Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 29, 2012
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
Indian Laws
TMI SMS
Articles
News
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Transfer Pricing – Arm Length Price – selection of comparables - assessee is not estopped from pointing out a mistake in the assessment. - AT
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Difference in stock submitted to bank and income tax department -addition based on stock statement submitted to Bank is not sustainable - AT
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Franchisee fees - satellite schools which are running under the name and logo of Delhi Public School - not liable to tax and additions deleted following principle of consistency - AT
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Payment to MCD towards registration, conversion and parking charges - revenue v/s capital - harges paid by the assessee to MCD, could not be allowed in view of explanation to sec. 37(1). - AT
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Unexplained jewellery found in the lockers - no seizeure of gold jewellery, if it is found to the extent of 500 grams and claimed to be of a married lady. - AT
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Compensation for delay in handing over the possession of the property - holding charges - held as capital receipt in nature - AT
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Penalty paid to NSE for trading violation - not in the nature of violation of law and hence cannot be termed as penalty. - deduction allowed - AT
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Under Section 132(4) unless the authorized officer puts a specific question with regard to the manner in which income has been derived, it is not expected from the person to make a statement in this regard - AT
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Tender Fees Expenses - Revenue v/s Capital - It was incurred in connection with the integral part of profit earning process and not for acquisition of any asset- held as revenue in nature. - AT
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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 - 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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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
Customs
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EPCG Scheme - as the catalysts are separately mentioned in addition to consumables in the EPCG scheme for existing plant and also separately mentioned in the definition of capital goods under the policy - stay granted - AT
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Penalty under Section 114(i) of the Customs Act - non-mention of Section 113 in the show-cause notice would not per se invalidate the penalty imposed under Section 114 if the penalty is otherwise supported by the essential facts alleged and proved - AT
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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
DGFT
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Amendment in SION A-1578 - Printed Cards - Public Notice
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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
Corporate Law
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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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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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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
Indian Laws
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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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Quarterly Report on Debt Management for the Quarter July-September 2012 Released
VAT
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DVAT 51 reconciliation return Qtr 1 to 3 of 2011-12 extended to 31/12/2012. - Order-Instruction
Case Laws:
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Income Tax
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2012 (10) TMI 791
Addition on account of undisclosed investment u/s 69B - Assessee had acquired land and paid the consideration in F.Y. 2000-01 - Got the possession of land in F.Y. 2000-01 and get registered in the F.Y. 2005-06 - AO has relied on the jantry price or minimum price of land in a particular area - And presumed that the amount expended is more than the amount recorded in the books – AO made addition u/s 69B of difference amount – Held that:- As the provisions of Sec.50C cannot be applied for making addition u/s. 69B. AO has relied on the jantry rates without bringing any material on record to prove that assessee has in fact made investments over and above than that recorded in the books, no addition required to be made. In favour of assessee
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2012 (10) TMI 790
Transfer Pricing – Arm Length Price – Whether assessee is estopped from pleading before the CIT(A) that the comparable taken by it are wrong, whereas same has been accepted by TPO - CIT(A) holding that the 4 comparable selected by the assessee and accepted by the TPO, are not functionally comparable and decides in favour of assessee – Held that:- Following the decision in case of Quark Systems Pvt. Ltd. (2009 (10) TMI 591 - ITAT, CHANDIGARH) that assessee is not estopped from pointing out a mistake in the assessment, for such mistake is the result of evidence adduced by the tax payer. In this case the assessee has demonstrated that prima facie there is a mistake in its taking all these comparables. Appeal decides against revenue. In respect of retrospective amendment to Sec.92C - Set aside the issue to the file of the CIT(A) for fresh adjudication
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2012 (10) TMI 789
