TMI Tax Updates - e-Newsletter
October 27, 2012

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise Indian Laws

TMI SMS

• IT - Computation of cost of acquisition of membership card of stock exchange - cost of acquisition of 10,000 shares worked out to be Rs. 2,51,10,000/-

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• Dishonour of cheque - rebuttable presumption - appellant sufficiently rebutted the initial presumption as regards the issuance of the cheque u/s138 SC

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• Dishonour of cheque - rebuttable presumption - appellant sufficiently rebutted the initial presumption as regards the issuance of the cheque u/s138 SC

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• CBEC Circulars clarifying that the gold & silver mountings and findings are covered by the Ntf No. 62/2004-Cus. are contrary to Provisions of law

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Articles

1. ACCREDITED CLIENT PROGRAMME

   By: DR.MARIAPPAN GOVINDARAJAN

2. RIGHT TO INFORMATION: PERSONAL DETAILS CAN BE PROVIDED ONLY IF IT IS IN LARGER PUBLIC INTEREST.

   By: DEVKUMAR KOTHARI

News

1. I&B Ministry Monitors Digitization Progress 85% Digitization achieved in Metros 85% achievement in Cable TV Digitization, with DTH it is 90%

2. Protocol for Amending the Convention and Protocol Between the Republic of India And the Kingdom of Spain for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital Signed

3. Quarterly Report on Debt Management for the Quarter July-September 2012 Released

4. 16 States and Union Territories Sign Tripartite Agreements for Laying Digital Highways Under National Optical Fibre Network; Sibal says this will help Bring Government at the Doors of Common Man

5. TRAI Invites Stakeholder comments on DRAFT amendment to Quality of Service of Broadband Service Regulations, 2006 on Financial Disincentives

6. NLC Presents Dividend of Rs.439.49 crore to the Government

7. Final Report of the Committee constituted for formulating Accounting Standards for the purposes of notification under section 145(2) of the Income-tax Act, 1961.

8. Global crude oil price of Indian basket rises to US$ 107.33/bbl on 25.10.2012

9. Nomination of officers for SAARC Seminar on Taxpayer services at Dhulikhel, Nepal

10. Approval of National Policy on Electronics 2012

11. Extension of Jiribam-Imphal Road (Tupul) new line to Imphal

12. Disinvestment of 10 percent paid up equity capital in National Mineral Development Corporation

13. Backward Regions Grant Fund (BRGF) - State Component

14. Sachin Pilot Reviews Connectivity in Border Areas of J&K, Launches High Speed Rural Broadband in J&K, inaugurates Cyber Forensic Lab in Jammu

15. ITDC Pays Dividend of Rs 3.95 Crore to the Government

16. Sachin Pilot to Launch Nationwide Rural Outreach Programmethrough Common Services Centres in J&K

17. Global crude oil price of Indian basket declines US$ 107.17/bbl on 24.10.2012

18. Production Performance of Oil & Natural Gas sector for the month of September, 2012

19. Good Governance at Various Levels Starts and Ends with Stakeholders or Citizens –V Narayansamy International Capam Conference Inaugurated

Notifications

VAT - Delhi

1. F.7(433)/Policy-II/VAT/2012/785-795 - dated 23-10-2012 - DVAT

Submission of information in Form T-2 shall come into force w.e.f. 01-01-2013.

Circulars / Instructions / Orders

VAT - Delhi

1. 21 - dated 25-10-2012

Last date of filing of online returns for the second quarter 2012-13 extended upto 16-11-2012. The last date of filing of hard copy is also extended upto 19-11-2012.

2. F.3 (33)/P-II/ VAT/ Misc./2006/802-812 - dated 25-10-2012

DVAT 51 reconciliation return Qtr 1 to 3 of 2011-12 extended to 31/12/2012.

FEMA

3. 47 - dated 23-10-2012

Export of Goods and Services –Simplification and Revision of Softex Procedure

DGFT

4. 07 (RE-2012)/2009-14 - dated 25-10-2012

Para 5 of Public Notice No. 12 (RE -2012)/2009-14 dated 26th July, 2012 - Validity of Duty Credit Scrips issued under Chapter 3 was reduced from 24 months to 18 months

Companies Law

5. 34/2012 - dated 25-10-2012

Filing of Balance Sheet and Profit and loss account in Extensive Business Reporting Language mode for the financial year commencing on or after 01.04.2012

Highlights / Catch Notes

Income Tax

• Replacement and overhauling costs to maintain existing assets are revenue expenditures, classified as current repairs.

  Case-Laws - AT : Revenue or Capital expenditure – replacement/ overhauling/ rejuvenation - to preserve and maintain already existing asset - allowed as current repairs - AT
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• Capital Gains Impact on Stock Exchange Membership Card: Acquisition Cost of 10,000 Shares Set at Rs. 2,51,10,000.

  Case-Laws - AT : Capital Gains - Computation of cost of acquisition of membership card of stock exchange - the cost of acquisition of 10,000 shares worked out to be Rs. 2,51,10,000/- AT
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• Expenditure on maintaining an existing asset, without creating new benefits, qualifies as allowable current repairs for taxes.

  Case-Laws - AT : When an expenditure was incurred to preserve and maintain already existing asset and such expenditure is not bringing any new asset into existence or obtaining new advantage such expenditure is allowable as current repairs. - AT
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• Fees for Increasing Share Capital Not Amortizable u/s 35D(2)(c)(iii) of Income Tax Act.

  Case-Laws - AT : Disallowance of expenditure u/s 35D - As the fee paid for increase in share capital is not fee for registration of company and hence is not amortised even u/s 35D(2)(c)(iii) - AT
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• Service Tax Deduction Disallowed u/s 43B Until Paid, Aligns with Legal Precedents and Tax Regulations.

  Case-Laws - AT : Disallowance u/s 43B - he amount in question as service tax is covered by the provisions of section 43B. - AT
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• Penalty of Rs.10,000 Imposed for Each Year Due to Failure to Quote PAN, No Leniency Granted in Case.

  Case-Laws - AT : Penalty for Non Quoting of PAN - the assessee does not deserve any lenient view - Assessee is liable for penalty of Rs.10,000/- in each assessment year in dispute - AT
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Customs

• Gold and Silver Mountings Not Covered Under Notification No. 62/2004-Cus.; Board's Circulars Deemed Invalid.

  Case-Laws - AT : Board’s Circulars clarifying that the gold and silver mountings and findings are covered by the Notification No. 62/2004-Cus. are contrary to the provisions of law and, hence, have no validity - AT
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DGFT

• Reduction in Validity of Duty Credit Scrips from 24 to 18 Months Announced in Public Notice No. 12 (RE-2012.

  Circulars : Para 5 of Public Notice No. 12 (RE -2012)/2009-14 dated 26th July, 2012 - Validity of Duty Credit Scrips issued under Chapter 3 was reduced from 24 months to 18 months - Circular
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FEMA

• Softex Procedure Simplified: Streamlined Export Processes Under FEMA to Boost Trade and Reduce Bureaucracy for Exporters.

  Circulars : Export of Goods and Services –Simplification and Revision of Softex Procedure - Circular
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Corporate Law

• Companies Must File Financial Statements in XBRL for Financial Years Starting April 1, 2012, to Boost Transparency.

  Circulars : Filing of Balance Sheet and Profit and loss account in Extensive Business Reporting Language mode for the financial year commencing on or after 01.04.2012 - Circular
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• Appellant Successfully Rebuts Presumption in Cheque Dishonor Case u/ss 138 and 139 of Company Law.

  Case-Laws - SC : Dishonour of cheque - rebuttable presumption - appellant sufficiently rebutted the initial presumption as regards the issuance of the cheque under Sections 138 and 139 - SC
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• Individuals Must Comply with Section 454 of Companies Act: No Evasion in Filing Statement of Affairs in Liquidation.

  Case-Laws - HC : Submission of Statement of Affairs of the company in liquidation – The persons under Section 454 of the Act who are required to submit the Statement of Affairs cannot create circumstances where neither can notice be served on them nor do they file Statement of Affairs. - HC
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Indian Laws

• Committee Proposes New Accounting Standards u/s 145(2) to Boost Transparency and Consistency in Tax Reporting.

  News : Final Report of the Committee constituted for formulating Accounting Standards for the purposes of notification under section 145(2) of the Income-tax Act, 1961.
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• Government's Debt Management Report for July-September 2012: Insights on Borrowing, Fiscal Policies, and Economic Stability Measures.

  News : Quarterly Report on Debt Management for the Quarter July-September 2012 Released
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Central Excise

• Appellant Granted SSI Exemption; Brand Registration Argument for "Que" Does Not Deny Benefit.

  Case-Laws - AT : SSI exemption - appellant herein cannot be denied the benefit of SSI notification on the ground that the brand Que is not registered in their name - AT
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VAT

• DVAT 51 Reconciliation Return Deadline for 2011-12 Extended to December 31, 2012.

  Circulars : DVAT 51 reconciliation return Qtr 1 to 3 of 2011-12 extended to 31/12/2012. - Order-Instruction
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• Deadlines Extended: Online Tax Returns for Q2 2012-13 Due by Nov 16, Hard Copies by Nov 19.

  Circulars : Last date of filing of online returns for the second quarter 2012-13 extended upto 16-11-2012. The last date of filing of hard copy is also extended upto 19-11-2012. - Circular
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• Form T-2 Submission Mandatory from January 1, 2013, Following VAT and Sales Tax Notification.

  Notifications : Submission of information in Form T-2 shall come into force w.e.f. 01-01-2013. - Notification
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Case Laws:

• Income Tax

• 2012 (10) TMI 760
  Rectification of mistake - Self-contradictory order of CIT(A)'s - rejection of appeal by CIT(A) and giving directions given by the CIT(A) to AO - Held that:- When in the opinion of the CIT (A) the appeals are not maintainable against the order u/s 200A and the appeals have been dismissed by him as not maintainable, there is no question of giving effect to the order of CIT (A) that A.O.should give appeal effect to these orders within two months of the receipt of the order. As in the grounds of appeal, the assessee has pointed out that there were certain mistakes committed by the A.O. while taking the view that there was delay in deposit of TDS where he submitted that there is no delay in the deposit of the TDS by the assessee. Thus in view of the above, the proper course for the assessee would have been to file the rectification petition under Section 154 requesting the AO to modify the order passed u/s 201(1A).

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• 2012 (10) TMI 759
  Taxability of the assessee u/s 44D - charge on assessee having a PE in India - assessee contested to be held liable u/s 44BBB - Held that:- As per findings of the ITAT Delhi for AY 2004-05 and 2006-07 in assessee's own case that the assessee had a permanent establishment in India. Also that the business profits of the assessee from the supervision charges are in the nature of “Fees for technical services” (FTS) from rendering of supervision services in connection with the erection, testing and commissioning of the power project deserves to be upheld as there is no contrary view or judgment the assessee placed controverting the findings of the AO in this regard. Accordingly, the findings of the ld. AO that amount received by the assessee has to be taxed as business profits in terms of the provisions of Article 7 of the DTAA read with Section 44D and Section 115A are confirmed and upheld - decided in favour of the Revenue. Interest u/s 234B - Held that:- It is noticed that the receipts of the assessee are liable for tax deduction under the provisions of section 195 & that M/s OHPC has deducted tax at source on the payments made to the assessee. Whether the Tax Deducted a Source has been correctly deducted or not is not the issue but the fact remains that the receipts of the assessee are liable to TDS and TDS has been done. In these circumstances interest under section 234B is not leviable on the assessee - in favour of the assessee.

