Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 17, 2012
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Customs
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F.No.354/22/ 2010-TRU (Pt.1) - dated
16-10-2012
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ADD
Corrigendum Notification No. 12/2012 –Customs (ADD) - Anti-dumping duty on import of Coumarin, originating in, or exported from, the People’s Republic of China.
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94/2012 - dated
15-10-2012
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Cus (NT)
Amends Notification No. 36/2001-Customs (N.T.), dated the 3rd August, 2001 - Palm oil, Palmolein, Soyabean Oil (Crude) and Brass Scrap (all grades) - Traiff Values
Service Tax
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F.No.137/99/2011 - dated
15-10-2012
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ST
Extension of time to file return in Form ST3 - 1st April 2012 to 30th June 2012, from 25th October, 2012 to 25th November,2012.
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Disallowance of inter office commission paid/payable by the assessee to head office and other overseas branches - the rule of mutuality applies and the assessee cannot be allowed any deduction in this regard. - AT
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Penalty u/s 271D - whether provisions of section 269SS are attracted to the amounts received from sister concern - no penalty - HC
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Expenditure on account of software held as Revenue in nature. - AT
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Capital or revenue expenditure - payment of custom duty for de bonding increases value of the asset and it is required to be added to the costs or written down value - AT
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There are no words of limitation in section 11 of the Income-tax Act requiring that the income should have been applied for charitable or religious purposes only in the year in which the income has arisen - AT
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Aggrieved party - right to appeal - CIT(A) dismissed the appeals by the directors as 'not maintainable - no order u/s 179 of the Act has been passed. - appeals not maintainable - AT
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Whether notice under Section 158 BC cannot be treated as invalid in view of the provisions as contained in section 292B of the Act – section 292B has no application - HC
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Deduction u/s 80-IA/IB - manuscripts edited and formatted into desired pages and also certain drawings are also scanned and redrawn by using computer. - no manufacture - no deduction - AT
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The decision of the High Court or the Hon’ble Supreme Court rendered prior to or even subsequent to the order, will constitute mistake apparent from the record within the meaning of Section 254 (2) and it should be corrected by the Tribunal. - AT
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Salary income of the assessee on which he had been subjected to deduction of tax at source, cannot be categorised as “undisclosed income” as defined in section 158BB - HC
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Payments made in excess of Rs.20,000/- in cash was not a justifiable reason for deleting the disallowance under Section 40A(3) of the Act as payment is made to associate concern. - AT
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Charitable purpose - registration u/s 12A - The shortcomings by themselves cannot be put on par with lack of genuineness of the Society - HC
Customs
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Amends Notification No. 36/2001-Customs (N.T.), dated the 3rd August, 2001 - Palm oil, Palmolein, Soyabean Oil (Crude) and Brass Scrap (all grades) - Traiff Values - Notification
DGFT
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Trade in Border Haats across the border at Meghalaya between Bangladesh and India. - Public Notice
Service Tax
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Extension of time to file return in Form ST3 - 1st April 2012 to 30th June 2012, from 25th October, 2012 to 25th November,2012. - Notification
Central Excise
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It is well settled law that such documentary evidences are required to be given preference over the oral statements. - AT
VAT
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Ujala Supreme - rate of VAT - 4% OR 12.5% - highly diluted form of Acid Violate Paste (AVP) - it retains the essential characteristics of AVP - taxable @ 4% - HC
Case Laws:
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Income Tax
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2012 (10) TMI 444
Income from other sources v/s profit and gains from business and profession - gift from UK based company - Held that:- The transaction is of a gift which is a capital receipt in the hands of the assessee and therefore it cannot be said to be a case of any benefit or perquisite arising from business. The contention of the DR that by the said transaction the assessee has derived benefit and such benefit has arisen from the business connection of the donor and the donee, cannot be accepted as no direct nexus has been established by any tangible material brought on record by the Ld.CIT [A]. Simply because both the donor and the donee happened to belong to the same group cannot ipso facto establish that they have any business dealings. Thus in the absence of any specific provision taxing a Gift as a deemed business income, provisions of sec. 28 [iv] cannot be applied on the facts of the case. The CIT [A] erred in taxing the value of the stamp duty as income under sec. 28 [iv] - the provisions of sec. 28 [iv] and sec 56 [1] & [2] will not apply - in favour of assessee. Taxing notional income from the flats as Income from House property - Held that:- The said flats are shown under the head 'fixed assets' in the balance sheet of the assessee company & have been kept for use for the employees of the company cannot be brushed aside lightly. However, for the year under consideration, the assessee could not establish the usage of the flats by the company for its business purposes, therefore, annual letting value of the flats is liable to be taxed as per the Municipal rateable value, therefore this issue is restored back to the files of the AO - in favour of assessee for statistical purposes. Disallowance of maintenance charges and depreciation - Held that:- ALV has to be taxed for the year under consideration, the assessee will get the statutory deduction of 30% from the ALV, therefore no separate deduction of maintenance charges is to be allowed & that the assessee has failed to establish the flats have been used for the purposes of business for the year under consideration, the depreciation claimed cannot be allowed - against assessee. Addition of consultancy fees - Held that:- Direction of the CIT(A) to verify the correct figure of the consultancy fee receivable during the year whether it is USD 10,50,000 or USD 11,50,000. Accordingly, while deleting the addition made by the AO issue remitted back to AO with a direction to verify the actual figure of consultancy fee for the year under consideration.
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2012 (10) TMI 443
Reopening assessment u/s 147 - AY 1997-98 & 1998-99 - Held that:- There is nothing in the reasons to indicate, even remotely, that the assessee did not disclose this necessary fact in its return or accompanying documents. It can naturally not be so because the deduction on account of interest paid to head office and overseas branches can only be claimed by way of a debit to the Profit and loss account which is always a part and parcel of the documents accompanying the return of income. Once the assessee disclosed the fact of claim of deduction on account of interest paid to head office or other overseas branches and the original assessment was completed u/s 143(3) accepting such claim, there can be no question of initiation of reassessment proceedings after a gap of four years from the end of relevant assessment year - in favour of assessee. Reopening of assessment - AY 1999-2000 - Held that:- The issuance of notice u/s 148 is within a period of four years from the end of the relevant assessment year - as decided in Multiscreen Media Private Limited v. Union of India [2010 (2) TMI 269 - BOMBAY HIGH COURT reopening on the basis of finding in an order of assessment passed for a subsequent assessment year, where additional material has emerged before the A.O. to lead to the formation of belief that income chargeable to tax had escaped tax, is sustainable. The facts of the instant case stand on a rather stronger footing because here the reassessment is on the basis of the CIT(A)'s order for a subsequent year, thus the initiation of reassessment proceedings for the current year is in order - against assessee. Non deduction of TDS - Disallowance of interest payable to head office and other overseas branches - Held that:- As decided in Sumitomo Mitsui Banking Corporation v. DDIT [2012 (8) TMI 450 - ITAT, MUMBAI] the interest paid to the head office of the assessee bank by its Indian branch cannot be taxed in India in the hands of assessee bank, a foreign enterprise being payment to self which cannot give rise to income that is taxable in India as per the domestic law - as interest paid by the Indian branch is not chargeable to tax in India, it follows that the provisions of section 195 would not be attracted and there being no failure to deduct tax at source from the said payment of interest made by the PE - in favour of assessee. Disallowance of inter office commission paid/payable by the assessee to head office and other overseas branches - Held that:- Since the principle of mutuality is applicable on transactions between Indian branch and head office and other overseas branches, there cannot be any income or any expenditure due to such internal transactions. As the inter office commission has been paid by the assessee to its head office and other overseas branches, it is obviously a transaction with the self. Accordingly the rule of mutuality applies and the assessee cannot be allowed any deduction in this regard. The view taken by the learned CIT(A) on this issue is upheld - against assessee. Interest u/s 234B - Held that:- As decided in DIRECTOR OF INCOME-TAX (INTERNATIONAL TAXATION) Versus NGC NETWORK ASIA LLC [2009 (1) TMI 174 - BOMBAY HIGH COURT] when the duty is cast on the payer to deduct tax at source, on failure of the payer to do so, no interest can be charged from the payee assessee u/s 234B, thus ssue of charging of interest u/s 234B in the present case is no more res integra - in favour of assessee. Penalty u/s 271(1)(c) - disallowance u/s 40(a)(i) & income of the head office/foreign branches - Held that:- When the additions made in the assessment order have been deleted, obviously there cannot be any foundation for imposition of penalty qua such additions - in favour of assessee.
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2012 (10) TMI 442
Refusal to grant renewal u/s 80-G - ITAT allowed the claim as registration of assessee trust u/s 12-AA is still subsisting - Held that:- The object of Section 80-G moves further and beyond registration under Section 12-AA to provide for deductions in respect of donations to certain trusts/charitable institutions. Once the registration under Section 80GG has been granted, for which the registration under Section 12-AA is also necessary, the renewal cannot be refused, unless any material, which may either be withheld or concealed, has come to the notice of the Commissioner or that the Commissioner, on examining of the application of funds or income come to a conclusion, that the income has been used for the purposes other than the purposes for which the registration under Section 80GG was granted. As the registration under Section 12-AA has not been cancelled in the present case and the application for allowing benefit under Section 80-G was also allowed in the previous years. The trust has not added any new object in the trust deed nor there is any material by way of balance sheet or the utilisation of the income of the trust to come to a conclusion that activities which are not for charitable purpose the order of the Tribunal does not suffer from any error of law - in favour of assessee.
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2012 (10) TMI 441
Penalty u/s 271D - whether provisions of section 269SS are attracted to the amounts received from sister concern as Temporary accommodation to meet immediate requirements of the business and is levy of penalty u/s271D justified - Held that:- It is not in dispute that the assessee had transaction with its own sister concerns having the commercial transaction and during that course, they used to pay the amount through cheque or cash. It cannot be said that the transactions could not have been business transactions and during the course of the transactions, some payments have been made in cash. Otherwise also, it may only be a technical mistake retaining certain loans of one party, thus imposing penalty cannot be justified - in favour of assessee.
