Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 23, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Penalty u/s 271(1)(c) of the Income Tax Act, when assessee was assessed and had paid tax under MAT provisions – there cannot be imposition of penalty under Section 271(1)(c) of the Act for addition made under the normal provisions - HC
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Allowance of Interest expenditure u/s 36(1)(iii) - In case of real estate business, the said setting up of business was complete when first steps were taken by the respondent-assessee to look around and negotiate with parties - HC
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Taxability of assessee, who falls within section 44BB of the Income Tax act – Appellant assessee himself referred the case prejudicial to it - decided against the assessee - HC
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Charitable trust - The donation is not to set up any scholarship fund, but for scholarship to be granted to the individual students, forming part of the regular expenditure of the done- trust and, as such, not a corpus donation - exemption allowed - AT
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Overseas Commission Agent - Liability For TDS u/s 195 - There is no element of 'agency' to attract the provisions of section 194H - The overseas parties do not sell the goods as agents of the assessee-company - book entries in books of account are not conclusive - AT
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Penalty u/s 271(1)(c) - when the Assessing Officer is not able to prove that the assessee was guilty of fraud or gross or willful negligence, penalty cannot be sustained - AT
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Deduction of Partner’s Remuneration from additional Business Income surrendered during survey u/a 133A - there is no restriction - claim allowed - AT
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TDS on renting of pipelines for for transportation of GAS – provision of section 194C are applicable, and not section 194I, and therefore, interest under section 201(1A) is not payable by the assessee - AT
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Allowance of arbitration award as expenditure – prior period - The award was passed on 20th July, 2006 and accounts were finalized and audited on 12th September, 2006 i.e. after the date of order - this can be allowed as an expenditure in year 07-08. - AT
Customs
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Calculation under export obligation - the export proceeds realized in any currency would be converted into USD and the term ‘any currency’ would refer to the foreign currency realized through exports, since the aim of the scheme was to promote foreign exchange earnings in fully convertible currency. Subsequent de-valuation of the rupee cannot come to the aid of the appellant - HC
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Temporary licence as Customs House Agent -Merely because the petitioners were granted with a temporary licence, they cannot seek continuation even after its expiry without achieving the prescribed qualification under the changed Regulations - HC
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Settlement of cases - we need not confuse with respect to the submission based upon the definition of adjudicating authority as expression “adjudication” has been clearly used and an application under section 127B(1) has to be filed before the adjudication is made - HC
Corporate Law
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Dishonour of cheque - There is no averment that the two accused herein were in charge of and responsible for the conduct of the business of the company at the time the offence was committed. - proceedings dropped - SC
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Proceedings against the additional director who has resigned before the AGM but his resignation was not accepted by the company - proceedings to be dropped - HC
Indian Laws
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The deed of agreement having been insufficiently stamped, the same was inadmissible in evidence. - Duty as required, has not been paid and, hence, the same is inadmissible in evidence - SC
Service Tax
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Taxability of Cleaning service provided to charitable school - Whether the building of ISB can be considered as a commercial building - prima facie the activity is not taxable - AT
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Denial of CENVAT Credit - input services for the purpose of renting of immovable property - input services for setting up of factory premises - Management, Maintenance or Repair Service - stay granted partly - AT
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Job Work - Business auxiliary services - Manufacture - Whether the conversion of pipes/tubes by undertaking the processes by the appellants amounts to manufacture or not - stay granted - AT
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Nature of sercvies - Man power supply or job work - Grinding of coffee beans and thereafter mixing it with chicory and packing of such coffee powder - So Prima facie, this is a case of job work rather than supply of man power - AT
Central Excise
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Determination of Assessable Value – stock transfer - mere ‘Terminalling Charges’ shown in the stock-transferred invoices would not itself attract excise duty, unless it is shown that the same are also recovered from the customers - AT
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Removal of Inputs / Capital Goods As such – The revenue cannot argue against its own Circular, when the Board has stated that the provisions of the Rule 3(5) of the Cenvat Credit Rules, 2004 would apply in respect of the capital goods and inputs on which credit has been availed are removed as such - AT
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When the differential duty required to be paid is available as credit to the same appellant’s own recipient unit, the interest on such differential value is required to be charged or not - prima facie appellant is liable to discharge interest liability - AT
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Exemption under Notification No. 3/2006 - Whether ‘cadbury perk’ can be called as wafer biscuits or not - it may not be correct to take a view to deny the exemption that it is not a wafer biscuit - stay granted - AT
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Affixation of MRP - switchgear products i.e. electrical goods such as contractors, relay, pushbutton switches, Moulded Case Circuit Breaker (MCCB), etc. - sale through dealers/distributors - commodities are meant for industrial or institutional consumers - matter referred to larger bench - AT
VAT
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Classification of goods - the uprooted tress had become waste one, hence could be used as firewood - exempted from sales tax - HC
Case Laws:
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Income Tax
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2013 (10) TMI 883
Burden of Proof - Unexplained cash credit – Held that:- The assessee, apart from furnishing the permanent account number of the creditor, has also furnished their balance sheet, copy of income tax return, confirmation, bank account etc. -The amount advanced to the assessee is duly disclosed in the balance sheet of all the creditors - Even the assessee has also explained the source of cash deposited in the bank account of the creditors - the initial onus which lay upon the assessee was duly discharged - If the Assessing Officer wanted to examine the issue further, he could have very well issued notice under Section 131 to the creditors which has not been done by the Revenue – Following Commissioner of Income-Tax, Orissa V/s Orissa Corporation Pvt. Limited [1986 (3) TMI 3 - SUPREME Court] - the assessee has duly discharged the onus of proving the cash credit in the name of all the three creditors - the addition sustained by the learned CIT(A) for unexplained was deleted cash credit - Decided in favour of Assessee. Disallowance of Several Expenses - The assessee is an individual and the personal use of vehicle by the assessee and his family members cannot be ruled out - the Assessing Officer has disallowed 1/5th out of diwali expenses, telephone expenses, sales promotion expenses and miscellaneous expenses - these expenses are supported by self-made vouchers only which are not verifiable - 1/5th disallowance out of car and conveyance expenses as well as diwali, telephone, sales promotion and miscellaneous expenses is fair and reasonable – Decided against Assessee. Addition of Low Household Expenses – Held that:- The Assessing Officer has found that the total withdrawal for household by the assessee and his wife was only Rs. 1,11,578 - the household expenses at Rs. 12,000/- per month - the estimate of Rs. 12,000/- per month for household expenses is quite fair and reasonable – Decided against Assessee.
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2013 (10) TMI 882
Addition on account of 69B of Income Tax Act – Addition after making reference to the 3CD report wherein unsecured loans of Rs.4.6 crores and repayment of Rs.4.52 crores were recorded. The Assessing Officer observed that during the scrutiny proceedings, the respondent-assessee had shown loan amount of Rs.4.25 crores and repayment of Rs.3.32 cores – Held that:- Assessing Officer had made an error in reading the 3CD report and has recorded that the respondent-assessee had actually received Rs.4.35 crores. The amounts were received from E-City Entertainment India (P) Ltd. and Taneja Developers & Infrastructures Ltd. Similarly, with regard to repayment, the details/documents was examined and it was held that the respondent-assessee had paid Rs.4,52,40,721/- to E-City Entertainment India (P) Ltd. and Taneja Developers & Infrastructures Ltd - Departmental representative was not able to demonstrate any factual error – No document has been filed to controvert the above findings – Decided against the Revenue.