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• 2012 (10) TMI 758
  Liability towards service tax - CIT(A) deleted the disallowance - Held that:- payment of service tax was made by the assessee and the payments received by it from the banks and financial companies to whom the services were rendered by the assessee for which the assessee received the demand after the deduction of tax at source. The amount so received by the assessee was eligible to tax and the revenue authorities under Custom & Excise Act raised demand of tax as per provisions contained in Section 68 of the Finance Act, 1964. Also that AO has not brought any fact or evidence to substantiate the fact that the service tax payment made by the assessee was in nature of penalty - in favour of assessee. Depreciation on UPS - @60% OR 15% - Held that:- AO has no reason to take a different stand for granting depreciation on computer UPS @ 15% because the computer UPS is also an inseparable peripheral to the computer which is eligible for 60% deprecation. Therefore, CIT(A) rightly allowed depreciation @60% and no reason to interfere with these findings - in favour of assessee. Disallowance u/s 40A(9) - Held that:- The assessee company is continuously depositing employees’ share to Provident Fund (Account 10, Pension) from financial year 2004-05, 2005-06, 2006-07 and 2007-08. The DR did not dispute the fact that this payment has been complying the statutory requirements of the assessee and this kind of payment has not been disputed in the earlier years by the authorities below. Therefore, the findings of the AO cannot be sustained. CIT (A) rightly held that the demand was made on account of statutory liability of the assessee, therefore, the action of the Assessing Officer was misconceived - in favour of assessee. Non deduction of TDS - advertisement and business promotion expenses - Held that:- The assessee company had given discount by its principal manufacturer during the financial year under consideration against the various promotional schemes and as per trading account submitted by the assessee before the authorities it is apparent that the assessee has shown purchases of vehicles after deducting the discount from the billing amount. But that the CIT (A) has not discussed and given a finding in this regard that how the discount given by the principal manufacturer by way of deducting the same in the sales bills raised against the assessee and the debit notes raised on assessee by the Principal (Manufacturer) to collect the payment made by principal manufacturer on account of advertisement and sales promotion expenses is co-related and deserves to be allowed as the expenditure incurred by the assessee - thus it is appropriate to restore this issued to the file of CIT(A) for adjudication - in favour of revenue for statistical purposes.

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• 2012 (10) TMI 757
  Revenue v/s capital expenses - Vehicle running and maintenance, Traveling Conveyance, Depreciation on Car, Telephone expenses,Household expenses, Household expenses - Held that:- The assessee did not produce the relevant bills and vouchers before the AO or the CIT(A) nor could justify the expenses with any other material - He also did not deny that expenditure on Deck and fittings of speaker and Air Conditioners in car is capital in nature. Moreover, since personal use of cars and telephones by the assessee and her family members or staff has not been denied nor it was claimed that the assessee or her family members had any independent vehicles or telephones for personal use, thus disallowance of 1/4th of the expenses on running and maintenance of vehicles as also expenses on telephones/mobiles, in the light of provisions of sec. 38(2) is reasonable. Regarding disallowance of expenses for want of relevant bills and vouchers & that books of account were not required to be rejected since trading results have nowhere been disputed by the AO or the CIT(A) estimated disallowance made by the AO has been found by the CIT(A) fair and reasonable - Also the addition on expenditure towards house hold expenses has been made by the AO, considering status of the assessee and totality of facts and circumstances and the said estimate has not been found unreasonable by CIT(A) while not an iota of evidence regarding sources of meeting household expenses nor even break up of expenses under broad heads has been brought to notice, thus addition made by the AO & upheld by CIT(A), is justified - against assessee.

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• 2012 (10) TMI 756
  Deemed dividend u/s 2(22)(e) - disallowance of interest paid as borrowed funds has been advanced interest free for non-business purposes - Held that:- As is evident on perusal of the assessment order that the assessee pleaded before the AO that the loan was taken in the ordinary course of business & the AO rejected the submissions of the assessee on the ground that unsecured loans carried interest and obligation to repay, but the CIT(A) did not record any findings on this aspect nor is known as to whether or not any such plea as to whether or not funds were received in the ordinary course of business was taken before the CIT(A)- As it is well established that trading advances are not covered within the mischief of section 2(22)(e) it fair and appropriate to vacate the findings of learned CIT(A) and restore the matter to his file for deciding the issue afresh to pass a speaking order - in favour of assessee by way of remand. Interest u/s 36(1)(iii) - Disallowance as commercial expediency of advancing interest free loans to the sister concerns not established - Held that:- If in the process of examination of claim for such a deduction, it transpires that the assessee had diverted certain funds to associates without any interest, there would be a very heavy onus on the assessee to be discharged before the AO to the effect that in spite of pending loans on which the assessee was incurring the liability to pay interest, still there was justification for diversion of funds to associate or sister concerns for non-business purposes - as complete facts are not available nor the assessee furnished date(s) of interest free advances or dates of borrowings and nor furnished any material, establishing commercial expediency in advancing aforesaid funds before the lower authorities and even before us, nor the ld. CIT(A) recorded any findings on these aspects, it is fair and appropriate to set aside the order of the CIT(A) and restore the issue back to his file for deciding the matter afresh - in favour of assessee by way of remand. Disallowance u/s 14A - certain investments in shares out of funds borrowed or from its own sources - Held that:- As decided in Maxopp Investment Ltd. & Others Versus Commissioner of Income Tax [2011 (11) TMI 267 - DELHI HIGH COURT] even where the assessee claims that no expenditure has been incurred in relation to income which does not form part of total income, AO will have to verify the correctness of such claim & if AO is satisfied with the claim of the assessee with regard to the expenditure or no expenditure, AO is to accept the claim of the assessee insofar as the quantum of disallowance under section 14A is concerned. In such eventuality, the assessing officer cannot embark upon a determination of the amount of expenditure for the purposes of section 14A(1). In case, the assessing officer is not, on the basis of objective criteria and after giving the assessee a reasonable opportunity, satisfied with the correctness of the claim of the assessee, he shall have to reject the claim and state the reasons for doing so. Having done so, AO will have to determine the amount of expenditure incurred in relation to income which does not form part of the total income on the basis of a reasonable and acceptable method of apportionment - thus set aside the order of the CIT(A) and restore back for deciding afresh in the light of aforesaid judicial pronouncements of Maxopp Investment Ltd.- in favour of assessee by way of remand. Service charges - income from house property v/s business income - Held that:- It is apparent that facilities are inseparable part of tenancy since one cannot be enjoy the facilities without the tenancy. The prime object of the assessee under the two agreements was to let out the premises to the bank with additional right of continuous supply of electricity and water besides facilities for junction box/cables for telephone for which rent was being paid month by month. In view of the foregoing, especially when the assessee claimed that their claim had been accepted in the preceding years while there is no such finding in the impugned order nor the assessee placed any material, suggesting that ensuring continuous supply of electricity, water or facilities for junction box/cables for telephone to the tenants is business of the assessee it is fair and appropriate to set aside the order of the CIT(A) and restore the matter to his file for deciding the issue, afresh - in favour of assessee by way of remand.

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• 2012 (10) TMI 755
  Reopening of assessment - difference in total sales in the trading account - Held that:- AO added the amount merely because the creditors did not respond to notice issued u/s 133(6) but the assessee in his application under rule 46A of the IT Rules,1962 submitted confirmations of these parties but PIN code of these parties and their PAN was not mentioned in the said confirmations. CIT(A) discarded these confirmations and upheld the addition in these two assessment years, without examining either the nature of these liabilities or following the procedure laid down in rule 46A of the IT Rules,1962 in respect of applications filed by the assessee for admission of additional evidence in these two assessment years. It is not evident from the impugned orders as to why the assessee did not submit relevant confirmations before the AO and whether the assessee was given sufficient opportunity by the AO. The CIT(A) did not care to record any reasons before admitting additional evidence nor appears to have ascertained the genuineness of the said evidence through independent enquiries or through the AO . CIT(A) did not follow the procedure laid down in Rule 46A of the IT Rules,1962 nor even recorded any findings as to whether or not the assessee was prevented by sufficient cause from producing the said evidence/documents before the AO and nor even ascertained the nature of these liabilities, thus the findings of the CIT(A) are set aside and restore the issue back to his file, with the directions to follow the mandate in terms of Rule 46A of the IT Rules, 1962 - in favour of assessee for statistical purposes.

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• 2012 (10) TMI 754
  Validity of reopening of assessment u/s 147 - Assessee purchase the assets and lease back to the same party – Claim 100% depreciation on leased out of assets – AO issue notice u/s 148 on the basis of Investigation report of ADIT - Excessive and wrong allowance of the claim of depreciation on leased assets – Assessee contended that basis is only change of opinion – Held that:- As concluded from the facts AO did have tangible new material to reopen the assessment u/s 147 and to form a reason to believe that income had escaped assessment. There is nothing either in the assessment order passed u/s 143(3) or in the details or explanation filed by the assessee in response to notice u/s 143(2) to show that the AO had made any enquiry on the issue of allowability of depreciation and whether the nature of transaction is operating leased or a finance lease. We are unable to accept the contention of the assessee that full and true particulars relating to the purchase and leased back transaction were furnished with ROI. Therefore, investigation report of ADIT is very relevant and tangible additional material for formation of belief that income chargeable to tax has escaped assessment on account of excess claim of depreciation allowed in the original assessment. Reopening of assessment on the basis of wrong facts - Non existence of the asset was detected only during the investigation and enquiry of investigation wing – Held that:- The assessee has not conclusively established that the facts pointed out in the investigation report are absolutely wrong. The claim of depreciation was finally disallowed on the ground that the transaction of purchase and lease back were sham, than it cannot be said that the reopening is on the basis of wrong facts. Merger of Order of assessing authority with CIT (A) – Assessee contended that reopening of assessment when the assessment order has merged with the order of CIT(A), then reopening of the assessment is bad in law – Held that:- There is nothing either in the assessment order or in the record available at the time of assessment to suggest that the AO had made any attempt to address this issue. As no such issue was under consideration before the appellate authority and the assessment order was not set aside. Therefore notice u/s 148 can be issue for on the basis of belief that has not been raised before CIT(A) Depreciation on leased assets – The assessee has purchased the assets on hire purchase basis and then leased back to the same parties - AO argued that transactions of sale and lease back of assets are sham but the interest of the assessee was to recover the entire investment and avail the benefit of 100% appreciation. Since rental receipts has been taxed, this issue has not been adjudicated by the CIT(A). Accordingly, the issue of capital component in the rental receipt not to be taxed is set aside to the record of the CIT(A). Issue remand back to CIT(A)

