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Income Tax
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2012 (10) TMI 902
Refund u/s 237 - power of AO to investigate - Whether Petitioner is entitled to refund of Rs.1,70,691/- as claimed in its return filed on 01.09.2003 for the assessment year 2003-04 along with interest as provided under the Income Tax Act, 1961 – Following the decision of court in case of [Babu Ram Chandra Bhan v. ITO 1990 (9) TMI 34 - ALLAHABAD HIGH COURT] while considering the provision of Section 237 held that a person becomes entitled to refund only when he satisfies the Assessing Officer that a certain amount is due to him. This satisfaction necessarily involves an inquiry where there is a dispute as to the entitlement to the amount to be refunded. While there is no specific provision empowering the Income-tax Officer or the Assessing Officer to investigate such a claim, such a power is implicit and inherent in him as would be evident from section 237 of the Income-tax Act, 1961 - petitioner is directed to appear before opp. party no.1-Income Tax Officer, Ward-2(2), Cuttack within a period of four weeks from today to satisfy him with supporting documents about his entitlement to get refund in terms of Section 237 of the Income Tax Act, the Assessing Officer is directed to grant refund immediately along with interest in accordance with law - writ petition is disposed of.
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2012 (10) TMI 901
Whether prior year expenditure can be adjusted against the income of the subsequent year where the assessee is following the mercantile system of accounting as per Tribunal - Held that:- given the nature of deposit maintained by the assessee and the fact that the claims from the customers were settled after protracted litigation and arbitration, the crediting and debiting of the receipts and expenses as and when the claims settled were reported in the return, which apparently required an investigation into the claims of the assessee. If the relief on the merits of the claim could be considered only through the process of reasoning, given the limited scope of Section 143(1)(a) of the Income Tax Act, which is only a prima facie adjustment on a non-debatable issue Section 143(1)(a) - revenue's appeal is rejected and order of the Tribunal is confirmed - No costs.
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2012 (10) TMI 900
Disallowance u/s 14A - assessee contested that dividend income was only incidental was not tenable - Held that:- As decided in GODREJ AND BOYCE MFG. CO. LTD. Versus DEPUTY COMMISSIONER OF INCOME-TAX AND ANOTHER [2010 (8) TMI 77 - BOMBAY HIGH COURT] disallowance u/s 14A r.w.r. 8D is not retrospective and is applicable from Assessment Year 2008-09 and disallowance for earlier period to be determined on reasonable basis - as assessment year in appeal is 2007-08 the case is remitted back to the file of the AO with a direction to follow the decision of case - in favour of assessee for statistical purposes. Disallowance of payment of license fee u/s 40A(2) - Held that:- Revenue disallowed the entire expenditure excessive because it is paid to a director who is a common in both the companies but neither recorded as to how the payment was excessive compared to prevailing market rate for such payment nor has he brought out a comparable case on record to prove that the entire expenditure is excessive - restore this matter back to the file of the AO with a direction to pass a speaking order - in favour of assessee for statistical purposes.
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2012 (10) TMI 899
Penalty u/s 271(1)(c) - dis-allowance of interest on borrowed funds on the ground that funds were not utilized for the purpose of business - Held that:- It is undisputed that entire material was disclosed by the assessee in the return of income. AO had disallowed interest on borrowed funds on the ground that the funds were not utilized for the purpose of business. Merely because the disallowance has been made would not mean that the case of assessee falls into furnishing of inaccurate particulars of income. CIT(A) while deleting penalty has also held that the assessee had offered an explanation and was able to prove that the explanation was bona fide and all facts relating to the same had been disclosed. Since neither Part-A nor Part-B of Explanation was found to be applicable, in our considered opinion penalty u/s 271(1)(c) is not imposable - Decided in favor of assessee
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2012 (10) TMI 898
Penalty u/s 271(1)(c) - dis-allowances on account of excess depreciation on farm house and commercial flats - Held that:- On perusal of penalty order it is found that not even a whisper has been made in the penalty order as to which specific particulars were furnished inaccurate or were concealed. Mere erroneous claim in the absence of any concealment or furnishing of inaccurate particulars, is no ground for levying penalty, especially when there is nothing on record to show that the explanation offered by the assessee was not bona fide or any material particulars were concealed or furnished inaccurate. In the instant case, the assessee discharged the onus cast on it in terms of explanation 1 to sec. 271(1)(c) and there is nothing to suggest that the assessee furnished any inaccurate particulars or concealed the particulars. Admittedly, the claim for deduction of depreciation was there in the documents forwarded with the return. penalty is directed to be deleted - Decided in favor of assessee
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2012 (10) TMI 897
Transfer pricing - ALP - Disallowance of expenses - reduction in net profit ratio - alleged that turnover is decreased in comparison to last year but expenses increased significantly as compared to previous year figure – Held that:- Income of the assessee has been accepted by the learned TPO as being on arm's length basis - Assessing Officer has made the addition merely on estimates - Assessing Officer has first time confronted the assessee on 2nd of December, 2008. It was supposed to file reply by 10.12.2008. The assessee has filed the reply on 12.12.2008. Again the Assessing Officer raised the query on 24.12.2008 and directed the assessee to explain by 26.12.2008. In this short period, assessee could not submit the reply and the Assessing Officer accordingly passed the assessment order before 31.12.2012 - sufficient opportunity was not granted to the assessee by the Assessing Officer. He has just provided two days time for explaining its position – matter remanded to Assessing Officer for readjudication
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2012 (10) TMI 896
Expenditure on account of foreign visits - held that:- . We also fail to understand on what basis the Commissioner of Income Tax (Appeals) has allowed 50% we think it was completely guess work and it appears as if just because the Commissioner of Income Tax (Appeals) thinks that the aforesaid expenditure of disallowance should be granted and it was granted. Disallowance of depreciation - lease hold property – Held that:- There was no document to show whether it was a leasehold interest or otherwise - assessee is not the owner and the lessee - assessee is entitled to depreciation only on that portion of capital expenditure on construction of any structure brought about by the assessee and uses for the parties on business as it is clearly written under Explanation I to Section 32(1) - Since no agreement has been produced to substantiate that the assessee holds lease for more than 12 years therefore, the claim made by the assessee is not sustainable
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2012 (10) TMI 895
Denial of registration u/s.12A of the Act – alleged that the objects of the Assessee are not for the benefit of general public but for specific members – Held that:- Primary purpose for which the assessee was established was to promote commerce and trade in art silk, silk yarn - promotion of commerce and trade in art silk, etc., was an object of public utility not involving the carrying on of any activity for profit within the meaning of s. 2(15) of the Act Holding of conferences abroad would not make the activities of the Assessee being carried out outside India. The benefits of such conference will ultimate go to Assessee and its members. It cannot be said that the activities of the Assessee were carried on outside India - none of the reasons assigned by the DIT for rejecting the claim for registration can be sustained - appeal of the Assessee is allowed
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2012 (10) TMI 894
Survey u/s 133A - Addition on account of books of account of the assessee were found incomplete - appellant submitted that though the cash in hand was found to be Rs.30,40,000/- whereas unaccounted cash was to the tune of Rs.3,23,999/- only – Held that:- during the course of survey, the assessee was not able to offer any plausible explanation for the sum of Rs.30,40,000/- which was surrendered by the assessee. Further, during the course of survey, it was found that certain sale invoices were either not recorded in the books of account or were under invoiced. The assessee had also admitted certain notings in the diary and note books to be on account of sales which were unaccounted. In the light of the aforesaid findings, the contention of the assessee that the amount of Rs. 27,16,001/- could not be included as unaccounted cash and it was Rs.3,23,999/- only does not carry any weight and the plea of the assessee has rightly been dispelled by the authorities below. – against assessee
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2012 (10) TMI 893
Search and seizure operation u/s 132(1) – Rejection of books – gross profit rate – alleged that assessee has shown low gross profit – Held that:- Assessing Officer applied gross profit rate at 30% on the turnover resulting into addition as has been mentioned in the assessment order - books of accounts of the assessee were also not found reliable and the same were rightly rejected u/s 145(3) of the Act - it appropriate to apply the gross profit rate at 10% - appeals of the assessee are allowed in part
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2012 (10) TMI 892
Revenue or capital - expenditure incurred on installation of laser upgradation kit – AO observed that in respect of the claim of assessee that it is only current repairs, it is held that as there was no replacement to any existing spare parts, therefore, it cannot be claimed as current repairs and disallowed the claim of the expenditure of assessee. - Held that:- Expenditure incurred by the assessee by purchasing of upgradation kit was to carry out precision eye surgery by using advanced technology, which was the need of the time in the line of the business of the assessee - revenue in nature - decided in favor of assessee.