Addition u/s 68 - Assessee purchase the property in the capacity of power of attorney holder - Subsequently, the same property was sold - The sale consideration was received in the form of DD for Rs. 90 lakhs and the remaining amount by way of cash - AO treats payment received by way of DD as the sale consideration – And made addition u/s 68 for the difference amount – Held that:- When the assessee purchased the property the payment made to the seller was debited to the books of accounts and when he sold the same it was credited to the books of account. He paid the taxes also. These very important aspects were neither considered by the AO nor considered by the CIT(A). The assessee had purchased the property for Rs 2,71,42,870/- and sold it at Rs. 90,00,000/- the balance amount has to be considered as a business loss. Issue remits the matter back to the file of the AO to examine the issue afresh in accordance with law. Issue remand back to AO
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2012 (10) TMI 788
Unexplained investments - Difference in valuation shown by the assessee and determined by DVO - reopening of assessment - CIT(A) deleted the addition - Held that:- Assessee has not disputed the fact that except the letter dated 06.06.2008, he did not submit any information or explanation in response to the notices and questionnaire issued by the AO, thus AO had no option but to call the report from the DVO about the valuation of the property purchased by the assessee on 11.8.2005 to verify the consideration declared by the assessee. Therefore, AO rightly proceeded to call the report from the DVO with regard to valuation and verification of the consideration of the property purchased by the assessee. As per the CIT(A)'s Order the issue was related to the property in Mayurdhawaj Apartments, Patpar Ganj, Delhi, but the issue in the present appeal is related to the property purchased by the assessee in Darya Ganj, New Delhi. Furthermore, the assessee filed a copy of sale deed related to property purchased during the AY 2004-05 before ITAT ‘E’ Bench but on careful perusal of the orders of the authorities below, it is observed that the assessee has not filed a copy of the registered sale deed in his favour either before the authorities below or before us. AO called a DVO report on compelling circumstances and at the same time did not confront the same to the assessee as per provisions of Section 142A(3), thus the impugned order is cryptic and not well-reasoned. Therefore, it is appropriate to restore the issue to the file of AO with a direction to decide the issue de novo following the provisions of Section 142A, inter alia provisions of Section 56(2) - in favour of revenue for statistical purposes.
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2012 (10) TMI 787
Difference in stock submitted to bank and income tax department - CIT(A) deleted the addition - Held that:- Quantitative detail of stock was the same as in the statement submitted to the bank as well as that maintained for finalization of accounts for income tax purposes. The difference occurred only because of difference in valuation method and the same was valued at dealer price for the bank, whereas it was valued at cost or market price, whichever is less, for the balance sheet - there is no evidence that bank had verified the stock physically. AO has not made any independent verification of the books of accounts and stock. He has not pointed any error in the books of accounts and stock. It is a settled law that if two views are possible, the view in favour of the assessee has to be adopted. Under the circumstances, the addition based on stock statement submitted to Bank is not sustainable - in favour of assessee. Non deduction of tax u/s. 194H - CIT(A) deleted the addition - Held that:- The payments made by the assessee was for services rendered to the distributors of the assessee. Hence, the same would fall under the definition ‘commission or brokerage’ u/s. 194H as decided in M/s Vodafone Essar Cellular Ltd. vs. ACIT [2010 (8) TMI 691 - KERALA HIGH COURT] hence, principally, in agreement with the view taken by the AO on this issue - Considering the submissions of assessee that the payments in this case on many occasions did not cross the threshold limit for deduction of tax u/s. 194H submitting the ledger of discount a/c in the books of assessee. Thus upon careful consideration of the documents in this regard the issue is remitted to the file of the AO to ascertain the exact amount of tax which the assessee was liable to deduct - in favour of Revenue for statistical purposes.
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2012 (10) TMI 786
Franchisee fees - satellite schools which are running under the name and logo of Delhi Public School - CIT(A) deleted the addition - Held that:- As decided in assessee's own case that the amount received by the assessee society from various satellite schools which are running under the name and logo of DPS having a different managerial set up than the assessee DPS society was considered as not liable to tax and additions made by the Assessing Officer in this regard had been deleted following principle of consistency - AO has not brought any substantial or incriminating cause against the assessee society which supported him in his action to consider the fee received from satellite schools liable to be taxed in the hands of assessee society - in favour of assessee. Depreciation - capital expenditure treated to have been applied for the object of the trust, allowance of depreciation will amount to double deduction - CIT(A) allowed the claim - Held that:- As decided in D.I.T. vs. Vishwa Jagriti Mission [2012 (4) TMI 289 - DELHI HIGH COURT] claim of depreciation on fixed assets utilized for the charitable purposes has to be allowed while arriving at the income available for application to charitable and religious purposes, since the income of the society should be computed on the basis of commercial principles. Claim to depreciation for determination percentage of funds to be applied for purposes of trust is permissible – Not a case of double benefit - in favour of assessee. No provision for set off losses u/s. 11, 12 & 13 - Held that:- As decided in D.I.T. vs. Raghuvanshi Charitable Trust [2010 (7) TMI 158 - DELHI HIGH COURT] the adjustment of the expenses incurred by the trust for charitable and religious purposes in the earlier year against the income earned by the trust in the subsequent year would amount to applying the income of the trust for charitable and religious purposes in the subsequent year in which such adjustment has been made and will have to be excluded from the income of the trust u/s 11(1)(a) - in favour of assessee.