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• 2012 (10) TMI 753
  Capital Gain - genuine transaction of purchase and sale - AO was of the view that the entire transaction was a sham & circular transaction. - Held that:- The only aspect, which is material and affecting the interest of the parties, is the purchase price at which the assessee purchased the shares. The inflated price paid by the assessee over and about the market price of the shares is only to assist and help the group concern and not for any wise investment based on a prudent business decision. The entire chain of events clearly established that the assessee has purposefully purchased the shares at a higher price than the market rate available on the date of purchase and thereafter sold the shares by incurring loss. The purpose and intention behind these transactions is so apparent and obvious that what is shown by the parties is not the real. The facts and circumstances as well as the relevant material can lead to only one conclusion that all these exercise of purchase of sharers was meant to assist the group company in order to satisfy the conditions for availing the finance from the ICICI Ltd. - decides in favour of revenue

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• 2012 (10) TMI 752
  Disallowance of depreciation in case of Trust – Whether depreciation can be claimed on asset whose full cost of addition has claimed as application of income u/s 11 – AO argued that depreciation on the same assets amounts to double deduction – Held that:- Following the decision of the Tribunal in the assessee’s own case that full expenditure had been allowed in the year of acquisition of the assets, what he really meant was that the amount spent on acquiring those assets had been treated as “application of income” of the trust in the year in which the income was spent in acquiring those assets. This did not mean that in computing income from those assets in subsequent years, depreciation in respect of those assets cannot be taken into account. Appeal decides in favour of assessee

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• 2012 (10) TMI 751
  Revenue or Capital expenditure – replacement / overhauling / rejuvenation - Assessee is engage in the business of generation of electricity and mining of Lignite – Expenditure incurred towards replacement of various components in boilers and components of BWE under the LEP - Assessee claimed such expenditure as revenue – AO’s view was that this is one time expenditure at the end of life span of the asset with a view to give new life – Held that:- What was replaced was only the parts of machinery and the expenditure was incurred only to preserve and maintain the existing assets and therefore, the expenditure on such repairs is allowable as deduction under current repairs. Following the decision in case of Saravana Spinning Mills P. Ltd. (2007 (8) TMI 16 - SUPREME COURT OF INDIA) that when an expenditure was incurred to preserve and maintain already existing asset and such expenditure is not bringing any new asset into existence or obtaining new advantage such expenditure is allowable as current repairs. Appeal decides in favour of assessee

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• 2012 (10) TMI 750
  Capitation fees - recalling of the Order of ITAT - exemption u/s 10(23C) - CIT(A) has set aside the assessment on that issue to the file of the Assessing Officer, when he has no power to set aside an assessment order under provisions of the Act. - Held that:- order of CIT(A) set aside - matter remanded back to AO for fresh decision.

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• 2012 (10) TMI 749
  Exemption u/s 11 - corpus fund - donation received with direction - capitation fee - anonymous donations - Held that:- Capital receipts by way of development fund, contributions and donations could not be added as they were received with specific direction that they should be treated as corpus fund or development fund. Assessee in the instant case has not been able to prove that the contributions received by it are not in the nature of capitation fee collected from students/prospective students or their relatives in the guise of donations. - In the absence of any evidence filed by the assessee in that behalf the assessing officer treated the same as the income of the assessee and the CIT(A) too confirmed the addition made by the assessing officer in that behalf. - Matter remanded back to AO for fresh decision. Fee received included fee received in advance which is to be excluded before arriving at the amount of Rs. 1.00 crore. In these circumstances, we remit the issue to the file of the Assessing Officer to examine whether the fees received in advance has been included so as to arrive to the conclusion that the aggregate receipt is more than 1 crore and therefore the assessee is out of purview of section 10(23C)(iiiad). Nature of contributions - capital in nature - The income has to be computed in a commercial manner even in the case where exemption is denied and the capital receipts cannot be taken as income of the assessee in case the Assessing Officer is satisfied that the contributions are capital in nature. Incidentally, the Assessing Officer is required to verify the figure as donation received - all the three appeals of the assessee under consideration are treated as allowed for statistical purposes.

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• 2012 (10) TMI 748
  Disallowance of Loss – Held that:- As the expenditure incurred has been inflated and vouchers were not produced, since the Assessing Officer has made ad-hoc disallowance and certain expenditure is inevitable while carrying on the manufacturing activity disallowance of expense is restricted to 50% i.e. Rs. 2.5 lakhs in the interest of justice - appeal of assessee is partly allowed. Disallowance of interest - Following the decision of Supreme Court in case of [SA Builders Ltd. Vs. CIT(A),2006 (12) TMI 82 - SUPREME COURT] Held that:-since there was no business purpose and moreover, there was no business expediency in giving such loans/advances, interest-free to the group concerns, proportionate amount of interest attributable to such advances/loans, has to be disallowed from the claim of interest made by the assessee - issue restored to the file of the Assessing Officer to decide the same in the light of the decision of the ITAT, Mumbai Bench wherein it was held that if the own capital is sufficient to cover up the interest free advances,no disallowance is warranted. Finance charges - Outstanding amount or the provision for expense (and not the amount already paid) is liable for disallowance if TDS is not deducted. Sec 40(a)(ia) can apply only to expenditure which is payable” as of 31st March and does not apply to expenditure which has been already paid during the year - issue restored to the file of the Assessing Officer to decide the same – appeal allowed for statistical purposes. Disallowance of Freight inward and Factory expenditure – Held that as the expenditure is likely to have been incurred for Business purpose disallowance to 50% is restricted - appeal is partly allowed. Consultancy charges – Held that :- Order of CIT(A) is confirmed in allowing claim of the assessee to the extent the TDS challans were furnished and proper deduction of tax at source had been made and has disallowed the balance on which assessee has not made TDS deduction - appeal of the assessee is dismissed. Water Charges – Held that:- As the assessee had not deducted tax at source on such payment as per the provisions of section 194C of the Act – issue restored to the file of the AO to decide the same - allowed for statistical purposes. Disallowance on account of employee contribution u/s 36(i) - Issue remitted to the file of the Assessing Officer to verify the details as it has been submitted befor that the Assessing Officer has failed to consider the information furnished before him and the Assessing Officer shall decide same in accordance with law after providing an opportunity of hearing to the assessee - allowed for statistical purposes. Delayed payments - set aside this issue to the file of the Assessing Officer to verify the claim of the assessee that the amount disallowed u/s 40(a)(ia) for delayed payments of TDS now allowed as TDS was paid in the current year. The Assessing Officer shall allow deduction after verifying the disallowance made u/s 40(a)(ia) - appeal of the assessee is partly allowed for statistical purposes.

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• 2012 (10) TMI 747
  Unexplained income of the assessee - Addition u/s 68 - no other source of income except agricultural income - Held that:- As decided in Commissioner of Income-Tax Versus Smt. P. K. Noorjahan [1997 (1) TMI 6 - SUPREME COURT] the sources of investments (i.e. that the same were financed from out of the savings from the income of the properties which were left by her mother's first husband) could not be treated as income of the assessee. As in the present case the assessee deposited the amount of Rs. 26,30,000/- received through cheque by the father of the assessee who expired and the source as explained by the legal heir that the amount was received by his father on account of sale of agricultural land, thus considering the social status and living standard and other attendant circumstances, the only inference that should have been drawn by the A.O. must have been in favour of the credibility of the explanation rather than the materiality of evidence - in favour of assessee.

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• 2012 (10) TMI 746
  Computation of “cost of acquisition” of membership card of stock exchange - capital gain arising on transfer of shares - cost of the memberships card to be taken at the cost paid OR proportionate cost - Held that:- As from record it is found that the assessee has acquired membership card of Bombay Stock Exchange during the financial year 1999-00 by paying Rs. 2,51,00,000/-. At the time of conversion of Bombay Stock Exchange from AOP to a limited company, the assessee was allotted 10,000 shares for Re. 1/- each together with trading rights. Thus, the cost of acquisition of 10,000 shares worked out to be Rs. 2,51,10,000/-. Accordingly, the cost of 5000 shares would work out to be Rs. 1,25,55,000/- which is liable to be deducted as cost of acquisition of 5000 shares while working out the capital gains. Thus, the assessee has correctly worked out the cost as per the provisions of section 55(2)(ab). Accordingly no infirmity in the order of the CIT(A) in directing the AO to adopt the cost of acquisition of 5000 shares at Rs. 1,25,55,000/- - against Revenue.

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• 2012 (10) TMI 745
  Disallowance of “Shortage, Damages, Moisture” expenses - Held that:- The AO has grossly failed to make out any case for making such huge disallowance out of claim duly supported by evidences and details on record. He has casually discussed that turnover of the appellant with M/s. Vippy was 'bit' percentage only without varying the facts on record. As for making any disallowance u/s 37(1) again recourse to provision of section 145 what is required to be established is that either the claim is ingenuine, bogus or Incurred for nonbusiness purpose/consideration or is excessive vis-a-vis some comparable case' or the past history of the appellant's case but nothing of the sort has been done by AO and based on some vague discussion, he has made such un-narrated disallowance, which is neither justified in facts nor in law. The disallowance made at Rs. 15 lakh is hereby deleted - in favour of assessee. Addition in respect of amount credited in the Bank account through R.T.G.S - CIT(A) deleted the addition - Held that:- On verifying the letter issued by Bank of India, Khandwa Branch, confirming the transaction made with TATA Chemicals Limited through RTGS the amount of Rs. 56.50 lacs was received by assessee from company for purchase of Soya bean on its behalf. Accordingly, there is no infirmity in the order of the CIT(A) for deleting the addition as per fpositive material on record - in favour of assessee.

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• 2012 (10) TMI 744
  Addition on account of commission received - differences between the gross total income as per TDS Certificate and gross income as per Profit & Loss A/c - business of providing shipping agency services – Held that:- Excess commission income on which TDS was deducted but did not crystallize during the relevant assessment year, was reversed by the assessee company during the year end - Assessing Officer has not found any discrepancy and therefore the reversion of detention commission allowed - CIT(A) has deleted the addition after examining the matter in detail - Revenue’s appeal dismissed.