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2013 (10) TMI 881
Penalty u/s 271(1)(c) of the Income Tax Act, when assessee was assessed and had paid tax under MAT provisions – Held that:- Reliance has been placed upon the decision of the Delhi High Court in Commissioner of Income Tax versus Nalwa Sons Investments Limited, [2010 (8) TMI 40 - DELHI HIGH COURT] wherein it has been held that when taxable income is computed on book profits under Section 115JB and not under the normal provisions, Explanation (4) has to be accordingly applied. In view of the said Explanation, the additions made by the Assessing Officer under the normal provisions are totally irrelevant - Thus, there cannot be imposition of penalty under Section 271(1)(c) of the Act for addition made under the normal provisions – Decided in favor of Assessee.
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2013 (10) TMI 880
Allowance of Interest expenditure u/s 36(1)(iii) of the Income Tax Act – date of commencement of real estate business - Held that:- Respondent company was incorporated on 4th August, 2005, i.e., in the last Assessment Year 2006-07. It had entered into a Memorandum of Understanding dated 31st May, 2006 with third parties in respect of a project near Chandigarh, Mohali, Punjab. Subsequently, joint venture agreement dated 5th July, 2006 was executed between the respondent and third parties - Loan of ₹ 25 crores was taken by the respondent-assessee on 16th May, 2006 - Date of setting up of business depends upon facts and the nature of the business - In case of real estate business, the said setting up of business was complete when first steps were taken by the respondent-assessee to look around and negotiate with parties. There can be a gap between setting up and when first steps were taken by the respondent and finalisation of the first written agreement. Business activities of the respondent did not require construction of a factory, machinery etc. Negotiations are required to enter into a written understanding and it is obvious that the loan was taken for business and to proceed further and conclude the deal – Deduction of interest allowed u/s 36(1)(iii) – Decided against the Revenue.
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2013 (10) TMI 879
Taxability of assessee, who falls within section 44BB of the Income Tax act – Appellant assessee himself referred the case prejudicial to it – Held that:- Assessee has referred the case CIT vs. Halliburton Offshore Services Inc., [2007 (9) TMI 230 - UTTARAKHAND HIGH COURT], and submitted that the case of the assessee is covered by the said decision – Through the decision in the abovementioned case, an impression was given by the assessee, itself, to the Tribunal that any payment received by an assessee, who falls within Section 44BB, will be taxed in accordance with the mandate contained therein - In the grounds of appeal, there is not even a single whisper that it was not the assessee, who had brought to the notice of the Tribunal the said judgment of this Court and it was not the assessee, who had submitted that the issue raised in the appeal before the Tribunal was covered by the said judgment – Decided against the Assessee.
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2013 (10) TMI 878
Allowance of the loss on re-valuation of foreign currency u/s 43(2) of the Income Tax Act – Held that:- Relying upon the decision of the case Padamjee Pulp & Paper Mills Ltd. V/s. CIT reported in [1993 (10) TMI 16 - BOMBAY High Court], it was decided against the Revenue. Deduction on account of enhancement of lease rental - section 37(1) - Held that:- the finding of fact recorded by the Tribunal is that the variation in the lease rental was made on account of increase in the lease deposit. This variation was held to be based on commercial consideration. Thus, the conclusion of the CIT(A) in that regard was upheld. - Decided against the revenue.
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2013 (10) TMI 877
Whether the issue framed is a question of law to be heard before supreme court of india - Purchases of internal manufactured assets for the purposes of deduction under Section 32AB of the Act – Held that:- This is a substantial question of law which needs to be decided by the High Court in the pending appeal.
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2013 (10) TMI 876
Modification application to modify the grounds of appeal – Held that:- At that juncture, the court shall address to the issue whether a substantial question of law as sought to be introduced by way of amendments could have been incorporated in the appeal which has been preferred by the revenue and pending before the High Court without assailing the other judgment of the Income Tax Appellate Tribunal - Once an amendment is allowed by way of an interim measure, his opposition that no appeal has been preferred against the judgments of Income Tax Appellate Tribunal, would become frustrated – Hence, modified the order of High Court – Decided in favor of Assessee.
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2013 (10) TMI 875
Charitable trust - claiming deduction u/s 24 on account of repair from rental income - Held that:- The claim is, by all counts, without merit. This is for the simple reason that the income of a charitable trust or institution, subject to its application for charitable purposes, for which it has been in fact formed (per its constituting charter) is exempt from tax under Chapter III (ss.10 to 13B) of the Act. The said income does not form part of the total income of the entity to which it arises or accrues or is received by. It is only the income forming part of the total income u/s.2(45) of the Act, which is to be classified under the various heads of the income u/s.14 and, accordingly, subject to the computation provisions of Chapter IV (ss. 14 to 59) of the Act. The expenditure incurred in earning the same is, likewise, and only understandably, not to be taken into account in computing the total income under the Act, which represents trite law, and toward which a separate section (sec. 14A) has since been inserted by Finance Act, 2001 with retrospective effect from 01.04.1962. - Decided against the assessee. Exemption u/s 11(1)(a) of the Income Tax Act – Donation made to TEF, a charitable institution under the same management - Held that:- The law in the matter is by now well settled, so that donation by one charitable trust to another would entitle the donor fund to claim exemption qua application of income u/s. 11(1). As pointed out by the hon'ble court in Sarladevi Sarabhai Trust (No. 2) (1988 (3) TMI 53 - GUJARAT High Court), it would make no difference if the donation is toward the corpus of the donee-fund, so that it is only the income therefrom, and not the donation sum itself, that is liable to be spent for or utilized for the charitable purposes of the recipient. The word 'application' has a wider connotation than the word 'spent', so that an application of income of the donor trust could not be denied. Again, the corpus fund may not necessarily be invested in specified securities but could also be toward capital expenditure, which again qualifies as an application of income. The amount of Rs. 20.80 lacs is paid to TEF for the scholarship to students of Tolani Maritime Institute, being run by it, i.e., the payee-trust. The same is clearly an application of income to that extent and, in fact, stands reflected in the income & expenditure account - The donation is not to set up any scholarship fund, but for scholarship to be granted to the individual students, forming part of the regular expenditure of the done- trust and, as such, not a corpus donation, as stated in the relevant receipt. However, this would not materially impact; rather, only enhances the assessee's case inasmuch as one of the Revenue's objections was of the same being toward the corpus of the donee. The same would, therefore, without doubt, qualify for exemption u/s. 11(1)(a).
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2013 (10) TMI 874
Revision of Order prejudicial to Revenue as per Section 263 – Disallowance u/s 14A r.w. Rule 8D of I.T. Rules - Held that:- It cannot be said that assessing officer has taken a possible view in the matter as the same has been done without making any inquiry as to how figure of disallowance has been worked out by the assessee - The law is settled that if AO had passed an order without properly conducting the inquiry, the same can be held to be erroneous and prejudicial to the interest of revenue - AO has accepted the suo moto disallowance u/s. 14A of the Act without going into the details as to how this figure was worked out by the assessee and no query being raised by the AO during the assessment proceedings in this regard, CIT has rightly invoked the provision of Section 263 of the Act - the order passed by Ld. CIT u/s. 263 upheld – Decided against Assessee.