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2012 (10) TMI 785
Difference in gross receipts as per TDS certificates and as declared by assessee - CIT(A) deleted the addition - Held that:- As per the reconciliations submitted by assessee out of gross receipts as per TDS certificates, a sum of ₹ 1,63,93,102/- was received as advance from U.P. Jal Nigam and ₹ 40,00,000/- was received as advance from C & D S Unit of UP Jal Nigam, Baghpat and the same were duly reflected in the balance sheet under the head secured loan. The assessee has also furnished the confirmations in this regard from the respective departments confirming the advance given to the assessee vide its letter dated 17.3.06 & the assessment was framed after considering the reconciliation statement and confirmations furnished by the assessee. CIT(A) has clearly given a finding that the assessee has submitted its reconciliation of the total turnover and the variation in the receipts as per accounts and that as per the TDS certificates is cogently explained. Based on the reconciliation, the addition in this case is not sustainable - in favour of assessee.
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2012 (10) TMI 784
Deduction u/s 80HHC in respect of DEPB credits - Held that:- Following the order of ITAT in assessee’s sister concern case the issue about calculation of 80HHC in respect of DEPB credits is set aside and restored back to the file of Assessing Officer. Direction to AO to decided afresh in the light of the decision of Topman Exports Versus Income-tax Officer, (OSD), 14(2), Mumbai [2009 (8) TMI 827 - ITAT MUMBAI] wherein held that the face value of DEPB is chargeable to tax under section 28(iiib) at the time of accrual of income, that is, when the application for DEPB is filed with the competent authority pursuant to exports and profit on sale of DEPB representing the excess of sale proceeds of DEPB over its face value is liable to be considered under section 28(iiid) at the time of its sale - in favour of assessee for statistical purposes.
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2012 (10) TMI 783
Addition towards estimated interest on advances - Held that:- AO disallowed interest @12% per annum on the amount paid to three relatives on loan taken by the assessee on the ground that the assessee paid interest to the bank and on unsecured loans. Neither the date of advances nor the nexus between loans or advances and funds borrowed is evident from the impugned order nor the CIT(A) recorded any findings as to the business expediency of interest free advances or on the nexus between borrowed funds and interest free advances. As the 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 nor the CIT(A) recorded any findings on these aspects, it will be fair and appropriate to set aside the order of the CIT(A) and restore the issue raised in this ground back to his file for deciding the matter afresh in accordance with law - in favour of assessee for statistical purposes. Payment to MCD towards registration, conversion and parking charges - revenue v/s capital - Held that:- Expenses which are permitted as deductions are such as are made for the purpose of carrying on the business and if a sum is paid by an assessee conducting his business because in conducting it he has acted in a manner which has rendered him liable to penalty for breach of laws, it cannot be claimed as a deductible expense. The assessee is expected to carry on the business in accordance with law. The evasion of law cannot be a trade pursuit. Since in the instant case, MCD demanded the aforesaid compounding charges only when Hon’ble Apex Court directed the MCD to act and seal the premises in view of flagrant violations of various laws including Municipal Laws, Master Plan and other plans besides Environmental laws and indisputably, the assessee misused its property and violated the civic and Environmental laws, it is to be opined that aforesaid charges paid by the assessee to MCD, could not be allowed in view of explanation to sec. 37(1). Thus the issue as to whether expenditure is revenue or capital, becomes academic and therefore, does not survive for our adjudication - against assessee. Disallowance of 1/5th of expenses - conveyance, vehicle maintenance & telephone expenses - Held that:- Since personal use of cars and telephones by the Karta of the assessee HUF and his family members or staff has not been denied nor it was claimed that the Karta or his family members had any independent vehicles or telephones for personal use, disallowance of 1/5th of the conveyance expenses, expenses on running and maintenance of vehicles as also expenses on telephones/mobiles, in the light of provisions of sec. 38(2) is reasonable - against assessee.