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• 2012 (10) TMI 743
  Long term capital gain - sale of shares – non-compete consideration over and above sale consideration - business income or capital gain - grievance of the assessee is that Learned Commissioner has erred in taking cognizance under sec. 263 of the Act and thereby modifying the order of Assessing Officer, directing him to treat a sum as a business income under section 28(va) of the Act - Held that:- Contract was for sale of shares - They have fixed the sales price and paid the consideration - Department had not said that shares were sold at a lower price then the one available in the open market. The shares were sold at the price for which acquirer had acquired the shares of more than 20% from the public in an open offer - According to the assessee, he has sold the shares for which he has offered capital gain to tax - assessee has sold only 19.55% share of the total holding. Priya Das Gupta has sold 14.68% share and in her case department has accepted the capital gain by adopting the price at Rs.190 per share. There is no allocation towards alleged "non-compete" - Assessing Officer has taken one of the possible views. He has not applied any incorrect provisions of law and, therefore, the amount of Rs.1 7,72,17,484 cannot be treated as business income under sec. 28(va) of the Income-tax Act, 1961 as received for non-compete fees - Assessing Officer has rightly treated it as a part of long term capital gain - appeal of the assessee is allowed

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• 2012 (10) TMI 742
  Reopening – period of limitation – deduction of interest expenditure from income from other sources under section 57(iii) of the Act – Difference of opinion - third member decision - Held that:- Assessee had disclosed primary facts in the returns filed. Further, the Assessing Officer had raised certain queries about borrowings and the interest paid thereon and the dividend earned. The assessee, on both the occasions, supplied necessary material through letters and documents produced on record - during the scrutiny assessment proceedings, the Assessing Officer was actually aware about the claim of the assessee under section 57(iii) of the Act - primary onus to provide such details even if not disclosed cannot be shifted on the assessee - reopening of assessment beyond a period of four years - interest paid on borrowed funds, which were utilized for the purpose of shares for earning dividend would fall within the parameters of section 57(iii) of the Act - there was no failure on the part of the assessee to disclose fully and truly all material facts, necessary for assessment. The notices for reopening the assessments beyond a period of four years, from the end of the relevant assessment years, must fail on that ground alone – in favor of assessee

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• 2012 (10) TMI 741
  Unexplained cash credits – Held that:- Assessee has failed to prove the creditworthiness of all the creditors and no source of their income has been filed - there were no sufficient funds available in their bank account and they were having only small bank balance, which was even not sufficient to meet out their household expenses or day-to-day requirements - assessee has not adduced any sufficient evidence before the authorities below to prove the creditworthiness of the creditors and genuineness of the transactions in the matter. Therefore, the assessee has not satisfied the essential ingredients of section 68 of the IT Act - assessee appeal dismissed Disallowance of 20% expense out of conveyance and mobile phone expenses – alleged that the assessee claimed several expenditures and it was also found that most of the expenses have been incurred in cash and appear excessive looking to the volume of business and also not fully verifiable – Held that:- Use of phone and car for personal purposes cannot be denied. Since no log book is produced to show that these expenses were used wholly and exclusively for the purpose of business - Only copies of the ledger account have been filed, but nothing is proved whether these expenses were incurred wholly and exclusively for the purpose of business – against assessee

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• 2012 (10) TMI 721
  Direction for special audit - Deemed dividend u/s 2(22)(e) - advances received from one of its partners with no interest was paid - Held that:- There is a good deal of force in the contention of the petitioner that there was no proposal initially by the AO for special audit and that he did not form any opinion that the accounts of the assessee were complex and a special audit was required to protect the interests of the revenue. AO did examine the accounts of the assessee on 18.11.2011. He issued a proposal for special audit under Section 142(2A) on 21.11.2011. The petitioner submitted a detailed reply to the same on 24.11.2011. After considering the reply, the AO prepared a report on 16.12.2011. The penultimate paragraph to this report gives the impression that it was some kind of an interim report, informing the CIT that the submissions of the petitioner are being examined with regard to the issues raised in the show cause notice, the CBDT guidelines, the provisions of law and the judicial decisions relied upon. It also states that the issue of business advance received by the assessee from DLF Ltd. and in turn advanced to certain land owning companies was being examined in the assessment proceedings. AO further stated in the final report that whatever details are required in respect of the issues raised in the show cause notice dated 21.11.2011 were being examined in the assessment proceedings and the assessee has been asked to furnish further details (which is an apparent reference to the hearing posted on 28.11.2011) and further that a draft order has been prepared which is enclosed with the final report for the perusal of the CIT. It is very difficult to treat this report of the Assessing Officer as a proposal submitted by him to the CIT for special audit of the accounts of the petitioner. Also it contains a clear statement that since the complexities in the accounts have been answered by the petitioner and since the details and material submitted by the petitioner would be examined in the course of the assessment proceedings which were pending on that date, no special audit was required. It difficult to accede to the proposition that the CCIT could have applied his mind in such a short period of time to the proposal put forward by the Assessing Officer on 27.12.2011 as both the proposal and the approval bear the same date. In these circumstances, there could not have been a serious application of mind on the part of the CCIT. It was merely a ritualistic or mechanical approval given by the CCIT. There is nothing on record to show that there was any fresh development between 26th December and 27th December, 2011 compelling the AO to change his mind and come to the conclusion that "certain complexities have been noted in the accounts of the assessee" and therefore special audit was required to be carried out. It was incumbent on the AO to issue another show-cause notice to the petitioner u/s 142 (2A), after he changed his mind and proposed special audit on 27.12.2011, and invite the petitioner's objections - in favour of assessee.

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• 2012 (10) TMI 720
  Depreciation in respect of capital construction equipment - disallowance as machinery or equipment kept ready for use in the construction projects, but not actually used - Held that:- Certain machinery and equipment were let out on hire to the contractors and they used them in the construction of the projects. Depreciation was allowed in respect of those equipment and machinery under Section 56(ii). Some machinery and equipment relating to the construction of the projects were not actually put to use, though they were kept ready for use and this factual position is not in dispute. Moreover, though the Tribunal took the view that the equipment and machinery which was not actually put to use related to the power generation and were to be installed after the construction of the projects was completed, the question referred to this Court for opinion shows that the equipment was “capital construction equipment” which was kept ready for use. Moreover, it does not stand to reason that the assessee would invest monies in acquiring power generation equipment long before the construction of the projects is completed. As under Sec 32 two conditions are necessary before an allowance by way of depreciation i.e. ownership of the asset & use of the assets for the purposes of the business interpreted to include a case where the asset is kept ready for use, but is not actually put to use as decided in CIT vs. Refrigeration and Allied Industries Ltd [2000 (8) TMI 37 - DELHI HIGH COURT]. Thus the description of the machinery and equipment which was kept ready for use shows that no power generation equipment was involved the Tribunal erred in rejecting the assessee’s claim for depreciation on capital construction equipment kept ready for use, though not actually used, for the assessment years 1979-80 and 1980-81 - in favour of assessee.

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• 2012 (10) TMI 719
  Penalty u/s 271 (1) (c) - claiming non compete fee as a capital receipt - CIT(A) deleted the levy - Held that:- It is very much clear from the perusal of the provisions laid down u/s 271 (1) (C) that for seeking exemption from penal action regarding an income not declared in the return income, the assessee is required not only to establish that all the facts relating to the same and material to the computation of his total income have been disclosed by him but he has to establish also that the explanation for not showing this income in his return of income was bona fide. As in the present case keeping in mind that the provisions laid down u/s 17 (3) (1) were clear to bring the receipt as taxable and there was no scope of debate regarding its taxability, the bona fide of the explanation of the assessee that he was under a belief that the amount received is a capital receipt not chargeable to tax is not acceptable - thus while not declaring the capital receipt in question as his income in his return of income filed by the assessee, the assessee in the present case had furnished inaccurate particulars of income attracting the penal action provided u/s 271 (1) (C) - against assessee.

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• 2012 (10) TMI 718
  Sale of raw material to holding company at less than the market price - CIT(A) deleted the addition - Held that:- Assessee company purchased raw material namely fruit juice concentrate during the year 31.3.2002 for the purpose of manufacturing ‘Tropicana Twister’, a proposed new brand of juice drinks. The aforesaid raw material had been purchased in the preceding year and represented the raw material and was in respect of the proposed new brand of juice drinks. However, due to change in the market and lack of demand in the aforesaid product in the Indian Market, proposed launch of the aforesaid product could not be materialized and launch of the aforesaid product was abandoned. Also the concentrate which was imported by the assessee has a shelf life which was about to expire, and as such, assessee considered it appropriate in its business interest to sell the same to recover the cost and thus it sold the same to its holding company. Thus, there was no loss incurred in this regard. This decision was a business decision and was based on the realization that the product does not command adequate demand. Loss on sale of packing material as well as gross profit addition were based on the same rationale that the new product has limited demand in the Indian market. It is the contention of the assessee that the said aforesaid concentrate has a limited shelf life, since the same was due to expire. Assessee had to sell the same to its holding company to minimize the loss in this regard. Thus, this was a business decision of the assessee and Revenue cannot question the same. Also no evidence that assessee has sold the concentrate to its holding company which in turn has made a profit in this regard, by selling it to others. Hence, the contention of the revenue that assessee could also have found buyers as the holding company is also devoid of cogency - in favour of assessee.

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• 2012 (10) TMI 717
  Rectification application - Mistake apparent from the record - date of letter of first letter of the assessee in the re-assessment proceedings is 28.9.2004 and not 28.2.2004 - Held that:- In order to attract the application of section 254(2), a mistake must exist and the same must be apparent from the record. The power to rectify the mistake, however, does not cover cases where a revision or review of the order is intended. A mistake which can be rectified under section 254(2) is one which is patent, which is obvious and whose discovery is not dependent on argument or elaboration. Recalling of the order is not permissible under Section 254(2). As decided in Ras Bihari Bansal Vs. Commissioner of Income Tax [2007 (4) TMI 47 - HIGH COURT, NEW DELHI] it is well settled that an oversight of a fact cannot constitute an apparent mistake rectifiable under this section. Similarly, failure of the Tribunal to consider an argument advanced by either party for arriving at a conclusion, is not an error apparent on the record, although it may be an error of judgment. The mere fact that the Tribunal had not allowed a deduction, even if the conclusion is wrong, will be no ground for moving an application under section 254(2). Further, in the garb of an application for rectification, the assessee cannot be permitted to reopen and re-argue the whole matter, which is beyond the scope of the section - dismissal of application of the assessee being devoid of any merits as the assessee has not been able to point out any apparent mistake in the order passed by the Tribunal and in case application of the assessee is accepted, it would tantamount to review of the order of the Tribunal which is not permissible - against assessee.

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• 2012 (10) TMI 716
  Whether a appellant Society is a person u/s 2(31) - appeal not maintainable for not an Order within the meaning of Section 246A(1)? - Held that:- In the letter or order dated 31st August, 2011, the CIT(A) has only stated that the appeals filed by the assessee are not maintainable because the letter dated 3rd December, 2010 is not an order within the meaning of Section 246A(1). The assessee filed the appeals against the above order of learned CIT(A) in which the grounds raised by the assessee have already been reproduced this order. From those grounds, it would be evident that the assessee has challenged the finding of the AO and not the order of the CIT(A). The appeal before the ITAT arises against the order of the CIT(A) and not against the order of the AO unless it has been specifically provided under the Income-tax Act. The income of the assessee was determined vide assessment order dated 31st December, 2010 and thereafter, only the demand notice and challan were issued. Therefore the appellate order is the assessment order dated 31st December, 2010 and, in fact, the assessee has filed appeal against such assessment order which is pending before the CIT(A) - the assessee’s apprehension, that if it had not filed the appeal against letter dated 3rd November, 2010 it would be presumed that the assessee is liable to Income-tax Act, is misplaced and that in its appeal against the assessment order dated 31st December, 2010, if so advised, the assessee may still deny its liability to be assessed under the Income-tax Act and if so denied, then the appellate authority would decide the same on merits. CIT(A) was justified in holding that the appeals of the assessee against the letter dated 3rd November, 2010 were not maintainable - against assessee.