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2013 (10) TMI 873
Overseas Commission Agent - Liability For TDS u/s 195 - Applicability of Section 194H – Held that:- The assessee has been exporting its goods to the non-residents introduced to it by local agents on commission basis - The modus of drawing invoices and recording the transaction in the books has been stated - the amount represents a discount given to the purchases and not a business commission - Once the export invoice is raised and the goods are delivered, the sale transaction is complete - These transactions are found to be on principal to principal basis - There is no element of 'agency' to attract the provisions of section 194H - The overseas parties do not sell the goods as agents of the assessee-company - The assessee is not crediting the personal accounts of the overseas parties - existence or absence of entries in the books of account is not a decisive or a conclusive factor in ascertaining the income or claiming the expenditure - Therefore, no such disallowance u/s 37(1) can be made without appreciating the real nature of the entries made in the books of account - the CIT (A) has correctly deleted the addition – Decided against Revenue. Deletion u/s 40A (2)(b) - There are no instances on similar market conditions for similar quality of the yarn, higher price has been paid to the sister concern than the outsiders - So, no adhoc disallowance in this account is sustainable - it cannot be held that assessee has paid higher price to its sister concern than what was the cost to the assessee for producing the similar quality of the finished fabric. The comparative chart of yarn purchased from M/s PSL International at an average rate of Rs. 125/- per kg is supported by copies of invoices - It is noticed that the purchases from M/s PSL International is at the prevailing market rate - the rate at which purchase of yearn is made from M/s PSL International P. Ltd is comparable to the rate at which purchases are made from third/other parties - The adhoc disallowance at the rate of 1% cannot be approved - The A.O. has not given a finding that the payment made by the assessee is excessive or unreasonable having regard to the fair market value of the goods - This opinion has to be framed before invoking section 40A(2)(a) of the Act – Relying upon Upper India Publishing House [P] Ltd Vs. CIT [1978 (12) TMI 2 - SUPREME Court] - Decided against Revenue. Disallowance of Excess Interest – Held that:- The assessee-company has explained that where payment is made within 30 days interest is paid @ 18% and in other cases, interest is paid @ 21% - This fact has not been disputed by the revenue - The rate of interest chargeable for delayed payments are mentioned in the invoices itself - this clearly established payment policy of the assessee-company – Decided against Revenue.
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2013 (10) TMI 872
Method for Computing Arm’s length Price – Opportunity of Being Heard – Addition under Arm’s Length Price – Comparison of Like with Like – Held that:- it is quite clear that no such addition has been ultimately made in the computation of income by the Assessing Officer and tax liability in relation to such adjustment has not been determined against the assessee - the only premise that can be drawn is that the grievances raised in the Grounds of Appeal relating to the addition in respect of international transactions of the manufacturing wire segment, as proposed by the TPO in his order do not arise out of the impugned order of the Assessing Officer passed under Section 143(3) read with Section 144C(13) of the Act - the Grounds do not require any adjudication for the present - if in future the Assessing Officer takes steps to give effect to the said addition and determine tax liability thereof, assessee shall be at liberty to appeal against such addition, if so advised in law - the Grounds of Appeal in respect of international transactions of manufacturing wire segment was dismissed as they do not arise out of order of the Assessing Officer - Decided against Assessee. Rejection of Transfer Pricing Analysis – Held that:- The TPO has clearly misdirected himself in computing the transfer pricing adjustment in respect of all transactions of the assessee's Tools manufacturing segment and not limiting it to the transactions with the AEs - the entire exercise of conducting a transfer pricing analysis is to compute ALP of an international transaction alone - the adjustment that is required to be made is to be limited to the international transactions with the AEs and not to the entity/segmental level transactions – Relying upon IL Jin Electronics (I) (P.) Ltd. Versus Assistant Commissioner of Income-tax , Circle-11(1), New Delhi [2009 (11) TMI 669 - ITAT DELHI] - There was enough merit in the plea of the assessee and conclude by directing the Assessing Officer to re-compute the adjustment only with regard to the transactions in the Tools manufacturing segment carried out with the AEs and not to the entire transactions in the segment which include the transactions with the non-AEs also - Decided in favour of Assessee. Opportunity of Being Heard – Held that :- Following Tin Box Company vs. CIT [2001 (2) TMI 13 - SUPREME Court] - once it is established that the Assessing Officer had not given to the assessee an appropriate opportunity of being heard, that the assessee had an opportunity before the higher appellate authorities was really of no consequence, for it was the assessment order that counted inasmuch as the assessment order was required to be made only after the assessee had been allowed a reasonable opportunity of being heard - The issue of the PLI adopted by the assessee in respect of Tools manufacturing segment of Operating Profit/Operating Revenue is concerned, the same has been altered by the TPO without giving the assessee any opportunity of being heard - the matter ought to be remanded back to the AO/TPO for consideration afresh – Decided in favour of Assessee. Addition made in Arm’s Length Price – Held that:- For the purpose of determination of ALP, an international transaction has to be compared with uncontrolled and unrelated transactions by using the data relating to the financial year in which the international transaction has been entered into - the assertion of the TPO that the said concern is functionally incomparable is a mere bald assertion devoid of factual support - the action of the TPO in excluding the said concern is not well founded and is liable to be set-aside - it cannot be said that the concern is consistently loss-making and accordingly, there was not enough reasons to sustain the action of the TPO in excluding the said concern from the list of comparable - the PLI of assessee's Tools management segment is higher than the arithmetic mean of comparable margins, thus the international transactions between the assessee and the AEs in respect of Tools management segment can be considered to be at arm's length price from the Indian Transfer pricing perspective – Decided in favour of Assessee. The Assessing Officer is directed to re-compute the ALP of the international transactions in respect of the Tools manufacturing segment.
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2013 (10) TMI 871
Penalty u/s 271(1)(c) of the Income Tax Act – Held that:- As per decision in case of Reliance Petroproducts Pvt.Ltd.[ 2010 (3) TMI 80 - SUPREME COURT], it was stated by the Hon'ble Jurisdictional High Court that mere submitting a claim which is incorrect in law would not amount to giving inaccurate particulars of the income of the assessee but if the claim, besides being incorrect in law is mala fide, Explanation 1 to Section 271(1)(c) would come into play – However, in the present case, assessee has not made any claim for deduction which is found to be not allowable by the Assessing Officer. Assessee is manufacturing home decorative items, cutlery, tableware etc. which are being supplied to its associated enterprise viz., Michael Aram Inc., USA. Since the transaction of sale between the assessee and associated enterprise was international transaction, the matter was referred to TPO for determining the arm's length price. The TPO determined the arm's length price at more than the sale consideration shown by the assessee - Whatever sale consideration was received by the assessee from its associated enterprise was duly accounted for. It is also not in dispute that the assessee has furnished all the particulars with regard to sale made to associated enterprise. The details supplied by the assessee in its return of income are not found to be incorrect or erroneous or false. Merely because some adjustment is made by applying transfer pricing provisions, it cannot be said that there was any concealment of income or furnishing of inaccurate particulars – Decided in favor of Assessee.
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2013 (10) TMI 870
Penalty u/s 271(1)(c) of the Income Tax Act for disallowance of entire commission payments made in the quantum proceedings by the Assessing Officer – Held that:- Disallowance out of commission payments sustained by the Tribunal is merely by estimation of the excess amount of expenditure which the assessee might have been claimed by the assessee, and further, since such disallowance has been made on the basis of the material furnished by the assessee itself and already available on record, this is not a fit case for imposition of the penalty under S.271(1)(c) of the Act - Further, unless the claim of the assessee was proved to be bogus or that any amount was received back by the assessee, the disallowance of the expenditure by itself, cannot be a reason for levy of penalty. The addition is only on account of difference in estimation of expenditure liable for disallowance made by the Assessing Officer and the Tribunal, and the claim of the assessee itself was not found to be bogus. The Assessing Officer could not prove that there was willful or gross negligence on the part of the assessee, resulting thereby either in concealment of income or furnishing inaccurate particulars of income. As per Allahabad High Court in the case of CIT V/s. K.L. Mangal Sain[1974 (5) TMI 6 - ALLAHABAD High Court], when the Assessing Officer is not able to prove that the assessee was guilty of fraud or gross or willful negligence, penalty cannot be sustained - Considering totality of facts and circumstances of the case on hand, this is not a fit case for levy of penalty – Decided in favor of Assessee.
