TMI Tax Updates - e-Newsletter
October 4, 2012

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws FEMA Service Tax Central Excise Wealth tax Indian Laws

Articles

1. REVERSE CHARGE MECHANISM IN SERVICE TAX

   By: Dr. Sanjiv Agarwal

News

1. VIEW YOUR ARREAR DEMAND

2. “Latest from systems-SEPT.2012”

3. Sales Turnover of Spmcil for the Year 2011-12 Increased to Rs. 3422.68 Crore as against Rs. 3134.57 Crore in 2010-11; Spmcil Becomes A Debt free Company

4. Auction for Sale of Government Stocks

Notifications

Customs

1. 56/2012 - dated 1-10-2012 - Cus

Amendment in Notification No. 96/2008-Customs dated 13th August 2008, so as to provide deeper concessions under DFTP scheme for Least Developed Countries (LDCs).

DGFT

2. 18 (RE-2012)/2009-14 - dated 1-10-2012 - FTP

Exemption of Assam Comilla Cotton [ITC(HS) Code 5201 00 12] from export restriction on cotton - Limit of 5,000 Bales was exempted from the cap on export of cotton during the previous cotton seasons 2010-11 and 2011-12.

3. 17 (RE-2012)/2009-14 - dated 1-10-2012 - FTP

Procedure and conditions for registration of contracts for export of cotton (Tariff Codes 5201 and 5203) w.ef 1st October 2012.

Circulars / Instructions / Orders

FEMA

1. Press Note No. 9 (2012 Series) - dated 3-10-2012

Setting up of step down (operating) subsidiaries by NBFCs having foreign investment above 75% and below 100% and with a minimum capitalisation of US$ 50 million - amendment of paragraph 6.2.24.2 (1) (iv) of 'Circular 1 of 2012- Consolidated FDI Policy'

Highlights / Catch Notes

Income Tax

• Court Rules Hire-Purchase Agreements as Leases, Revenue in Nature, Clarifying Expenditure Classification Distinction.

  Case-Laws - HC : Revenue vs. capital expenditure - hire-purchase v/s agreement of lease - right to purchase to be exercised after expiry of certain period - held as lease transaction / revenue in nature - HC
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• Anonymous Donations Require Full Disclosure for Tax Compliance u/s 115BBC(3) of the Income Tax Act.

  Case-Laws - AT : Anonymous donation /undisclosed income - Merely filing list of donors containing names and addresses / incomplete addresses does not satisfy the conditions laid down in section 115BBC(3) - AT
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• Supreme Court Confirms Market Committee's Charitable Status u/s 12AA, Despite Amendments to Income Tax Act.

  Case-Laws - SC : Market Committee - charitable purposes - Even after the amendment of Section 10(20) and Section 10(29), the assessee continues to enjoy the registration u/s 12AA - SC
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• Flat Registration in Semi-Finished State Does Not Affect Deduction Claim u/s 80IB(10) of Income Tax Act.

  Case-Laws - AT : Registration of flat in semi finished condition is not fatal to the claim of the assessee for deduction u/s. 80IB(10) of the Act. - AT
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Customs

• Customs Notification 96/2008 Amended to Boost Duty-Free Tariff Preferences for Least Developed Countries.

  Notifications : Amendment in Notification No. 96/2008-Customs dated 13th August 2008, so as to provide deeper concessions under DFTP scheme for Least Developed Countries (LDCs). - Notification
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• Shipping Bill Conversion Under Advance Licence Scheme Faces No Denial from DGFT, Commerce Ministry, or Customs.

  Case-Laws - AT : Denial of conversion of shipping bill - conversion under advance licence scheme has not been denied by the DGFT or Ministry of Commerce or Customs due to any dispute. - AT
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• High Court Rules Crude Palm Oil with Acid Value 9.77 Not Prohibited; Import Allowed Under Specific Conditions.

  Case-Laws - HC : Prohibited goods - import of Crude Palm Oil (Edible Grade) - acid value was 9.77 in the sample - mported goods is not for immediate use as a food item as declared - Customs Authority directed to not to treat the goods as prohibited goods - HC
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DGFT

• Assam Comilla Cotton exempted from export limits for 2010-12 seasons; 5,000 bales allowed freely by DGFT.

  Notifications : Exemption of Assam Comilla Cotton [ITC(HS) Code 5201 00 12] from export restriction on cotton - Limit of 5,000 Bales was exempted from the cap on export of cotton during the previous cotton seasons 2010-11 and 2011-12. - Notification
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• New Guidelines for Registering Cotton Export Contracts under Tariff Codes 5201 & 5203 Effective October 1, 2012.

  Notifications : Procedure and conditions for registration of contracts for export of cotton (Tariff Codes 5201 and 5203) w.ef 1st October 2012. - Notification
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FEMA

• NBFCs with 75-99% foreign investment can form step-down subsidiaries if they meet $50M capitalization per FDI policy amendment.

  Circulars : Setting up of step down (operating) subsidiaries by NBFCs having foreign investment above 75% and below 100% and with a minimum capitalisation of US$ 50 million - amendment of paragraph 6.2.24.2 (1) (iv) of 'Circular 1 of 2012- Consolidated FDI Policy' - FDI GUIDELINES
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• Interest on Seized Foreign Currency u/r 8(ii) Not Mandatory; Writ Petition Cannot Enforce Payment.

  Case-Laws - HC : Interest on the seized foreign currency - It is not as if payment of interest under Rule 8 (ii) was mandatory and which could be enforced by way of a writ petition - HC
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Corporate Law

• High Court Approves Asset Transfer from Company A to Company B, Triggering Indian Stamp Act Provisions.

  Case-Laws - HC : Scheme of amalgamation /arrangement sanctioned by the High Court - transfer from A to B would definitely a “transfer” to attract the provisions of Indian Stamp Act, 1899 - HC
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Wealth-tax

• Valuation of Promoters' Shares Under Wealth Tax Should Consider Depreciated Value; Rule 11 Suggested for Methodology.

  Case-Laws - HC : Valuation of shares under Wealth Tax – depreciated value of a promoters' quota shares suffering restriction on free transferability - Rule 11 could only be a plausible method - HC
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Service Tax

• Co-owners assessed individually for service tax on renting; exemption applies if each stays under Rs. 10 lakh threshold.

  Case-Laws - AT : Renting - SSP exeption upto Rs. 10 Lacs - co-owners - if individually all the appellants be considered as provider of such service, their aggregate value does not exceed the threshold limit. - AT
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• Cenvat Credit Rule 2(l): Landscaping of Factory or Garden Qualifies as Input Service for Modernization and Renovation.