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• 2012 (10) TMI 715
  India - Netherlands DTTA - fees for technical services v/s business income - Permanent Establishment (‘PE’) in India - Held that:- The issue before the DRP was whether the receipt from sale of software can be treated as fees for technical services or not, however, the DRP traveled to the issue which was not before it and held SSPL to be dependent agent of LBV. That while doing so, the assessee was not allowed any opportunity of being heard as DRP has exceeded its jurisdiction because the jurisdiction of the DRP under Section 144C is limited to confirm, reduce or enhance the variation proposed in the draft order. The DRP is not entitled to make out entirely a new case. It would meet the ends of justice if the orders of the lower authorities are set aside and the matter is restored to the file of the Assessing Officer directing the AO to allow adequate opportunity of being heard to the assessee - in favour of assessee for statistical purposes.

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• 2012 (10) TMI 714
  Payment of Royalty - Revenue v/s capital - Held that:- As decided in assessee's own case that the assessee was required to pay royalty @2% of the items manufactured and sold under the agreement determined on the basis of quantity and value of the production. Therefore, the expenditure incurred by the assessee company was essentially of recurring and revenue in nature. AO treated 25% of such payment as capital in nature but these findings are not justified as the assessee company was not deriving any benefit of enduring nature. Accordingly, the expenditure of royalty so claimed by the assessee company on the products manufactured by it was related and computed at 2% of net ex-factory sale price on half yearly basis under the agreement. Admittedly, the assessee company did not make payment of royalty for acquiring process or design or technology which can be utilized by the assessee in the years to come and the assessee company was not deriving any benefit of enduring nature. Thus such expenditure does not fall in the ambit of capital in nature - in favour of assessee. Disallowance of car expenses, advertisement expenses and sales promotion expenses - CIT(A) deleted the addition - Held that:- There was no disallowance by the AO related to motor car, advertisement and sales promotion expenses in the earlier assessment year. On bare reading of the assessment order, AO merely held that the personal nature of expenses under these heads cannot be ruled out, therefore, he made estimated disallowance of 10% on account of expenses incurred in this regard & has not brought any evidence or observation that the particular part of this expenditure was incurred to extend personal benefit to any director or employee of the company - the accounts of the assessee company are continuously audited by the Chartered Accountant and there is no adverse reporting in the audit report regarding any personal use of any business asset by the director or employee of the company - as decided in Sayaji Iron & Engg. Co. Ltd. vs. CIT [2001 (7) TMI 70 - GUJARAT HIGH COURT] that for the purpose of company, no expenditure shall be deemed to be in the nature of personal expenditure as the company has a separate legal entity - in favour of assessee.

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• 2012 (10) TMI 713
  Deduction u/s 80IC - assessee’s hotel is not environment friendly as held by AO - sustenance of disallowance by the CIT(A) as the assessee did not commence its operations in the period specified - Held that:- As decided in M/s Anchal Hotels (P) Ltd., Versus Assistant Commissioner of Income tax, Circle-2, Dehradun [2012 (10) TMI 639 - ITAT, DELHI] in terms of section 80- IC(2)(b), the deduction is admissible if the hotel commences the operation within the period mentioned in the statute. It is also admissible if the hotel commences any operation and undertakes substantial expansion during the period mentioned in the statute. Therefore, in the case of an existing hotel, the deduction will be admissible if the substantial expansion takes place within the prescribed period. Thus assessee would be entitled to deduction under Section 80IC considering the substantial expansion taken place within the prescribed period by assessee - in favour of assessee.

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• 2012 (10) TMI 712
  Disallowance u/s 14A - Not been doing any business activity - Held that:- Assessee except reiterating his stand, could not demonstrate how the rental income, interest income or dividend income of the assessee is to be assessed as a business income. All the incomes resulted to it are incidental income of its past investment or a rental income. The assessee failed to file computation of income in respect to AY 2008-09 in order to indicate the business income shown by him - against assessee.

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• 2012 (10) TMI 711
  Disallowance of expenditure u/s 35D - Whether fee paid for increase in share capital is eligible u/s 35D – Held that:- Following the decision in case of Punjab State Industrial Development Corporation Ltd.(1996 (12) TMI 6 - SUPREME COURT) expenditure incurred by a company in connection with issue of shares with a view to increase its share capital is directly related to the expansion of the capital base of the company and is capital expenditure even though it may incidentally help in the business of the company and in the profit making. As the fee paid for increase in share capital is not fee for registration of company and hence is not amortised even u/s 35D(2)(c)(iii). - Appeal decides in favour of revenue

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• 2012 (10) TMI 710
  Whether agricultural land sold during the year of purchase is eligible to cover under the exception of capital assets u/s 2(14)(iii) – Whether income earn from transfer of such land is, exempt from the provision of capital gain or consider as income from trading - Held that:- Following the decision in case of Gemini Pictures Circuit Private Ltd.(1996 (3) TMI 8 - SUPREME COURT) No agriculture operation was carried out, immediately sale after purchase, situated at the main road near the city from all these facts the intention of the assessee was not to put to the land for agricultural use and accordingly, it was not used for agriculture purpose by the assessee as well as even by the purchaser, who is a builder, then the Sec 2(14)(iii) would not apply in the case of the assessee. Therefore, nature of transaction of purchase and sale rightly held as trading. Appeal decides in favour of revenue

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• 2012 (10) TMI 709
  Addition on account of Hawala Payment – Certain call were made to Dubai from the telephone of assessee - Timing of phone calls matches with the timing of the transaction of hawala payment as per police report – Held that:- As said amount of money is also not the established by any material or evidence except the police report. Since the police report is subject to the Court finding and judgment; therefore, until and unless the decision of the Court on the police report is available the said evidence brought on record by the Department is not sufficient to make the addition. Therefore issue remand back to AO to be decides on the basis of the decision of Court on the police report. Addition on account of difference in balance with party and assessee – Held that:- The assessee has clearly mentioned the reasons of difference being the cheque received and payment accounted twice; but none of the authorities below examined the said factual explanation and even overlooked the same. Issue remand back to AO

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• 2012 (10) TMI 708
  Rectification u/s 254(2) - Rectification of mistake apparent from the record - Assessee wanted the Tribunal to review its earlier order, that even if there was mistake of judgment by the earlier bench, subsequent bench of the Tribunal was not empowered to rectify it – Held that:- Even if argument of the assessee for so called five errors/mistakes considered, it will be only an error of judgment or non-consideration of arguments, but it cannot be termed a mistake apparent form record. In our opinion in such situation filing an appeal u/s. 260A with High Court is the only remedy. Appeal decides in favour of revenue

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• 2012 (10) TMI 707
  Disallowance u/s 43B - Amount of service tax billed to clients credited directly to ‘Service tax payable’ A/c under ‘Current Liability’ hence not credited to P&L A/c - Held that:- the amount in question as service tax is covered by the provisions of section 43B. - having neither debited the amount of service tax to the profit and loss account as an expenditure nor having claimed the same as deduction, disallowance u/s. 43B cannot be made. - there is no finding specifically recorded by the AO or by the Ld. CIT (A) regarding the assessee having not debited the service tax to the profit and loss account nor having claimed the same as deduction - Issue remand back to AO. Non deduction of TDS - A revised return was filed by the assessee by making the impugned disallowance u/s. 40(a)(ia) suo motu - Claim was made during the course of the assessment proceedings before the AO - AO however completed the assessment without considering this claim of the assessee - CIT (A) also did not decide the said issue stating that the same was not arising from the order of the self-assessment - Held that:- This issue was raised by the assessee during the course of assessment proceedings and the same was not considered by the AO on merits, the assessee cannot be precluded from raising it in the appeal filed against the order of the AO. Merely because the AO has not considered the issue specifically raised by the assessee during the course of assessment proceedings and has not given any finding or decision thereon, it cannot be said that the said issue is not arising from the order of the assessment. Therefore issue remand back to CIT (A) for consideration Addition on account of difference between ITS details and books - The assessee could reconcile the ITS details except an amount of Rs 1,21,032/- Un-reconciled amount was treated by the AO as unexplained cash credit u/s 68 – Assessee contended that addition cannot be made merely on the basis AIR Information – Held that:- As the AIR (ITS) Data was provided by the AO to the assessee with an opportunity to reconcile the said data with the figures appearing in the books of account. A difference of Rs.1,21,032/- remained finally un-reconciled and such difference representing credit balance was rightly added by the AO. Appeal decides in favour of revenue

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• 2012 (10) TMI 706
  Rejection of application for renewal of exemption u/s 10(23C)(iv) - assessee claiming exemption under section 11 in revised return - Held that:- In the present case, it is an admitted position that the assessee had filed Form No.10 as required under rule 17 of the Rules r.w.s. 11(2) alongwith the revised returns filed in respect of all the assessment years under consideration before the assessment came to be completed, therefore, while completing the assessments for the assessment years under consideration, the AO had the necessary information in respect of the claim for exemption under section 11 of the Act made by the assessee before him, thus the assessee was, therefore, entitled to the benefit of section 11 on the basis of the information supplied by it prior to framing of the assessment orders. As decided in Commissioner of Income-Tax Versus Mayur Foundation [2004 (12) TMI 48 - GUJARAT HIGH COURT] the assessment proceedings cannot be said to be complete and are pending till the appeal is heard and disposed of by the Tribunal and accordingly held that the Tribunal was justified in considering a new ground by the assessee claiming benefit under section 11 during the course of the appeal - not possible to state that there is any legal infirmity in the impugned order of the Tribunal in holding that rule 17 of the Rules is directory in nature and in holding that the assessee had duly complied with the requirements of sub-section (2) of section 11 of the Act.

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• 2012 (10) TMI 704
  Disallowance of various Expenses in part or in full - Held that:- It is observed that the main reason for making the respective disallowances by the AO is that the assessee has not substantiated her claims by way proper evidences, such as bills/vouchers in respect of the claims. The main grievance of the AO is that for most of the claims, the assessee filed self-made vouchers, which are not unverifiable in nature. In the totality of the facts and circumstances of the case, to meet the ends of justice, one more opportunity may be given to the assessee to substantiate her claims before the AO by way of filing proper documentary evidences.