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2012 (10) TMI 440
Late payment of TDS u/s 40(a)(ia) - whether amendment made to the provisions of section 40a(ia) would apply with retrospective effect from 1.4.2005 or w.e.f 1.4.2010 ? - Held that:- As decided in COMMISSIONER OF INCOME TAX, KOL-XI, KOL Versus VIRGIN CREATIONS [2011 (11) TMI 348 - CALCUTTA HIGH COURT] the amendment to the provisions of Sec.40(a)(ia) of the Act, by the Finance Act, 2010 is applicable retrospectively from 1.4.2005. Consequently, any payment of TDS on or before the due date for filing return of income u/s.139(1) cannot be disallowed in terms of provisions of sec.40a(ia). As in the instant case the assessee deposited the tax deducted at source on 29.5.2007 i.e. before the due date for filing return of income u/s.139(1) and especially when the Revenue have not brought to notice any contrary decision, no interfere with the findings of the CIT(A) is called for.
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2012 (10) TMI 439
Reopening of assessment u/s 147 - loss on trading of shares - Held that:- The AO has made additions on different heads and no addition has been made under the head which remained the subject matter of the reasons for reopening the assessment & CIT (A) has upheld the validity of reopening has not decided the issue of validity of the notice issued u/s 148 and assessment made in furtherance thereto u/s 147 read with 143 (3) in view of the proviso to section 47, thus in the interest of justice the matter is set aside to the file of the CIT (A) to decide the same afresh - in favour of assessee for statistical purposes.
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2012 (10) TMI 438
Repairs and maintenance - Capital v/s Revenue - CIT(A) deleted the addition - Held that:- CIT(A) held that the repairs were carried out to provide best patient care, excellent atmosphere and hygienic conditions. Similar repairs had been carried out in the case of another hospital of the group company where the AO had treated the repair and maintenance of the building in that case also as capital expenditure which was deleted by the Hon’ble ITAT, Chandigarh. Hence the addition here also to be deleted. Basis and reasoning given by Ld.CIT(A) are convincing and neither any contrary material is placed on record nor any higher court’s order is filed when it is otherwise a covered matter - in favour of assessee.
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2012 (10) TMI 437
Validity of re-opening of assessment u/s 147/148 - research and development expenditure - dis-allowance of technical assistance fee paid as capital in nature - Held that:- It is seen that the assessee was asked to furnish the details of Research & Development expenses and the complete details including the break-up were provided by the assessee in the original assessment which was completed after considering the details and the reply of the assessee. Thus, it is seen that the facts and issue involved in the present year of appeal are identical to the facts and issue involved in AY 2001-02 wherein the Tribunal has confirmed the order of the CIT(A) holding the re-assessment proceedings as invalid. Respectfully following the same, in the present year of appeal also, re-assessment proceedings are held to be invalid - Decided in favor of assessee
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2012 (10) TMI 436
Addition on account of enhancement in respect of Retention Money claimed in revised return to be not accrued – Held that:- It is trite law that as for as possible the tax should be levied on real income. The issue of warranties can be dealt in two manners. If amounts are received than make a provision for warranties in P & L A/c on reasonable parameters which is conventionally allowed in IT assessments. In case of amounts not received, the second method can be to treat the unpaid amounts as not accrued pending settlement of express warranty issues, which is the situation in assesses case. The appellant has undertaken the project and was duty bound to give satisfactory performance as per warranty. For satisfactory execution of contract as also removal of defects ordained by the contract, certain sum is retained. Had the appellant provided for warranty in the accounts or claimed deduction as such, the same would have been allowed. Since the amount set apart being as per agreed terms and is contractually determined, even such provision would be allowable. Therefore looking from both angles, the retention money not payable to the appellant during the year is not accrued and hence not taxable during this year – Decided in favor of assessee Dis-allowance of Work Contract Tax – Section 43B – Revenue contended that appellant failed to furnish any details/evidence for claim of WCT and hence is not allowable – Held that:- When the tax is deducted by the client in accordance with WCT Act, so far as appellant being a contractor it can be treated to have paid such tax. The revenue cannot disallow the payment and at same time tax the sum received as refund out of such payment. Amounts are allowable u/s. 43 B - additions are therefore deleted for both the years. Dis-allowance of amount disallowed in A.Y. 2007-08 for nonpayment of TDS u/s. 40(a)(ia), which is paid during the relevant financial year and hence claimed as allowable under proviso to S40(a)(ia) – Held that:- Having disallowed such sum in A.Y. 2007-08 in view of sec. 40(a)(ia) and not sec. 37, it is not open for A.O. to examine them in AY 2008-09. Amount so disallowed for non deduction or non depositing tax before due date will be allowed as a deduction in computing the income of the previous year in which such TDS was paid to govt – Decided partly in favor of assessee
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2012 (10) TMI 435
Disallowance of Foreign Travelling expenses – Whether expense on which FBT has been paid are allowed, irrespective of its nature either personal or official - AO argued that assessee failed to satisfy that such expenditure was incurred wholly and exclusively for the purpose of business – Company had paid FBT on the aforesaid expenses – Held that:- As the CBDT explaining the provisions regarding the FBT makes it clear that FBT is levied on the expenses incurred by the employer irrespective of whether the same are incurred for official or personal purposes. Once FBT is levied on such expenses it follows that the same are treated as fringe benefits treated by the assessee as employer to its employees and the same have to be properly allowed as expenses incurred wholly and exclusively for the purpose of business. Following the decision in case of Hansraj Mathuradas (2012 (10) TMI 300 - ITAT, MUMBAI) direct the AO to delete the disallowance. Issue decides in favour of assessee Expenditure on computer software – Capital or revenue expenditure - Assessee contended that expense has been incurred only on licence to use the software and that it was mere upgradation of the software – Held that:- Expenditure on account of software does not form part of the profit making apparatus of the assessee and the same is to enable the management to conduct the assessee’s business more efficiently or more profitably and following the decision in case of Raychem RPG Ltd. (2011 (7) TMI 953 - BOMBAY HIGH COURT) direct the AO to allow the software expenditure as Revenue in nature. Issue decides in favour of assessee Disallowance u/s 40(a)(ia) – Non deduction of TDS – Assessee has not deducted TDS on payment of lease rent – Held that: As the assessee has paid entire lease rent on 20-05-2005 could not be controverted revenue. Since no amount of the lease rent is payable as on 31-03-2006, therefore, in view of the decision in case of Merilyn Shipping and Transport (2012 (4) TMI 290 - ITAT VISAKHAPATNAM), no disallowance u/s. 40(a)(ia) can be made. Issue decides in favour of assessee
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2012 (10) TMI 434
Addition on account of transfer pricing – Whether AO issue notice u/s 133(6), to comparable companies to gather information in relation to transfer pricing – If yes, information that was obtained u/s 133(6), whether the same was put across to the assessee – Held that:- AO can collect information about comparable by issuing notices u/s 133(6). Any information obtained in the course of assessment proceedings has to be supplied to the assessee for its objections, if any. The absence of doing so leads to violation of fundamental principle of natural justice. Therefore case remand back to AO. Addition on account of foreign exchange fluctuation gain on export u/s 10A – Whether forex gain from export is a part off profit used to calculate deduction u/s 10A - Held that:- Profit derived means profit of the business of the undertaking the same proportion as the export turnover bears to the total turn over of the business carried on by the undertaking. Profit has to be computed as normally understood without insisting on proximate connection between the business of undertaking and the profit. Therefore there is no dispute that foreign exchange fluctuation gain is in respect of export proceeds so amount represents income as it is in the revenue field. Allow in favour of assessee. Excess provision written back & miscellaneous income also constitute profit from business while claiming deduction u/s10A Disallowance of debonding charges – Debonding charges treated as revenue expenditure by assessee – Held that:- As the capital goods placed in the bonded area are subject to restrictions that they cannot be sold and they cannot be removed outside the area for use of self. This encumbrance is removed once the goods are cleared from the bonded area on payment of duty. The result is that the assessee can deal with the goods in any manner it desires including sale thereof. Therefore debonding charges should be treated as capital expenditure & added to cost/wdv of asset. Decision in favour of revenue.
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2012 (10) TMI 433
Eligibility for benefits of Section 11 - Appeal is made by Revenue against the order of CIT(A) - Donations,Auditorium fee and Building fund - Held that:- Assessee has not charged any money by whatever name it is called, i.e. donation, building fund, auditorium fee etc, over and above the prescribed fee for the admission of students, the assessee would be entitled for exemption under S.11, even though the notification under S.10(23C)(vi) of the Act have not been received by it. Claim of Depreciation - Held that:- As purchase of capital asset is used to promote the objective of the trust and not for any Business Activity is allowed as application of income, depreciation is not allowable on capital asset. Entire cost of acquisition is treated as application of income and is either written off in the first year or carry-forward to subsequent years itself - issue raised by the Revenue is set aside to the file of the Assessing Officer for fresh consideration after giving reasonable opportunity of hearing to the assessee. Disallowance u/s 13(1)(c) of the Act - Held that the payment of Rs.3,60,000/- per annum as honorarium to the Secretary of society, which was not proved to be in excess of the normal and prevalent remuneration being paid for an identical services contemporaneously, cannot be considered as a “benefit” to the interested person as would attract the provisions of section 13(1)(c) and debar the appellant from claiming exemption u/s. 11. The assessing officer is therefore directed not to deny exemption u/s. 11 on this ground alone.