  Case-Laws - AT : Cenvat credit – input services - rule 2(l) - Landscaping of factory or garden certainly would fall within the concept of modernization, renovation, repair, etc. of the office premises - AT
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Central Excise

• Court Rules on Differential Excise Duty for Decorative Laminated Sheets Under Subheading 3920.31; Appellant Must Pay.

  Case-Laws - HC : Payment of differential excise duty on 'decorative laminated sheets' - such goods fall under sub heading 3920.31. - appellant was required to pay the differential duty. - HC
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• Prompt Resolution of Government Benefits Essential to Support Exporters and Uphold Policy Intentions.

  Case-Laws - HC : If the benefits to which assessee is legally entitled to and is conferred on them by the policies of the Government as well as the statutory provisions is not settled expeditiously, the very object of granting these benefits would be defeated and the enthusiasm on part of these exporters to carry on the business is seriously hampered. - HC
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• Enhanced Duty Rate Timing: Does It Start After Bill Passage or Enactment? No PCTA Declaration Made.

  Case-Laws - AT : Applicability of enhanced rate of duty coming into force with immediate effect after passing of the Bill on 29.04.2008 or on date of enactment as on 10.05.08 - no declaration under PCTA was made - AT
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Case Laws:

• Income Tax

• 2012 (10) TMI 64
  Speculation loss - whether the speculation loss declared from the sale of shares can be set off against the profit available ? - Held that:- Considering the AO's submission that the fact remains that there was no delivery of the shares and on both occasions i.e. at the time of purchase as well as at the time of sale, it was only the sister concern M/s A. Nitin Capital Services which was involved in the transaction, but how M/s A. Nitin Capital Services’ books and other particulars were made available, especially, having regard to the fact that its representative sought repeated adjournments and since he did not furnish the necessary particulars after receiving summons under Section 131. Having regard to these circumstances, the fact that M/s A. Nitin Capital Services’ assessments were completed, could not have been decisive as far as the assessee’s claims in the present case are concerned That dividends in the shares concerned had not been enjoyed by the assessee even for the period it claimed to have held the shares - there was no evidence of any delivery being effected or any consideration actually having passed between the parties. The assessee relied almost entirely on book entries made in that regard - thus as that amount was not brought to tax and the assessee’s claim of loss was not allowed to be set of against its business profits - in favour of revenue.

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• 2012 (10) TMI 63
  Penalty u/s 273(2)(c) - ITAT deleted the levy - Held that:- After finding that there is order of assessment of the income including the addition of Rs. 20 lakhs in the income of the assessee, the assessee deposited the advance tax. There was no illegality in the order passed by the ITAT and in view of the order passed by this Court in Tax Case No. 10 of 1999(R) wherein penalty on account of undisclosed income has been set aside after taking note of the assessee that one of the partners of the assessee declared undisclosed income because of the pressure of the searching officer and in fact there was no undisclosed income, thus the Tribunal had not committed any error - in favour of assessee.

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• 2012 (10) TMI 62
  Reopening of assessment - ITAT cancelled the order passed by the AO u/s 143(3)/147/251 - Held that:- As decided in Hemraj Munshi Ram Versus Union Of India And Others [1998 (9) TMI 17 - PATNA HIGH COURT] issuance of notice under Section 148 itself is found to be without any reason and basis as the relevant material was already seized and were in possession of the revenue itself and in that fact circumstances, particulars furnished could be generally verifiable by the revenue and there was no reason to hold that assessee had failed to disclose fully and truly material facts to the A.O. As in the present case in consequence of search and seizure operation, the assessment was completed by making the assessment orders on 30.11.1978, 30.11.1979, 30.11.1980 and 30.11.1981. Therefore, the matters which were pending before the A.O. before making the assessment orders and against the above assessment orders, the appeals were preferred and assessment orders were set aside by CIT(A) vide order dated 15.3.1988 and matters were remanded to the A.O. These proceedings could have been completed by or before 31.3.1990. The A.O. had two years time with it. The relevant materials were already lying with the officers as they were seized during the course of the search and seizure. The A.O. could have completed the assessment but it appears that in the present cases, a pretext has been taken by the A.O. and thereafter, only for the extension of period of limitation, the A.O. issued notice under Section 148. Thus after remand order, if A.O. proceeds for assessment and there was no limitation, then there was no necessity of taking help of Section 148 and Section 147 - in favour of assessee.

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• 2012 (10) TMI 61
  Deduction u/s 80IA as well as u/s 80HHC - whether an assessee is entitled to full deduction or has to be proportionately reduced - Held that:- While calculating the deduction the provisions of the deducting sections have to be followed. There is nothing in Section 801A(9) which lays down that the assessee would not be entitled to claim deduction under Section 80HHC on that portion of the profits of the unit of which benefit has been taken under Sections 801A or 801B. The object of Section 801A(9) is not to curtail the deduction but to avoid double benefits - The total benefits cannot be higher than the gross income and cannot exceed the profits of the priority undertaking. The assessee would be entitled to the benefit of Sections 801A or 801B separately and to that of Section 80 HHC independently and while computing the deduction under Section 80 HHC the profits or deductions which have been granted under Sections 801A or 801B cannot be taken into consideration. Thus in agreement with the Bombay and Karnataka High Courts that in case the contention of the revenue that the profits and gains, permitted to be deducted under Section 80IA or 80IB, should be deducted out of the profits of the business and thereafter the profits and gains of the export business are to be reckoned for the purpose of calculating the benefit under Section 80HHC is contrary to the statutory provisions and the letter and spirit of the Act. The deductions are independent of each other and therefore, full deduction under each Section can be claimed though the overall benefit has to be restricted to the total profits and gains of such eligible business - in favour of assessee.

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• 2012 (10) TMI 60
  Interest under Sections 234A and 234B - whether interest can be charged in an order of rectification under Section 154 for the first time - Held that:- If the return is not filed within time or if advance tax is not paid within time then the assessee is liable to pay interest and the payment of interest is mandatory. However, if the AO or the appellate authority does not order the payment of interest, the assessee cannot be directed to pay interest by the demand notice. AO virtually acts like a judicial officer but if he passes a wrong order not to levy the interest then the revenue must challenge the said order get the same set-aside and an order must be passed directing interest should be paid. If no such order is there, the revenue cannot claim interest. However, in case the assessment order is silent with regard to the payment of interest then without challenging the assessment order the revenue cannot, while issuing notice of demand, claim interest under the aforesaid sections - in favour of assessee.