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• 2012 (10) TMI 703
  Penalty u/s 272B - assessee failed to mention PANs on the form No. 16 & 16A issued to the persons from whom the tax has been deducted at source - Held that:- Any person who receives any sum or income or amount is duty bound to intimate the PAN to the person responsible for deducting tax at source. But in our view that is only possible, if the person responsible, asks him to provided his PAN. In the present case, assessee has not made any attempt to write a single letter to the receiving person for providing their PAN. Moreover, assessee has not given any explanation before the ITO (TDS), even the assessee has also failed to appear before him on the date fixed. Since assessee has failed to establish the reasonable cause for not quoting PAN in Form No. 16 & 16A, hence, penalty u/s 272B is levied on account of non-compliance of provisions of section 139A - Decided against assessee

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• 2012 (10) TMI 702
  Determination of Net profit rate - Applicability of N.P. rate @ 4% on the total receipts as against 8% applied by the AO, ld. first appellate authority has reduced the N.P. rate of 4% to the gross receipts computed by the A.O. instead of 8% applied by the A.O. on the basis of previous assessment year and especially the increase in the rates of the material used by the assessee in its construction business to meet ends of justice - Impugned order by dismissing the appeal filed by the Revenue and C.O. filed by the assessee is upheld - appeal of revenue is dismissed.

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• 2012 (10) TMI 701
  Exemption under Section 10(23C)(iv) - non filing of balance-sheet and income & expenditure accounts statement - Audit report was filed under Form 10B and not under 10BB - Petitioner was charging processing fees ranging from 0.1% to 0.5% of the project costs. - Held that:- Once the financial year 2011-2012 had started w.e.f. 01.04.2011 and only 26 days had passed, the rejection of the application for non-production of the audited balance-sheet and income and expenditure accounts for the assessment year 2011-2012 was not justified as there was still time available with the petitioner to get its accounts audited and file the return for assessment year 2011-2012. Charitable activity / purpose - held that:- petitioner had not been charging processing fees since 01.02.2009 which was the ground of rejection for earlier years. - The application fees received by the Board was from sale of application forms and not for income of the Board but were only incidental charges and reliance was placed upon advancement of the object of general public utility which falls under the charitable acts under Section 2 of the Act. - matter remanded back for reconsider these factors.

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• Customs

• 2012 (10) TMI 761
  Imposition of anti dumping duty on import of Diethyl Thio Phosphoryl Chloride - Personal hearing - natural justice – previous Designated Authority was changed – Held that:- Newly appointed Designated Authority cannot rely on in the hearing given by the previous officer holding the position of Designated Authority - since public hearing was granted by one Officer and the Final Findings were submitted by the another person, the entire procedure was in violation of the principles of natural justice. - In the result, by allowing this petition, the Final Findings dated 6th May 2010 issued by the Designated Authority and the Notification dated 7th July 2010 issued by the Union of India on the basis of such final findings, are set aside.

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• 2012 (10) TMI 740
  Granting of CHA License – Held that:- Following the decision in case of Sunil Kohli (2012 (10) TMI 638 - SUPREME COURT) those who had cleared the examinations under the regulations issued in the year, 1984, would be eligible for the grant of license, subject to their fulfilling the other conditions of eligibility, as the actions already taken under the earlier regulations issued in the year, 1984, had been saved by the new regulations issued in the year 2004. Therefore, direct the authority to issue the necessary certificate granting the Customs House Agents Licence to the petitioner, as per Regulation 9 of the Customs House Agents Licencing Regulations, 2004, on the petitioner complying with the requirements prescribed under Regulation 10 of the said regulations. In favour of assessee

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• 2012 (10) TMI 739
  Demand of duty and penalty – import of mountings and findings of Gold jewellery - benefit of duty exemption under Notification No. 62/2004-Cus - expression “gold in any form” or “silver in any form” shall include medallions and coins but shall not include jewellery made of gold or silver as the case may be and foreign currency coins – Held that:- Gold mountings and findings being items as jewellery are outside the purview of Notification No. 62/2004-C.E. and, hence, the Board’s Circulars No. 40/2004-Cus., dated 4-6-04 and 13/2006-Cus., dated 29-3-06 clarifying that the gold and silver mountings and findings are covered by the Notification No. 62/2004-Cus. are contrary to the provisions of law and, hence, have no validity - duty demands raised against the respondents are confirmed along with interest under Section 28AB of Customs Act, 1962. The Revenue’s appeals are allowed.

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• 2012 (10) TMI 738
  Demand of duty – it was found that they had imported excess quantity of cartons and did not utilise the same in the packing of goods exported – Held that:- Export obligation have been fulfilled and the cartons have been used in the manufacture of export product, no violation of the terms and conditions of the exemption notification has been committed - duty demanded and confirmed by the department is merely on technical grounds without any legal basis or substance - appellant has utilised the imported cartons in the manufacture and export of Pears soap and they have not diverted or mis-used – in favor of assessee

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• 2012 (10) TMI 728
  Demand of duty, interest and penalty – import of medical equipment - importer claimed Customs duty under Notification No. 64/88-Cus., - Held that:- Appellants are eligible for benefit of Notification No. 65/88-Cus., - Notification No. 65/88-Cus., grants exemption not only from the basic Customs duty but also from the Additional Duty of Customs (CVD) leviable under Section 3 of the Customs Tariff Act - when CVD is exempted, there is no liability to pay special excise duty. The Commissioner, while quantifying the duty liability, has not granted any benefit in respect of special excise duty - entire quantification confirmed by the adjudicating authority is totally incorrect and the matter has to be remanded back to the adjudicating authority for correct quantification.

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• 2012 (10) TMI 700
  Direction to conduct interrogation - allowing presence of petitioner's Advocate - Held that:- Allowing the application of assessee and direct that the petitioner's counsel to be allowed to be present at the time of interrogation, made to sit at a visible distance, but beyond audibility. This order will not permit the petitioner from not appearing before the customs authorities as and when called upon & shall co-operate at all times.

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• 2012 (10) TMI 699
  CHA – import of goods – misdeclaration – alleged that goods were actually MPEG cards and that the ores described in the Bill of Entry - case of the Revenue is based on the statement of Shri Biswajit Bhowmick. Shri Arsh Kumar who imported the goods in the name of M/s. Shiv Shakti Enterprises was not asked whether CHA firm or Shri Biswajit Bhowmick were aware of the fact that what was being imported was MPEG card or not and whether he had given them any specific instructions to ensure that the goods are improperly declared and cleared without any problem by the Customs. All questions put to Shri Arsh Kumar related to importation, documentation, repatriation of moneys, etc - CHA firm submitted that the Director of CHA relied upon that the CHA firm had only done the work of clearing of goods and neither he nor his employee was aware of the fact that what was being imported was MPEG card – Held that:- Statement has been improved as submitted but in the absence of any corroboration by the importer himself or any facts and circumstances of the case which are needed to reach such conclusion - no case has been made out against the appellants by the Revenue – order set aside

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• 2012 (10) TMI 698
  Under valuation – import of various spices and dry fruits – Held that:- When undervaluation is alleged, the Department has to prove it by evidence or information about comparable imports - adjudicating authority has given cogent reasons, for rejection of the invoice of the petitioner by placing reliance on the documentary evidence showing import of same goods - order is in consonance with Rule 6 of the Rules as well as the provisions of the Customs Act - petitioner had chosen not to appear before the second respondent, in spite of opportunity given - writ petition dismissed

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• Corporate Laws

• 2012 (10) TMI 736
  Violation / breach of Section 454 of the Act by non submission of Statement of Affairs of the company in liquidation – Appellant submitted that no case / charge of violation / breach of Section 454 of the Act can be made without service of a notice under Rule 124 of the Companies (Court) Rules, 1959 and which has not been served on the appellant. From the complaint under Section 454(5) of the Act, it is shown that it is the admitted position that the notices though issued to the appellant, were received back undelivered. Held that:- Section 454(2) having created two categories and having made the duty, to submit and verify a statement on the first category, to be automatic and not dependent on any direction of the Court or a notice from the Official Liquidator, mere use of the word 'are' along with the words 'have been' in Clause (a) of Sub-section (2) should not be allowed to dilute the obligation placed on the first category of persons aforesaid to submit Statement of Affairs within the time prescribed in Sub-section (3). The complaint under Section 454(5) against the appellant has been filed in his capacity as a Director of the company in liquidation at the relevant time i.e. falling in the first category of persons aforesaid and thus the obligation of the appellant to submit the Statement of Affairs was not dependent on the service of any notice. That being the position, the argument of the senior counsel for the appellant that no notice was served on the appellant is of no avail The persons under Section 454 of the Act who are required to submit the Statement of Affairs cannot create circumstances where neither can notice be served on them nor do they file Statement of Affairs. The appellant has all defences open to him in the prosecution and no case for discharging the appellant as sought is made out - no merit in this appeal, the same is dismissed. We refrain from imposing any costs.

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• 2012 (10) TMI 697
  Claim of Interest on outstanding payment of work order - Held that:- As the amount is not crystalized and it is difficult to accept the case of the Petitioner that the amount is due and payable on the date of the demand notice and/or as on the date of the filing of the Petition, therefore, there is no case made out by the Petitioner. The Company Petition is dismissed.

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• 2012 (10) TMI 696
  Winding up - Held that:- As decided in Meghal Homes (P) Limited Vs. Shree Niwas Girni K.K. Samiti & ors [2007 (8) TMI 447 - SUPREME COURT OF INDIA]when the affairs of the Company had been completely wound up or the Court finds that the Official Liquidator can not proceed with the winding up of the Company for want of funds or for any other reason, the Court can make an order dissolving the Company from the date of that order the liquidation proceedings deserve to be brought to an end. Considering the facts and circumstances of this case, the liquidation proceedings deserve to be brought to an end. M/s Crown Sales (I) Pvt. Ltd. is dissolved under Section 481 of the Companies Act. The Official Liquidator is also permitted to transfer the balance fund available in the Company’s account to the Reserve Bank of India after creating provision or making payment towards the government fee, audit fee and liquidation expenses. The Official Liquidator is permitted to close the books of account of the company with the copy of this order communicated to the ROC within 30 days by the Official Liquidator.

