers and the entries in respect of the same was to be made within a period of 24 hours. As such extending the benefit to the appellant, the confiscation of excess found scrap and wire is aside - in favour of assessee. Demand on the shortages of inputs - Held that:- Admittedly quantity of 5511 kg. of semi-finished goods was found by the officers at the time of physical verification of the goods. The said quantity was manufactured out of the said raw material alleged to be found short. As such this is not a case of removal of the inputs from the factory but as a mere case of technical error of not making entry for issuance of inputs in the statutory records. As such there in no justification for confirmation of demand of duty - in favour of assessee..

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• 2012 (10) TMI 344
  Waiver application u/ 35F - Pre deposit - area based exemption - commencement of production after 7-1-2003 - Held that:- As the appellant would not be entitled to any interim relief as penalty amounts have already been waived by the Tribunal. Balancing the equities between the parties and keeping in view that the appellant has not passed on the burden to the consumer and has not realised excise duty from the consumers, as also that the appellant has stated on affidavit that it is in great financial hardship and if the appellant is required to deposit to the amount it would cause undue hardship even to the extent of closing down the industry and also keeping in view that the matter is under active consideration of the Apex Court in the case of Union of India vs. West Coast Paper Mills Ltd.[2004 (2) TMI 344 - SUPREME COURT OF INDIA], the appeal of the appellant before the Tribunal may be heard, provided the appellant deposits 50 percent of the imposed excise duty with the AO within eight weeks from Order and furnishes security, which may be other than cash or bank guarantee, for the balance amount before the Assessing Officer within the same period.

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• 2012 (10) TMI 343
  Denial of benefit of Notification No. 64/95 – alleged that appellant for not fulfilling the condition of producing the certificate at the time of clearance of the goods – Held that:- Perusal of the invoice number dated 24-12-2004 indicates the number and date of the certificate i.e. 25-10-2004 which goes to show that the appellant was in possession of the requisite certificate - appellant could not produce the same at the time of clearance which was produced subsequently along with ER-1 returns - if there is any lapse it is not more than a technical lapse and for technical lapse substantial benefit cannot be denied – in favor of assessee

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• 2012 (10) TMI 342
  Interest on refund - appellants were availing the benefit of exemption Notification No. 1/93-C.E. and the officers when they visited informed the appellant that since the unit was registered with DGTD, benefit of SSI exemption was not available and they were compelled to pay an amount of Rs. 6,25,000 – Held that:- Excise authorities had collected the amount as tax without the authority of law and therefore interest should be paid from the date of collection till the date of actual repayments - appellant is eligible for interest

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• 2012 (10) TMI 340
  Demand of duty - cross examination - held that:- The request for cross examination has been rejected on the ground that the person sought to be cross examined are co-noticees who can not be compelled to appear for cross examination, which is incorrect as partners and employees of M/s. SKTC, employees of M/s. HTGC, and Chemical Examiner of SIIR whose cross examination had been sought along with others, are not co-noticees. The cross examination of the proprietors/partners and employees of the transport companies is necessary - matter set aside and restored to adjudicating authority for de novo adjudication after permitting the cross objection. No accounting of non cenvatable goods – Held that:- there is no provision for maintaining account of non-cenvatable inputs - inputs - supari in this case is a non-cenvatable input - no provisions of the Central Excise Rules, 2002 have been contravened in respect of the raw supari and processed supari seized from the premises of M/s. DG and hence neither M/s. DG nor M/s. ST are liable for penalty under Rule 25(1) nor the seized supari is liable for confiscation under Rule 25(1) of the Central Excise Rules. Confiscation - just for non-accountal of supari, provisions of Rule 26, as the same stood during the period of dispute, would not be attracted. In view of this, penalty on Shri Dhirendra Shukla is not sustainable and the same set aside. Confiscation of cash - money laundering – charge against these persons is basically of money laundering, for which there are no provisions for penalty in the central excise rules and certainly not in Rule 26, which is attracted in respect of any person, who is concerned in acquiring the possession of or is concerned in dealing with any excisable goods, which he knew or had reason to believe were liable for confiscation - irrespective of whether the currency is liable for confiscation or not, no penalty under Rule 26 is imposable on M/s. SVOL, Shri Sanjiv Mishra and Shri Pratyoosh Mishra as Directors of M/s. SVOL and as such, the part of the impugned order imposing penalty on them under Rules 26 is set aside

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• 2012 (10) TMI 339
  Drawback – rejection of fixation of brand rate of drawback – alleged that there was no duty payable on aggregates in terms of Sr. No. 92 of the Notification No. 6/2006-C.E. - applicant has submitted that the duty exemption available against Sr. No. 92 is conditional because there is the condition that they are to be captivity consumed in the manufacture of tractor – Held that:- Such condition is not provided under column (5) of the said Notification No. 6-2006-C.E. The exemption is available to all goods captively consumed. Hence the exemption contained in the Notification No. 6/2006-C.E. at 1-3-2006 (Sr. No. 92) being absolute and unconditional is rightly covered under Section 5A (1A) of Central Excise Act, 1944 and manufacturer has no option to pay duty on said exempted goods - availment of duty exemption was mandatory in terms of Section 5A (1A) of the Central Excise Act, 1944 and no duty was payable on aggregate part of tractors – application rejected

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• 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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• CST, VAT & Sales Tax

• 2012 (10) TMI 374
  Difference in the rates of the goods mentioned on the delivery slip and the invoice - Held that:- Tribunal had come to the conclusion after in the open court, with the aid of calculator, the requisite calculations were carried out and that there was no difference in the rates depicted in the delivery slip and the invoice after adding the Central Excise at the rate of 16.32% in the bill. The rates in both the documents were identical. Version of the department that driver of the vehicle had tried to bribe Constable by offering him a currency note was not accepted as if he had spurned the offer of money, he would have not allowed the vehicle to cross ICC and if had accepted it, he would have let off the vehicle. Thus, there does not seem to be any substance in the story proffered by the Department - in favour of assessee.

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• 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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• Wealth tax

• 2012 (10) TMI 375
  Date of valuation of shares - Whether the Tribunal was right in law in holding that the value of shares must be taken at the rate quoted the lowest in any of the stock exchange situated in the country though the assessee was assessed to tax elsewhere - Held that:- the tribunal is directed to draw the statement of case and refer the aforesaid question of law to this Court.

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• 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 370
  Writ of certiorari for quashing advertisement for sale of unit being illegal, arbitrary and against the provisions of Punjab Industrial Incentive Code - Held that:- The petitioner had earlier approached this Court by way of Civil Writ Petition challenging the proceedings initiated under Section 29 of State Financial Corporation Act, 1951 by the respondent-Corporation on 20/24.10.1997. The petitioner having withdrawn the earlier writ petition without any permission to file fresh petition on the same cause of action has again sought to challenge the action of the respondent-Corporation after expiry of 15 years. Learned counsel for the petitioner was unable to justify as to how the present petition was maintainable - writ dismissed.

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• 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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