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• 2012 (10) TMI 59
  Revenue expenditure versus capital expenditure - hire-purchase v/s agreement of lease - Held that:- There is a lot of difference between the purchase, hire-purchase and lease agreement. In this case the terms indicate that the provider of the machines was required to maintain the machines and, therefore, he was entitled to take the rent also as per the terms of the agreement, and the petitioner, in the any relevant year could not have exercised his right to purchase the Air Conditioner, his right to purchase the Air Conditioner could have been exercised after expiry of certain period of time. Therefore, in that situation, there was an agreement for lease only - in favour of assessee. Revenue expenditure v/s capital capital expenditure - Held that:- the fee paid to the Architect, some expenses incurred on old capital work in progress which was abandoned and cost of damaged cabinets it is not in dispute that the project could not be accomplished because of the reason that the place where it was to be undertaken had a poor quality of soil and all the construction already damaged. - The other articles bought by the assessee also got damaged and, therefore, in that fact situation, the Tribunal was fully justified in holding that such expenditure which may be pre-operational expenditure for a project can be treated to be a revenue expenditure actually and not a capital expenditure - in favour of assessee.

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• 2012 (10) TMI 58
  Unverifiable transactions - Disallowance under Section 40(a)(ia) - ITAT deleted the addition - Held that:- The Tribunal come to the conclusion that when the assessee paying more tax under Section 115 JB and even observed that it is no body's case that the regular assessment under the provisions of Section 143(3) would have fetched more tax to the Revenue. No reason for any such observation when Tribunal was of the view that neither the A.O. nor the C.I.T. (Appeal) had appreciated the facts. The Tribunal also ignored this fact that the A.O. and C.I.T.(Appeal), both considered each and every fact, which is required to be considered under Section 143(3) and then in that situation, merely because of the one line in the operative part of the order contrary to the specific facts mentioned in the first para that the case is duly processed under Section 143(1)(a), the Tribunal should not have directed the A.O. to rectify the demand notice under Section 115JB and the Tribunal held in this way. Thus ITAT has erred by holding that the AO has not made the impugned additions under the regular provisions of the Act, obviously, under Section 143(3) & also committed error of law in upholding the deletion of addition of Rs.7,49,672/- and Rs.34,44,754/-. A.O. should have considered the plea of the assessee also before holding that he is proceeding under Section 143(1)(ia), and in pursuance of notice under Section 143(2) and 142(1), but he should have considered the asseess's claim under Section 115JB, which has not been and as such, rejected the plea of the assessee in spite of taking note of the fact that assessee has shown the book profit of Rs.2,05,86,930/- under Section 115JB - The matter is remanded to the A.O. for fresh consideration to decide whether the assessment is required to be made under Section 115JB or under Section 143(3) - in favour of assessee by way of remand.

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• 2012 (10) TMI 57
  Charitable Trust - Depreciation - dis-allowance under order passed u/s 154 - Revenue contended double deduction i.e. capital expenditure as application of income and depreciation on the same assets which have already been claimed as application of income - Held that:- High Court in the case of CIT v Sheth Manilal Ranchhoddas Vishram Bhavan Trust (1992 (2) TMI 51 - GUJARAT HIGH COURT) held that depreciation should be allowed u/s 11(1)(a) for the charitable institutions and societies since income of the Trust is to be computed on commercial basis i.e. as per normal principles of accounting which provides that to arrive at net income, depreciation should be deducted. Therefore, allowance of depreciation by CIT(A) upheld - Decided against Revenue

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• 2012 (10) TMI 56
  Survey - addition u/s 69 on account of undisclosed investment in stock – difference between quantity of stock as per stock register maintained on the Computer against quantity of stock mentioned in stock Register submitted to the Excise department – Held that:- It is observed that Assessing Officer has not rejected books of account of the assessee. Obviously the opening stock as on 1-4-2008 would be the closing stock as on 31-3-2008, which a per stock register is 25,555 kg. and accepted by the department for A.Y. 2008-09. There is no purchase of supari as on 1-4-2008, as the first purchase bill of supari is through bill no. 51 dated 2-4-08 from Nidhi Sales, which is verifiable from the purchase a/c submitted to the AO during assessment proceedings. There being no corroborative evidence in support of the entry found in the loose seized document, addition made u/s 69 is directed to be deleted – Decided in favor of assessee.

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• 2012 (10) TMI 55
  DTAA between India and Korea - computation of the income attributable to the Indian (PE) of the Korean company – applicability of provisions of Transfer Pricing or Rule 10 read with Rules 10A to 10E – Held that:- Supreme Court in the case of Hyundai Heavy Industries (2007 (5) TMI 196 - SUPREME COURT ) has observed that conjoint reading of sections 4 and 5 states that taxable unit is a foreign company and not its branch or PE in India. A non-resident assessee may have several incomes accruing or arising to it in India or outside India but so far as taxability under sec. 5(2) is concerned, it is restricted to incomes which accrue or arise or which deemed to accrue or arise in India. Plain reading of Rule 10 suggests that it can be applied in the cases where income accruing or arising to any non-resident from any business connection is such which cannot be definitely ascertained. In the present case, assessee has submitted the transfer pricing report and buttressed its contention with the material that income shown at cost+9% is at arm’s length. Assessing Officer nowhere pointed out that income cannot be definitely ascertained on the basis of the material placed on record by the assessee and, therefore, he is computing the income under Rule 10. Further, department itself has accepted the method of assessee in a number of years and sub Article 5 of Article 7 of the DTAA between India and South Korea also provides that profits attributable to PE shall be determined by the same method year by year unless there is good and sufficient reason to the contrary. Since no reasons are assigned by the AO for adopting different method from same source of income, in different years, it is held that income of the assessee be computed at cost+9% as declared by it, and accepted in subsequent year from the same contract – Decided in favor of assesse. Interest u/s 234B – Held that:- In case of a non-resident where entire income is subject to withholding tax u/s 195, then assessee could not be held to have committed default in payment of advance-tax and consequently it was not liable to pay interest u/s 234B.