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• Service Tax

• 2012 (10) TMI 765
  Denial of CENVAT Credit of duty paid on capital goods - assessee contested against the denial as had filed the ST3 returns for the relevant period in November 2007 - no separate SCN issued - Held that:- In this case, after issue of Show Cause Notice, returns have been filed, credit has been shown and debits have been made. However, before the returns were filed, Show Cause Notice has already been issued and in reply to the Show Cause Notice, the respondent had already made the claim for CENVAT Credit of duty paid on capital goods which was required to be considered by the adjudicating authority. Thus just because the returns were filed subsequently, the requirement under the law for the adjudicating authority to consider availability of CENVAT Credit and allow the benefit of admissible CENVAT Credit while confirming the duty demand does not undergo a change Issue of another Show Cause Notice to deny the CENVAT Credit would only open a line for another round of litigation without any corresponding benefit to either side. The defence regarding the admissibility of CENVAT Credit canvassed by the assessee was considered by adjudicating authority and while doing so, the admissibility/in-admissibility of CENVAT Credit to the respondent was considered. Therefore, it cannot be said that the principles of natural justice for denying the CENVAT Credit available to the respondent did not become available to them in the absence of Show Cause Notice after filing of ST-3 returns with regard to the CENVAT Credit. If a Show Cause Notice was to be issued and separate proceedings were to be initiated, the original adjudicating authority would not have allowed the appropriation and would not have allowed the benefit of credit itself since it would have been the subject matter of another litigation and thereby the respondent would have been required to make payment in cash and later on file refund claim resulting in further litigation regarding unjust enrichment and other aspects. Thus the arguments advanced that a separate Show Cause Notice should have been issued for dis-allowing the CENVAT Credit after the returns were filed, have no merit. Once the claim that the CENVAT Credit was available and assessee's omission was only in following the procedure, his claim for the benefit of provisions relating to imposition of penalty under Section 80 of Finance Act, 1994 has to be considered favourably. Therefore, to the extent of availability of CENVAT Credit on capital goods to the respondent, penalty under Section 78 has to be waived - The benefit of payment of 25% of duty liability towards penalty subject to the condition that the entire amount of Service Tax liability, interest and penalty to the extent of 25% are discharged within one month from the date of communication of the order of the Tribunal, is extended. Thus assessee has to pay total service tax by debiting CENVAT Credit on capital goods received subsequent to 10.09.2004 and by paying balance in cash with interest and 25% of Service Tax paid in cash towards penalty within 30 days of receipt of this order and in case of failure, pay penalty equal to the Service Tax payable in cash.

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• 2012 (10) TMI 764
  Waiver of pre-deposit – Service tax, interest & duty - Appellants are not disputing the services rendered by them but disputing the amount of service tax liability worked out in the SCN - Disputing the service tax under the category of manpower for the technical labour supply – Appellants did not file any reply to the show cause notice due to ignorance of law – Held that:- As concluded from the fact of the case Service tax liability which has been admitted by the appellant, works approximately to Rs. 75 Lakhs and has already deposited an amount of Rs. 50 Lakhs after the adjudication order was passed. Therefore, another chance needs to be given to the appellants for presenting their case before the lower authorities. Direct to Deposit Rs. 30 lakhs to adjudicating authority. Appeals are allowed by way of remand

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• 2012 (10) TMI 763
  Whether the non issuance of show cause notice can be held to be fatal to the Revenue’s case or the Revenue should be granted an opportunity to issue show cause notice – Held that:- Non issuance of show cause notice would not make the respondent automatically entitle to refund claim, without considering the merits of the case - issuance of show cause notice was the preliminary requirement - matter stands remanded to the lower authorities for observing such principles of natural justice

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• 2012 (10) TMI 762
  Cenvat credit - commission paid to consignment agent – Held that:- Role of consignment agent attributing to the promotion of the sale. Once sale promotion falls within Rule 2 (l) of Cenvat Credit Rules 2004, admissibility of cenvat credit of the service tax paid in respect of such service availed is permissible - pre-deposit is waived

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• 2012 (10) TMI 726
  Non payment of Service Tax - assessee claimed adjustment of amount paid in excess towards short payment - man power recruitment/supply agency services - demand of penalty u/s 76 - Held that:- Considering the Order of Commissioner in the case of M/s Jani (appellant assessee) Commissioner had allowed the adjustment of demand of Service Tax and interest thereon for the year 2005-2006 from the excess amount paid by them for the year 2006-2007. Otherwise, there is no need for mentioning the amount excess paid in the order portion if he has not allowed the adjustment of amount. Thus in the absence of any specific observation not allowing the adjustment, the obvious conclusion appears to be that the excess payment has been adjusted towards short payment and since the amount excess paid is more than Rs. 2 lakhs and the same happened in the very next year, the penalties that are imposed under Section 77, 78 and interest, can be said to have been adjusted in excess payment made by the appellant. Under these circumstances, there is no case for any further demand. Penalty under Section 76 of Finance Act, 1994 also cannot be imposed since the amount paid by the appellant is sufficient towards Service Tax liability. In the case of M/s Vishal (second appellant assessee), the Commissioner has totally ignored the excess payment in next two years and has considered only short payment. In the light of the fact that the facts in both the cases are same and the orders have been passed on the same day, differential treatment between the two appellants, in similar circumstances, cannot be sustained. Accordingly, by following the principles in the case of M/s Jani, the appeal filed by M/s Vishal is also to be allowed and for the same reason - appeal decided against revenue

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• 2012 (10) TMI 725
  Demand of service tax - fleet card - Appellant, a non-banking financial company are engaged in financing purchase of commercial vehicles, cars etc., and registered under Banking & other financial services, Business Auxiliary Service, Business support service etc. - Appellant extended credit facility for purchase of fuel/lube oils through co-branded fleet cards – alleged that such income was liable to service tax under the head “Banking and other financial services” falling under Sec.65(12) upto May’06 and there after under “Credit card, Debit card or other payment card service” falling under Sec.65(33a) of the Finance Act – Held that:- Fleet cards cannot be used to withdraw any cash and the bills in respect of the same are also settled by the appellant to the oil companies directly. It also has limited usage and is thus distinguishable with the credit cards on the basis of scope of usage and restrictions - income earned as a finance charge is nothing but the interest on loans given and interest on loans are not liable to service tax - ‘fleet card’ income earned by the appellant is not liable to service tax

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• 2012 (10) TMI 724
  Demand of service tax on life membership fees - it has been claimed that such fees are refundable as per the by-laws of the appellant - copy of the by-laws not shown – Held that:- Service tax is leviable under the head “club or association services” on life membership fees collected by the appellant from the members - appellant got registered with the Department as early as in August, 2006 as providers of “club or association service” and “mandap keeper service”, but they did not choose to pay service tax on their collections which were, by virtue of the definition of the service, prima facie taxable under the above heads - There is no valid explanation for this omission. Hence, it appears, the allegation of suppression of facts with intent to evade payment of service tax is also tenable - appellant directed to pre-deposit

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• 2012 (10) TMI 723
  Demand, interest and penalty - Air Travel Agent Service - providing the service of air travel ticket booking, the appellant used central “Computer Reservation Systems” (CRS) software – Held that:- Appellant had used the software developed by M/s. Amadeus India Pvt. Ltd. for booking air tickets to the customers. For continued usage and patronage of the said software in the midst of other competing booking systems available in the ticketing trade, M/s. Amadeus India Pvt. Ltd. have paid an incentive/commission to the appellant - amount collected as incentive is in no way connected to the service rendered by the appellant to their clients in providing the service of booking air tickets nor it is billed to the clients - appellant is not liable to pay service tax on the amount collected as incentive. As the demand itself is not valid the question of demanding interest and imposing penalty do not arise - Appeal is allowed

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• Central Excise

• 2012 (10) TMI 735
  Non-granting of abatement - Compounded Levy Scheme - CLS – Assessee pays lesser amount of duty - Due to shut down of factory for certain period – Held that:- As per the earlier order of Tribunal in this case on same issue, the appellant was required to pay the entire amount and then claim the abatement from the lower authorities which he failed to do so. Agitating the issue before us under the guise of revenue neutrality or any other point, without exercising the right to appeal against our final order, we find that we are unable to go into the merits of the case as on date. We are unable to review our own order, as Statute prohibits us from doing so. Therefore, same order is upheld.

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• 2012 (10) TMI 734
  Classification of product – Penalty u/s 11AC – Assessee is engaged in the activity of grinding/pulverizing of mineral rocks into mineral powder of various micron sizes - Classify under CETA Sub Heading 25174100 – As per AO, product is correctly classifiable under schedule 38249090 – Held that:- There is no dispute that the appellants are not adding anything other than the marble and the marble powder received to make the final product. Since revenue not able to substantiate his view, the product continues to be under Chapter 25 since the exclusion in the Note 1 to Chapter 25 cannot apply to the product. According to Note 3 of Chapter 25, any product classifiable under Heading 2517 and any other heading of this chapter are to be classified under Heading 2517 only. The specific heading has to be preferred to the general heading. Chapter 38, as submitted, is a residual chapter as compared to Chapter 25 and therefore, specific heading has to be preferred to the residual heading. In favour of assessee

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• 2012 (10) TMI 733
  Demand of duty, interest and imposition of penalty – related person – Held that:- Shareholders of a public limited company do not, by reason only of their shareholding, have an interest in the business of the company. Equally, the fact that two public limited companies have common Directors does not mean that the one company has an interest to the business of the other - assessee and the chemical company were not related persons

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• 2012 (10) TMI 732
  Waiver of pre-deposit of duty – wrongly availed Cenvat credit – Held that:- Premises on which the rent has been paid is not registered with Central Excise Department - premises on which the rent and Service Tax has been paid is not registered with the Revenue's authority as a manufacturing unit - applicant had wrongly availed the credit on Service Tax paid on rental charges - applicant is directed to make deposit

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• 2012 (10) TMI 731
  Waiver of pre-deposit - cenvat credit has been disallowed on courier service – Held that:- Sending documents/invoices to various customers, other plants, offices is definitely relatable to manufacture and therefore credit is admissible

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• 2012 (10) TMI 730
  Demand of duty u/s 11D - appellant received non-duty paid petroleum products and were required to discharge duty liability on the clearance of the same at the appropriate rates. - appellant holds Central Excise Registration and are engaged in storing and supplying of petroleum products - they had remitted to the exchequer only 50% of each of the duty charged – Held that:- Appellant had discharged the duty liability at 50% of the duty of normal rate applicable vide Notification No. 29/2002 dated 13-5-2002 and Notification No. 34/2002 while they collected from the buyers/customers excise duty @100% of the normal rate applicable - provisions of Section 11D are clearly attracted because they were the persons liable to pay excise duty and they also collected the excess amount by way of excise duty - appellant directed to make a pre-deposit of 50% of the duty. In respect of other demand - appellants were acting as dealers in respect of duty paid petroleum products received from refineries - the provisions of Section 11D cannot apply.