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2013 (10) TMI 869
Penalty u/s 271(1)(c) of the Income Tax Act - Held that:- As regards, partner's capital and cash credits of Rs.32,37,280/- and Rs.18,05,000/-, the learned CIT(A) in quantum has allowed the relief to the assessee and the ITAT 'D' Bench Ahmedabad, Revenue appeal is dismissed - Therefore, when the basis of the addition does not exist, then no penalty can subsist - As regards, the penalty on the cash credit of Rs.1,50,000/- regarding to Mr. Mathew no details have been furnished by the assessee before any of the authorities - In the facts and circumstances of the case, the assessee has concealed the income and furnished inaccurate particulars of income – AO is right in levying the penalty with regard to the cash credit of Rs.1,50,000/- relating to Mr. Mathew and the same is hereby confirmed.
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2013 (10) TMI 868
Deduction of Partner’s Remuneration from additional Business Income surrendered during survey u/a 133A - Held that:- The assessee had offered the same as business income but source of the same was not known and also income was not declared under any head of regular profit and loss account - As per the provisions of section 40(b), a partner of the firm would be allowed remuneration from the business profit declared by the Assessee for the particular year and for determining the book profits for the purpose of determining the remuneration the income disclosed during survey u/s 133 A cannot be considered as part of the business profits. DCIT Vs. M/s. Shree Labdhi Prints 2012 (11) TMI 442 - CESTAT, AHMEDABAD ] - additional income for taxation during the course of survey is accepted as business income of the assessee and there is no bar in the Act from claiming partners remuneration on such additional business income – the order of the learned CIT(A) reversed and the AO is directed to allow the claim of the assessee – Decided in favour of Assessee.
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2013 (10) TMI 867
TDS on renting of pipelines for for transportation of GAS – TDS to be deducted u/s 194C or u/s 194I of the Income Tax Act - Assessee has made payment of gas transportation charges to Gujarat State Petronet limited for F.Y.2007-2008 at Rs.22,81,69,361/- – Held that:- Since there is no control over the pipeline from transporters and the contract for transport by any mode other than rail way, was specifically covered under section 194C of the Act - Present appeal is covered by the provision of section 194C, and not under section 194I of the Act, and therefore, interest under section 201(1A) is not payable by the assessee – Decided against the Revenue.
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2013 (10) TMI 866
Unexplained Cash Credit u/s 68 - Whether the CIT (A) has erred in confirming the addition considering the amount of cash deposited to bank as unexplained cash credit u/s 68 - The show cause notice was given to the assessee to explain the source and the genuineness of the cash deposited from time to time, which has not been explained satisfactorily – Following CIT Vs. KS.Dattareya [2012 (6) TMI 439 - Karnataka High Court ] - mentioning of wrong section does not change the sum and substance of the findings of the AO - the assessee has not been able to substantiate or prove the source and genuineness of the cash deposits made at twenty-two occasions in his bank account - there was no infirmity in the order of the learned CIT(A) on the issue. As regards amount claimed to have been saved by the assessee out of his salary income drawn during the year - For verification, notice under section 133(6) of the Act was given to the employer of the assessee, which was not replied - The assessee has not placed on record, how and where the saving in the last 18 years were kept - It is unbelievable that an assessee for the last 18 years has been savings the salary in cash and keeping the same with him in the same form at all times to come, and suddenly the entire amount is deposited during the year in the bank account in cash for purchase of residential house - No documentary evidence was placed on record by the assessee or no cogent explanation was placed on record to justify the assessee was in fact having saved out of his salary income - the AO is justified in not accepting the source of savings claimed by the assessee from the salary income. As regards the source from his father, the father of the assessee was retired on superannuation and the pension certificate of mother - No other documentary evidence was produced by him to show credit- no satisfactory explanation was provided for the source of income – In the absence of any documentary evidence that the father and mother of the assessee had saved for giving gift to the assessee and in the absence of any cogent explanation with regard to the source, the AO is justified in not accepting the source of gift from father of the assessee – Decided against Assesse.
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2013 (10) TMI 865
Allowance of arbitration award as expenditure – Held that:- Payment to Software Technology Park of India of Rs. 5,75,000/- due to award of Arbiter, the arbitration was started in F.Y. 05- 06 itself and hearing was going on. The assessee gathered that ultimate analysis it has to pay in pursuant to award to the Software Technology Park of India. The award was passed on 20th July, 2006 and accounts were finalized and audited on 12th September, 2006 i.e. after the date of order - Addition confirmed by the CIT(A) under year consideration is upheld. However, this can be allowed as an expenditure in year 07-08. Allowance of Bad Debts u/s 36(1)(vii) of the Income Tax Act – Held that:- Reliance has been placed upon the judgment in the case of TRF Ltd. v CIT [2010 (2) TMI 211 - SUPREME COURT], wherein law is settled and assessee has written off this bad debt in the account itself sufficient to claim bad debt which has been done in the account – Decided in favor of Assessee. Disallowance of Rs.2,00,000/- on account of misappropriation of cash for which legal action has been taken by the appellant - The appellant claim Rs. 2 lacs under the the head misappropriation of cash from the bank account allegedly made by one of its employees – Held that:- After considering the facts of the case as revealed from the copy of FIR that there was misappropriation of fund for Rs. 2 lacs and placed the evidences on record. He has established the misappropriation of fund by the employees – Allowed as expense as various courts have held.
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Customs
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2013 (10) TMI 903
Calculation under export obligation - Benefit of Policy circular No.8 (RE-98)/98-99 - impact of foreign exchange fluctuation - devaluation of rupee - Export obligation against EPCG licence - Held that:- the export obligation in the licence dated 18th March, 1991, as amended on 3rd February, 1992 is stated in US$ i.e. US $ 11,600,459. No equivalent value in rupees is stated - The Government had specifically mentioned the export obligation in the foreign currency which was calculated on the basis of the US Dollar rate prevalent as of that date. Since the Government’s scheme was to earn foreign exchange, it ensured that the export obligation was specifically mentioned in the requisite foreign currency. It is noteworthy that the export obligation is spread over a period of 4 to 8 years and conversion of export obligation based on exchange rate on the date of export i.e. after such a long period would be unreasonable in view of the sharp fluctuation in the currency values and continued depreciation of the Indian rupee vis-à-vis the US Dollar - policy circular No.8 (RE-98)/98-99, dated 28th May, 1998 was not applicable with retrospective effect especially for an export obligation for which the last shipment was stated to have been made on 14th September, 1995. Therefore the appellant cannot claim any benefit under the said circular. Notably, in any case, the said circular also stipulated that the export proceeds realized in any currency would be converted into USD and the term ‘any currency’ would refer to the foreign currency realized through exports, since the aim of the scheme was to promote foreign exchange earnings in fully convertible currency. Subsequent de-valuation of the rupee cannot come to the aid of the appellant - Decided against assessee.