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2012 (10) TMI 891
Calculation of deduction under Section 80HHC of Income-tax Act - A.O. while calculating deduction under Section 80HHC of the Act, had excluded 90% of the job receipts from the eligible profits relying on Explanation (baa) - As per the assessee, expenses incurred for the purpose of earning such receipts should be deducted and only 90% of the balance ought to be excluded for the purpose of calculation of deduction under Section 80HHC of the Act – Held that:- Expenses incurred by the assessee for earning income of the type mentioned in Explanation (baa) to Section 80HHC of the Act, had to be set off and 90% of the balance alone could be considered for exclusion, while working out the deduction under Section 80HHC of the Act - issue requires re-working and a re-look by the A.O – matter remanded to the A.O.
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2012 (10) TMI 890
Disallowance u/s. 14A read with Rule 8D of the Act – alleged that borrowed funds utilized for investment in shares -contention of the assessee is that in the earlier Assessment Year 2006-07 where no dividend income was received by the assessee, no disallowance of expenditure can be made u/s. 14A of the Act - Held that:- Even in a year where no exempt income was earned or received by the assessee, disallowance u/s. 14A can be made – in favor of revenue Arm's length price - assessee has entered into international transaction with its associated enterprises, India Telecom Holdings Ltd., Mauritius by way of granting a loan – Held that:- it LIBOR rate which has to be considered while determining the arm's length interest rate in respect of the transaction between the assessee and the Associate Enterprises. As it is noticed that the average of the LIBOR rate for 1.4.05 to 31.3.06 is 4.42% and the assessee has charged interest at 6% which is higher than the LIBOR rate, we are of the view that no addition on this count is liable to be made in the hands of the assessee. In the circumstances, the addition as made by the Assessing Officer on this count is deleted Disallowance of TDS credit – Held that:- DRP has observed that in the submissions assessee has not given any basis for TDS claim made by it - TDS credit was not given for defective certificates - DRP directed the Assessing Officer to consider the claim as per law with respect to the claim of TDS – matter remanded to AO
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2012 (10) TMI 889
Denial of accumulation under section 11(2) of the Act – assessee Society is running educational institute - alleged that assessee did not specify the purpose of accumulation in Form 10B - Held that:- Assessee has accumulated income for the specific purpose and for which the funds have been used accordingly in subsequent years - assessee has applied the accumulation of funds as specified which were in accordance with the object of the trust – disallowance set aside – in favor of assessee
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2012 (10) TMI 888
Rejection of books of accounts - Disallowance u/s 40(a)(ia) for non deduction of TDS – on account of material purchases made from M/s Radhey Shyam Gupta India (P) Ltd. (RSGIPL) - Held that:- The work has been by converting into self execution work by an act of splitting of work into a transaction of purchase and sale. The provisions of law cannot be interpreted in such a manner to convert a possible task into impossible task by such interpretation. Once the books are held to be camouflaged and not representing the assessee's proper income, in that case the proper course is to reject the books of a/c and estimate the income. The action of the lower authorities has resulted into an impossible situation i.e. holding the entire road contract receipts as the income of the assessee. It will be arbitrary and unjust to hold assessee's entire receipts as income. Since the books of accounts are not reliable, they deserve to be rejected and in that case a reasonable estimate of income has to be made. In our view, ends of justice will be met if a fair and reasonable estimate is made in place of technicalities of applicability of sec. 40(a)(ia); the debate about words 'paid and payable' and the debate about revenue having not proceeded against the assessee u/s 201(1). To put rest to these technical debates, it will be in the interest of justice to make a reasonable estimate of assessee's income, when its work execution has not been questioned. - Income estimated at 6% i.e. 8% minus 2% for subletting. - Decided partly in favor of assessee.