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2012 (10) TMI 432
Exemption u/s 11 - exemption of the educational income of the Trusts, Societies etc - the main grievance of the Revenue is with regard to the conclusion of the CIT(A) that the assessee is eligible for benefits of Section 11 of the Act in alternative to the provisions of S.10(23C)(vi) of the Act. - Held that:- Assessee has not charged any money by whatever name it is called, i.e. donation, building fund, auditorium fee etc, over and above the prescribed fee for the admission of students, the assessee would be entitled for exemption under S.11, even though the notification under S.10(23C)(vi) of the Act have not been received by it - Impugned order of the CIT(A) be set aside and restore the matter to the file of the assessing officer with a direction to verify the aspect of donation, capitation fee etc. if any collected by the assessee, after giving an opportunity of being heard to assessee. Depreciation - Held that:- As the purchase of capital asset is used to promote the objective of the trust it is allowed as application of income where the entire cost of acquisition is either written off in the first year itself or in subsequent years and depreciation is not allowable on capital asset as it is not used for Business activity - in favour of revenue for statistical purposes.
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2012 (10) TMI 431
Commission paid to non resident agent - Assessing Officer found that the assessee has paid an amount of Rs.80,50,703/- to non resident agents without deducting tax at source. The AO therefore disallowed the entire amount u/s 40(a)(i) and added it to the total income.The CIT (A)‘s order was challenged in appeal before the ITAT. Held that:- The reasoning of the AO that since the DDs have been purchased from banks in India and have been sent through courier, the payment of commission deemed to have been paid in India is also not acceptable. - the AO has failed to bring any material on record to show that the payments were made to the non resident agents in India at the request of the foreign agents. Non resident agents did not carry out any business operations in India and has acted as selling agents of the assessee outside India. Therefore, the commission earned by them for services rendered by them outside India cannot be considered as income chargeable to tax in India as non resident do not have any permanent establishment in India Therefore, when the commission paid to the non residents are not chargeable to tax under the provisions of the Act, no deduction of tax is required to be made u/s 195(1) of the Act and disallowance made u/s 40(a)(i)by Assessing officer is not sustainable - against revenue.
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2012 (10) TMI 430
Allowability of Depreciation - Held that:- Assessee is not claiming double deduction on account of depreciation as has been suggested by Ld. Counsel for the Revenue. The income of the assessee being exempt, the assessee is only claiming that depreciation should be reduced from the income for determining the percentage of funds which have to be applied for the purposes of the trust. There is no double deduction claimed by the assessee as canvassed by the Revenue. It can not be held that double benefit is given in allowing claim for depreciation for computing income for purposes of Sec.11 - in favour of Assessee. Application of income - Carry forward and set off of Losses - Held that:- there are no words of limitation in section 11 of the Income-tax Act requiring that the income should have been applied for charitable or religious purposes only in the year in which the income has arisen - It has also been held that income derived from trust property is to be determined on commercial principles and the application of such commercial principles also warrants the conclusion that the expenditure incurred in an earlier year can be set off against the income of the subsequent year. Therefore, Orders of the lower authorities are set aside and Assessing Officer to quantify the excess application of income by the assessee-Trusts and allow carry forward of the same for set off against the surplus made by it in a subsequent year - in favour of Assessee.
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2012 (10) TMI 429
Aggrieved party - right to appeal - CIT(A) dismissed the appeals by the directors as 'not maintainable - liability of directors u/s 179 - Held that:- the apprehension of the assessees that they have been made liable to pay a portion of tax u/s 179 of the Act, is unwarranted and misconceived. As per the provisions of the Income-tax Act, no person can be made liable to pay any tax for himself or on behalf of any other entity for which he has been associated unless a specific order is passed in the matter. In the present case, no such order u/s 179 of the Act has been passed. - the appeals preferred by the assessees are dismissed as 'not maintainable'.
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2012 (10) TMI 428
Applicability of Sec.50C of the Act - Held that:- sec 50C is not applicable on transfer of lease hold right - Decided against the revenue. Addition on Redeposit - Held that:- After considering the submissions of the remand report and examining the bank account, it was found that the appellant had withdrawn cash of Rs.7,25,000/- before depositing Rs.7,50,000/, In the circumstances, there is no necessity for addition of Rs.7,50,000/. The addition is restricted to Rs.25,000/- as the balance amount is explained by the withdrawal from the same bank account on the earlier dates - against Revenue. Addition on Cash Deposit of Rs.3,00,000/- Held that:- Alternate claim of the assessee could not be rejected, especially when AO was re-opening the assessment for the AY 2005-06 for verifying the source of payment for purchase of lease right. Here, it is also noteworthy that where AO has passed a non-speaking order, but the FAA had discussed the issue in length. Not only this he rejected the claim of the assesse with regard to Agricultural income. Thus stand taken by the FAA does not suffer from any infirmity - against the Revenue.
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2012 (10) TMI 427
Suo motu revisional jurisdiction under s. 263 of the Act – Held that:- If the order of the AO was based on wrong assumption of facts, incorrect application of law or non-application of mind, interference was permissible - order of the AO suffers from non-application of mind - AO failed to make basic enquiry required to be made when there was unusual increase of prices of shares purchased by the assessee by cash and the identity of the persons from whom the shares were purchased and to whom the shares were sold, was not ascertained nor the broker examined - shares were not of well known company and possibility of undisclosed income being introduced in the form of capital gain was not ruled out - case was clearly within the purview of exercise of suo motu revisional jurisdiction The observations of the Tribunal that since as many as 7 hearings had taken place and that the CIT could not have raised an objection to the manner of assessment, are unsustainable in law and not warranted by legal requirement under s. 263 of the Act for exercise of suo motu revisional jurisdiction. - in favour of the Revenue
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2012 (10) TMI 426
Whether notice under Section 158 BC cannot be treated as invalid in view of the provisions as contained in section 292B of the Act – Held that:- Intent and purport as provided under section 158 BC is to serve a notice on the assessee by providing a time of not less than 15 days and not more than 45 days - grant of extra time is without authority of law. It cannot validate an invalid notice - when the sum and substance of the notice issued to the assessee is not in conformity with the purpose of the Act, section 292B has no application - The waiver or the consent cannot override the provisions of statue. What is mandated cannot be diluted. - in favour of the assessee Whether section 240 of the Act is not applicable to Chapter XIV-B of the Act and therefore, the taxes paid pursuant to the return filed in the block assessment is liable to be refunded – Held that:- For Clause (b) of proviso to section 240 to apply, the taxes should have been paid by the assessee voluntarily - revenue cannot contend, that the refund adjusted is to be treated as tax paid, so as to deny the assessee the refund due, subsequently, due to annulment of assessment. Payment of taxes voluntarily is different from adjusting the refund without reference to the assessee - It cannot be held that the assessee has paid taxes and accordingly, in terms of proviso to section 240 to deny refund to the assessee - Commissioner of Income Tax (Appeals) exceeded his jurisdiction to deny the refund - in favour of the assessee Jurisdiction - refund – Held that:- Jurisdiction of the Appellate Authorities to adjudicate the issue of refund in the Appellate proceedings is consequential upon the validity of the assessment proceedings. Having recorded a finding by holding that the entire assessment proceedings are invalid, the question of the jurisdiction of the appellate authorities therefore would not arise for determination Whether Appellate Authorities should have directed the Assessing Officer to pass a fresh order of assessment in view of holding that the notice is invalid - revenue contended that if the notice was held to be invalid, the Assessing Officer should have been directed to pass a fresh order of assessment by complying with the limitation in terms of section 158BC – Held that:- Time to be granted in terms of section 158BC is mandatory. Having failed to comply with the same, granting another opportunity to the revenue is highly improper - period as specified in the Act requires to be strictly complied with. Therefore, the plea of the revenue for a direction to pass fresh orders of assessment after complying with the provisions of section 158BC requires to be rejected - in favour of the assessee
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2012 (10) TMI 412
Disallowances on account of trade creditors - assessee had done no business with them during the financial year respectively, represent only opening as balances – Held that:- Account copies of the parties as appearing in the books of account of the assessee for assessment year 2005-06, 2006-07 and 2007-08 confirm the submission of the assessee. So, it is clear that no new amount had been credited by the assessee in their accounts during the assessment year under consideration. Therefore, application of section 68 was rules out and addition cannot be made - Assessing Officer has not brought on record any evidence to prove that these parties are bogus - disallowance made on account of cash credits has been correctly deleted Additions on account of unproved trade creditors – Held that:- Additions are made on the basis of the report of the Income-tax Inspector that there is no concern by such name but the assessee had filed before the Assessing Officer purchase and sale bills of the said concerns but the books of account of that concern could not be produced - assessee had made total purchases of Rs. 1,33,39,325/- and there was a carry forward opening balance of Rs. 2,04,050/-. During the period, the assessee made payments of Rs. 1,26,09,000/- and the balance amount has been shown as trade creditor of Rs. 9,34,275/-. A confirmatory letter from M/s Oriental Leathers has also been filed alongiwth copy of account showing payments having been made to the party. The ITI’s report cannot stand in view of the above evidence - addition correctly deleted
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2012 (10) TMI 411
Claim of deduction u/s 80-IA/IB - denial as there is no new article or thing which comes into existence as a result of the assessee’s activity - Held that:- In the present case, the assessee receives from its customers manuscripts which are either typed or handwritten ones. After receiving the same, the assessee converts the same into typed form by typing or scanning into the computer. Thereafter the same is edited and formatted into desired pages and also certain drawings are also scanned and redrawn by using computer. Thereafter the same is copied into the hard disc and supplied to the authors or clients.Practically the assessee is receiving some information on manuscript and converting the same into hard disc for using in the computer.Thus the above activity of the assessee neither amounts to manufacturing nor amounts to producing an article or thing - against assessee. Disallowance of foreign travel expenses - Held that:- No details were filed with regard to the foreign travel to show that the expenses were incurred wholly and exclusively for the purpose of the business and accordingly the ground raised by the assessee dismissed - against assessee.