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2013 (10) TMI 902
Valuation of the imported goods - Quantification of penalty - Adjudicating authority reduced penalty from ₹ 25 Lakhs to ₹ 5 Lakhs - Appellant contends that no amount of penalty should be imposed - Held that:- differential customs duty as directed by the Tribunal has already been paid by the said Company and that during the pendency of the appeal before the Tribunal, appellants were granted interim stay against the recovery of the penalty imposed by the adjudicating officer - revenue had raised the dispute about the valuation of the goods for the purpose of assessment in respect of an agreement entered into by the said Company commencing from a date three years prior to the appellants joining the said Company. Therefore, this was not a case for imposing penalty on the appellants - Ad interim stay granted to assessee.
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2013 (10) TMI 901
Review petition - Tribunal recorded that merits as such was not argued before them when order dated 3rd June, 2011 was passed by the Customs, Excise and Service Tax Appellate Tribunal. At that time, as per the tribunal, only one question was argued that the appellant herein was not personally involved and the transaction in question was undertaken by one Sita Ram Aggarwal - Held that:- Appeal filed against the order dated 3rd June, 2011 was dismissed by this Court on 9th February, 2012. At that time, it was submitted by the appellant that other points were also raised before the tribunal, but were not answered and decided. It was in these circumstances that in order dated 9th February, 2012 it was recorded that in case the appellant had argued and addressed other grounds, it was open to him to file an appropriate application before the tribunal. The said application was filed and has been dismissed recording the facts. The tribunal has held that in the earlier round the points now raised in the miscellaneous application were not argued and addressed. It is in this context the tribunal has observed that they do not have any power to review - Decided against assessee.
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2013 (10) TMI 900
Failure to satisfy export obligation - Duty demand - Goods were imported under Export Promotion of Capital Goods Licence (EPCG) scheme - Exemption from Customs duty on import of plant and machinery - Held that:- Tribunal directed petitioner to deposit 50% of disputed amount - The interim order passed by the second respondent by way of will stand varied and the petitioner will have the benefit of the interim stay, on condition that the petitioner satisfies 25% of the disputed amount within one month - Stay granted partly.
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2013 (10) TMI 899
Temporary licence as Customs House Agent - Validity of Regulation 8(5) - Held that:- system of issuing temporary licence was dispensed with by virtue of 2004 Regulations. Under the new Regulations qualified applicants are given chance to clear the examination upto a maximum period of 7 years. The stipulation is with respect to new applicants who apply for licence after commencement of the 2004 Regulations. At the same time, a restriction was imposed through the new Regulations for continuance of the temporary licences already granted. Continuance of such temporary licence will be permitted only if the person concerned qualify the examination within the said period. The applicants for fresh licence are distinct and different class from persons already holding temporary licence under the erstwhile Regulations - Once the rule making authorities have decided to dispense with the practice of granting temporary licence, it is only reasonable that those persons already holding such licences were given chance for renewal of such temporary licences upto a maximum period of two years, without the licences qualifying the requisite examinations as required in the case of persons seeking licence under the new Regulations. Merely because the petitioners were granted with a temporary licence, they cannot seek continuation even after its expiry without achieving the prescribed qualification under the changed Regulations - Decided against petitioner.
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2013 (10) TMI 898
Settlement of cases - scope of the term adjudicating authority and proper officer - whether recovery proceeding can be said to be a proceeding relating to adjudication as contemplated under Section 127A and 127B of the Customs Act, 1962 - Held that:- A bare reading of the definition of adjudicating authority indicates that any authority competent to pass any order or decision under this Act is to be treated as adjudicating authority but does not include the Board [Commissioner (Appeals)] or Appellate Tribunal, as the case may be. Proper Officer has been defined separately in relation to any functions to be performed under the Act and there is specific assignment of those functions by the Board. The assignment of the functions by the Board is necessary to a proper officer. Any order or decision under this act to be passed by adjudicating authority has to be understood in the context it has been used and cannot include orders passed by proper officer in recovery proceeding when adjudication is over. The provisions contained in Section 127B clinches the issue with respect to the question whether the recovery proceedings pursuant to the order of adjudication which has been passed can be said to be covered for the purpose of enabling an imcumbent to seek the benefit of the provisions contained in Section 127B. It is clearly mentioned in Section 127B that any importer, exporter or any other person in respect of a case relating to him may make an application, however, before “adjudication”. Once adjudication has been made no application can be filed to avail benefit of the provisions contained in Section 127B(1). So, we need not confuse with respect to the submission based upon the definition of adjudicating authority as expression “adjudication” has been clearly used and an application under section 127B(1) has to be filed before the adjudication is made - In our opinion as no adjudication proceeding is pending in this case, in our view, Settlement Commission has rightly opined that provision of Section 127B of the Act cannot be invoked for the purpose of settlement of the dues - Decided against assessee.
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2013 (10) TMI 897
Granting of CHA license – CHA are governed under regulation Customs House Agents Licensing Regulations, 1984 & 2004 – To carry the business as CHA, agent is required to get license from prescribed authority – the applicant is required to clear the written as well as oral examinations to be held in terms of Clause 8 of those regulations to get license – Held that:- The examinations held under the 1984 Regulations did not get nullified with the enactment of the 2004 Regulations and the candidates who had qualified the examinations held under the 1984 Regulations are not required to again qualify the examination which may be held under the 2004 Regulations. As a corollary, it must be held that those who had cleared the examinations held between 1995 and 2003 under the 1984 Regulations would be eligible for grant of licence subject to their fulfilling other conditions of eligibility - Following decision of SUNIL KOHLI & ORS Versus UNION OF INDIA & ORS [2012 (10) TMI 638 - SUPREME COURT] - Decided in favour of petitioner.
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2013 (10) TMI 896
Granting of CHA license – CHA are governed under regulation Customs House Agents Licensing Regulations, 1984 & 2004 – To carry the business as CHA, agent is required to get license from prescribed authority – the applicant is required to clear the written as well as oral examinations to be held in terms of Clause 8 of those regulations to get license – Held that:- The examinations held under the 1984 Regulations did not get nullified with the enactment of the 2004 Regulations and the candidates who had qualified the examinations held under the 1984 Regulations are not required to again qualify the examination which may be held under the 2004 Regulations. As a corollary, it must be held that those who had cleared the examinations held between 1995 and 2003 under the 1984 Regulations would be eligible for grant of licence subject to their fulfilling other conditions of eligibility - Following decision of SUNIL KOHLI & ORS Versus UNION OF INDIA & ORS [2012 (10) TMI 638 - SUPREME COURT] - Decided in favour of petitioner.
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Corporate Laws
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2013 (10) TMI 895
Dishonour of cheque - prosecution of two directors - offence under Section 138 of the Negotiable Instruments Act - High Court quashed applications for quashing the entire prosecution including the order under Section 482 of the Code of Criminal Procedure - Held that:- it is difficult to infer that there is any averment that these two accused were in-charge of and responsible for the conduct of the business of the company at the time the offence was committed. The allegations in the complaints in sum and substance mean that business and financial affairs of the company used to be decided, organized and administered by accused Nos. 2 to 6 and while doing so, other Directors including the two accused herein were consulted. The inference drawn by the complainant on that basis that these two accused, therefore, are in- charge and responsible to the company for the conduct of its business, is absolutely misconceived. We are, therefore, of the opinion that essential averment in the complaints is lacking - every person who at the time the offence was committed is in charge of and responsible to the Company shall be deemed to be guilty of the offence under Section 138 of the Act. In the case of offence by Company, to bring its Directors within the mischief of Section 138 of the Act, it shall be necessary to allege that they were in charge of and responsible to the conduct of the business of the Company. It is necessary ingredient which would be sufficient to proceed against such Directors. However, we may add that as no particular form is prescribed, it may not be necessary to reproduce the words of the section. If reading of the complaint shows and substance of accusation discloses necessary averments, that would be sufficient to proceed against such of the Directors and no particular form is necessary. However, it may not be necessary to allege and prove that, in fact, such of the Directors have any specific role in respect of the transaction leading to issuance of cheque. Section 141 of the Act makes the Directors in charge and responsible to Company for the conduct of the business of the Company within the mischief of Section 138 of the Act and not particular business for which the cheque was issued. There is no averment that the two accused herein were in charge of and responsible for the conduct of the business of the company at the time the offence was committed. Hence, there is no essential averment in the complaints. In view of what we have observed above, the prosecution of accused A.K. Singhania and accused Vikram Prakash cannot be allowed to continue. Accordingly, the order of the High Court quashing the prosecution of the accused Vikram Prakash is not fit to be interfered with. For the same reason the order passed by the High Court declining the prayer of A.K. Singhania for quashing of the prosecution cannot be sustained and the appeals preferred by him deserve to be allowed - Decided in favour of appellant.