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2012 (10) TMI 782
Unexplained jewellery found in the lockers - search - Held that:- Central Board of Direct Taxes Circular No. 1916, dated May 11,1994, lays down guidelines for seizure of jewellery and ornaments in the course of search, the same takes into account the quantity of jewellery which would generally be held by the family members of an assessee belonging to an ordinary Hindu household - not to seize gold jewellery, if it is found to the extent of 500 grams and claimed to be of a married lady. Similarly, to the extent of 250 grams claimed to be belonging of a unmarried lady and 100 grams claimed to be belonging of male member, than no seizure is to be affected. In the present case value of jewellery surrendered by assessee is 738.570 grams of Rs. 5,64,674/-. The total jewellery treated to be “explained” one is 2888 grams as per the circular & rest of the jewellery is to be treated as “unexplained” - First Appellate Authority has erred in deleting the total value of jewellery , thus the total addition required to be made by the AO is value of jewellery i.e 139 gms + 234 gms by taking the value at 755 per gm - partly in favour of revenue.
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2012 (10) TMI 781
Sale of agricultural land as an adventure in the nature of trade - Whether "Agriculture Lands" fall with the definition of "Capital Asset" ? - Held that:- The properties are duly shown in the returns more particularly in the wealth-tax return. Thus, AO draw wrong inference by considering the facts in an erroneous manner. He could not bring any material which suggests the dominant intention of the assessee to earn profit by selling the properties at higher rate immediately after the purchase. On the other hand, assessee has demonstrated that she has been making investment in the properties intending to hold them, enjoy their income - in favour of assessee. The revenue in its grounds of appeal has also pleaded that CIT (Appeals) has deleted the addition by entertaining additional evidence in contravention of Rule 46A of Income-tax Rules, 1962. However, DR was unable to point out which document was produced by the assessee by way of additional evidence. The assessee did not move any application under Rule 46A . The documents considered by the CIT(Appeals) were produced before the Assessing Officer. In view of the above discussion, no merit in the appeal of the revenue - in favour of assessee. Compensation for delay in handing over the possession of the property - holding charges - Income from property v/s Capital receipt - t in case the developer failed to construct the building then it will pay a compensation of Rs. 50 per sq.ft. of the super area per month to the intending allottee for the period of such delay - initially assessee shown receipt of holding charges as rental income - Held that:- Compensation received form DLF Commercial is a capital receipt - in favour of assessee.
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2012 (10) TMI 780
Repair and maintenance of the office - Capital v/s revenue - Held that:- From perusal of details of the expenses it reveals that all these details pertained to minor repairs carried out in the office. Incurrence of these expenses did not result into any asset of enduring nature. Therefore, CIT(Appeals) has rightly observed that the expenses incurred by the assessee are of revenue nature, which were incurred in order to carry out current repairs in the office as well as on other items so that the office premises can be used more effectively for the purpose of the business - in favour of assessee. Disallowance of bad debts - amount forfeited by the landlord, on account of notice period rent, outstanding rent, water and electricity charges - Held that:- The assessee has submitted that all these items are of revenue nature as had the security was not adjusted then equal amount would have been paid by the assessee and it could get refund of security. The situation will remain the same. As far as the advance given to the lorry vendor is AO did not investigate the issue with the angle whether it is a revenue expenditure or not & simply disallowed. Thus FAA has considered all other details and thereafter deleted the disallowance no force in the ground of appeal raised by the revenue - in favour of assessee.