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2012 (10) TMI 887
Failure to collect tax at source (TCS) u/s 206C - Proper notice - wrong mention of provision in the notice – Held that:- Details were called for from the assessee, but the assessee instead of giving complete details filed an evasive reply and adopted delaying tactics - In both the letters/notices referred to by the ld. counsel for the assessee, the AO proposed to take action against the assessee u/s. 206 C of the Act for not collecting the taxes as per the above provisions for the purpose of granting parking lots to various contractors - assessee attended the proceedings before the AO and was aware of the proceedings u/s. 206C being taken against him. Therefore, quoting wrong provision in the notice would be of no consequences and such contentions of the ld. counsel for the assessee have no merits and are liable to be rejected. Whether the assessee is liable for failure to collect tax at source – Held that:- Since the assessee failed to collect the taxes as per law, therefore, the assessee would be responsible to pay tax as per law along with interest - appeals of the assessee are dismissed
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2012 (10) TMI 886
Royalty payment – revenue or capital – lump sum payment - Held that:- assessee has acquired only a licence to use the brand name and trademarks of the foreign collaborator. A mere lience to use the other party's patent and knowledge have been considered as permissible revenue expenditure by the Apex Court in the I.A.E.C (Pumps) case [232 ITR 316]. However, at the same time, a portion of such expenses would also be in the nature of a capital expenditure to the extent that such expenses were to protect the advantage of using the foreign collaborator's brand name and trademarks. - 25% held as capital in nature and 75% held as revenue in nature. Disallowance u/s 14A read with Rule 8D - held that: - Assessing Officer directed to not to apply Rule 8D in the present case since the assessment year under appeal is 2005-06 and Rule 8D is applicable only from the assessment year 2008-09 – matter remanded Deduction under section 43B in respect of employees contribution to Provident Fund - Held that:- Omission of second proviso to section 43B of the Income Tax Act, 1961 by the Finance Act, 2003 operated retrospectively from 01.04.1988 and not prospectively from 01.04.2004 - Assessing Officer directed to verify as to whether this contribution paid by the assessee before the due date for filing of return - If the payments were made before the due date for filing of return, such contributions are to be allowed as deduction - issue is allowed for statistical purpose
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2012 (10) TMI 884
Transfer pricing – ALP – computation - TNMM method - selection of comparable - Held that:- there is no dispute that the transaction between the Assessee and its group companies in Germany whereby the Assessee provided services in the form of contract testing and research services was an international transaction attracting the provisions of Sec.92 of the Act Comparables chosen by the assessee on the basis of the contemporaneous data for A.Y 2006-07 gives an arithmetic mean of 18.97% which we have already mentioned. This is the highest arithmetic mean of the comparable chosen by the assessee - TPO has not given any reason whatsoever for rejecting these comparables - if TPO does not reject a comparable on the ground of functional incomparability then neither the AO or the revenue can take a plea of functional incomparability of the comparables chosen by the assessee in its TP Study - assessee's operative margin has to be held as within the range of 5% of the arithmetic mean of 18.97% of comparable companies and the same has to be accepted as ALP - addition made by the AO and confirmed by the DRP is directed to be deleted - the reasons given by the TPO does not anywhere mentioned as to how the comparables selected by the assessee were not functionally comparable. - decided in favor of assessee.
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2012 (10) TMI 883
Rejection of revision application u/s 264 - Notice - Penal interest under Sections 215 and 139(8) of the Act - On completion of the assessment of M/s K. and Company where the petitioner's share was determined assessee moved an application dated 16.7.1988 to respondent No.2 for passing the rectification order under Sections 154/155 of the Act – Held that:- Rectification order has been passed on an application of the assessee. He cannot complain against the order by reason only of the fact that there was no notice to him for levying the interest - assessee had himself filed the application and interest under Sections 215 and 139(8) of the Act for default in paying advance tax is mandatory and is imposable where the assessee is liable to pay advance tax - no separate notice under sub-section (3) of Section 154 of the Act was, thus, required to be issued and no benefit can be derived by him on that count. To conclude, the assessee could not escape from the liability to pay interest and no fault could be noticed in the order of the Commissioner rejecting the petition of the assessee filed under Section 264 of the Act - petition dismissed
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2012 (10) TMI 882
Disallowance u/s 14A – new issue in remand proceedings - held that:- there is no dispute that the issue raised by the ld. CIT(A) for disallowing the claim of exemption u/s 10 is a new issue which neither emanates from the assessment order nor from the order of the Tribunal, therefore, the ld. CIT(A) has not only crossed his jurisdiction but has also passed the order against the provisions of section 251 of the Act as he cannot go beyond the direction of the Tribunal to find out a new issue i.e. new source of income which had not been considered by the AO at all. - CIT(A) was not justified in enhancing the income by discovering a new source of income not considered by the AO. - Decided in favor of assessee. Section 14A versus Section 44 - overriding effect - Insurance business - Held that:- Sec. 44 creates a specific exception to the applicability of ss. 28 to 43B. Therefore, the purpose, object and purview of s. 14A has no applicability to the profits and gains of an insurance business. - in favour of the assessee
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2012 (10) TMI 861
Penalty u/s 271(1)(c) - disallowance including addition of sundry creditors u/s 41(1) - Held that:- As it is not in dispute that the outstanding liabilities in the accounts of sundry creditors was added by the A.O. u/s 41(1) without considering the fact that such amount was payable by the assessee from October, 1999, 2000, 2001 & 2003. Thus merely because the assessee did not file the appeal before the CIT(A) against the addition made u/s 41(1) does not mean that the said liability is false or untrue or the assessee has concealed the particulars of its income. As it is not the case of the Revenue that the assessee has unilaterally written back the accounts of the sundry creditors in its P&L account as a matter of fact the liability was shown in the balance sheet as on 31-3-2007. The assessee being a limited company, this amounted to acknowledging the debt in favour of the creditors for the purposes of section 18 of the Limitation Act, 1963. The assessee’s liability to the creditors, thus, subsisted and did not cease nor was it remitted by the creditors and the liability was enforceable in a court of law. This being no concealment on the part of the assessee which may call for levy of penalty u/s 271(1)(c) - in favour of assessee.
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2012 (10) TMI 860
Penalty u/s 158BFA(2) - CIT(A) deleted the levy - Held that:- The facts are not in dispute that there is a difference of Rs. 18,25,849/- between the undisclosed income returned by the assessee and finally assessed. Thus merely because the part of the addition has been confirmed by the Tribunal and the assessee has not filed appeal before the Hon’ble High Court does not mean that the assessee is liable to penalty u/s 158 BFA(2). As decided in CIT vs. Satyendra Kumar Doshi And Another [2009 (1) TMI 240 - RAJASTHAN HIGH COURT] proviso to section 158BFA(2) enumerates the circumstances wherein no penalty is leviable but from that also it cannot be inferred that the absence of the circumstances enumerated will attract the provision of penalty automatically. Of course, as per the provision of section 273B no penalty shall be imposable on the person or the assessee, as the case may be, on their failure referred to in the said provisions if he proves that there was reasonable cause for the said failure. But then the said provision in no manner leads to the presumption that in respect of the cases other than covered by section 273B for any failure or violation imposition of the penalty is automatic. Each provision of penalty has to be construed independently keeping in view the language employed therein - thus as the assessee’s explanation was not found to be false or untrue and keeping in view that the A.O. while imposing the penalty at minimum i.e. 100% has accepted the reasonable cause though for limited purpose, that on the facts and circumstances of the case, the penalty u/s 158BFA(2) is not leviable - in favour of assessee.