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2013 (10) TMI 894
Proceedings against the additional director who has resigned before the AGM but his resignation was not accepted by the company - Relieving the Additional Director from the Proceedings – Held that:- Even before the next Annual General Meeting of the Company the petitioner tendered his resignation resigning his Additional Directorship - But there was no document to show that such a resignation was accepted - The acceptance of such resignation before the Annual General Meeting of the Company would have caused termination of his tenure as Additional Director with effect from the date of resignation - Thereafter, he cannot be held responsible for any of the defaults committed by the Company or by the Directors of the Company. If the respondent chooses to make him responsible for any lapse or default committed by the Company or its Directors before the petitioner ceased to be an Additional Director, then the respondent shall be wholly justified in doing so - It was also obvious from the records that for the show cause notice the petitioner had issued a suitable reply stating that he should not be held responsible for the lapses on the part of the Company or the Directors after he ceased to be an Additional Director of the Company - As the same was not accepted by the respondent, the petitioner had approached the Court by way of present petition - the show cause notice shall be ineffective as against the petitioner and the petitioner shall be relieved of the proposed proceedings based on the aforesaid show cause notice - the Company Petition was allowed and the respondent was directed to relieve the petitioner wholly from the proceedings sought to be initiated pursuant to the show cause notice issued by the respondent.
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FEMA
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2013 (10) TMI 904
Jurisdiction of special judge - Transfer of case from the Magistrate to the Special Judge - Held that:- it is apparent from a reading of Section 56 of the FERA as also Section 61 of the FERA that exclusive jurisdiction has not been conferred on the Magistrate to try cases relating to a violation of the provisions of the FERA. Absent jurisdictional exclusivity, the principle of law laid down in Antulay is not applicable and the Special Judge could have been conferred jurisdiction to try the case against the petitioners - The right of appeal available to the petitioners in the present case is not taken away by transferring the case from the Magistrate to the Special Judge. The petitioners continue to have the right to appeal, but it is only the forum that has changed. They can now prefer an appeal from the order of the Special Judge to the High Court. Therefore, it is not as if the petitioners are denuded of any right to agitate their cause in a superior forum by the transfer of the case to the Special Judge - Therefore, it cannot be seriously urged that the petitioners were prejudiced by a change of the appellate forum. High Court could have exercised its judicial power of transfer under Section 407 of the Code (if called upon to do so) and it could also have exercised its administrative power of transfer under Article 227 of the Constitution, which it did, as is evident from the letter dated 6th May 2002 issued by the Registrar General of the High Court of Jharkhand to the Secretary to the Government, Law (Judl.) Department, Government of Jharkhand. The fact that for an administrative exigency, the High Court decided to exercise its plenary administrative power does not per se lead to the conclusion that the transfer of the case from the Magistrate to the Special Judge was unlawful. The legality of the action cannot be called in question in this case since no prejudice has been caused to the petitioners by such a transfer - Decided against appellant.
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Service Tax
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2013 (10) TMI 915
Taxability of Cleaning service provided to charitable school - Whether the building of ISB can be considered as a commercial building - Stay application - Held that:- meaning of ‘used or to be used’ for commerce or industry was considered and there it was observed that when the constructions are for the use of organizations or institutions being established solely for educational, religious, charitable, health, sanitation or philanthropic purposes and not for the purposes of profit have to be treated as non-commercial. It is his submission that ISB is a charitable trust and therefore, the building has to be considered as non-commercial and therefore, it goes out of the definition - cleaning services in respect of non-commercial buildings and premises thereof is not covered for the purpose of levying of service tax. Retrospective amendment was basically to clarify the meaning of expression ‘Commercial Training or Coaching Centre’ - What is under consideration by us is cleaning services and not commercial training or coaching service. In our opinion, the retrospective amendment and the decisions of the Tribunal in relation to ‘Commercial Training or Coaching Centre’ cannot be applied to the cleaning services In cleaning service, what is required to seen is the purpose of building and the purpose of the building has to be examined in the light of understanding whether it is commercial or industrial building and how a layman understands the same. In the case of ‘Commercial Training or Coaching Centre’, the definition itself has been amended to ensure that even if the charitable trust rendering a commercial training or coaching centre, the same may be liable to tax - Stay granted.
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2013 (10) TMI 914
Service tax liability - Banking and financial services - reverse charge - Held that:- appellant had paid no commission to the foreign banks for receiving banking and financial services but had made payments only to an Indian bank. Prima facie, there was no material on record before the adjudicating authority to legitimise such an inference - waiver of pre-deposit and stay of all further proceedings pursuant to the adjudication order as confirmed by the order of the Commissioner (Appeals) is granted, on condition that the appellant remits the assessed tax component plus interest thereon as due, within 6 weeks from today and reports compliance by 26-09-2013. - stay granted in respect of penalty.
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2013 (10) TMI 913
Waiver of pre deposit - Commercial or industrial construction service - Held that:- Prima facie, on perusal of contract in issue and the analysis by the adjudicating authority, some of the activities/services provided by the appellant fall within the site formation taxable service while others fall within commercial or industrial construction service - waiver pre-deposit and stay further proceedings pursuant to the adjudication order is granted on the condition that the appellant remits 50% of the balance due of the assessed tax liability plus the interest thereon - stay granted partly.
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2013 (10) TMI 912
Denial of CENVAT Credit - input services for the purpose of renting of immovable property - input services for setting up of factory premises - Management, Maintenance or Repair Service - stay - Held that:- Commissioner observed that after construction of the building, it became a source of collection of rent which became taxable service at a later period. In our considered view, the definition of ‘input service’ under Rule 2(l) of the CENVAT Credit Rules, 2004 provides ‘any service used in relation to setting up, modernization, renovation or repairs of factory, premises of provider of output service’. There is no dispute that input service was utilized for setting up the building and after completion of the building the applicant used for renting of immovable property which is an output service. So the denial of credit on input service utilized on renting of immovable property, prima facie is not justified Regarding the denial of credit on input service used in ‘Management, Maintenance or Repair Service’, on perusal of the list of various input services, we find that some services such as Architect Service, Interior decorator, Insurance Auxiliary Service, Erection and Commissioning or Installation, Security Agency Services etc. cannot be utilized for the output service namely ‘Management, Maintenance or Repair Service’ - prima facie credit is not allowable. Demand of service tax - Input service on electricity charges - Held that:- electricity is goods as held by the Courts in several cases. DG sets is also used for generating electricity - applicant has failed to make out a prima facie case for waiver of predeposit of entire amount of tax along with interest and penalty. - Stay granted partly.