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2012 (10) TMI 779
Transfer Pricing Adjustment - working capital adjustments - assessee contested against the comparables selected - Held that:- Assessee has surplus capital from reserve, share capital etc. but still it operates its activity from the borrowed fund, then on the surplus capital, it would earn interest income which is independent to the operation of the company. Such income would be assessed as income from other sources, but the profit margin from the operations would be on lower side because of interest expenses etc. Thus, the working capital as envisaged by the assessee would always effects its profit. If the assessee was not require to use its own working capital then it will be a relevant factor for determining the profit margin and an adjustment to eliminate the disparity would always require. Considering the stand of the learned TPO in assessment years 2007-08 and 2008-09 where benefit of working capital adjustment was granted to the assessee, the plea of the assessee is allowed and set aside the issue to the file of the Assessing Officer with a direction that AO shall grant working capital adjustments after considering the computation filed by the assessee before the DRP - in favour of assessee. Exclusion Allsec Technology Ltd. from the list of comparables - Held that:- Extracting the filters applied by the assessee for eliminating the non-comparable companies or adjusting their profit margin, the assessee has not applied the filter i.e. the companies who have incurred expenses of more than 5% of its sales on advertisement and marketing which required to be excluded. At this stage, in the absence of any finding, at the level of the TPO or of the learned DRP, it is difficult to verify the version put forth by the the assessee. Apart from this profit margin of any company is dependent upon many factors. By taking into consideration the one aspect, if on excluding the comparables then not a single comparable would be identified. The simple reason is whenever any adjudicating authority would try to carry out a study of the result of any company with a particular angle then the result would be different. The assessee ought to have placed specific details before the TPO and demonstrated how a prejudice had caused to the assessee, if comparables who have incurred more than 5% of sales a expenses towards advertisement and marketing are selected. Therefore no in the contentions of the assessee for excluding of Allsec Technology Ltd. from the list of comparables - against assessee. Excluding of Maple E-Solution from the list of comparables - Held that:- Maple e Solution has shown 100% loss in financial year 2002-03 but all of a sudden shown profit at 37.38% in financial year 2004-05. In financial year 2008-09, it again shown losses and its profit margin is -65.23%. Considering this aspect, we are of the view that this comparable deserves to be excluded from the list of comparables. With the above observations the issue is set aside back to the file of the Assessing Officer for re adjudication - in favour of assessee. Filter of 25% transaction with related party of the total revenue - Held that:- In a scheme of Income-tax Act the expression “associate enterprises” is somewhat similar to that of “related party”, defined in section 92A(2)(a) i.e. if an enterprises holds 26% share in the other enterprises then it can be considered as an associate enterprises. Similarly, under sec. 40A(2)(b) interested persons means if a person is having not less than 20% of voting power in a company then such person would be considered as substantial interest in the company. This section relates to examination of the cases where some undue benefit is being extended by a company. These two provisions give an indicator that whenever any issue regarding an interest created in any company is being examined which has influenced over the results of the company then these aspects can be taken as guidance one can safely say that an entity can be taken as uncontrolled, if its related party transaction do not exceed 25% of the total revenue. Thus, no fault in the conclusion of the TPO for applying this filter to the extent of 25% transaction with related party of the total revenue - against assessee. Very large companies who have a turnover of more than Rs.260 crores cannot be considered as a comparable companies, in view of their huge turnover. Therefore, finding force in the contentions of the assessee and direct the AO to exclude these three comparables and thereafter reworked out the means profit of the comparables - in favour of assessee.
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2012 (10) TMI 778
Jurisdiction power u/s 263 by CIT(A) - Failure of AO to initiate penalty proceedings while completing assessment under Section 143(3) - Held that:- The Assessing Officer while passing the assessment order under Section 143(3) had given an office note that the surrender of the agricultural income which was made by the assessee was subject to no penal action under Section 271(1)(c). A perusal of the same clearly shows that the assessee had made surrender with a clear condition that no penal action under Section 271(1)(c) would be initiated. The office note further depicts that the offer of the assessee was accepted by the department since the department had no documentary evidence against the assessee except the report of the Inspector. Once that was so, the department could not take somersault and seek to levy penalty. The penalty imposeable under sec. 271(1)(c) or under section 273(b) are independent proceedings then the assessment order. The penalty imposeable under sec. 273-B is to be imposed for false statement of/or failure to pay advance tax. Both these penalties are not dependent upon the assessment order but relying on decision taken in Additional Commissioner Of Income-Tax, Madhya Pradesh Versus Indian Pharmaceuticals [1978 (10) TMI 12 - MADHYA PRADESH HIGH COURT] AO has exercised his discretion for not visiting the assessee with the penalty. His order cannot be termed as erroneous and, therefore, no action under sec. 263 is justifiable - in favour of assessee.
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2012 (10) TMI 777
Penalty u/s 271(1)(c) - addition to income - Held that:- The assessee has given an explanation the amount represents sale of car and recovered from the blues on account of Shri Deepak Seth. The addition was made because supporting documents were not given by the assessee. Its explanation was not found to be false. Only thing is that assessee could not substantiate its explanation with the supporting evidence. Thus, this amount, prima facie, cannot be considered for the purpose of the penalty. Non deduction of TDS - Held that:- The revenue authorities have not referred any circumstance or past conduct of the assessee which suggests that such type of mistake expressed by the assessee as bona fide cannot happen in its case. Though it is quite difficult to prove or disprove such type of claim with the help of demonstrative evidence but the Assessing Officer who assessed the assessee annually may refer some circumstance which can highlight the antecedents of the assessee or its conduct in earlier or subsequent year to suggest that it was not a bona fide mistake rather it was a deliberate attempt. No such material is available on the record, therefore, we do not have any hesitation to conclude that such type of mistake can happen while filing the return - direction to delete the penalty levy - in favour of assessee.