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2012 (10) TMI 859
Transfer of inherited land held by assessee with his relatives – Held that:- Entire gain arising out of such transfer cannot be taxable in hands of assessee alone although he has failed to submit details of land found during search - Order passed by the CIT (A) in case of the present assessee also is set aside and restore the matter back to the file of the AO who shall re-examine the issue in the light of given directions - In the result, both the appeals are treated as allowed for statistical purposes. Undisclosed Income – Held that:- Order passed by CIT is in gross violation of natural justice as no proper opportunity of being heard was extended to the assessee, therefore order passed by the CIT u/s 263 is set aside and direct the CIT to pass an order afresh after affording an adequate opportunity of being heard to the assessee. Since we are remitting the matter back to the file of CIT, the other grounds raised in this appeal have become merely academic and therefore not adjudicated upon - In the result, all three appeals filed by the assesses are treated as allowed for statistical purposes
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2012 (10) TMI 858
Deduction u/s 80IB – Built up area - Whether the terrace area would be included in built up area – Held that:- For the period prior to 01.04.2005, no such definition was on the statute and hence, the built up area has to be considered as per the DC rule of the sanctioning authority. The DC rules do not include terrace in the built up area. So the amendment which has come in this regard w.e.f. 01.04.2005 will not affect the projects which have commencement prior to 01.04.2005. In view of this, assessee is entitled for deduction u/s.80IB (10) as claimed. Appeal decides in favour of assessee Deduction u/s 80IB – Inclusion of commercial area in built up area - Housing project of the assessee was started in F.Y. 2003-04 - AO reject the assessee’s claim on the point of commercial area – Held that:- The assessee had no occasion to comply with the new condition introduced w.e.f. 01.04.2005 that commercial operation should not exceed 2000 sq.ft. and hence does not applicable in respect to the projects which have commencement before to 01.04.2005. The housing project of the assessee has started in F.Y. 2003-04 and therefore is not commercial operation includible in housing projects hence there is no justification for denying deduction u/s.80IB(10). The A.O. is directed accordingly. Issue decides in favour of assessee
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2012 (10) TMI 857
Disallowance u/s 14A r.w.r. 8D - interest paid to ICICI bank on purchase of shares and a further amount being ½% of average investment under Rule 8D(2) - Held that:- From the details of the expenditure it is clear that the expenditure incurred and claimed by the assessee has direct nexus with the professional income of the assessee but is not the case of the revenue that the assessee has used his official machinery and Establishment for earning the exempt income. AO has not pointed out that certain expenditure is not incurred for earning the professional income but are incurred in relation to dividend income or such expenditure is incurred for inseparable and indivisible activities comprising professional as well as the activities on which is exempt income has been earned by the assessee, then in the absence of any such instance of expenditure, finding of AO or any material to show that the expenditure incurred and claimed by the assessee against the taxable income has any relation for earning the exempt income, the provisions of section 14A cannot be applied. From the assessment order it is observed that the AO simply kept the assessee's submissions on record without appreciating as to whether these were correct or not. He proceeded on the premise as if the disallowance as per Rule D is automatic irrespective of the genuineness of the assessee's claim in respect of expenses incurred in relation to exempt income. It is an incorrect course adopted by the AO - as the disallowance cannot exceed the total actual expenditure incurred and claimed by the assessee the total expenditure claimed by the assessee in the Profit and Loss account is Rs.45,977/- thus the disallowance should be restricted to this amount - partly in favour of assessee.
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2012 (10) TMI 856
Penalty u/s. 271D - loan or deposit received from Samajwadi Party - ignorance to the provisions of section 269SS - CIT(A) deleted the levy - Held that:- Samajwadi Party deposited the impugned amount on 23.06.2005 in the joint bank account of the assessee in cash & on the same date, the said amount was withdrawn for the purpose of making payment to Nazul Department for getting the joint property of the assessee converted from lease hold to free hold. The AO did not dispute the genuineness of the transaction entered into between the assessee and Samajwadi Party and no addition has been made in this regard. These facts would clearly reveal that on 23.06.2005 when Samajwadi Party deposited the amount in cash in the joint account of the assessee, the assessee was in dire need of (cash) money because on the same day the amount in cash was withdrawn from the joint account of the assessee and was deposited with the Nazul Department. It is supported by the challan of the treasury and the registered deed executed by the Nazul Officer on 23.06.2005 and 24.6.2005. If the assessee would have taken the loan from Samajwadi Party through banking channel through cheque, it would have taken some time for process in clearing. Since the amount is deposited in the joint account of the assessee on 23.06.2005 and was withdrawn on the same day for making cash payment to the Nazul Authority, there can be no reason to doubt the bona fide of the assessee. Thus, the assessee has been able to prove that for bona fide reasons the assessee had taken cash loan from his own party (Samajwadi Party) and entered into the genuine transaction. Routing of the cash deposit through the bank account of the assessee without direct receipt and payment of the impugned cash would further endorse the bona fide of the assessee. Section 269SS did not prohibit taking of loan in cash from political party or otherwise. It simply provides mode of taking or accepting certain loans and deposits instead of cash. The prohibition is provided under these provisions for taking or accepting from any other person a loan or deposit otherwise than by account payee cheque or draft if it exceeded the prescribed limit. Therefore, whether Samajwadi Party had no provision in their Constitution for giving loan or advance to the assessee, would not be relevant criteria to decide the issue of levy of penalty u/s. 271D. Further, Samajwadi Party has filed their confirmation that the impugned loan was given to the assessee and his wife, which was repaid later on through banking channel - a "reasonable cause" for failure to comply with the provisions of law is proved - in favour of assessee.
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2012 (10) TMI 855
Rejection of the books of accounts - invoking the principles of best judgment - Held that:- The provisions of sec. 145(3) invoked by the AO, lay down that if the AO is not satisfied about the correctness or completeness of the accounts of the assessee, or where the method of accounting provided in sub-section (1) or accounting standards as notified under sub-section (2), have not been regularly followed by the assessee, the AO may make an assessment in the manner provided in section 144. As is apparent from the facts narrated in the impugned order, the AO nowhere recorded any finding that the books of accounts maintained by the assessee for Koldam project were incorrect, rendering it impossible to deduce the profit and despite that he proceeded to invoking the principles of best judgment. There is no deviation in the method of accounting employed by the assessee in the previous year from the accounting standards prescribed u/s 145 of the Act while the auditor's observations did not affect the taxable income of the assessee, the assessee having provided detailed explanations against each of the observations of the auditors along with the supporting documents - as decided in CIT Vs. Amitbhai Gunwantbhai [1980 (6) TMI 10 - GUJARAT HIGH COURT] if there is no challenge to the transactions represented in the books then it is not open to Revenue to contend that what is shown by the entries is not the real state of affairs. Secondly, even if for some reason, the books are rejected it is not open to the AO to make any addition on estimate basis or on pure guess work. As there being no explanation in respect of claim of expenditure of Rs.3,20,656/- mentioned in observation (f) the amount is required to be added back. As assessee did not raise any objection if the said amount is added back. To that extent impugned order is modified and AO is directed to disallow the claim of these expenses - As regards other observations of the auditors, since there is no challenge to the transactions represented in the books in the light of these observations, then it is not open to Revenue to contend that what is shown by the entries is not the real state of affairs - partly in favour of assessee.