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• 2012 (10) TMI 54
  Membership fees to National Multi Commodity Exchange of India - revenue or capital expenditure - assessee engaged in trading of grains and commission agents - Held that:- Membership fees of National Commodity Exchange of India cannot be considered to be of enduring nature and therefore the action of the A.O. in disallowing the amount holding it to be of capital nature was uncalled for - Decided in favor of assessee Addition to the extent of 10% of vehicle, telephone, insurance and depreciation on account of personal usage of the vehicle - capitalization of interest paid on loan taken for purchase of vehicle, before the use of vehicle - Held that:- Since the assessee has not been able to controvert the finding of the A.O. nor placed any material either before lower authorities or before us, addition made is upheld - Decided against assessee

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• 2012 (10) TMI 53
  Deduction u/s 80HHC in relation to Foreign exchange fluctuation – AO made reduction of entire fluctuation gain for the purpose of calculating deduction u/s 80HHC - AO considered such income as income from ‘Other Sources’ and not derived from export business – Held that:- Following the decision of ITAT in case of Sujata Grover (2001 (11) TMI 232) and in the case of Priyanka Gems (2004 (12) TMI 288) have held that gains due to fluctuation in the foreign exchange rate emanating from export is its integral part and cannot be differentiated from the export proceeds and it is the part of profits of business. Therefore, foreign exchange fluctuation/gains arose only from export invoice value and are directly relatable to export business of the assessee and the same cannot be excluded from the export turnover. Appeal decide in favour of assessee Deduction u/s 80HHC in relation to service rendered – AO made reduction of 90% amount was liable to be deducted from the profits of business in terms of explanation u/s 80HHC, as it was in the nature of ‘income from other sources’ - CIT (A) reducing 100% of ‘income from the services rendered’ – Held that:- There is no discussion by the Assessing Officer and the CIT(A) with regard to the nature of transaction and the same has not been elaborately discussed either in the orders of the Assessing Officer or of the CIT(A). Case remand back to AO. Addition on account of provision for warranty – Held that:- Estimation should be on a reasonable basis as well as on a scientific basis and on the basis of past history of assessee, so that on the basis of certain information gathered in due course of time, so as to arrive at the correct percentage of the claim. Case remand back to the AO. Addition on account of Voluntary retirement scheme – Assessee has taken over the another company - The attached liabilities have also been agreed to be taken over which resulted into absorption of 184 employees of the said erstwhile company – AO treat it as capital expenditure – CIT(A) delete the same – Held that:- It was held that when the payment is made for the purpose of retrenchment of workers, it was for the purpose of reducing the staff and bring about a reduction in wage bill as well. So, the expenditure incurred was for the purpose of business and also with a view to maintain good relationship with the labourer. Decision in favour of assessee. Depreciation on Plant and Machinery – Held that:- As the amount pertains to the difference of the gratuity fund transferred to the balance-sheet and the assessee wants to claim depreciation on this amount, then definitely, it is out of the purview of section 32 of I T Act, so no depreciation deserves to be allowed. AO has to examine the value of the asset in terms of the said agreement vis-à-vis the value of the plant and machinery shown in the books of accounts for the year under consideration. Therefore case remand back to AO

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• 2012 (10) TMI 52
  Validity of reopening of assessment u/s 147 - buy back of shares at low price in AY 05-06, originally issued on premium - addition made u/s 68 - AY 04-05 - Held that:- There was sufficient reason for reopening of assessment, in sofar as original assessment completed u/s 143(3) was reopened within a period of three years. From the record, we found that statement of Director of assessee company was recorded, wherein it was stated that shares of Rs. 10/- which was issued at a premium of Rs. 90/- were purchased back by the Directors at a face value of Rs. 10/- only. This statement is valid information for the purpose of reason to believe that there is escapement of income, accordingly, we uphold the action of the Assessing Officer for reopening the assessment. So far as merit of addition is concerned, it is observed that AO should have brought on record positive material to substantiate the transaction of issue and repurchase of shares as bogus, having been done by paper company. However, no effort was made by the Assessing Officer or CIT(A) to establish identity of the share applicants. Matter is restored back to the file of Assessing Officer for deciding afresh as per law - Appeal of assessee allowed in part for statistical purposes.

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• 2012 (10) TMI 51
  Addition on account of shortage in closing stock – AO made addition on basis of transfer of stock from godown & plant - Held that:- As concluding from the fact of the case the final discrepancies remaining are too negligible, considering the huge volume of purchases of soyabean as well wheat seeds. Therefore issue decides in favour of assessee Disallowance of claim of depreciation on purchase of car on last day of FY – Held that:- As no fuel at all was purchased for running of such vehicle nor any other expenses for running of the vehicle were incurred before 31.03.YY. No evidences to establish the user of such vehicle for the purpose of business. Mere payment for purchase & register with RTO alone cannot be sufficient to establish the fact that vehicle was actually used for the purposes of business. Appeal decides in favour of revenue Rejection of books of accounts – AO applying GP rate @ 15% - Assessee was trading in foodgrains - Assessee had shown GP of 6.95% as compared to gross profit of 1.95 % and 6.47 % shown in the earlier AYs – Seeds are purchased at price which is above the market prices in form of bonus to farmers – Held that:- As the components of bonus paid was not clearly bifurcated and defects in the books of accounts with regards to cash credit, creditors, shortage etc. such GP ration is justified.

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• 2012 (10) TMI 50
  Withdrawal of registration u/s 12A - twice alteration of objects - engagement in commercial activities - Revenue contended that when the said objects, which formed the basis of the grant of registration, stand altered, the very foundation of the registration stands removed, so that it could not survive - assessee contesting power of the CIT as the competent authority in invoking section 12AA(3) - Held that:- CIT as the competent authority, is empowered by law to examine if the activities being actually pursued are genuine or carried out in agreement or in accordance with those objects. Change in the object clause (s) is violative of an implied and fundamental condition for continuation of registration, cognizance of which can be taken of by the income tax authorities even de hors section 12AA(3) as well as u/s 293C. Commercial activities - Held that:- Unless the functioning of the assessee, which is stated to be on commercial lines, so as to disqualify it as a charitable entity, is shown to be so with reference to its revised/ amended objects, we are unable to see as to how the same (the changes or the revision of its objects and the rules/regulations) has a bearing on its registration or entitles the Revenue to revisit the same, i.e., considering that it has accepted the assessee's functioning as a charitable entity up to the AY 2007-08. Neither the continuation of registration nor its withdrawal is automatic, and there is or can be no presumption with regard to either. The assessee was bound, notwithstanding the genuineness of the reasons motivating or leading to the changes, i.e., assuming so, to have reported them to the Revenue, in absence of which its claim for continuation of registration cannot hold. The said changes having come to the notice of the Revenue now, i.e., during the course of the assessment proceedings for the AY 2008-09, it is obliged and empowered under law to take cognizance of the same. It shall follow the same procedure, as it would have, had the assessee voluntarily reported those changes in time. And, again, there can be no presumption for consequential cancellation/withdrawal of registration. If on basis of examination of facts, explanations and objections, CIT comes to the conclusion that registration as granted cannot be continued, he shall withdraw the same per a speaking order. The withdrawal could have, even as directed per the impugned order, a retrospective effect, i.e., from the date from which the impugned object(s), i.e., which the Revenue finds as objectionable from the standpoint of the assessee's registration or its continuation as a public charitable institution u/s. 12A of the Act, comes into effect. Matter remanded back for fresh consideration. CIT shall adjudicate per a speaking order; his order being appealable - Decided in favor of assessee for statistical purposes