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2012 (10) TMI 776
Penalty paid to NSE for trading violation - Disallowance - Held that:- The nature of assessee’s business is that it is regulated by NSE and NSE as part of its exercise to keep check on members keep on checking books of accounts from time to time and for violation of procedure and norms generally imposes penalty, which are not in the nature of violation of law and hence cannot be termed as penalty. Moreover, the assessee has been paying these types of penalties from 1998 onwards till 2007-08 and in none of the years the so-called penalty was disallowed. Therefore, the first ground of appeal with respect to penalty for trading violation is allowed - in favour of assessee. Disallowance of Telephone expenses for personal usage - Held that:- It is clear from the facts of the case that the telephone was installed at the residence of the director and its personal use cannot be denied the disallowance of 20% is very reasonable disallowance which is based upon the facts and circumstances of the case - against assessee. Disallowance of business promotion expenses - Held that:- The facts of the case that assessee was generally engaged in trading of shares on its own account and had spent an amount of Rs.1,10,615/- as business promotion expenses, keeping in view the facts of the case, the disallowance of 20% is reasonable especially keeping in view the fact that as per assessment order, the assessee had very few clients. Disallowance of municipal tax - Held that:- It is seen that at the time of sale of property, the seller is required to clear all outstanding dues of municipal taxes if any. The Assessing Officer has made disallowance on the basis that the assessee had sold the property vide agreement to sell dated 29.8.2002 and whereas the date of tax was 19.9.2002 i.e. after the date of agreement to sell. However, AO has not appreciated the fact that past accrued taxes and liabilities before the date of sale has to be borne by the seller. Nor AO has brought out any contrary observation from the agreement to sell from where it could be said that municipal tax was to be paid by the purchaser. Therefore, the disallowance made by the AO and upheld by the Ld CIT(A) was not justified - in favour of assessee.
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2012 (10) TMI 775
Speculative loss - CIT(A) deleted the addition - Held that:- The genuineness of loss was never questioned by A.O., therefore, without going into the findings whether the loss was genuine or not, the case of the assessee is covered by the case of sister concerns M/s. Orient Overseas Pvt. Ltd. wherein under similar facts and circumstances, the ITAT had remitted the case back to the file of A.O. - in favour of revenue for statistical purposes. Disallowance of interest being not incurred for the purpose of business and profession - CIT(A) deleted the addition - Held that:- On analysis of balance sheet, there does not seem to be any loans or advances which can be said to have been given out of borrowed funds. The non charging of interest from sister concerns is also covered by the decision of Hon'ble Apex Court in the case of SA Builders vs. CIT reported (2006 (12) TMI 82- SUPREME COURT OF INDIA ) wherein it was held that transfer of borrowed funds to a sister concern is to be seen from the point of view of commercial expediency and not from the point of view whether the amount was advanced for earning profit, thus no reason to interfere in the order of CIT (A) on this account - against revenue.
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2012 (10) TMI 774
Penalty u/s 271 AAA - search and seizure u/s.132 - Held that:- Under Section 132(4) unless the authorized officer puts a specific question with regard to the manner in which income has been derived, it is not expected from the person to make a statement in this regard and in case in the statement the manner in which income has been derived has not been stated but has been stated subsequently, that amounts to the compliance with Explanation 5(2) of the Income Tax Act, 1961 as decided in CIT vs. Mahendra C Shah [2008 (2) TMI 32 - GUJARAT HIGH COURT] Examining the statements recorded at the time of search u/s 132(4) came to a conclusion that the assessee was never asked about the manner in which the income was earned, nor that she was even asked to substantiate the manner in which undisclosed income was arrived - in favour of assessee.
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2012 (10) TMI 773
Tender Fees Expenses - Revenue v/s Capital - Held that:- The assessee has been submitting tender in its day-today business which are basically works contract on turn key basis. The assessee has procured orders for sale of its items manufactured. It has to fulfill the tenders floated by State Governments or Electricity Boards. It is not necessary that it will get the order. It does not create any new asset. It was incurred in connection with the integral part of profit earning process and not for acquisition of any asset, thus Revenue authority has failed to look into the true nature of the expenses - in favour of assessee. Bank Guarantee & Loan Processing Charges - Held that:- Considering assessee's submission it can be concluded that loan was taken for working capital on perusal of the copies of invoices issued by various vendors as it reveals that the goods purchased by the assessee are insulator, panels etc. FAA fail to look into the fact that assessee is in the business of manufacture distributor transformers, HT cable box on job contract basis. It also constructs power houses and lays electrical lines. In connection with these operation, assessee has to purchase all these items. These items were consumed in the ultimate final product, which is the trading stock of the assessee - in favour of assessee.