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2012 (10) TMI 854
Rectification application u/s. 154 rejected - Short term capital - normal rate of 30% OR @ 10% as provided in Sec. 111A - Held that:- In the present system of e-filing of return which is totally depended upon the usage of software, then is possible that some clerical errors may occur at the time of entering the data in the electronic form. The return is prepared electronically which is converted into an XML file either through the free down loaded software provided by the CBDT or by the softwares available in the market. In either of the case, there is every possibility of entering incorrect data without having the expert knowledge of preparing an XML file. As the assessee has claimed Short Term Capital Gains and has shown it in the revised e-return but the same figure did not appear under the item where the short term capital gain is to be taxed at special rate u/s. 111A i.e. internal page-19 of the return under Schedule CG – Capital gains under item No. 7. However, at the same time under Schedule SI-income chargeable to income tax at special rates IB the assessee has shown STCG (iiia) special rate @ 10% which clearly establishes that the assessee has shown STCG liable to be taxed at special rate of 10%. Accordingly, reversing the finding of the CIT(A) AO is directed to allow credit subject to special rate of tax as per provisions of Sec. 111A and rectify the intimation u/s. 143(1) accordingly - in favour of assessee.
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2012 (10) TMI 853
Penalty u/s 271(1)(c) - non-disclosure of ROC fee and interest expenditure - Held that:- The explanation of the assessee that non-disclosure of both the above income was indeed due to inadvertence on the part of the assessee and thus the mistake was bona fide is not so convincing. The assessee has offered tax on the above heads in its revised statements only after selection of the case in scrutiny and after issuance of notice u/s 143(2)/142(1) and after raising the specific queries by the A.O with reference to those expenses claimed by the assessee in the Profit & Loss Account. Thus, no substance in the contention of the assessee that the disclosure of additional income while revising the computation of income was voluntary - the mistakes committed in not disclosing the above additional income in its return of income originally filed, was not bona fide to extend the benefit of Explanation-1 to section 271(1)(c) to the assessee - against assessee.
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2012 (10) TMI 852
Penalty u/s 271B - assessee had not got its account audited u/s 44AB - Held that:- As decided in ACIT Versus Smt. Bharti Sharma [2010 (7) TMI 494 - ITAT, NEW DELHI] the assessee cannot be penalized for the act for which there is no failure on his/her part - for the purpose of sec. 44AB, turnover of all the businesses has to be considered but the provisions of sec. 271B will be pressed in operation in respect of the failure only and not in respect of accounts which have been audited. Setting aside the orders of the authorities giving directions to AO to delete the penalty levied in respect of M/s. Rex Engineering & Shares whose accounts were admittedly audited under sec. 44AB and audit report thereof was filed well within the prescribed time limit - partly in favour of assessee.
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2012 (10) TMI 851
Disallowance of renovation property expenditure - Held that:- Earlier sale deal was fixed with Smt. Kavita Agarwal vide agreement dated 16.8.2002 for a consideration of Rs.80 lakhs and sum of Rs.25 lakhs was said to have been received which was alleged to have been refunded on 24.10.2002 due to the fact that the deal could not be materialized. Then again the same property was sold to Shri Amit Sibal for a sum of Rs.1,01,00,000/- but the assessee has claimed to have incurred an expenditure of Rs.52,60,758/- to remove certain defects in the construction and therefore in fact the building was sold for a net consideration of Rs.48.31 lakhs as against the earlier agreement with Smt. Kavita Agarwal for Rs.80 lakhs. It is not understood as to what prudence the assessee had used at the first place by refunding the amount of Rs.25 lakhs received from Smt. Kavita Agarwal without forfeiting which always remains as the standard condition in any agreement to sell and then by agreeing to sell the same to another buyer after a period of about five months at a much lower net consideration after considering the alleged claim of expenses. This situation does not arise in reality and is against the normal human behavior. The assessee did not submit the original invoices of construction alleged to have been done on the property. It had submitted only photo copy of invoices and most of the invoices were in the name of Nahar Theatre Pvt. Ltd. and name of the assessee was written after cutting the name of Nahar Theatre Pvt. Ltd - From the details of invoices as placed it is apparent that major amount was alleged to have been spent between 7.4.2002 to 23.10.2002. Therefore, how it can be claimed that alteration/addition/renovations were done at the direction of ultimate buyer Shri Amit Sibal because agreement to sell could only be entered into with him after termination of first agreement of dated 16.,8.2002 which was said to have been terminated on 24.10.2002. Therefore, it emerges from the above that most of the expenses related to the period before entering into agreement to sell with Shri Amit Sibal which ultimately implies that expenses incurred before agreement with Shri Amit Sibal cannot be said to have been incurred at his behest - against assessee. Disallowance of Festival expenses - Held that:- As assessee had only one property, the disallowance of Rs.50,000/- out of total festival expenses of Rs.2 lakhs was justified.
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2012 (10) TMI 850
Penalty u/s 271(1)(c) - difference in original return and revised return - Held that:- Penalty was imposed due to failure of the assessee to explain the difference in difference in profit figures in the two returns. The explanation before CIT(A) that revised return was without its consent is of no force also the assessee had filed original return and had revised it by lowering the profits and on explanation it could not explain the difference. Thus it can be opined that the assessee took this plea before CIT(A) as it was unable to explain the difference in expenses. Therefore, the assessee was liable to penalty. Though AO had imposed the penalty for a lump sum amount of Rs.5,00,000/-, CIT(A) modified it and directed the AO to calculate the penalty on the basis of tax ought to be evaded. No infirmity in the order of CIT(A) except regarding quantum of penalty which should be calculated on the basis of difference between figures of profits between two profits & loss accounts. Thus direction to AO to calculate penalty accordingly - partly in favour of assessee.
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2012 (10) TMI 849
In genuine brokerage - CIT(A) allowed the claim on admitting additional evidence u/r 46A - Held that:- On perusal of the record, it is found that AO has issued notice u/s 143(2) on 16.09.2009. He completed the assessment on 21.12.2009, meaning thereby the proceeding was alive only for a period of three months. The assessee has submitted before the AO that parties may not be easily accessible after a time gap. With one party, it had dealt with only once. Thus taking into consideration this aspect observed that assessee was prevented by sufficient reasons for not producing the evidence its case falls within the ambit of Rule I of Rule 46A. No reason to interfere in the order of CIT(A)and thereafter rightly deleted the addition - in favour of assessee.