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• 2012 (10) TMI 49
  Computation of depreciation u/s 32 – Whether depreciation can be claim from the date of actual commencement of business or from the date of setting up of the business – Assessee contended that place of business was ready by 30.09.2003 - First sale bill of the raised on date 01.01.2004 – AO apply of 50% of the depreciation rate for half year – Held that:- Once business has been set up and ready to commence business, expenses have to be allowed irrespective of the fact that actual commencement of the business was much later. Therefore, the building was fully ready prior to 30.9.2003 and depreciation should be allowed at normal rate. We are however unable to accept the arguments that merely because the building was ready, the business had been set up. The assessee was setting up entertainment centre and, therefore, unless assessee was ready to provide any of the entertainment services, it cannot be said that place of business had been set up and the building was used for the purpose of business. It has not been examined whether these fitness machines were ready for use before 30.9.2003. No specific opportunity had been given to the assessee to prove whether any of the services in the entertainment centre were were ready before 30.9.2003. Case remand back to AO

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• 2012 (10) TMI 48
  Rejection of books of accounts u/s 145 – Calculation of profit by applying Net Profit ratio – Whether AO in making best judgment assessment u/s 144 has possess absolute arbitrary authority to assess any figure he likes - Assessee engage in construction business – Labour expense constitute 37% of total expense – Vouchers do not contain details like labour rate, working days etc. – Cash payment of labour expense amounting Rs. 1.39 cr. out of total exp. of labour of Rs. 7.47 cr. - Cash payment were made of only 20% of total labour exp. – Held that:- Assessee working at 21 sites during the year and most of the labour was unskilled and illiterate, don’t have permanent address, not have bank account. Net Profit rate shown by assessee was on higher side in comparison to earlier years. On the basis of decided case of Brij Bhushan Lal Parduman Kumar(1978 (10) TMI 2 - SUPREME COURT) that even in the case of best judgment assessment u/s 144, the same has to be done on reasonable basis and it should not be vindictively or capriciously. Therefore, AO is not justifying in rejection of books and applying NP rate. Treating Foreign expenses as bogus – AO contended that it does not have any relation with the business need – Held that:- As the assessee furnished break-up details of local and foreign traveling of the partners. No family members accompanied the partners and that by itself is sufficient to show that the expenditures are for business purpose. Visits to foreign country were made to know for its high standard urban infrastructure like Hong Kong, Malaysia which led to increase of knowledge of recent technology in construction business. Further, the machinery was purchased from abroad in the later years. Therefore, same cannot be treated as bogus. Appeal decides in favour of assessee

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• 2012 (10) TMI 47
  Disallownace of expenses - depreciation, administrative expenses & donation - AY 2000-2001 - Held that:- In the absence of any documentary evidence on record, that the assessee used plant and machinery during the course of its trading activities no depreciation can be allowed - against assessee. Disallownace of expenses - AY 2001-02 - Held that:- Restore the issue to the file of CIT(A) to decide the claim of the assessee in respect of Rs.1,60,000 as the assessee furnished copy of FIR before the AO for theft on merits by a speaking order. However, in respect of balance amount of Rs.50,000 as sundry debtor the assessee failed to produce any documents at the time of remand proceedings and, accordingly, the AO could not verify the claim of the assessee. Hence, the claim of Rs.50,000 made by the assessee is rejected - partly in favour of assesseby way of remand. Claim of depreciation - Held that:- As there is no dispute to the fact that there was no claim of the assessee for depreciation before the authorities below and the said claim is raised by the assessee before the Tribunal for the first time. Considering the facts of the case and the fact that no details were filed before the authorities below to consider the claim of the assessee for depreciation, thus additional ground for claiming depreciation is not maintainable as claim of the assessee for depreciation depends on the factual details which the assessee failed to furnish not only in the return filed but also during the course of assessment proceedings - against assessee. Addition on account of cash in hand - AY 2003-04 - Held that:- Considering the fact that the said amount is appearing in the balance sheet which is duly audited, no justification to treat the said amount as undisclosed income of the assessee. Hence, the addition of Rs.5,09,555 is deleted by reversing the orders of authorities below - in favour of assessee. Disallowance of 50% of administrative expenses - Held that:- The claim can be disallowed if the assessee has not established that amount in question has been wholly and exclusively laid out for the purpose of business. Since in the present case assessee has not been able to furnish the requisite proof to establish that the expenses aggregating to Rs.13,28,150 which has been disallowed by authorities below, was incurred wholly and exclusively for the business purposes of the assessee - against assessee. Disallowance of commission expenses - Held that:- Assessee has not been able to establish whether any service was received to the assessee for the alleged payment of commission of Rs.20,02,250 to M/s. Gurudev Chemox Industries, Bangalore. Merely filing of said certificate at page 130 of PB does not establish that any service was received to the assessee - against assessee.