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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 & remained with the lessee itself – Held that:- Following the decision in case of Induslnd Bank Ltd (2012 (3) TMI 212 - ITAT MUMBAI) that under finance lease, the asset in question is stated as sold to the lessee at a predetermined price already received by the assessee as security. This peculiar feature shows that the assessee had no interest in the asset itself; 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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Customs
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2012 (10) TMI 772
EPCG Scheme - Revenue contended that the Notification provides exemption to the spare parts for existing plant and machinery whereas as per the EPCG scheme under para 5.1A, spares including reconditioned spares, tools, spare refractories are covered and the Notification during the period in dispute provides exemption only to the spares and not to the catalysts hence the demand is rightly made. - Held that:- In the policy, the capital goods also include catalysts for initial charge and under the EPCG scheme for existing plant, the catalysts are separately mentioned in the spares. Catalysts and consumables are separately mentioned in para 5.1A of the Policy. The Notification in question provides exemption from payment of duty in respect of spares as well as consumables. Subsequently, the consumables were omitted for the benefit of the Notification. The applicant was declaring catalysts in the bills of entry and the same were cleared without any objection. In these circumstances, as the catalysts are separately mentioned in addition to consumables in the EPCG scheme for existing plant and also separately mentioned in the definition of capital goods under the policy, prima facie we find merit in the contention of the applicant on merits as well as on time bar. - stay granted.
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2012 (10) TMI 771
Penalty under Section 114(i) of the Customs Act - wrong provision of law has been quoted by the Revenue in the show-cause notice - non-mention of Section 113 in the show-cause notice would not per se invalidate the penalty imposed under Section 114 if the penalty is otherwise supported by the essential facts alleged and proved - no allegation of “fraudulent” export in the show-cause notice - show-cause notice did not allege the essential, and consequently the adjudicating authority could not hold any goods to be liable to confiscation in terms of Section 113 of the Act - nobody could have been held to have rendered the goods liable to confiscation so as to attract a penalty under Section 114 of the Act in the present case - question whether Section 114 of the Act could be invoked against the appellant did not arise in that case - in favor of assessee.
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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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Corporate Laws
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2012 (10) TMI 770
Scheme of Amalgamation - Held that:- In view of the approval accorded by the Shareholders and Creditors of the Petitioner Companies, representation / reports filed by the Regional Director, Northern Region and the Official Liquidator, attached with this Court to the proposed Scheme of Amalgamation, there appears to be no hurdle to grant of sanction to the Scheme of Amalgamation. Consequently, sanction is hereby granted to the Scheme of Amalgamation under sections 391 and 394 of the Companies Act, 1956. Certified copy of the order be filed with the ROC within 30 days from the date of receipt of the same. The whole or part of the undertaking, the properties, rights and powers of Petitioner & also all the liabilities and duties be transferred to and vest in the Transferee Company without any further act or deed. All the Permanent employees of all the Transferor Companies shall become the employees of the Transferee Company without any break or interruption in their service & Petitioner shall stand dissolved without winding up. This order will not be construed as an order granting exemption from payment of stamp duty or taxes or any other charges, if payable in accordance with any law - the Petitioner Companies would voluntarily deposit a sum of Rs. 1,00,000/- with the Common Pool of the Official Liquidator within three weeks from today - Scheme of Amalgamation sanctioned.
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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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Service Tax
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2012 (10) TMI 795
Service Tax paid on GTA services - Following the decision of court in case of [ INDIA CEMENTS LTD. Versus COMMISSIONER OF C. EX., SALEM, 2007 (3) TMI 83 - CESTAT, CHENNAI] Held that:- In the presence of specific provision providing for treatment of service for which the Assessee is liable to pay Service Tax on out-put services - appellant is eligible for Cenvat credit. Out-ward transportation - whether the appellant is eligible for the credit of Service Tax paid on out-ward transportation of finished goods from the place of removal during the period from April, 2005 to September, 2005 - Held that:- Credit of Service Tax would be available in respect of Service Tax paid on out-ward transportation of finished goods from the place of removal. Accordingly the entire demand for service tax and penalties imposed cannot be sustained. Therefore, the appeal filed by the Revenue is rejected and cross objection also gets disposed of.