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2012 (10) TMI 405
Tax on receipts from Dubai, UAE companies - u/s. 44D r.w.s. 115A OR u/s. 44BB - Held that:- Undoubtedly Hon'ble Jurisdictional High Court has held that income in this case is chargeable u/s. 44D read with section 115A but the issue as to whether the assessee was entitled to relief under Article 22 of the DTAA between India and UAE has not been looked into. Also this issue was also earlier remitted by the Tribunal to the file of the AO and AO has not considered it the matter needs to be referred back to the Assessing Officer to consider the same - in favour of assessee for statistical purposes.
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2012 (10) TMI 404
Adjustments made to the purchase price of imports from Associated Enterprises - rejection of CUP method claimed by the assessee - CIT(A) deleted the addition - Held that:- The assessee had furnished proper details to show comparable transactions of Non-AE parties which match with the transaction of the assessee with its AE. Persuing the chart reproduced from the order of CIT(A), it was observed that the rate of diamonds per carat varies between Rs. 38,561/- to Rs. 98,499/-. It was the submission of assessee that the transaction compared being in the immediate vicinity of the transaction entered into by the assessee with its AE is sufficient to prove that the price charged by its AE was comparable with price charged by Non-AEs. However, he could not produce details about the quality of the diamond mentioned with reference to invoices. Therefore, CIT(A) has wrongly accepted the CUP method and TPO was right in observing insuffciant details were furnished to prove the justification of applicability of CUP method. As the ALP can be worked out only with respect to international transaction of the assessee with its AE it is just and proper to restore this issue to the file of AO with a direction to verify the aforementioned calculations submitted by the assessee after giving the assessee reasonable opportunity of hearing and if the aforementioned calculations are correct then the difference being within the safe harbour of +/- 5%, no addition with regard to ALP should be made - in favour of revenue by way of remand.
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2012 (10) TMI 403
Reopening of assessment u/s 147 - Held that:- In the reasons recorded of reopening the assessment AO raised two contentions, firstly, he contended that certain figures do not match with the Tax Audit Report and, secondly, that with respect to certain expenditure of R and D, double benefits were claimed in the form of depreciation as well as deduction under section 35AB but when the assessee objected to such grounds and pointed out in detail that the claims were valid and that there was no double claims made, the AO in the order rejecting the objections went on yet different aspect altogether. We are not commenting on the validity of this new angle sought to be brought in by the Assessing officer. Suffice it to note that the notice for reopening must fail or succeed on the basis of the reasons recorded. If a new ground occurs to the Assessing Officer after he recorded the reasons for reopening of assessment and issued notice for such purpose, surely this cannot be a ground to support the notice, thus no valid basis for reopening the assessment - in favour of assessee. Non-remission of export sale proceeds - Held that:- The assessee had made full disclosure about the claim under section 80HHC including the the sum of Rs.3,03,970/- towards the export sale proceeds, for which the assessee had also also sought extension. When such material was placed before the AO, at the time of original assessment, he could have disallowed the same. However, by no stretch of imagination, it can be said that the assessee failed to fully and truly disclose all material facts. In fact, in the original assessment AO scrutinized the claim of the assessee under section 80HHC. Even in the order disposing of the objections, the Assessing Officer has nowhere stated that the assessee failed to disclose full facts with respect to such claim - in favour of assessee. Assessee had debited lease equalization amount in the profit loss and account - Held that:- Neither in the reasons recorded nor even in the order disposing of the objections of the petitioner, the Assessing Officer has been able to demonstrate that the assessee had failed to disclose truly and fully all material facts. On this ground, reopening of assessment would not be permissible - in favour of assessee Interest on delayed payment - rate much higher than the prevailing market rate - Excess claim of deduction under section 80IA - Held that:- The only disclosure was that the assessee had earned interest income of Rs.3,03,48,973/-. There was no further information available on record that such interest included overdue payment charges at the rate of 24% received from the sister concern, viz. Aditya Medisales. Even without the aid of explanation (1) to proviso to section 147, therefore, it was perhaps open for the Assessing Officer to contend that there was no true and full disclosure on the part of the assessee in this respect. At any rate, by applying such explanation, it can be easily gathered that the assessee failed to disclose fully and truly all material facts. Counsel for the petitioner, however, vehemently contended that these were not primary facts. Only primary fact was that the assessee had earned interest income. We are, however, of the opinion that in the context of the close connection between the petitioner and Aditya Medisales, the fact that the assessee was eligible for deduction under section 80IA the interest income received from the sister concern had relevance to the provisions of section 80IA(10), primary facts were not on record - against assessee.
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2012 (10) TMI 402
Capital Gains v/s Income from Business - Held that:- Through out the assessee’s intention was to maintain two separate portfolios – one for the investment purpose and the second for the trading purpose and has segregated his transactions. The assessee has also been consistent in this approach right from earlier years which has been accepted by the Department after full scrutiny and examination. The shares which were held for a period of less than sixty days, the assessee has incurred net loss and maximum gain has come from the shares which were held for a period of nine months or so. Thus, the theory of the AO as well as the CIT(Appeals) gets demolished from the above facts that the assessee has gained a lot and has entered into several transactions. It is a known phenomenon in Stock Exchange that a single transaction is split by the computers trading in the Stock Exchange into many smaller transactions but that does not mean the assessee has carried out several transactions. Thus, the findings of the CIT (Appeals) as well as the AO that the short term capital gain is to be assessed under the head “Income From Business” solely on account of frequency of transactions cannot be sustained. As decided in The Commissioner of Income Tax Versus Gopal Purohit [2010 (1) TMI 7 - BOMBAY HIGH COURT] if the assessee has maintained two separate books of account, separate portfolios i.e., one in relation to investment in shares and other relating to business activities involving dealing in shares and such an approach has been consistently being followed by the assessee and allowed by the Department, the sale of shares shown under the head “Investment” cannot be treated and taxed under the head “Income From Business”. Thus the shares held as investment by the assessee and the income arising on sale of such shares is assessable under the heads “Short Term Capital Gains” & “Long Term Capital Gains” and not under the head “Income From Business” - in favour of assessee.
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2012 (10) TMI 401
Rectification u/s 254(2) – Disallowance u/s 14A – Since the matter has been left un-adjudicated and therefore, there is an apparent mistake in the impugned order of this Tribunal, which requires to be rectified. Issue needs fresh consideration following the decision in case of Godrej & Boyce Manufacturing Co Ltd (2010 (8) TMI 77 - BOMBAY HIGH COURT). Issue remand back to AO. Rectification u/s 254(2) - Disallowance of deduction u/s 10A on suo-moto disallowance made by the assessee in relation to reimbursement of salary and expenses of its AE – Held that:- As the finding of the Tribunal is not based on any new issue or point; but the disallowance was made by the AO and confirmed by the CIT(A) on the very same point. For exercising the jurisdictional u/s 254(2), it is the mandatory condition that such mistake should be wide apparent, manifest and patent and not something which could be involved serious circumstances of disputes of question of facts or law and can be established by long drawn process and reasoning on the point to be rectified. Therefore, the Tribunal has no power to review its order passed on merit and in the grab of rectification of mistake no order can be passed u/s 254(2) which amounts to reversal of the order passed after discussing all the facts and statutory provisions in detail. Issue decides in favour of revenue.
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2012 (10) TMI 399
Validity of notice issued u/s 158BD – Satisfaction recorded by AO in pursuance of issuance of notice u/s 158BD - Assessee contended that no satisfaction whatsoever has been recorded by the A.O of the searched persons(s) against the assessee which could validate the assessment proceedings against the assessee - AO of the assessee requested the AO of the searched persons(s) to issue him a letter so that the proceedings can be started against the assessee u/s 158 BD - Notice u/s 158BD cannot be issued by him unless a letter to that effect is received - Held that:- The quantification by the DDI(Inv) of the undisclosed income in the hands of assessee cannot be termed or equated with “satisfaction” recorded by the AO of the searched persons(s). And also no material whatsoever has been handed over by the AO of the searched person(s) to the AO of the assessee on the basis of which such alleged “satisfaction” is recorded. There is complete lack of any “satisfaction” recorded by the AO of the searched persons(s) as the letter dated 8/3/2001 does not record any “satisfaction” against the assessee which can only be said to be the “satisfaction” of AO of the searched person(s). Therefore, assessment proceedings carried out against the assessee are not valid for the reason that notice u/s 158BD was issued without fulfilling the condition precedent necessary for issue of notice u/s 158BD. Appeal decides in favour of assessee
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2012 (10) TMI 398
Rejection of books u/s 145 – Accommodation entries/bills – Whether books were rejected u/s 145 merely on the basis of, if one of the director of assessee company is engaged in providing accommodation bills - AO concluded that the assessee is also engaged in the business of providing accommodation bills - The AO estimated the commission/brokerage/consideration from providing the accommodation bills/entries @1% (net of expenses) on the total turnover – Held that:- Only because of such person in his statement has accepted of providing accommodation bills cannot ipso facto make the assessee company also to be engaged in the same kind of business. There is no reference of the name of the assessee company in the statement given by such person & document there from. As we have held that commission income is not assessable in the hands of the assessee, its return as per account is accepted and the addition made with respect to commission is deleted. Appeal decides in favour of assessee.
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2012 (10) TMI 397
Rectification of Order u/s 254 - Whether non-consideration of a decision of Jurisdictional Court or of the Supreme Court can be said to be a "mistake apparent from the record” - Held that:- it is settled principle of law that the decision of the jurisdictional High Court or the Hon’ble Supreme Court rendered prior to or even subsequent to the order, will constitute mistake apparent from the record within the meaning of Section 254 (2) and it should be corrected by the Tribunal. Decision of Apex Court in ACIT Vs. Saurashtra Katch Stock Exchange of India (2008 (9) TMI 11 - SUPREME COURT) followed.