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2013 (10) TMI 911
Job Work - Business auxiliary services - Manufacture - Whether the conversion of pipes/tubes by undertaking the processes by the appellants amounts to manufacture or not - Waiver of pre deposit- Held that:- for the period subsequent to 16/06/2005, the order of the Commissioner (Appeals) has attained finality since there is no challenge to the order of the Commissioner(Appeals) by both the sides that appellant is liable to pay service tax on the processes undertaken by them on job work basis for others. The challenge to the Commissioner (Appeals) order is only with regard to the period prior to 16/06/2005. Under these circumstances, unless it is shown to us that the processes undertaken by the appellants when job work is done on the pipes are different from the situation when they undertake the processes on their own account, we consider that the Department cannot be said to have a prima facie case - stay granted.
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2013 (10) TMI 910
Mandap Keeper Services - Denial of credit on telephones - Held that:- According to the Revenue the said telephone connections were not installed in the premises from where the output services were provided – since telephone connections were at Reception only and were connected through EPABX Systems, it cannot be said that no telephones were installed in the specific area - petitioner has made out a prima facie case and is entitled for grant of relief - waiver of pre-deposit of the adjudicated liability and stay all further proceedings pursuant to the impugned order is granted - Following decision of M/s Rambagh Palace Hotels Pvt. Ltd. vs. C.C.E. [2013 (12) TMI 556 - CESTAT NEW DELHI] - stay granted.
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2013 (10) TMI 909
Condonation of delay - Held that:- Though no wholly satisfactory cause is shown since the appellants counsel states that the appellant has an iron clad case, to succeed in the appeal and unwarranted injury to a public body would ensue if the appeal was rejected for delay, we condone the delay but on terms, i.e. on the condition that the appellant deposits Rs.1000/- towards costs to the credit of Revenue within three weeks from today - Decided in favour of assessee.
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2013 (10) TMI 908
Waiver of pre deposit - Customs House Agency Service - Held that:- applicant has placed reconciliation statement explaining the difference between ST-3 return and MISC Report, inasmuch as a portion of differential amount was adjusted in their income for credit note adjusted for excess billing, tax paid by recipient under GTA service, godown rent tax was not paid since the services were prior to 1.6.2007 etc. which will be examined in detail at the time of appeal hearing. At any event, we find that the applicant has already paid Rs.40 lakhs, which is sufficient for waiver of pre-deposit of balance dues. Accordingly, we grant waiver of pre-deposit of balance dues and stay recovery thereof during the pendency of the appeal - stay granted.
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2013 (10) TMI 907
Waiver of pre deposit - Held that:- Tribunal in the case of BASP Industries (2011 (6) TMI 389 - CESTAT, MUMBAI) has allowed cenvat credit of service tax paid on telephone installed and in the case of Hindustan Zinc Ltd. (2009 (4) TMI 129 - CESTAT, BANGALORE) allowed cenvat credit of service tax paid on security services provided in colony security, transport services for employees etc. In these circumstances, I find that the applicants are able to make out a prima facie case for total waiver of pre-deposit. Therefore, pre-deposit of the dues adjudged is waived and recovery thereof is stayed during the pendency of the appeal - stay granted.
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2013 (10) TMI 906
Nature of sercvies - Man power supply or job work - Grinding of coffee beans and thereafter mixing it with chicory and packing of such coffee powder - Held that:- There is no reason to understand Labour Bill as bill for labourers. The primary understanding should be as bill for labour done which is the argument of the applicant. So Prima facie, we feel that this is a case of job work rather than supply of man power. Therefore, we waive the requirement of pre-deposit of dues arising from the impugned order for admission of appeal. There shall be stay on collection of such dues during the pendency of the appeal - stay granted.
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Central Excise
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2013 (10) TMI 893
Waiver of Pre-deposit - Activity Manufacture OR Not – Revenue was of the view that the activity done by the applicant amounted to manufacture – Held Following TI Diamond Chain Ltd. Vs. CCE [2000 (3) TMI 1041 - SUPREME COURT OF INDIA] - the Tribunal has already examined the matter and granted waiver of predeposit in the assessee’s own case on an identical matter, waiver of pre-deposit in this case also granted and there shall be stay on collection of such dues during the pendency of the appeal.
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2013 (10) TMI 892
Determination of Assessable Value – Waiver of Pre-deposit of Duty and Penalty - The issue is determination of assessable value of stock-transferred petroleum products by the Applicant from the Refinery to their Marketing Division - The dispute centers around the liability to duty on ‘Terminalling Charges’ shown in the ‘Stock-Transferred Invoices’ by the Applicant when from their Refinery to their Marketing Division, on which no excise duty is paid – Held that:- The clearance of the petroleum products from their Refinery to their Marketing Division is only a stock-transfer and not sale and since the sale is affected from their Marketing Division in the transaction value with their customer, the ‘Terminalling Charges’ are included - mere ‘Terminalling Charges’ shown in the stock-transferred invoices would not itself attract excise duty, unless it is shown that the same are also recovered from the customers by their Marketing Division, but on which no duty has been paid by the Applicant - No evidences had been brought on record by the Revenue to rebut the claim of the Applicant, as made out by the Applicant in their reply to the show cause notice that the ‘Terminalling Charges’ are included in the transaction value at which the petroleum products are sold by their Marketing Division - the Applicant could able to make out a prima facie case for total waiver of the pre-deposit of all dues adjudged – Stay granted.
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2013 (10) TMI 891
Removal of Inputs / Capital Goods As such – Rule 3(5) of CC Rules – Revenue contended that appellant should have paid the duty @ 16% on the inputs on which CENVAT Credit was availed, on the ground that the said clearance would amount to clearance of manufactured goods. - Whether the duty paid/ CENVAT Credit reversed equivalent to the credit taken on the inputs cleared as such by the appellants is correct or not – Held that:- Following Eicher Tractors Vs CCE Jaipur [2005 (9) TMI 340 - CESTAT, NEW DELHI] - It is seen that the Board vide its circular dated 25-4-2005 has categorically said that clarifications given in this Circular supersede the earlier Circular dated 1-7-2002 - The revenue cannot argue against its own Circular, when the Board has stated that the provisions of the Rule 3(5) of the Cenvat Credit Rules, 2004 would apply in respect of the capital goods and inputs on which credit has been availed are removed as such - the impugned order is correct, legal and does not suffer from any infirmity – Decided against Revenue.
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2013 (10) TMI 890
Short payment of duty - Differential Duty - When the differential duty required to be paid is available as credit to the same appellant’s own recipient unit, the interest on such differential value is required to be charged or not - Alleged that assessable value adopted by them it had not been worked out at 110% cost of the production duly certified by Cost Accountant - later differential duty deposited – Held that:- Following BAYER ABS LIMITED Versus COMMISSIONER OF CENTRAL EXCISE, VADODARA [2010 (9) TMI 904 - CESTAT,AHMEDABAD] - Appellant is liable to discharge interest liability as ascertained by lower authorities - even where the duty is short paid by an assessee, is available as credit to the recipient unit of the same assessee, interest in terms of provisions of Section 11AB is required to be confirmed and interest is leviable. Waiver of Pre-deposit - The appellant cannot be said to have made out prima facie case for complete waiver - No financial difficulty has been pleaded - it would be appropriate if the appellant deposits the entire interest amount - the appellant directed to deposit an amount – upon such submission there shall be waiver of pre-deposit and stay of recovery in respect of the penalty imposed on the appellant – Partial stay granted.