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2012 (10) TMI 794
Stay petitions – Whether Liability of Service tax arise on the services of a Builder himself if he is constructing residential complex – Held that:- As circular dated 21.01.2009 discusses about the issue, which needs reconsideration by the lower authorities after perusing the agreement entered into by the perspective customers or buyers of the flats. As both the lower authorities have not considered the Board Circulars dated 21.01.2009 and 10.02.2012. Appeal remand back to AO for fresh consideration stay granted.
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2012 (10) TMI 793
Demand - Extended period of limitation – Held that:- Error was detected by the department on their own - appellants had made a wrong entry in their ledger accounts and on the basis of wrong entry, earlier show-cause notice was issued. Subsequently, after finalization of the balance sheet the appellant had confirmed that the higher amount shown in the balance sheet was the correct commission amount paid to the foreign service provider. On the higher amount paid, the department sought additional service tax liability - appellant’s plea that the demand is hit by limitation of time cannot be accepted - appellant directed to make pre-deposit
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2012 (10) TMI 767
Cenvat credit - show cause notice to point out that if the Mobile-phone was not installed in the registered premises, that became the reason for denial of Cenvat credit – Held that:- In the view of show cause notice, it is inconceivable how an input service wherever exists shall be reason to grant Cenvat credit - requirement of law is that such service must be relevant to manufacture or providing output service. That was not disputed in the show cause notice - waiver of pre-deposit allowed.
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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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Central Excise
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2012 (10) TMI 769
Demand of duty - Clearance without warehousing certificate – SCN has been issued for clandestinely removal of said goods with intent to evade payment of duty leviable thereon – Held that:- The jurisdictional officer in charge of the warehouse has duly signed the AR3-A and certified for having received the said goods and for having accounted for in the Bonded Register. Further the goods were cleared under valid CT-3 Certificate issued by the competent authority and the clearance of goods from EOU to another EOU, the Project Authority s certificate was also produced before the Adjudicating Authority and the same was also produced before Appellate Authority. On such a clinching evidence on receipt of goods at EOU and accepted by in-charge of the EOU, the Revenue’s appeal is devoid of merits as the grounds of appeal does not contradict the fact of signature of P.O. and nor it is claimed as forged. Appeal decides in favour of assessee
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2012 (10) TMI 768
Waiver of pre-deposit of Duty along with interest and penalty - appellant has under valued their finished products cleared from the factory premises by not following the procedure of provisions of Section 4A of the Central Excise Act - Held that:- As first appellate authority has dismissed/ rejected the appeals only for non compliance - pre-deposit of amount of Rs. 10 Lakhs is sufficient deposit to hear and dispose the appeals.Impugned orders is set aside and directed the first appellate authority to consider the appeals filed by the appellants on merits of the case and take up the matters for disposal after following the principles of natural justice and without insisting on further pre-deposit - Appeals are allowed by way of remand to the first appellate authority.
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2012 (10) TMI 766
Restoration of appeals - applicants have not complied with the order of pre-deposit – Held that:- Applications for restoration have been filed belatedly - applications for restoration are filed almost after four years after the appeals were dismissed by the Bench - there are series of decisions that indicate that restoration application should have been filed within three months from the date of dismissal of the appeal. In this case, it is not so - applications are dismissed
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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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Indian Laws
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2012 (10) TMI 792
Permission for Dismantling and beach of ship - Held that:- Concerned authorities are directed to allow the ship in question to beach and to permit the ship owner to proceed with the dismantling of the ship, after complying with all the requirements of the Gujarat Maritime Board, the Gujarat Pollution Control Board and Atomic Energy Regulatory Board, if any toxic wastes embedded in the ship structure are discovered during its dismantling, the concerned authorities shall take immediate steps for their disposal at the cost of the owner of the vessel, M/s. Best Oasis Ltd., or its nominee or nominees. further, in all future cases of a similar nature, the concerned authorities shall strictly comply with the norms laid down in the Basel Convention or any other subsequent provisions that may be adopted by the Central Government in aid of a clean and pollution free maritime environment, before permitting entry of any vessel suspected to be carrying toxic and hazardous material into Indian territorial waters - no order as to costs.
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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 ₹ 25 lakhs with accrued interest, if any, shall be refunded to her on production of a copy of this judgment.
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