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2012 (10) TMI 396
Disallowance of FCCB issue expense – accrual of expenditure - CIT(A) disallow on the ground that the expenditure pertains to the earlier year – Held that:- When the bills were raised in the year under consideration and the assessee received the bills only in the year under consideration, then there was no occasion for the assessee to book the said expenditure in the absence of the bill raised by the 3rd party. Further, the assessee has not claimed this expenditure in the earlier years and booked the same only in this year after the bills were received and payments were made. Expenditure is required to be booked only when it is crystallised by way of raising the bill by the other party. Issue decides in favour of assessee Disallowance of repair & maintenance expense – Capital v/s revenue in nature – Held that:- Except the expense in relation to erection and commission of effluent treatment plant, all other expenditure does not bring any new asset in existence but incurred only in respect of the existing is assets. When the expenditure is incurred in respect of existing asset, then the same is allowable as revenue in nature u/s 37 (1). Product development expenses u/s 35(2AB) – Disallowance was made by the authorities below by following the order for the A.Y. 2005–06 - Held that:- Assessee has furnished the bifurcation of expenditures in the note attached to the return of income itself. The assessee also filed details before AO. Tribunal has principally decided the issue in favour of the assessee for the assessment year 2005-06. There is no confusion or dispute on the bifurcation of amount for the year under consideration. Issue decides in favour of assessee Addition u/s 41(1) – AO’s ground is that some of the creditors are outstanding for a period of more than 3 years – Held that:- AO invoked Sec. 41(1) merely on the ground that the liabilities were three years old. Following the decision in case of Dsa Engineers (2009 (3) TMI 646 - ITAT MUMBAI) that if the assessee has not written off the liabilities reflected in sundry creditors account it was not open to the AO to make addition invoking Sec. 41(1) without proving that there was cessation of liabilities. Issue decides in favour of assessee Disallowance u/s 14A – Expense incurred in relation to earn exempt income – Assessee contended that his own funds and surplus are more than the investment made in the shares - Most of the dividend income received by the assessee is from foreign companies and the same is not exempt income – Held that:- Following the decision in assessee’s own case wherein it has been held that prior to assessment year 2008-09, Rule 8D was not applicable. However, the disallowance is warranted under section 14A of the Act. The A.O. must adopt a reasonable basis or method consistent with the facts and circumstances of the case. Issue remand back to AO. Depreciation on royalty payment – Held that:- Following the earlier order of this Tribunal that the royalty in payment has been made to acquire the brands and it is evident that such payment forms part of the cost of acquisition of brands and therefore, forms part of the total cost of the asset. Issue decides in favour of assessee Disallowance u/s 43B for delayed payment of PF and ESI – Held that:- Since payment are made within grace period of 5 days. Therefore, allowed the claim of the assessee by observing that the payment made within the grace period is allowable u/s.43B. Issue decides in favour of assessee Deduction u/s 35(1)(iv) – Whether both land and building excludes from the purview of Sec. 35(1)(iv) - AO argues that the buildings used for R&D are also excluded from the purview of Sec. 35(1)(iv) – Held that:- We see no merit in the above contortion because, firstly, when the legislature specifically excludes only the land from the purview of Sec. 35(i)(iv) it would be improper to enlarge the scope of the expression ‘land’ to include ‘building’. And assessee sought deduction on building and not on land. Issue decides in favour of assessee
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2012 (10) TMI 395
Addition made on account of Credit note – Weather credit notes are account for in books on accrual or received basis – Held that:- Even on accrual basis, the amount can be accounted for only when credit note is received. The amount becomes debt to the dealers as and when the credit note is received in books of assessee. Therefore what they receive from Telecom Company as a credit note is for dealer. In such a situation nothing has been added in the hands of the assessee as the benefit was intended for dealers and not for him. Appeal decide in favor of assessee Disallowance of interest free loan – Assessee has also taken & also provided interest free loan – AO issue show cause notice to assessee to explain why interest liability should not be disallowed – Assessee did not reply - Held that:- As interest free amount ( capital plus loan) was in possession of assessee which is more than amount of loan given. Therefore it cannot be said that the money was lent from borrowed funds and not from interest free funds. Decision in favor of assessee Disallowance of expense u/s 37 – Held that:- As AO have a clear finding in respect of staff welfare expenses and travelling and local conveyances expenses use by assessee and his family. Treat it as personal expenditure and disallowed the same. No verification has been made in respect of the personal user of telephone and petrol expenses and these expenses are not fully vouched therefore allowed. Appeal partial allowed.
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2012 (10) TMI 394
Search & seizure - block assessment - salary income earned during the block period treated as undisclosed Income on account of non-filing of return and late filing of returns - Held that:- When an assessee is a salaried employee and on such salary income, suffers deduction of tax at source and such tax is also shown to have been deposited by the employer with the Revenue, it can hardly be stated that such income is undisclosed income. Employer u/s 192 is required to deduct tax at source on salary income. Section 199 provides for credit of such tax deducted at source. Section 205 provides for a bar against direct demand of tax where such tax is deductible at source. Upon overall consideration of the statutory provisions noted hereinabove and the judicial trend, it is held that salary income of the assessee on which he had been subjected to deduction of tax at source, cannot be categorised as “undisclosed income” as defined in section 158BB - Decided in favor of assessee
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2012 (10) TMI 393
Addition on account of sales return – Goods sold by assessee is a branded commodity – Cover Under the regulations of Essential Commodity Act - In search and seizure undisclosed sale bills are seized - Assessee claims huge sales returns – Sales return claimed against profit because of non- acceptance by manufacturer - Held that:- It cannot be assumed that any brand will manufacture defective goods to such an extent. In normal circumstances, assessee cannot be allowed such goods return as claimed. Therefore sale returns claimed by assessee restricted to estimated 5% when the books of accounts are rejected. And undisclosed sales will be worked out accordingly. Case referred back to AO Addition on account of investment on out of books (Uchanti) purchases - The sales rejected as above, are on the basis of seized sale bills during search – And there is no evidence of any purchases outside the books of account – Held that :- Assessee has indulged in wide spread undisclosed sales. No reason is advanced as to how such a huge turn over can be carried out without some undisclosed purchases. In view of ITAT addition was very reasonable addition by AO. Decided in favor of revenue
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2012 (10) TMI 392
Dis-allowance u/s 14A - assessee submitted that they have already offered an amount of Rs.1 lac for dis-allowance in pursuance of earlier ITAT’s orders - AO not accepting submissions of the assessee, disallowed Rs.18,41,918/- in terms of Rule 8D - Held that:- Indisputably, Rule 8D is not applicable in the year under consideration in view of the decision in Maxopp Investment Ltd (2011 (11) TMI 267 - DELHI HIGH COURT). Moreover in the assessee’s own case for the AYs 2001-02 and 2003-04, 2004-05, co-ordinate bench upheld the disallowance of Rs.1 lac. In the light of consistent view taken in these decisions in identical circumstances, and nothing contrary being brought on record by Revenue, dis-allowance of only Rs 1 lac is upheld. Dis-allowance of claim u/s 35D - expenses incurred on issue of shares and increase in authorized capital - denial on ground that benefit of S35D could be availed for a period of 10 successive years beginning with the previous year in which the business commences which have been lapsed - Held that:- Indisputably expenditure was incurred in the FY 1999-2000 and 2000-01, for issuing the shares. The assessee claimed 1/10th of these expenses since then and no disallowance has been made in any of the earlier years. There is no dispute that the entire expenditure is revenue in nature and was allowable in the year when it was incurred. Instead of claiming the entire expenditure in that year, the assessee deferred the amount, claiming only 1/10th in each of the subsequent 10 years. Hence, expenditure does not fall within the ambit of section 35D and needs to be allowed as revenue expenditure. Depreciation on computer peripherals - UPS - Held that:- Since it is part of the computer system, hence entitled to depreciation at the higher rate of 60 per cent. See BSES Rajdhani Powers Ltd (2010 (8) TMI 58 - DELHI HIGH COURT ) - Decided against Revenue
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2012 (10) TMI 391
Disallowance of Payments made to Associate Concern in cash - Held that:- Payments made in excess of Rs.20,000/- in cash was not a justifiable reason for deleting the disallowance under Section 40A(3) of the Act as payment is made to associate concern. CIT(Appeals) fell in error in deleting the disallowance merely on the submission of the assessee, ignoring the ledger copies annexed to the assessment order by the Assessing Officer himself. The payments were all effected in cash and each of such payment exceeded Rs. 20,000/- the Assessing Officer had rightly made disallowance under Section 40A(3) of the Act - Order of CIT(Appeals)is set aside and order to reinstate the addition made by the A.O. under Section 40A(3) of the Act has been passed - in favour of Revenue.
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2012 (10) TMI 390
Charitable purpose - registration u/s 12A - Genuineness of Activities of Society - Held that:- The object of the Trust so long as it fits into any one of the objects as mentioned under Section 2(15) of the Act, the first requirement is fulfilled and the second requirement will be met by the genuineness of the activities of such institutions are also to the satisfaction of the authority. We do not find any recording by the Registering Authority about the lack of genuineness of activities, but the Registering Authority did notice some shortcomings on the part of the Society, in the manner of its functioning. The shortcomings by themselves cannot be put on par with lack of genuineness of the Society - decided in favour of assessee.
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2012 (10) TMI 389
Revision u/s 263 - Order Passed being erroneous and prejudicial to interest of Revenue - Held that:- omission on the part of AO in not including the amount of Rs.8 lacs to the income of the assessee without making appropriate inquiry, while passing the assessment order in the case of assessee for the relevant assessment year was undoubtedly erroneous and prejudicial to the interest of the revenue. The matter relates only to the amount of Excise Duty to be reimbursed by the assessee's sister concern M/s. Plasto Packs International Pvt. Ltd. in regard to job work and not with regard to any liability of Excise Duty borne by the assessee on other manufacturing activities undertaken by it. Regarding the amount of double addition and double taxation, suffice it to say that these are the matters to be gone into by the AO while passing the assessment order afresh after due consideration of the material on record. - remand order as passed by ITAT sustained.