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• 2012 (10) TMI 46
  Disallowance u/s 37(3A) - revised return filed by assessee - Held that:- there are mistakes in the amounts of disallowance made by the A.O. - Submission of assessee requires clarification. - in favour of assessee for statistical purposes. Guest house expenses - expenses incurred on salaries & wages to staff & repairs and renovation expenses are in the nature of guest house expenses - held that: these are not allowable in view of the decision of the Hon’ble Supreme Court in the case of Britannia Industries Ltd. vs. CIT (2005 (10) TMI 30 - SUPREME COURT) and accordingly the disallowance made by the A.O. upheld - With regard to the food expenses, matter remanded back. Incentive bonus - Held that:- this amount is allowable u/s 37(1) since it is remuneration to workers for extra work done which partakes the character of salary and it is not bonus as provided under the Payment of Bonus Act, 1965 - in favour of assessee. Deduction u/s 80VV - expenses incurred in connection with certain proceedings - payments for consultations, conferences and appearances relating to proceedings - Held that:- As decided in CIT Versus Hayward Waldia Refinery Limited [1992 (7) TMI 5 - CALCUTTA HIGH COURT] section 80VV seeks to restrict the allowance in respect of expenditure incurred by an assessee in respect of a specific proceeding under the Income-tax Act having no application in relation to remuneration or fees paid by an assessee to a tax consultant or other adviser for giving general advice in relation to taxation matters - Thus in the present case the disallowance made is deleted - in favour of assessee. Disallowance of Bhanwad Prospecting Survey expenses - Held that:- As the disallowance of Bhanwad Prospecting Survey expenses, it has been consistently held by the Tribunal in earlier assessment years that the assessee is entitled to the deduction u/s 35E, thus following the same the A.O. is directed to follow the orders of the Tribunal - in favour of assessee. Disallowance of repairs to building and machinery - Held that:- All these renovation and repairs were carried out by the assessee in its facilities available at the salt pans of the assessee are all essential repair and maintenance expenditure. Nothing is procured and embedded as new. The assessee has not extended its operational facilities area or plant. Therefore, these expenditures are to be treated as revenue in nature - in favour of assessee. Disallowance of Depreciation - Held that:- Since the foreign travel expenses has been treated as capital expenditure, therefore, on the said amount the assessee is entitled to the depreciation. As in the absence of any contrary material placed on record by the Revenue, we direct the A.O. to allow depreciation on foreign travel expenses treated as capital expenditure - in favour of assessee. Disallowance u/s 40A(3) - Held that:- The issue has not been properly examined as disallowance has been made on the basis of Tax Audit Report. The payments to employees cannot be said that the assessee has failed to establish the identity of the payees. It has also not been examined by the A.O. as to whether there is any single payment not exceeding Rs. 2,500/- in view of the decision of CIT vs. Aloo Supply Co. (1979 (12) TMI 60 - ORISSA HIGH COURT) - restore this issue back to the file of the A.O. to decide the same afresh - in favour of assessee for statistical purposes. Disallowance of expenses on fish and prawn culture - Held that:- The issue is covered in favour of the assessee by the order of the Tribunal in assessee’s own case for the assessment years 1981-82 and 1982-83 wherein it is held that the maintenance of fish ponds does not constitute any separate business but it is an essential part of the business carried on by the assessee in the normal course - in favour of assessee. Disallowance of interest on outstanding electricity duty, Central Sales Tax and Gujarat Sales Tax - Held that:- As the Tribunal in assessee’s own case for A.Y. 1984-85 observing that the interest on electricity deposit is neither duty nor tax, therefore, it is out of the scope of the section 43B, thus directed the A.O. to delete the addition - and with regard to the disallowance of Central Sales Tax and Gujarat Sales Tax, the Tribunal restored the issue back to the file of the A.O. to verify the payment - thus following same order appeal decided - partly in favour of assessee. Disallowance of payment made to Tata Services Ltd. - Held that:- Observing the order passed in assessee' own case for A.Y. 1984-85 that the A.O. was not justified in making adhoc disallowance of Rs. 2 lacs and accordingly directions to delete the disallowance - in favour of assessee. Disallowance of payment of Tata Sons, Cess charges and various items individually costing - Held that:- As assessee before the CIT(A) has filed detail note who without considering the same has decided the issue against the assessee, thus the issue should be restored back to the file of the A.O. - in favour of assessee for statistical purposes. Disallowance of interest paid on borrowings - Held that:- The assessee company was having its own funds aggregating to Rs. 160.73 crores as on 31-3-1985 and out of it, the assessee has advanced Rs. 3.58 crores, was not controverted. Thus as per decision in Munjal Sales Corporation Versus CIT [2008 (2) TMI 19 - SUPREME COURT] the Appellate Tribunal ought to have held that the loan given was from the assessee’s own funds - in favour of assessee. Disallowance of forfeiture of security deposits/performance guarantee deposit - Held that:- There is no dispute that the assessee has received Rs. 1,41,51,010/- towards full value of sale of 5000 MTs. of Soda Ash. However, there is no material on record to show the date of entry of consideration of the sale price recorded i.e. at the time of delivery of goods or receipt of sale value of Rs. 1,41,51,010/- or at a later stage i.e. on or before 31-3-1985. There is no material on record to show as to whether the HLL has received the imported consignment of Soda Ash on or before 31-3-1985 or whether any effort was made by the HLL to return the supply to the assessee by 31-3-1985 or has refused to return the goods or has sought extension of time to return the goods to the assessee - In the absence of all these relevant material on record the matter should go back to the file of the A.O. for fresh reconsideration - in favour of assessee for statistical purposes. Disallowance of expenditure on scientific research u/s 35(1)(ii) - Held that:- The assessee has made payment of Rs. 5 lacs to the Indian Institute of Chemical Engineers, Calcutta & in the absence of any material to show that the expression u/s 35(1)(ii) that “any sum paid to a scientific research association” does not include the payment made by the assessee or such payment is not allowable the view of CIT(A) was fully justified in deleting the disallowance - in favour of assessee. Levy of interest u/s 139(8) - Held that:- As this ground is consequential which was not objected to by the D.R the A.O. is directed to allow consequential relief to the assessee in respect of levy interest u/s 139(8) - in favour of assessee.

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• 2012 (10) TMI 45
  Revenue or capital receipt - Refund of the sales tax - amount was refunded to the assessee by the supplier on the ground that only sales tax was chargeable @ 2% and not @ 4% - Held that:- Though assessee received the amount towards payment of sales tax at 2% but assessee retained the said sum to themselves - this amount, will have to be treated as a revenue receipt (trading receipt) and accordingly will have to be taxed in their hands during the assessment year in question - in favour of the Revenue

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• Customs

• 2012 (10) TMI 43
  Benefit of DEPB credit - allegation of overvaluation - Held that:- proceedings against the exporter were dropped by this Tribunal relying on orders of RAMMAPATI EXPORTS versus COMMISSIONER OF CUSTOMS (PORT), KOLKATA [2006 (8) TMI 16 - CESTAT, KOLKATA] - once the charge against the exporter itself does not survive, the question of aiding and abetting also does not survive - the so-called new material/evidence not being relatable or relevant as found to uphold the charge of over-valuation, leads to the setting aside of the impugned Order and the notice. - in favour of assessee.