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• 2012 (10) TMI 729
  Whether exemption for captive consumption under Notification No. 67/95-C.E., is available to ingots cleared by the assessees but used in the manufacture of final products viz. CTD bars after opting out for compounded levy scheme – Held that:- Demand raised in the show-cause notice dated 22-3-2001 on ingots cleared on 31-8-1997 is barred by limitation for the reason that it was the practice of the assessees to raise an invoice for captive consumption of a large quantity of ingots and debiting the same in the RG 1 Register and used in the manufacture of final products not on the same date of their issue but on subsequent dates, and although the factory was not equipped to manufacture final products using such large quantity of ingots, no objection was raised to the issue of large quantity of ingots right from the commencement of the factory in 1995. Undisputedly, the assessee was manufacturing ‘MS Ingots’ in the ‘Induction Furnace Unit’ and other products in the “Roll Mill Area”. There is no indication about actual date of removal from the bonded store room if any of the “Induction Furnace Unit”. The assessees have also produced evidence to show that on earlier occasions also they were issuing more than or equal to 200 MTs on a single date. Their claim that when they issued the goods for captive consumption on 31-8-1997, they were under a bona fide belief that they were entitled to the benefit of exemption merits acceptance. - demand is barred by limitation – in favor of assessee

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• 2012 (10) TMI 727
  CENVAT credit – Held that:- Respondent has claimed the benefit of CENVAT credit of SAD on the strength of para 6 of Circular No. 27/2006-Cus., dated 13-10-2006 wherein it was clarified that customs duty paid in cash or through debit in certificate issued under DFCE/Target Plus Scheme could be availed as CENVAT credit or duty drawback – cenvat credit allowed

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• 2012 (10) TMI 695
  Abatement under Rule 96ZQ (7) of Central Excise Rules, 1944 - Held that:- Rule 96ZQ(5)(ii) of the Central Excise Rules, 1944 is held to be ultra vires Articles 14, 19(1) (g) and 265 of the Constitution of India. It is further held that after the omission of Rules 96ZQ, 96ZP and 96ZO of the Rules with effect from 1st March, 2001 no proceedings could have been initiated thereunder and after the omission of Section 3A of the Act with effect from 11th May, 2001, without any saving clause, no pending proceeding under the said rules which had not been concluded before the omission came into effect, could be concluded thereafter. The proceedings culminating into the impugned orders in the present case having been initiated/concluded after the omission of Rules 96ZQ, 96ZP and 96ZO of the Rules and Section 3A of the Act are, therefore, without any authority of law and as such, cannot be sustained.

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• 2012 (10) TMI 694
  SSI exemption - Notification No.1/1993 - Benefit of concessional rate of duty denied - the said brand Que is not assessee's brand and the said brand is of M/s Que Pharma, a partnership firm, which is having its own separate existence - Held that:- On perusal of the deed of assignment it can be said that deed of assignment was in respect of approximately 50 items manufactured by M/s Que Pharma, a partnership firm and the brand name as such have been assigned to the current appellant. In the Notification itself, explanation-IX mentions that brand name or trade shall mean a brand name or trade name whether registered or not. Thus, reference to brand name or trade name in Clause-4 of the Notification & the facts of the case of Jepika Paints [2008 (1) TMI 359 - HIGH COURT MADHYA PRADESH] is not to the registered trade name or brand name. Under these circumstances, and in view of the specific provisions contained in the exemption notification, the Tribunal erred in holding that the appellants were not entitled to be considered for grant of registration for exemption for period commencing from 19-4-1995 and ending on 18-4-1996 - appellant herein cannot be denied the benefit of SSI notification on the ground that the brand Que is not registered in their name - in favour of assessee only to the extent that the Tribunal shall now consider the case of the appellants with regard to the period commencing from 19-4-1995 to 19-4-1996.

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• 2012 (10) TMI 693
  Reversal of the cenvat credit on inputs – manufacture of paper and paper board - Prior to April, 2009, the appellant was clearing their final products i.e. papers on payment of full rate of duty, after availing the benefit of Modvat credit of duty, paid on the inputs and capital goods - w.e.f. 1-4-2009, they opted for a Notification No. 4/2006 – Held that:- On opting for exemption, in terms of a notification issued under Section 5A of the fact as an assessee is under a legal obligation to pay an amount equivalent to the Cenvat credit availed in respect of the inputs, if such inputs are lying in stock as on the date of opting for exemption - against assesee - directed to make pre deposit.

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• 2012 (10) TMI 692
  Demand and penalty – shortage of input – allegation of clandestine removal of goods – Held that:- Merely because the assessee chooses not to contest the demand on account of shortages, so as to avoid litigations, by itself, does not mean that allegation of clandestine removal stand established against him, especially in the absence of any corroborative evidence to that effect - no justifiable reasons to impose penalty upon the appellant

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• 2012 (10) TMI 691
  Confiscation - imposition of redemption - default in payment of duty - which was paid subsequently – Held that:- Confiscation of goods would mean that propriety of the goods shall rest with the Government and therefore if goods for confiscation are not available, redemption fine in lieu of confiscation cannot be imposed. - The natural conclusion that emerges is that if the fine is paid, the goods have to be returned. - it is nobody’s case that if the respondent pays Rs. 1 lakh, the goods will be returned by the Revenue. - No doubt, if the goods have been seized and released provisionally after execution of bond confiscation order can be made and fine can be imposed but not otherwise. – confiscation and redemption fine set aside

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• 2012 (10) TMI 690
  Limitation - Refund claim - petitioner had supplied aviation fuel to Air India - foreign bound flights such fuel would not attract excise duty - petitioner mistakenly paid the same – Held that:- it is established that the petitioner has fulfilled the mandatory and substantive requirement of the rules and the notification, its refund claim should not be defeated on the ground of some procedural infraction or the documents not being supplied in the original at the outset. In other words, on the basis of available and reliable documents and the materials on record, if the petitioner is in a position to establish before the Revisional Authority that the excise duty though exempt was paid wrongly, surely its refund claim should be granted. Limitation for claiming rebate of duty under Section 11B is one year - refund claim of the petitioner was barred by limitation prescribed under Section 11B of the Act - To the extent the petitioner’s refund claim pertained to the period beyond one year from the relevant date, the same would not be maintainable. To the extent the claim is within the period of limitation, the Revisional Authority shall re-examine the issue

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• 2012 (10) TMI 689
  Cenvat credit of service tax paid on insurance service - input service - manufacturing activity of the respondent was undertaken by the labourers provided by the contractor - All the labourers are covered by insurance at the cost of the contractor who paid the insurance premium - during the material period, it was a statutory requirement that all workers be appropriately insured – Held that:- Insurance service was indirectly related to the manufacturing activity and hence would get covered under Rule 2(l) of the Cenvat Credit Rules, 2004 as an ‘input service - burden is on the respondent to show that the insurance premium paid by the contractor was either reimbursed by the respondent/manufacturer or otherwise factored into the cost of production of the final product. If this fact is established, the respondent can be said to have received the insurance service as an input service - matter is remanded to the original authority

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• 2012 (10) TMI 688
  Penalty - Whether self-adhesive stickers are classifiable under Chapter 49 of the Central Excise Tariff as product of printing industry – Held that:- Respondent submitted that it is not the case of imposition of any penalty as it is a case of classification and the respondent was clearing the goods after filing necessary declarations, therefore there is no suppression of facts with intent to evade payment of duty - as the respondent was clearing the goods in question after filing the due declarations - it is not a case of imposition of any penalty – in favor of assessee

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• 2012 (10) TMI 687
  Rejection of Rebate claim on the ground of non-filing of original and duplicate copies of ARE-1 – Held that:- Rebate claim is not admissible if the original and duplicate copy of ARE-1 is not submitted alongwith rebate claim - first two rebate claims involving ARE-1 No. 16/21-9-08 and 25/21-12-08 the original/duplicate ARE-1 were submitted by applicant and the same is not disputed by department. Therefore, the rebate claim pertaining to these ARE-1, may be sanctioned if found in order in accordance with law. Rejection of Rebate claim on the ground claim in time barred - relevant date”for the purpose of calculating the stipulated period of one year for making application of rebate claim – Held that:- Time limitation period of one year stipulated under Section 11B(l) is to be computed from the relevant date on which the ship carrying load of impugned export goods left India - applicant is claiming that ship carrying said export goods left India on 8-6-08 and the rebate claim initially filed on 21-8-08 was resubmitted on 3-6-09 alongwith copy of Shipping Bill. As such, applicant claimed that the rebate claim is not time barred - claim of applicant is required to be verified from the relevant documents. If the relevant date, on verification is confirmed as 8-6-08, the rebate claim will be sanctioned to the applicant in accordance with law - original authority directed to conduct necessary verification

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• 2012 (10) TMI 686
  Offence - Benefit of concessional rate of duty – alleged that respondent No. 1 had wrongly availed all the benefit of concessional rate of duty in respect of paper classified under sub-heading 4805.90 in terms of Notification No. 138/86-C.E., dated 1-3-1986 as the goods were not manufactured out of specified raw material – Held that:- Complainant has not examined any independent witness - no person from the firms which supplied the waste and white paper to respondent No. 1 was examined - complainant has failed to prove the show cause notice was issued within prescribed time - respondents No. 1, 2 and 3 were discharged for offence punishable under Section 9 of the Act - under no circumstance the court shall give more than one opportunity to the complainant to examine pre-charge evidence - trial Magistrate shall decide the complaint in accordance with law - record of the trial court be sent back immediately so as to reach before the date fixed

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• Indian Laws

• 2012 (10) TMI 737
  Dishonour of cheque - rebuttable presumption - appellant submitted that no amount was due and that the respondent stealthily removed two cheques from the custody of the appellant of which the present one was forged and presented for clearance. - the trial Court found the appellant not guilty of the offence under Section 138 of the Act and acquitted her under Section 255(1) of Cr. P.C. - The High Court while reversing the judgment of the trial Court found the appellant guilty of the offence and sentenced her to pay a fine. Held that:- The judgment of the trial Court in having drawn the conclusions to the effect that the appellant sufficiently rebutted the initial presumption as regards the issuance of the cheque under Sections 138 and 139 was perfectly justified as there was no circumstance warranting the execution of Exhibit P-1 cheque in favour of the respondent. Also that the preponderance of probabilities also fully support the stand of the appellant as held by the learned trial Judge. The judgment of the High Court in having interfered with the order of acquittal by the learned trial Judge without proper reasoning is, therefore, liable to be set aside and is accordingly set aside. Consequently, the conviction and sentence imposed in the judgment impugned is also set aside. The amount deposited by the appellant with the trial Court in a sum of Rs. 25 lakhs with accrued interest, if any, shall be refunded to her on production of a copy of this judgment.

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• 2012 (10) TMI 722
  Writ - maintainability of an appeal under Clause 15 of the Letters Patent – errors of jurisdiction – Held that:- It is not a correct proposition in law that this Court cannot correct jurisdictional errors or errors resulting in miscarriage of justice committed by authorities which are subordinate to it by invoking powers under Article 226 of the Constitution - It is not a correct proposition in law that jurisdictional errors or errors resulting in miscarriage of justice committed by subordinate Courts/Tribunals can only be corrected by this Court in exercise of powers under Article 227 of the Constitution When the Court or tribunal has acted illegally or improperly such as in breach of the principles of natural justice the writ of certiorari is available under Article 226 - Where the facts justify the invocation of either Article 226 or Article 227 of the Constitution to correct a jurisdictional error or an error resulting in a miscarriage of justice committed by authorities subordinate to this Court, there is no reason or justification to deprive a party of the right to invoke the constitutional remedy under Article 226 of the Constitution -When a petition is filed under Articles 226 and 227 of the Constitution and the facts justify the filing of such a petition, it is not open to the Court to hold that Article 226 need not have been invoked, on the ground that Article 227 is clothed with the power to grant the same relief thus depriving the party of a right to elect or choose a remedy High Court was not justified in holding that the Letters Patent Appeal was not maintainable since the High Court did not consider the nature of the controversy and the prayers involved in the Writ Petition

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