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2012 (10) TMI 388
Research and Development Expense - Assessee contended that the expenditure incurred by the assessee for purchase of imported products of unique nature was for investigation and research in nature and hence allowable as Revenue expenditure. Held that:- AO disallowed the deduction of the rgound that importing of pumps and motors for research and development are not connected to assessee’s business and are not for any innovative purpose therefore, the assessee is not eligible for deduction u/s 37 of the Act. The assessee has not filed any evidence to substantiate his case neither before the Assessing Officer nor before the ld. Commissioner of Income-tax(Appeals) or even before the Tribunal - Order passed by CIT(A) set aside and matter remanded back to AO for fresh decision.
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2012 (10) TMI 387
Unexplained Cash Credits - Contention of Assessee was that he was able to explain and prove the source of the credit in its account, it was not incumbent upon the assessee to prove the source of income of the creditor. However he had written to the bank to supply necessary details to the Department but the bank refused to divulge information about the transactions in the account of Mr. Masqooth Ali. Held that:- the assessee had co-operated to establish the identity and capacity of the creditor and also genuineness of the transaction. The assessee has discharged his liability in proving that the amount of Rs.19,00,000/- which has been reflected in the books of accounts of the assessee was received from Mr. Masqooth Ali.Thus Cash credit is explained by Assessee properly - Appeal allowed in favour of assessee.
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Customs
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2012 (10) TMI 445
Writ petition - Confiscation and penalty – alternative remedy – Held that:- Writ petition cannot be directly entertained ignoring the statutory remedy of appeal, that was available to the petitioner - petitioner did not avail the remedy of getting the reference made to this Court under Section 130A of the Act. Petitioner has also not challenged the order passed by learned Additional District Judge - Petitioner has thus by his own action/inaction, while not questioning correctness of the confiscation order as also the order passed by the learned Additional District Judge, accepted those orders as valid, which orders have even otherwise became final. In these facts, petitioner cannot be held to be entitled to the relief prayed for
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2012 (10) TMI 425
Mis-declaration in exporting the non-Basmati Rice - reredemption fine and penalties - Held that:- There is clear and unambiguous admission to the misdescription of the goods. It was not case of classification or any dispute with regard to description, which was required to be sent for the final reference to DGFT, or to some other laboratories. The Tribunal proceeded on the basis that there was no dispute to the nature and quality of goods, which was not non-basmati rice. If the petitioner had any grievance with regard to non-consideration of matter on merits, the point should have been taken in the Tribunal itself. Having failed to do so, the appellant cannot be allowed to canvass the point in the High Court in an appeal under Section 130 of the Act. The redemption fine has been imposed at 10% of the penalty under Section 114 (5) on the ground that the goods were not exported and that containers did not go out of India & the penalty under Section 114 (i) have been imposed reasonably at Rs.6,90,000/-, which is 5% of the amount of penalty awarded by order in original - Thus the redemption fine and penalties were not levied only on confession & the customs authorities relied on test reports, which were not denied nor any objections were filed - against assessee.
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2012 (10) TMI 424
Maintainability of Writ petition – writ challenging the Show Cause Notice - Held that:- Customs Officer assigned with specific functions of assessment and re-assessment in jurisdictional area where goods imported alone are competent to issue Show Cause Notice under Section 28 of the Customs Act, 1962 as ‘proper officer’ and Collector of Customs (Preventive) had not been assigned such functions. Therefore it is submitted that the impugned order is issued by a Preventive Officer and hence the said Show Cause Notice is itself void abinitio - Court is not inclined to impugned the Show Cause Notice especially when the Respondents are seized of the matter and the Petitioner has also given its own inputs in coming to the proper conclusion which has been permitted by the earlier Division Bench of this Court - writ petition dismissed
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2012 (10) TMI 423
100% Export-Oriented Unit - manufacture of ready-made garments – alleged that 100% EOU had cleared without payment of duty certain goods and had been diverted into the domestic market in violation of the provisions of the Customs Act, 1962 – Held that:- Apart from the statement given by the employees who are also held guilty of liability to make payment of penalty there is no other material whatever to connect the company M/s. MNS Exports Private Limited and its Managing Director - disputed transaction has been carried out by collusion with three employees of the respondent-company and Sri Bhaskar who was an employee in the Customs Department and Sri Vikram Jain - in the criminal case no allegation was made against the respondent, it clearly shows that there was no nexus between M/s. MNS Exports Private Limited or its Managing Director - appeal is dismissed
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2012 (10) TMI 422
Duty drawback – alleged that appellants had declared the export goods to be Handicrafts/Artware of the constituent materials and accordingly claimed drawback separately on the constituent materials treating the goods as composite articles - appellants placed reliance on Circular No. 56/99-Cus., dated 26-8-1999 and produced the certificates issued by Metal Handicraft Service Centre and a few invoices stamped by the Export promotion Council for Handicrafts and based their claim for drawback on the fact that all the goods exported were handicrafts – Held that:- Since in this case neither any approval was taken from Commissioner of Central Excise/Customs nor discussions were held with certificate issuing authority, the decision taken by adjudicating/appellate authority to reject the respective handicraft certificate is liable to be set aside - matter back to original authority for de novo proceedings
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2012 (10) TMI 386
Refund claim of duty paid under protest rejected on ground that if the assessment is not challenged by filing any appeal, the refund claim made u/s 27 would not be maintainable - assessee imported Coking coal classifiable under heading 27011910 and claimed benefit of exemption Notification No.21/2002 - provisional assessment under Heading 27011910 @5% BCD - Held that:- The basic philosophy denying refund without challenging an Assessment Order, as held by the Apex Court in case of PRIYA BLUE INDUSTRIES LTD (2004 (9) TMI 105 - SUPREME COURT OF INDIA), rests on the principle that the proceedings of refund and filing of appeal against an assessment order are two separate proceedings and the scheme under the Act meticulously provides relief to the assessee, when the assessment order is not acceptable to him. It provides that when an assessee is aggrieved by the assessment order, the recourse open to him is to file an appeal before the appellate forum instead of asking for refund directly by short-circuiting the process of appeal prescribed to be followed under the Act, before the appropriate authority. Appeal filed by the Appellant is dismissed.
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2012 (10) TMI 385
Demand of duty – import of goods from Nepal - importer had claimed exemption under Notification 40/2002-Cus., - goods were intercepted by Directorate of Revenue Intelligence and seized under the belief that the importer had mis-declared the goods in the Bill of Entry for claiming the exemption under Notification 40/2002-Cus., - alleged that exemption under Notification 40/2002-Cus. was meant for goods of Napalese origin; the goods imported were pure Calcium Di-Pantothenate, classifiable under Customs Tariff Heading 29.36 and the goods were imported from Germany – Held that:- Case of the department is proved based on test reports - When the goods were available for testing and were tested and found to be different from what was declared, the appellant was just trying to avoid coming before the department - His agent was accepting that the certificate was forged - department did not make enquiries with the Nepal Chamber of Commerce which is stated to have issued the certificate is not a major flaw in investigation - no need for any joint visit by the Indian Customs and Napalese Customs to the factory of the exporter to find out the correctness of the certificate issued Whether goods could have been confiscated absolutely – alleged that goods were prohibited goods and liable to confiscation under 111(d) of the Customs Act – Held that:- Goods in question is not of a type which causes injury to public health or can cause damage or threat to the society if released into Indian market - goods have been sold by the Customs in Indian market - goods should have been released to the importer against a redemption fine rather than the customs department selling the goods after absolute confiscation. Value of the goods - Appellants have raised the objection that the basis for such assessment is not disclosed in the SCN or in the order-in-original - When the description was wrong the value declared cannot be accepted – Penalty – Held that:- Penalty imposed on the firm is about 45% of the assessed value of seized goods - Considering that goods were absolutely confiscated, and the relief from such order is being granted only after more than 8 years, and thus the appellant has suffered severe penal consequence we reduce the penalty
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Corporate Laws
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2012 (10) TMI 421
Oppression and mismanagement - scope of proceedings under Sections 397 and 398 - Held that:- As the first respondent herein had admitted in her first affidavit before the CLB that she had signed the memorandum of settlement of September 17, 2011 & there is nothing in the second affidavit by way of even a line of explanation as to what compelled the first respondent to admit her signature and her execution of the memorandum of settlement of September 17, 2011 or the changed circumstances under which she wished to retract therefrom. Upon the admitted execution of the share transfer forms and the handing over of the share certificates, and the subsequent registration of the transfer thereof, the respondents herein ceased to be shareholders of the company on the transfer being effected and could no longer pursue the proceedings under Section 397 and Section 398 whether on merits or for the oblique purpose of extracting further money for the sale of the shares or even for obtaining their rightful due therefor - the CLB ought to have focussed on the primary issue before it as to the permissibility of the continuation of the petition and not traversed beyond jurisdiction to ensure that the petitioners before it got their rightful due. The CLB should have appreciated that the petition under Sections 397 and 398 could no longer be prosecuted and ought to have left the petitioners before it free to canvass their grievance as to the inadequacy of the consideration before the appropriate forum. If the share certificates have been deposited by the appellants or their nominees with the CLB pursuant to the direction contained in the order impugned, they shall be immediately returned to the named holders thereof. If the sum of Rs.12,03,47,715 has been deposited by the respondents with the CLB, the respondents will be entitled to refund of the same immediately together with any accrued interest thereon.