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2013 (10) TMI 889
Remission of duty - rejecting the remission application - Principles of Natural Justice - Appeal Against Rejection of Remission Application – Rule 21 of the CE Rules – Held that:- The order is only an intimation to the appellant on behalf of the Commissioner that their claim of remission of duty has been rejected that you have not taken proper care for fire accident but no opportunity of hearing was given to the appellant - the order is in gross violation of principles of natural justice - Same is set aside and matter is remanded to the ld. Commissioner for fresh consideration of the issue with a direction to decide the issue afresh after giving a reasonable opportunity to the appellant to present their case – Decided in favour of Assessee.
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2013 (10) TMI 888
Exemption under Notification No. 3/2006 - Whether ‘cadbury perk’ can be called as wafer biscuits or not - Revenue was of the view that Cadbury perk cannot be considered as wafer biscuits and therefore exemption is not available – Held that:- Once it is accepted that the product is a wafer and wafer is a biscuit, it may be difficult to take a view that it is not a wafer biscuit - it will require more detailed consideration - Following International Foods Vs. CCE, Hyderabad [1974 (7) TMI 118 - ANDHRA PRADESH HIGH COURT] - wafer is a biscuit and therefore in view of the fact that there is no dispute that the product is covered under the category of wafer in terms of classification of Central Excise Tariff, it may not be correct to take a view to deny the exemption that it is not a wafer biscuit - the appellant has been able to make a prima facie case for eligibility of exemption under Notification No.3/2006. Valuation of Goods – Waiver of Pre-deposit - Revenue was of the view that the appellant cannot claim abatement towards re-distributors margin, dealers margin, cheque discounting expenses and secondary freight etc. – Held that:- The appellant is paying duty following the same system as followed by M/s. Cadbury India Ltd. in respect of their own products - M/s. Cadbury India Ltd. pays duty at the price at which the goods are sold to the redistributors and the same procedure has been followed - the appellant has been able to make out prima facie case against valuation issue also - the requirement of predeposit is waived and stay against recovery during the pendency of appeals is granted.
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2013 (10) TMI 887
Captive Consumption – Waiver of Pre-deposit - Whether the appellant is liable to pay central excise duty on jute single yarn in bobbins captively consumed in the manufacture of multiple fold yarn in plain reel hanks without payment of duty – Held that:- The finished product, i.e, yarn in multiple fold has been cleared without payment of duty and therefore appellant is not eligible for the exemption for captive consumption - the appellant has not been able to make out a prima facie case for waiver - the appellant is directed to deposit the entire amount of duty demanded as pre-deposit – upon such submission rest of the duty to be waived till the disposal – Partial stay granted.
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2013 (10) TMI 886
Interpretation of eligibility of CENVAT Credit – Waiver of Pre-deposit of CENVAT Credit and penalty under Rule 15(2) of CC Rules, 2004 r.w Section 11AC of the CE Act - Held that:- Following Vandana Global Ltd. vs. CCEX, Raipur [2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)] - This Tribunal has been taking a consistent view by allowing stay petition of the assessee where extended period of limitation is involved but directed predeposit, wherever demand is for normal period of limitation - the Applicant are directed to make amount as pre-deposit of Rs. 2.50 Lakh – upon such submission the balance dues would waived and its recovery stayed during pendency of the Appeal - Partial Stay granted.
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2013 (10) TMI 885
CENVAT Credit – Waiver of Pre-deposit - The principal allegation against the Applicant is that they had availed CENVAT Credit on the basis of input invoices only, without receiving the materials and utilizing the same in the manufacture of finished goods – Held that:- The Commissioner in the Order has made categorical finding whereby he recorded and analyzed the evidences in arriving at conclusion that the Applicant had availed the CENVAT Credit on various invoices without receiving the materials in their factory - Prima facie, the result of analysis of evidences by the ld. Commissioner are convincing and the Applicant could not rebut those evidences by way of filing any reply or contrary - the Applicant No.(1), directed to deposit 50% of the duty involved – upon such submission rest of the pre-deposit of the dues adjudged would be waived against all the Applicants and its recovery would be stayed during pendency of the Appeals – Partial stay granted.
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2013 (10) TMI 884
Affixation of MRP - switchgear products i.e. electrical goods such as contractors, relay, pushbutton switches, Moulded Case Circuit Breaker (MCCB), etc. - sale through dealers/distributors - commodities are meant for industrial or institutional consumers - Whether the appellants are required to affix MRP on their product as per the provisions of Standard of Weights and Measures (Packaged Commodities) Rules, 1977 or not – Difference of opinion - Held that:- matter referred to larger bench with the following issues: (1) The demands for the period prior to 1.3.2008 are not sustainable as there was no machinery provisions available to determine MRP of the product. OR The demands for the period prior to 1.3.2008 are sustainable as MRP of the product can be determined by the assessing officer using reasonable/best judgement based upon material available and consistent with principles and provisions of Section 4A of the Central Excise Act, 1944. (1) The demands for the period prior to 1.3.2008 are not sustainable as there was no machinery provisions available to determine MRP of the product. OR The demands for the period prior to 1.3.2008 are sustainable as MRP of the product can be determined by the assessing officer using reasonable/best judgement based upon material available and consistent with principles and provisions of Section 4A of the Central Excise Act, 1944. Whether demand for extended period is not sustainable in law?
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CST, VAT & Sales Tax
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2013 (10) TMI 917
Classification of goods - Whether the uprooted rubber trees can be classified as timber taxable at 8% or classified as firewood exempted goods under the Third Schedule to the Tamil Nadu General Sales Tax Act, 1959 - Held that:- On the admitted position that the uprooted trees were old and could not be conditioned again for making any other article of any usage, the finding of the Tribunal that the uprooted tress had become waste one, hence could be used as firewood, we have no hesitation in rejecting the Revenue's revision, thereby, confirming the order of the Tribunal - Decided against Revenue.
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2013 (10) TMI 916
Seizure of goods - Security demand - Held that:- it is desirable that the security as demanded from the assessee for release of the goods may be furnished - security to the extent of 20% of the value of the goods may be furnished incash or through bank draft - for the remaining 20% of the of the value of the goods, security may be furnished by the assessee, which may be other than cash or bank guarantee to the satisfaction of the assessing authority - Decided partly in favour of assessee.
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Indian Laws
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2013 (10) TMI 905
Admissibility of document which was not registered or no stamp duty was paid as prescribed - scope of the term Conveyance - specific performance of contract, possession and permanent injunction - - Plaintiffs contends that the properties in question were delivered to them on payment of the part consideration money in pursuance of the agreement to sell - Held that:- it is evident that an instrument by which movable or immovable property is transferred, comes within the expression “conveyance”. In the present case, an immovable property is transferred on payment of part of the consideration and handing over the possession of the property. The agreement to sell in question is a conveyance within the meaning of Section 2(10) of the Act and is to be duly stamped. Section 35 of the Act makes instruments not duly stamped inadmissible in evidence. The deed of agreement having been insufficiently stamped, the same was inadmissible in evidence. The court being an authority to receive a document in evidence to give effect thereto, the agreement to sell with possession is an instrument which requires payment of the stamp duty applicable to a deed of conveyance. Duty as required, has not been paid and, hence, the trial court rightly held the same to be inadmissible in evidence. If in a document certain recitals are made then the Court would decide the admissibility of the document on the strength of such recitals and not otherwise. In a given case, if there is an absolute unregistered sale deed and the parties say that the same is not required to be registered then we don’t think that the Court would be entitled to admit the document because simply the parties say so. The jurisdiction of the Court flows from Sections 33, 35 and 38 of the Indian Stamp Act and the Court has to decide the question of admissibility - Decided in favour of Appellant.
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