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2012 (10) TMI 848
Reopening of assessment - Long Term Capital Gain had escaped assessment - co-owner holding 50% share in the property - Held that:- Considering the agreement of Partition & documentary evidences AO has erroneously drawn his conclusions that the assessee was having 50% share in the said property, instead of the fact that the assessee has only 50 square yards out of 1050 square yards of the property. AO has also not brought any material on record to rebut the evidences filed by the assessee. The legal heirs of late Shri Arun Kumar Lal had shown the entire sale consideration in its return of income - in favour of assessee.
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2012 (10) TMI 847
Prior period expenses - CIT deleted the addition by admitting additional evidence under Rule 46A - revenue appeal - Held that:- CIT(A) did not consider any additional evidence violating Rule 46A of the Rules as he impliedly followed the provisions of Rule 46A by sending the additional evidence, which was first time submitted by the assessee to the AO for verification and the issue was de novo restored to the file of the AO. In this situation, it cannot be held that CIT (A) granted relief to the assessee by allowing the claimed expenditure but he simply restored the issue to the file of the AO for a decision in accordance with the Act. Thus this appeal of revenue is devoid of merits and deserves to be dismissed - against revenue.
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2012 (10) TMI 846
Jurisdiction of AO in framing assessment - No notice u/s. 148 issued by the AO having jurisdiction over the case - Assessment quashed by CIT(A) - Held that:- The assessee’s address was obtained from the bank records in which the assessee has given address of Delhi and on the same address the notice u/s. 148 was issued followed by notice u/s. 142(1). In response to that notice assessee appeared before the ITO, Ward 25(3), New Delhi and requested that assessee’s case is being assessed with ITO, Ward-I, Rohtak and requested to transfer the records to ITO, Rohtak from New Delhi. Thus, there is no case for assessee to have any grievance in this case as assessee was issued notice u/s. 148 at an address given to the bank by the assessee himself. Thus it can not be said that assessee’s case was reopened and assessed without assuming proper jurisdiction - As assessee never challenged the address at New Delhi in these circumstances CIT(A) erred in quashing the assessment, on the ground that proper jurisdiction was not obtained by the AO. Assessment in this case cannot be said to have been framed without assuming proper jurisdiction as the notice was very much issued at the address given by the assessee himself in the bank account - matter is being remitted back to the CIT(A) to consider the merits of the case and pass a speaking order - in favour of revenue for statistical purposes.
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2012 (10) TMI 845
Penalty u/s. 271(1)(c) - disallowance on foreign travel expenses - Held that:- Assessee’s submissions in this regard is note worthy that both the wives, who were also Directors of the company were receiving considerable salary which was accepted year after year. Hence, the visits cannot be said to be for non-business purposes. It has further been noted that disallowance in this regard in the preceding year was only 20% and on that addition penalty was not imposed, even the penalty notice has been issued by the AO. In this background it is to concluded that section 271(1)(c) postulates imposition of penalty for furnishing of inaccurate particulars and concealment of income. In this case disallowance has been made only on estimate basis. In the preceding year this disallowance was only 20% and no penalty was imposed. Thus on the facts and circumstances of this case the conduct of the assessee cannot be said to be contumacious so as to warrant levy of penalty u/s. 271(1)(c) - mensrea was a essential requirement of penalty u/s 271(1)(c) as decided in Dilip N. Shroff Versus Joint Commissioner of Income-tax And Another [2007 (5) TMI 198 - SUPREME COURT] - in favour of assessee.
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2012 (10) TMI 844
Penalty u/s. 271(1)(c) - excess deduction u/s. 80HHC - CIT(A) deleted the levy - Held that:- Disallowance has resulted on account of retrospective amendment in section 80HHC by way of Taxation Laws (second amendment) Act, 2005 with retrospective effect from 1.4.98. These provisions were not there in the relevant section at time when assessee filed return of income on 31st October, 2000. At this time the assessee made a bonafide deduction u/s. 80HHC, on the basis of certificate issued by the Chartered Accountant in the prescribed Form No. 10CCAC. Moreover, when assessee has disclosed all the material facts for computation of his income, it could not be said that the at time when assessee filed return, he had failed to disclose fully and truly all material facts necessary for assessment. As decided in C.I.T., Ahmedabad Versus Reliance Petro Products Pvt. Ltd. [2010 (3) TMI 80 - SUPREME COURT] it was up to the authorities to accept its claim in the Return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not attract the penalty u/s 271(1)(c) & if the contention of the Revenue is accepted then every Return where the claim made is not accepted by AO for any reason the assessee will invite penalty under Section 271(1)(c) - in favour of assessee.
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2012 (10) TMI 843
Interest u/s 234A, 234B and 234C - non maintenance of proper books of accounts - application for waiver of interest rejected - Held that:- Power of waiver has been conferred on the Chief Commissioner and the Director General by virtue of the Board's notification dated 23.5.1996. Notification also provide in clauses (a) to (e), the circumstances in which the waiver can be granted. The contention raised by the assessee that on account of a bona fide mistake, they could not file the return or pay tax in time cannot be said to be one which is covered by any one of the circumstances mentioned in notification - rejection of claim for waiver of interest cannot be said to be illegal - against assessee.