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2012 (10) TMI 383
Winding up of the Company - Petitioners contended that order of winding up against the respondent company be passed because the respondent company has, according to the petitioner, lost capacity to discharge its financial obligations and it is unable to pay its debt. The amounts in dispute were deposited by the petitioner companies towards security deposit in pursuance of identical agreements entered into between the petitioner companies and the respondent co. the petitioners have terminated the agreement in accordance with the terms thereof and that therefore the respondent company is under obligation to return the amount deposited towards security deposit. However, despite repeated reminders and requests and even after due and proper service of statutory notice at the Registered Office of the respondent company, the payment has not been made. The petitioners, therefore, have filed present petition. Held that:- in case of the three petitioners the respondent has not refunded a total sum of Rs.16 lacs (between the three petitioners) and upon service of statutory notice, in its reply through advocate it has for the first time made reference of its right to forfeit the security deposit of the two petitioners. - it prima facie appears that the dispute or defence sought to be raised by the respondent in case of all three petitioners are in nature of afterthought and they are not genuine and bona fide but are, as described by the Apex Court, ingenious mask invented by the respondent to defeat the petition and seem to have been raised only with a view to shielding or hiding its neglect as well as inability to refund the security deposit and delay or frustrate the obligation to refund the deposits. - it becomes relevant and necessary to examine as to whether there is any bona fides in the dispute sought to be raised by the respondent or not. The respondent is directed to deposit in the Registry of this Court, within 30 days from receipt of the certified copy of present order, 30% of the deposited amount by each of the three petitioners, i.e. Rs.4.80 lakhs (Rupees Four Lakh Eighty Thousand only) in the interest of justice and the Registry shall list the three petitions being Company Petition Nos.179 of 2010, 181 of 2010 and 182 of 2010 on 16th July, 2012 for further orders.
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Service Tax
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2012 (10) TMI 449
Credit of service tax on the services provided by a security agency - Held that:- Proposal to give an opportunity to the appellant to submit a detailed worksheet to the adjudicating authority so that he can submit a verification report to prove or disprove the claim of the appellant that they have fully discharged taxes payable. This report will be taken into account at the time of final disposal of this appeal before the Tribunal. Interest on delayed payment - Held that:- The appellants produced on record a compilation record including the document which are required to be verified at the original adjudicating authority level. The appeal is being remanded, the issue of payment of interest would also be re-decided by the adjudicating authority.
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2012 (10) TMI 448
Goods transport agency (GTA) services - payment of service tax by using cenvat credit - Held that:- As decided in Nahar Industrial Enterprises Ltd case [2010 (5) TMI 608 - PUNJAB AND HARYANA HIGH COURT] a perusal of para 2.4.2 of CBEC’s Excise Manual of Supplementary Instructions shows that there is no legal bar to the utilization of Cenvat credit for the purpose of payment of service tax on the GTA services. Also as per Rule 3(4)(e) of the Cenvat Credit Rules, 2004 the Cenvat credit may be utilized for payment of service tax on any output service - in favour of assessee.
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2012 (10) TMI 447
Penalty – separate accounts – alleged that appellants availed cenvat credit in respect of even those services which were not covered by the provisions of Rule 6(5) providing for cenvat credit even when separate accounts are not maintained – Held that:- When the omission was pointed out, the appellants promptly reversed the cenvat credit - appellant is a public sector unit and having regard to the size of the company and the operations of the company and also the circumstances, availment of wrong credit has happened because of accounting error and is a mistake - provisions of Section 80 are invocable in this case - penalty imposed on the appellant is set aside
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2012 (10) TMI 446
Demand of service tax under transport of goods other than water through pipeline - manufacture and supply of Ready Mix Concrete – Held that:- Common meaning of pipeline would clearly mean a permanent long distance installation of pipes, which connect two terminal points and movement of gas or oil are metered at locations - appellants are not engaged in transportation of goods by pipe line or conduit. Nor they are engaged in making available pipelines as a mode of transport for people, who want to move goods through pipeline - activity of pumping ready-mix concrete at construction sites do not attract service tax under the category ‘transport of goods other than water through pipeline’
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2012 (10) TMI 408
Principle of natural justice - assessee contended that Commissioner (Appeals) has not dealt with various pleas raised by the appellant and has simply confirmed the demand, by giving an impression as if the appellant have admitted their duty liability and have not contested the same - Held that:- On comparison of paragraphs as reproduced in the order and is originally contained in the memo of appeal, it comes out clear that the appellate authority has only reproduced a part of said paragraphs, leaving out the balance lines. As such, the entire colour of the submissions made by the appellant got changed. Commissioner (Appeals), being the first appellate authority, is expected to go through the facts of the case as also the grounds raised before him, record the submissions made before him and to give his own finding on the same. Disposal of the appeal with distorted reproduction of appellant's submission and mere endorsement of the order of original adjudicating authority cannot be appreciated at all. Matter remanded to Commissioner (Appeals) for fresh decision.
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2012 (10) TMI 407
Setting aside of Penalty imposed - Held that:- Penalty imposed is set aside - No malafide intention and suppression of Facts by appellant - As decided in case of [DCM Textiles Versus Commissioner of Central Excise [2012] 35 STT 88 (NEWDELHI-CESTAT)] For imposition of Penalty the intention to evade the duty must be proved. Merely not obtaining service tax registration or non-payment of tax, cannot be a ground of evasion of duty - penalty set aside.
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2012 (10) TMI 406
Levy of Interest and Penalty on Service Tax paid on GTA Services - Held that:- Interest and penalty cannot be imposed as there is no failure to pay the duty at the time Liability to pay arises.As decided in case of [CCE v. Nahar Industrial Enterprises Ltd.2010 (5) TMI 608 - PUNJAB AND HARYANA HIGH COURT], Payment made initially through Cenvat credit was a good discharge of the tax liability and hence there cannot be a demand for interest. Tax paid again in cash only to avoid unnecessary litigation cannot be a reason to demand interest and as there was no delay in payment of Tax Liability Penalty cannot be imposed.
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2012 (10) TMI 378
Cenvat credit - assessee had taken service tax credit of service tax paid on civil construction work in the factory – Held that:- Services used in connection with the setting up, modernization, renovation or repair of the factory or premises of output service provider, or office relating to such factory or premises are covered by the definition of ‘input service’ - requirement of pre-deposit of Cenvat credit demand, interest and penalty is waived
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Central Excise
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2012 (10) TMI 420
Eligibility of documents for taking credit under the MODVAT SCHEME - gate passes issued prior to 1.4.1994 but endorsed after that date - Held that:- Under Section 35 (H) (1) (iv) r.w.r. 11 of Chapter 27 of Allahabad High Court Rules, the application should be disposed of after the Appellate Tribunal is required to draw up the statement of the case, and refer the question to the High Court, within 120 days after receipt of such direction. As in this case, the question was called on 4.1.2002. The Central Excise Reference Application should have been disposed of by now and it appears that by an error, the matter was directed to be listed after four weeks. Application is accordingly disposed of & If the Tribunal has not yet drawn up the statement of the case, and not referred the question, the same may be done without any further delay.
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2012 (10) TMI 419
Modvat credit denied - dealer only issuing invoices to the appellants without actually supplying the goods manufactured by them - Held that:- Remand the matter to the original adjudicating authority, by accepting their stand that the credit cannot be disallowed in respect of all the transactions especially when the manufacturer as also dealer have deposed in their submissions that it is only sometimes that they were issuing invoices without actual supply of goods - in favour of assessee by way of remand.
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2012 (10) TMI 418
Demand of duty and penalty - clandestine removal of goods – alleged that M/s. New Era Metals was created artificially to camouflage illicit clearances - M/s. New Era Metals was engaged in trading activities. They have procured aluminum profiles from seven other trading units – Held that:- Trading units have paid sales tax on the transaction involved and the sales tax assessment by the authorities is also finalized - There is no concrete evidence on record to show manufacture of the goods by the appellant in that case and its clearance through a trading firm - in the absence of any evidence of excess consumption of raw material or of electricity to support the allegation of excess production and their removal, the demand cannot be upheld on the basis of clandestine removal - in the absence of any tangible and sufficient evidences the demand is not sustainable. It is well settled law that such documentary evidences are required to be given preference over the oral statements.
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2012 (10) TMI 417
Disallowance of cenvat credit – CENVAT credit in question had been availed on MS Flats and MS Angles - alleged that the above items could not be treated as parts, components or accessories of any “capital goods” defined under Rule 2(a) of the CENVAT Credit Rules – Held that:- Officer inspect the said equipments to ascertain whether the flats and angles could be considered as capital goods or Inputs - respondent filed a declaration as to how flats and angles were used and also filed certain photographs in support of such declaration. If this submission is factually true, it shall be open to the original authority to consider such materials also in de novo proceedings - appeal is allowed by way of remand
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2012 (10) TMI 416
Recovery of dues - stay application pending before tribunal - Held that:- CESTAT is required to dispose of the applications for interim relief expeditiously and preferably within a period of three months from the date of receipt of a copy of this order. - Revenue shall not take coercive steps against the petitioner till the disposal of the interlocutory applications of the petitioner for recovery of the amount liable to be deposited by the petitioner
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2012 (10) TMI 415
Cenvat Credit - retrospective amendment or prospective amendment - The question was as to whether the Appellant had failed to reverse an amount equivalent to ten percent of the value of the goods from the Cenvat Credit account in relation to goods cleared to SEZ Developers. - Held that:- Tribunal in its impugned order has observed that prima facie the amendment by the notification dated 31 December 2008 could not be retrospective since it was not clarificatory. However, tribunal in Sujana Metal Products Pvt. Ltd. - (2011 (9) TMI 724 - CESTAT, BANGALORE) has taken the view therein that the amendment by the notification dated 31 December 2008 is clarificatory and hence retrospective in nature. Matter remanded to Tribunal for fresh consideration
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2012 (10) TMI 414
Rebate claims – export – alleged that adjudicating authority has erred in sanctioning rebate amount in cash without ascertaining the correct value under Section 4 of the Central Excise Act, 1944 and without deducting from FOB value of all post removal expenses incurred factory gate onwards – whether in case of export, the place of removal is not factory gate but the place where the delivery of the consignment is given to the buyer and property in the form of goods is passed on to the buyer – Held that:- Place of removal may be factory/warehouse, a depot, premise of a consignment agent or any other place of removal from where the excisable goods are to be sold for delivery at place of removal - department has not determined the place of removal as per the statutory provision - it is essential to first determine the place of removal and then decide as to what shall be the assessable value under Section 4 - original authority directed to determine the place of removal taking into account the above observation and decide the rebate claims accordingly
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2012 (10) TMI 413
Restoration of appeal – delay in filing appeal - non-compliance with the requirement of pre-deposit – Held that:- Only 50% of the amount required to be deposited has been deposited and restoration application has been filed after 4˝ years. Because of the inordinate delay in filing the restoration application, the arguments regarding merits of the case cannot be considered without considering the plea of ld. SDR about delay in filing the application - application filed with such a delay for restoration of appeal, cannot be considered
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2012 (10) TMI 384
Clandestine manufacturing activity - 100% EOU for manufacture of Needles - One cannulae was needed for manufacturing one needle – alleged that stock as per RG-1 was nil on 26-7-2000 and there was no production recorded – Held that:- Unaccounted final products are seized from the possession of the Appellants. Their private records showed receipt and issue of cannulae - appellants had manufactured the needles as alleged. As a Hundred Percent EOU they were supposed to maintain account of raw materials and finished goods. They preferred to show these items to be nil and to continue manufacturing activity - confiscation of needles under the provisions of Central Excise Rules is upheld - redemption fine on needles is upheld.