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• 2012 (10) TMI 42
  Confiscation of goods and imposition of fine - violation of Section 111(o) of the Customs Act, 1962 – Held that:- Assessee imported the capital goods but not to the extent of Rs. 1 Crore, he cannot have the benefit of waiver of duty - assessee paid the duty and for delayed payment, he paid interest and thus, he did not avail the benefit of that notification - assessee conducting himself contrary to the notification thus exposing himself to the order of confiscation, do not arise - when once the assessee pay the duty and interest, goods will be out of the ambit of the said notification and they cannot be held liable for confiscation under Section 111(o) of the Act - in favour of the assessee

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• 2012 (10) TMI 41
  Demand – 100% E.O.U - alleged that dispatching of finished goods, unfinished goods and duty free raw-materials by the 100% E.O.U. to their group companies in DTA with the intention and for the purpose of (claimed) illegal/inadmissible Drawback – Held that:- Activities were done without obtaining proper permission from the jurisdictional (Customs) authorities with the help of other DTA Units - there were indeed specific checkings and investigations by the departmental officers under proper authority of law - contravention of simple (footnote) declaration can result in denial of consequential benefit - Revision Applications are thus rejected Time bar - DBK amounts claimed and sanctioned in 1996-1997 the original Show Cause Notice was issued on 18-7-2001 - applicants herein are contesting that the addendums/corrigendum letters issued thereafter in connection with the above Show Cause Notice should be taken as a fresh Show Cause Notice and if computed from last addendum dated 2-5-2002 the issued Show Cause Notice is “Time barred” – Held that:- Government, therefore takes up the very initial Show Cause Notice or issued date as the relevant date and rest of addendums/corrigendum letter as precise details clearly pointing out the relevant data/limits/scopes of this case proceedings which have already stood commenced - Show Cause Notice dated 18-7-2001 was issued within extended time of 5 years and as such Show Cause Notice can not be treated as time barred

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• Corporate Laws

• 2012 (10) TMI 40
  Scheme of amalgamation /arrangement sanctioned by the High Court - whether it would attract the mischief of Indian Stamp Act, 1899 in the State of West Bengal - Held that:- “Transfer of property” being “inter vivos”. Section 5 of the Transfer of Property Act would squarely be applicable in a scheme of amalgamation or demerger. It was a transfer between two “juristic persons”. Hence, it was nothing but one of the methods of transfer in corporate field that would certainly be inter vivos. An inter vivos transfer would definitely attract Stamp Duty as per the said Act of 1899 and/or the State amendments applicable therefor. On the question of “holding subsidiary” corporate entities are having distinctive features. Shareholders do not own the corporate entity. Lifting of the corporate veil might suggest otherwise. In the eye of law, corporate entities are distinct. Hence, transfer from A to B would definitely a “transfer” to come within the scope of paragraph 45 of Hindusthan Lever (2003 (11) TMI 335 - SUPREME COURT OF INDIA), attracting appropriate duty - As per the proposed law scheme of amalgamation and/or arrangement would involve two per cent Stamp Duty whereas the “conveyance” as of date would require payment of duty at the rate of seven per cent. It is for the State to fix the rate. So long the new law does not come in force the existing law would prevail. The parties would have to adhere to the same.

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• FEMA

• 2012 (10) TMI 44
  Interest on the seized foreign currency - applicability of Rule 8 – Held that:- Interest at the rate of 6% per annum under Rule 8 could have been awarded to the respondent on the seized Indian currency only - writ petition in the nature of enforcement of a civil liability that is claim for interest in the nature of compensation for wrongful retention of money is not maintainable. It is not as if payment of interest under Rule 8 (ii) was mandatory (as under Rule 8(i)) and which could be enforced by way of a writ petition - judgment awarding interest under Rule 8(i) qua Indian currency also can thus not be sustained

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• Service Tax

• 2012 (10) TMI 68
  Consultancy Engineering Service - service tax demand, interest thereon & penalty - period in question 19.04.2006 to 31.03.2007 - Held that:- Admittedly, the Appellant did not contest payment of Service Tax nor it is their case that there is no delay in payment of Service Tax. Therefore, the Appellant are required to pay interest on delay in payment of Service Tax in terms of Section 75, irrespective of the fact that the Applicant have paid the Service Tax before issue of show cause notice. As prior to 18.04.2006, i.e. before insertion of Section 66 of the Finance Act, 1994, the service recipient was not required to pay the Service Tax and the service recipient became liable to pay Service Tax after insertion of Section 66 w.e.f. 18.04.2006. Thus the learned Commissioner has not imposed any penalty under Section 76 or Sections 77 and the Department has not challenged the non-imposition of penalty under Sections 76 and 77. In these circumstances, there was a reasonable cause and therefore, the penalty is not imposable as per the provisions of Section 80.

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• 2012 (10) TMI 67
  Waiver of pre-deposit – Assessee individuals are co-owner of a particular building and have rented out the premises - Tenant issues different cheques to all the above individuals as they are co-owners - Amount received by the individuals would be within the threshold limit of SSI exemption N/No. 08/2008 – Held that:- As the cheques for rent are received individually by all the appellants, it was indicated in the agreement between the individuals for the purpose of renting out of premises to another person so as to make it specific that individually they are renting out the property to a person. As the said notification talks about the aggregate value of the taxable services rendered, should be considered for the purpose of exemption and in this case if individually all the appellants be considered as provider of such service, their aggregate value does not exceed the threshold limit. - Stay granted.

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• 2012 (10) TMI 66
  Waiver of pre-deposit – demand is under the head Maintenance or Repair Service - repairs undertaken by the appellant were in relation to the sale of machines – Held that:- explanation which was introduced with effect from 16-6-2005 is clarificatory and retrospective so as to cover the period of dispute - appellant’s services squarely fall within the ambit of the definition of ‘Business Auxiliary Service’ - during the period of dispute, they were entitled to exemption - demand under a different head is not sustainable - waiver of pre-deposit allowed

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• Central Excise

• 2012 (10) TMI 39
  Payment of differential excise duty on 'decorative laminated sheets' - treating the goods to be classified under sub heading 4823.90 OR 3920.31 - Held that:- As decided in COLLECTOR OF CENTRAL EXCISE, HYDERABAD Versus BAKELITE HYLAM [1997 (7) TMI 154 - SUPREME COURT OF INDIA] that such goods fall under sub heading 3920.31. Thus as the dispute with regard to payment of excise duty under sub heading 3920.31 is resolved the appellant was required to pay the differential duty. Waiver of Pre deposits - undue hardship - Held that:- For a hardship to be "undue" it must be shown that the particular burden to observe or perform the requirement is out of proportion to the nature of the requirement itself, and the benefit which the applicant would derive from compliance with it. Thus while safeguarding the interest of the revenue it has directed the appellant to deposit the entire amount of balance duty, except interest.