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2012 (10) TMI 842
Revenue recognition – Accrual of income - Assessee is a non-resident – Providing onshore construction work and onshore services in connection in relation to power & gas projects - Following the percentage of completion method for contracts as per AS 7 – Assessee entered into two Onshore Construction Initial Work Agreement – During the year assessee had received advance and expenditure incurred shown as WIP – AO estimates 40% of contract was completed & addition made for 10% of receipt amount – Held that:- The assessee did not produce invoices before AO. Issue remit back to revenue with direction to allow another opportunity to the assessee to place on record all the invoices on the basis of which assessee had been receiving payments from EDC in respect of Contract If the entire payment received by assessee during the year is in respect of said agreement and is in respect of work done under that agreement then the project having completed more than 20% will be liable to be assessed to that extent during the year under consideration and appropriate assessment will be done by the AO with regard to year under consideration. Issue remand back to AO
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2012 (10) TMI 841
Nature of expenditure - Revenue or Capital expenditure - Bank guarantee for commission paid by the assessee for securing timely repayment of the deferred credit facilities for buying machinery for its running business - Issued Deep Discount Bond (DDB) for financing the DND project - DDB holders were given an option under the offer to redeem the bonds in the 5th or 9th year of its allotment – Company entered into an agreement with another company the take out assistance against charges @ 1.6% per annum – Held that:- Following the decision in case of India Cements Limited (1965 (12) TMI 22 - SUPREME COURT) that the 'take out assistance fees' computed @ 1.6% per annum of the respective amount to take out obligation of both the entities were by way of guarantees on an exit option, independent of the financial position of the assessee company. The fees covers the event, in which the assessee-company may not have sufficient cash flow at the time of premature redemption of the DDBs after the end of the 5th and 9th year respectively at a pre-determined price. The guarantee fee was by way of assistance from financial institution; it was not an asset or advantage of an enduring nature. In favour of assesse
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2012 (10) TMI 840
Interest on short payment of advance tax – failure on the part of payer to deduct TDS u/s 195(2) - Had the payer made the deduction of tax at the appropriate rate, the net tax payable by the assessee would have been Nil - Held that:- Following the decision in case of Jacabs Civil Incorporated / Mitsubishi Corporation (2010 (8) TMI 37 - DELHI HIGH COURT) that once it is found that the liability was that of the payer and the said payer has defaulted in deducting the tax at source, the Department is not remedy-less and, therefore, can take action against the payer u/s 201 and compute the amount accordingly. No doubt, if the person (payer) who had to make payments to the non-resident had defaulted in deducting the tax at source from such payments, the non-resident is not absolved from payment of taxes thereupon. However, in such a case, the non-resident it liable to pay tax and the question of payment of advance tax would not arise. This would be clear from the reading of Sec 191 along with Sec. 209 (1) (d). Therefore, it would not be permissible for the revenue to charge any interest u/s 234 B. In favour of assessee
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2012 (10) TMI 839
Profit in Lieu of Salary - Whether the receipt of dearness relief to pensioner is taxable as profit in lieu of salary – Assessee is a retired judge of High Court – Held that:- The exemption from liability to pay income tax on certain perquisites or allowances received by a judge and which may not be included in the computation of his income chargeable under the head 'salaries' u/s 15 IT. Act,1961 is included u/s 22D, in Chapter IV as substituted by Act No. 20 of 1998. All other amounts received by a judge are taxable. The dearness relief will be included in the pension and is not exempt from income tax u/s 22D of the Act of 1954. Therefore, the dearness relief is 'profit in lieu of salary' and is included as an amount received by a retired judge u/s 17(3)(ii) and would be taxable as income. Appeal decides favour of revenue
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2012 (10) TMI 838
Exemption u/s 54EA - Joint development agreement - sale of flats - whether sale consideration on the sale of flats amounts consideration received by the assessee on the sale of long-term capital asset i.e., the land owned by the assessee? - Held that:- Whole or any part of the net consideration of sale is invested in Specified Securities within a period of six months after the date of transfer, the deduction under section 54EA is available. - Net Consideration as per the definition means, the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by the expenditure incurred wholly and exclusively in connection with such transfer. The definition of net consideration does not refer that the consideration should be received in cash only. - benefit of exemption allowed - decided in favor of assessee.
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Customs
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2012 (10) TMI 919
Interest on delayed payment of Refund – The refund claim of the petitioner had been rejected by the Department on the ground that the amount had been recovered from the petitioner for the breach of trust and that the claim had not been filed, within a period of six months from the date of the encashment of the bank guarantee. - Following the decision of Supreme court in case of [Sandvik Asia Limited Versus Commissioner Of Income-Tax And Others 2006 (1) TMI 55 - SUPREME COURT] Held that:- Department is solely responsible for the delayed payment, Interest of justice would be amply met if payment is made of simple interest at 9 per cent, per annum from the date it became payable till the date it is actually paid - the respondents are directed to pay the interest on the amount of Rs.6,60,000/- refunded to the petitioner, based on his refund claim, for the period, from December, 2004, to 26th of August, 2008, at the rate of 9% interest per annum, within a period of eight weeks from the date of receipt of a copy of this order - writ petition is disposed of with no costs - Consequently, connected miscellaneous petition is closed.
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2012 (10) TMI 918
Anti-Dumping Duty - Status of Domestic Industry - Appellant contended that they had concealed material information from the D.A. Even though they had stated that they had never imported the subject material from the subject country, they had actually imported the penultimate intermediate product namely Ceftriaxone Sodium (non-sterile) from there. They had also concealed their relationship with some of the Chinese exporters. The learned counsel for the appellants further states that for the purpose of injury analysis M/s. Orchid Chemicals has been wrongly excluded on the ground that it was a 100% EOU. Similarly, other domestic units have also been excluded from the consideration thereby restricting the domestic industry to comprise only the petitioners.Held that:- Domestic industry status granted by the D.A to the sole petitioner is justified. Market Economy Status - Appellant contended that one of the grounds taken by the D.A. that they are buying power from state controlled public utility is not a valid ground as the D.A. has taken no such objection in respect of some of the other anti-dumping cases. Market economy assessment is an overall assessment of the entity involved, covering several aspects and not an isolated examination of single parameter, which could give a decisive indication of the status of the entity. Held that:- Import prices at which the appellants are sourcing only about 5% of their raw material requirement internationally are quite low compared to the international import prices prevailing in India as per DGCIS data, which goes to indicate that the appellants are not operating in a Market Economy scenario. Determination of normal price - Held that:- Lower normal value calculated by the first method of construction adopting the average consumption norms of the cooperative exporters is required to be applied for the purpose of calculating the dumping margin and anti-dumping duty - Appeal is thus partly allowed by reducing the anti-dumping duty.
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2012 (10) TMI 917
Classification – Personal Digital Assistant (Data Processing Machine) - Revenue found the item to be “Pocket Surfer Device - revenue was of the view that the equipment has no capability for processing of data – Held that:- Device is of a kind used principally in data processing - device is covered by Chapter Note 5(B) - It is not explained which is the individual function, other than data processing which the device is capable of doing. Note 5(D) will apply in situations like that of a CNC machine or a machine used in testing of eyes which machine may be using a computer to program the device and analyse the data - Heading 84713090 is more appropriate than Heading 84798999 – in favor of assessee
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2012 (10) TMI 874
Doctrine of Merger – Commssioner (Appeals) has rejected the review application - Commissioner (Appeals) has not decided the issue on its merit - held that:- Commissioner (Appeals) has erred in dismissing the Review Application filed by the Department on the doctrine of merger. - Decision of Apex Court in Commissioner of Central Excise, Delhi Vs. Pearl Drinks Ltd. [2010 (7) TMI 10 - SUPREME COURT OF INDIA] followed.