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2012 (10) TMI 382
Valuation of aerated waters - whether rental charges was to be added to the assessable value or to be allowed as deduction - Held that:- Renting of containers in the case of packing of gases and liquids in reusable containers is a common trade practice. This is an ancillary or allied venture and the gains or profits from this activity are not to be added to the assessable value of the goods as decided in INDIAN OXYGEN LTD. Versus COLLECTOR OF C.E. [1988 (7) TMI 58 - SUPREME COURT OF INDIA]. The show-cause notices issued did not question the correctness of the amount claimed as rental on crates amounting to Rs. 15.23. On behalf of the assessee, it was also submitted that the rental could vary based on the nature of crates such as plastic or wooden. Thus the Commissioner despite having rejected the allegation of relationship, accepted the sale price, and in-principle accepted the deduction towards rental charges, has given no valid reasons to disallow part of the value claimed towards such rental on crates especially in the absence of any allegation that the amount claimed was inflated with a view to suppress the assessable value - in favour of assessee. Commissioner dropped the demand on the portions of value representing cost of advertisement and on the notional interest on advance deposit - Held that:- Regarding the dropping of demand on advertisement expenses as these expenses cannot be attributed to activities aimed at promotion of the product. Therefore, the Commissioner's reliance placed on the decision in the case of Philips India Ltd. [1997 (2) TMI 120 - SUPREME COURT OF INDIA] cannot be faulted - dropping of the demand relating to advance deposits as the department is presuming that such deposits must have been taken from all dealers on the ground that aerated waters could be supplied only in bottles and carried in crates. Such presumption cannot be the basis for confirming a demand. No evidence was adduced to show that taking a deposit has reduced the assessable value of the subject goods - in favour of assessee.
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2012 (10) TMI 381
Refund claim of duty paid on transportation charges - revenue contention that refund claims filed were barred by limitation - Held that:- The assessee addressed the communication to the Asstt. Commissioner for treating the assessment as provisional. Merely because the Asstt. Commissioner did not pass the order for provisional assessment cannot be held to be deterrent to the assessees stand. It was the duty of proper officer to accept the above request for treating the assessment provisional and to pass appropriate orders. The lapse on the part of the Asstt. Commissioner cannot be taken as a ground by the Revenue for treating the demands as barred by limitation thus the refund claims are not hit by bar of limitation - in favour of assessee.
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2012 (10) TMI 380
Restoration of the Appeal – appeal dismissed earlier for want of clearance from the Committee on Disputes – Held that:- Once it is apparent that merely on the ground of refusal of the permission by the Committee on Disputes, the appeal could not have been dismissed and yet the appeal was dismissed solely on the said ground, as rightly pointed out on behalf of the department, such an order deserves to be recalled
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2012 (10) TMI 379
Demand of duty and interest - appellant were manufacturing Pan Masala containing tobacco up to Retail Sale Price (RSP) of Rs. 1.05 per pouch and paid the duty @ Rs. 12 lakhs per packing machine per month - alleged that besides packing Gutkha with RSP of Rs. 1.50 per pouch, the Appellants were also manufacturing Gutkha weighing 2 gm per pouch having no printed RSP on the pouches for export purposes – Held that:- Rate of duty is to be determined only with reference to pouches on which RSP is fixed - This is a case where the department is trying to fix, duty rate with reference to cases where RSP was not fixed - It is not as if the Appellants were required to fix RSP and they had not affixed. They were not required to fix RSP on such pouches and there is no case of the Revenue to work out RSP on such export goods based on its own method which had no sanction under law - this is not a case where any revenue loss has really happened to the exchequer but the Revenue is trying to give its own interpretation to the law which did not deal with the situation at hand – demand and interest set aside
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2012 (10) TMI 377
Demand of duty and penalty - clandestine production and removal – alleged that Computer printouts showing clearance of SS Flats were seized – Held that:- Evidence of one of co-noticee cannot be relied upon against another co-noticee, unless it is corroborated by independent evidence - merely because incriminating oral evidence is recorded the same is not sufficient to establish a serious charge of clandestine production and removal of excisable goods - computer printouts are hit by the provisions of Section 36B(2) of the Central Excise Act. The genuineness of other loose slips is required to be established with corroborative evidence - duty demand on SS Flats is misdirected against them as they have admittedly never manufactured SS Flats but they are the manufacturers of SS Ingots only and there is no duty demand on SS Ingots - order set aside and matter remanded to the Commissioner for de novo adjudication
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2012 (10) TMI 376
Writ petition - time-limit – Held that:- High Court under Writ jurisdiction cannot direct the custom authorities to ignore time-limit prescribed under Section 27 of Customs Act, 1962 even though High Court itself may not be bound by the time-limit of the said Section - Custom authorities, who are the creatures of the Customs Act, cannot be directed to ignore or cut contrary to Section 27 of Customs Act - As Section 11B of the Central Excise Act, 1944 provides for the time-limit and there is no provision to extend this time limit. As such the revision application is clearly time-barred as it was filed after the time-limit specified under Section 11B of Central Excise Act, 1944.
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CST, VAT & Sales Tax
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2012 (10) TMI 450
Ujala Supreme - taxable @ 4% OR 12.5% - whether the product is substantially the same as its original material AVP or has it undergone a manufacturing process to transform itself into a commercially distinct identifiable end product - Held that:- The product “Ujala Supreme” though is a highly diluted form of Acid Violate Paste (AVP), as has been rightly held by the learned Single Judge, it retains the essential characteristics of AVP. Therefore, it cannot be said to be commercially distinct and different from the user product AVP, which is covered by Entry 114 of schedule II-C to the Act. Thus referring to Hon’ble Supreme Court in the well known case of UNION OF INDIA Versus DELHI CLOTH AND GENERAL MILLS CO. LTD.(1962 (10) TMI 1 - SUPREME COURT OF INDIA) that manufacture signifies bringing into existence a new substance and not merely to effect a change in one. Therefore, no justifiable reason to accept the submission of the appellant State that the product emerges out of a manufacturing process and to place the product in the residuary category in the fifth schedule to the Act. Therefore no different from the one taken by the learned Single Judge can be taken - in favour of assessee.
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2012 (10) TMI 409
Evasion of tax - non furnishing of the set of documents viz. Bill/invoice and GR at the ICC in respect of the consignment of 370 bags of 'Bidis' - Penalty imposed u/s 51(7) (b) of the Punjab Value Added Tax Act, 2005 - Held that:- As due to over-sight of driver he had left the invoice No.1900505 covering 370 bags in the vehicle and on being pointed out by the officer on duty, the driver went back and picked up the remaining documents from the vehicle and produced the same before the officer-in-charge. If the driver had been hiding to evade the payment of tax, he would have kept back Form ELTA-12 as well as Declaration Form-85. When all the documents relating to 370 bags were genuine, proper and complete in all respects and the transaction was voluntarily reported at the ICC, it would be treading in the realm of injustice to uphold the penalty. Leaving behind invoice No.1900505 ibid on the seat, does not seem to be intentional, rather oversight, which being a human mistake was rectifiable and by producing the same within no time before the officer on duty was rectified. The act being attributed to the driver, in no manner, was violative of the provisions of Section 51(2) of the Act. Consequently, the Penalizing Officer was not justified in imposing the penalty under Section 51(7)(b) of the Act, nor the first appellate authority has directed himself in the right perspective by affirming the findings of the officer incharge- cum-ETO, ICC Khallar Khera - in favour of assessee.
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Indian Laws
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2012 (10) TMI 410
Non issuing tickets to the passengers inspite of collecting the fare - punishment of removal from service to the guilty workman - Industrial Adjudicator deleted order of removal of the respondent workman from service - Held that:- The Industrial Adjudicator in the order dated 17th December, 2009 has given as many as three reasons for holding the departmental inquiry to be bad i.e. of the passengers during the inquiry having not supported the case of the checking staff, cash having not been checked by the checking staff and the appellant having not appointed the Presenting Officer. Merely, because sufficient opportunity of hearing had been given to the respondent workman alone is not sufficient for upholding the departmental inquiry. The Supreme Court in Indian Iron & Steel Co. Ltd. v. Their Workmen AIR [1957 (10) TMI 21 - SUPREME COURT] has held that though the management of a concern has power to direct its own internal administration and discipline but the power is not unlimited and when a dispute arises, the Industrial Adjudicator has the power to see whether the termination of service of a workman is justified. It was further held that though in cases of dismissal on misconduct the Industrial Adjudicator is not to act as a court of appeal and substitute its own judgment for that of the management but the Industrial Adjudicator will interfere when there is want of good faith OR when there is victimization or unfair labour practice OR when the management has been guilty of a basic error or violation of a principle of natural justice and when on the material on record the finding is completely baseless or perverse. Thus each of the three reasons given by the Industrial Adjudicator for holding the inquiry to be bad was sufficient for setting aside the same.
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