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• 2012 (10) TMI 38
  Non discharge of duty liability by the appellant under the provisions of Rule 8 of the Central Excise Rules, 2002 during the period April 2007 to April 2008 whereas assessee submits that it had discharged the duty liability as per the law but had failed to file the returns in time and there was some arithmetical error while calculating the duty paid - Held that:- Calculations needs to be done by the adjudicating authority or by the jurisdictional authorities, hence matter needs to be considered by the adjudicating authority appreciating the claim of the appellant on the factual matrix. Matter remanded back to adjudicating authority without expressing any opinion of the merits of the case

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• 2012 (10) TMI 37
  Demand of duty and penalty - assessee get raw material under job-work challan from other Central Excise Assessee manufacture finished products and clear the goods under exemption Notification 214/86-C.E. – alleged that Respondent had an agreement with suppliers of raw material to give back finished goods with weight equal to 90% of the weight of raw material supplied. The 10% is taken as burning loss or process loss – Held that:- Inputs used by the job-worker is identical to the goods supplied by the Principal manufacturer. But that fact cannot bring in any additional levy - This is only for the purpose of meeting his contractual obligation of restricting burning loss to 90%. Further the goods cleared by the Respondent is accounted by the recipient of the material as required under Central Excise Rules - demand on account of Component B is not maintainable - intention to evade payment of duty has not been clearly broughtout in the order-in-original - it was a bona fide mistake and there is no case to increase the penalty - Appeal filed by Revenue rejected.

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• 2012 (10) TMI 36
  Denial of cenvat credit – Held that:- There is no dispute regarding receipt of goods, use thereof in the manufacture by the assessees and the duty paid nature of the goods - even if the assessees have not been able to establish that the goods were directly purchased from the manufacturer through M/s. S.S.S. Products, the substantive right to credit cannot be denied for contravention of M/s. S.S.S. Products in not getting themselves registered, particularly when the violation cannot be attributed to the assessees who have no control over the dealer - substantive right cannot be denied in such a situation - assessees are eligible to credit

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• 2012 (10) TMI 35
  Request for issuance of a single Central Excise Registration Certificate – Held that:- Two sheds for which separate Central Excise Registration have been given are located in a single Industrial Estate, which are not far off from each other. The instructions does not speak of the distance between the two manufacturing units. Moreover, these are divided by the Industrial roads and not public road - Department directed to grant single Registration in respect of 2 units i.e. Unit I and Unit II - Appeal allowed

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• 2012 (10) TMI 34
  100% Export Oriented Unit - refund claim for the un-utilized Cenvat Credit of Service Tax which has been paid by them on input services. The claim was based on the ground that all their services were exported to their group companies located outside India – Held that:- There is no question of any procedural irregularity - These are in the nature of incentives given to the exporters to encourage them from getting the precious foreign exchange to the Country and also to see that the price which they keep in the international market is competitive - If these benefits to which they are legally entitled to and is conferred on them by the policies of the Government as well as the statutory provisions is not settled expeditiously, the very object of granting these benefits would be defeated and the enthusiasm on part of these exporters to carry on the business is seriously hampered. Therefore, it is of utmost importance that these refund claims are settled expeditiously - revisional authority directed to settle these refund claims

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• Wealth tax

• 2012 (10) TMI 69
  Valuation of shares under Wealth Tax – Assessee contended that the value should be taken as nil, considering the restriction on free marketability due to lock in period under promoter quota - AO pointed that shares of the company were quoted shares and arrived at the market value of Rs. 210/- as on the valuation date – Following the decision in case of R. Rathinasabapathy Chettiar (1973 (5) TMI 8 - MADRAS HIGH COURT) lock-in period on the shares held out of the promoters' quota, necessarily one has to arrive at the depreciated value of these shares. Since these shares, in reality, would not fetch the same amount of price as the shares enjoying easy transferability, the shares could not be treated on par more or less with the shares which can be dealt with easily or saleable readily. What could be the depreciated value of a promoters' quota shares suffering restriction on free transferability Rule 11 or Rule 21 – Held that:- In absence of any such guideline, the depreciation may range from 0 to 100 and it is always a question of debate. By adopting the principle as given under Rule 11, we are neither treating the shares as unquoted shares, nor are we ignoring the fact that the company's shares are quoted shares. Though the assessee is not in a position to show what could be the depreciated value of the restriction on the transfer, even invoking Rule 21, as had been done by the Revenue, we find that Rule 11 could only be a plausible method to arrive at the depreciated value of a quoted share, which suffers a lock-in period, by reason of it being allotted as a promoters' quota. Appeal decides in favour of revenue & case remand back to AO

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• Indian Laws

• 2012 (10) TMI 65
  Alleged wrong placement in the seniority list - Challenge the final seniority list of Assistant Engineers (Civil) in CPWD as on 01.01.2011 - accord the applicant his due seniority and place him below Sl. No.557 and above Sl. No.558 in the seniority list circulated vide O.M. dated 01.08.2011 - ITAT rejected the appeal on delay and / or laches - Held that:- The petitioner was a silent sufferer. He had made representations and was even driven to approach the Central Information Commission in order to obtain information with regard to his seniority. The petitioner’s case is better inasmuch as the final seniority list came to be published on 01.08.2011 and immediately thereafter, the petitioner approached the Tribunal by way of the said O.A. 4154/2011. Therefore the petitioner’s plea that he had approached the Tribunal within time is acceptable. Thus, the provisional seniority list of 01.04.2002 got substituted by the final seniority list of 01.08.2011. In these circumstances, it would be incongruous to hold that the petitioner could not challenge the final seniority list. Non-joinder of the 233 persons who would have been adversely affected by any order passed in favour of the petitioner - Held that:- As all the affected persons need not be added as respondents as some of them could be impleaded in a representative capacity if the number of such persons is too large. Secondly, when such a situation arises before a court and, for that matter before the Tribunal, an opportunity should be given to the petitioner to implead the necessary parties or at least some of them in a representative capacity. If the petitioner still refuses to do so, then the petition could be dismissed for non-joinder of necessary parties and not otherwise. In the present case, no such opportunity was offered by the Tribunal to the petitioner and, therefore the Tribunal erred in dismissing the original application at the admission stage itself. As the petitioner had, in fact, impleaded one such person, namely, the respondent No.3 Shree Pal Singh, who was the person, according to the petitioner, immediately below him in seniority. Although, it is true that the petitioner has not stated in the original application that the respondent No.3 was impleaded in a representative capacity, but it is also clear that the respondent No.3 would, while defending his case, also be espousing the case of all the 233 persons, who were similarly situated to him - as the Tribunal has erred on both counts on the point of limitation as well as on the point of non-joinder of parties the impugned order is set aside and is restored back to Tribunal to dispose of the same on merits - in favour of petitioner.

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