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2012 (10) TMI 873
Whether central excise and customs duty arrears have priority and precedence over the claims made by public sector Banks - either under the decree/recovery certificate granted by the Debts Recovery Tribunal (DRT) under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 or while enforcing the security interest under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - interim measure restrained the first respondent from confirming the sale in favour of the highest bidder but allowed the auction sale – Held that:- For the first time the Parliament created first charge on the property of the assessee in relation to duty, penalty and interest payable under the Central Excise Act or Customs Act as the case may be. But these provisions themselves exclude from their operational field, the recovery or withholding of monies under Section 529 A of the Companies Act, DRT Act and the SARFAESI Act - two provisions would do not support the Dept. - When they were about to conduct auction or about to confirm auction sale, the Assistant Commissioner intervened objecting Bank sale. So also the auction initiated under the SARFAESI Act in all these matters, is not yet completed. These are, therefore, saved by Section 11E of the Central Excise Act and Section 142A of the Customs Act, and the Dept., cannot claim first charge or priority in recovery
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2012 (10) TMI 872
Penalty - abetting illegal import – alleged that appellant was aware that the consignments were imported in the name of M/s. Kalinga Trading Co. showing one Shri Prakash Surendra Tiwari as the proprietor, even though Shri Jainarayan I. Rajbhar was the actual proprietor – Held that:- In spite of coming to know this fact, he did not inform the Customs authorities and got the bills of entry assessed as ABC dry chemical powder for fire extinguishers - he knew that one Shri Ajay R. Bhan was attempting to arrange certain manipulations with reference to the chemical test report of the goods under importation, but he remained silent and did not inform the Customs of the same - acts of omission and commission which rendered the goods liable to confiscation under Section 111(d) & (m) of the Customs Act, 1962, Shri Brajesh Tiwari is liable to penalty under Section 112 of the Customs Act Penalty against Shri Kishun Ram, Assistant Chemical Examiner - There is no evidence on record to show that Shri Kishun Ram undertook any activity, the commission or omission of which rendered the goods liable to confiscation. In the absence of such a positive evidence, the benefit of doubt has to be given to him and therefore, a penalty under the Customs Act, 1962 cannot be imposed on him. We should hasten to mention here that this finding of the Tribunal does not in any way affect the departmental disciplinary proceedings initiated against Shri Kishun Ram for dereliction of duty and that should be decided on the basis of the evidence available on record independently of the findings given herein. Penalty against Shri Shailendra Bahadur, Assistant Chemical Examiner. - There is no allegation that Shri Shailendra Bahadur was in touch with the importer or his agents nor did he take any money from the importer for testing the sample. In the absence of any evidence directly inculpating Shri Shailendra Bahadur in the commission of the offence, we are of the view that imposition of penalty on Shri Shailendra Bahadur cannot sustain in law. - penalty set aside
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Corporate Laws
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2012 (10) TMI 916
Scheme of Amalgamation & Arrangement - Held that:- That the Transferor Company does not have any employee, and accordingly, no clause has been included in the scheme with respect to transfer of employees of the Transferor Company to the Transferee Company - he scheme has been prepared in compliance with the Accounting Standard – 14 where Post merger, accounting aspects are as specified & the Transferee Company shall comply with the procedure prescribed under the Companies Act, 1956 for alteration of the Memorandum of Association of the Transferee Company. Neither the Petitioner Companies nor their counsels have received any objection pursuant to citations published in the newspapers & no objection has been received to the Scheme of Amalgamation & Arrangement from any other party, thus sanction is hereby granted to the Scheme of Amalgamation & Arrangement under Section 391 and 394 of the Companies Act, 1956 - Certified copy of the order be filed with the Registrar of Companies within 30 days from the date of receipt of the same - the whole or part of the undertaking, the property, rights and powers with all the liabilities and duties of the Transferor Companies be transferred to and vest in the Transferee Company without any further act or deed. Upon the Scheme coming into effect, the Transferor Companies 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 or permission/compliance with any other requirement which may be specifically required under any law.
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2012 (10) TMI 876
Scheme of Amalgamation - Held that:- In view of the written consent / NOC given, the requirement of convening meetings of Shareholders of the Applicant Company / Transferor Company no. 1 is dispensed with. Separate meeting of Un-Secured Creditors of the Applicant Company / Transferor Company no. 1 is proposed to be held under the supervision of this court on 22.12.2012 ( Saturday ) at 10.30 a.m. at D-26, Medico House, Janakpuri Institutional Area, Janakpuri New Delhi - 110058 - appointment of Chairperson & Alternate Chairperson for the meeting has been done - Transferor Company no. 1 is also directed to publish advance notice of the aforesaid proposed meeting in ‘Business Standards’ ( English, Delhi Edition ) and ‘Jansatta’ (Hindi, Delhi Edition ) minimum 21 days in advance before the scheduled date of meeting & Individual notices sent by ordinary post minimum 21 days in advance - if the quorum is not present the meeting would be adjourned for 30 minutes and the persons present in the meeting would be treated as proper quorum with Voting and proxy permitted - Chairman/Alternate Chairman shall file their reports within 2 weeks of the conclusion of the meeting.
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2012 (10) TMI 875
Application seeking rectification of the members register - Held that:- Neither in the order and nor in the statement of the counsel is there anything to show that the decree was set aside for the reason that the petitioner was not pressing his claim against the courier service, in fact this order shows that there appears to have been an out of Court settlement between the petitioner and the courier company, vehement submission of the petitioner that this decree had been set aside entitling him now to rectification in the share register for the reason that he had not received any money qua the loss of these shares is not borne out from the record. Claim of the petitioner stands satisfied.
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Service Tax
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2012 (10) TMI 922
Cenvat credit – input services - insurance policies - manufacture of aluminium - power plant located at some distance from the main unit of the appellant - alleged that since Renusagar Power Plant was located at different premises, it is a separate entity and it could not be termed captive power plant - appellant had wrongly availed Cenvat credit in respect of the services to be paid on the insurance policies pertaining to the power plant – Held that:- Renusagar Power Plant is a captive power plant of the Appellant’s manufacturing unit, the two have to be treated as one intergrated unit and therefore, the Cenvat credit of service tax paid on insurance policy for the power plant would be admissible
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2012 (10) TMI 913
Refund claim of service tax - denial as Terminal Handling Charges used in respect of goods exported - Held that:- The rejection has not been made on the ground that it is not Port Service but only on the ground that the Terminal Handling Charge was not specifically mentioned earlier. Since, there is no dispute nor there is any record or observation to show that service tax was not paid under the category of Port Service for Terminal Handling Charges and Port Services, admittedly are notified in the Notification No. 41/2007-ST, refund is admissible - in favour of assessee.
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2012 (10) TMI 912
Condonation of delay in filing an appeal before Commissioner (appeals) - Claim of exemption from the levy of service tax - As aggregate value of taxable service was less than Rs.10 Lakhs - delay in filing appeal - Held that:- Petitioner has stated that they had entrusted Ext.P5 order with their accountant & it was on account of his default that the appeal happened to be not filed. Considering the substance in what the petitioner says no reason to disbelieve that averment, there is no reason why the petitioner should be deprived of an opportunity to file an appeal against Ext.P5. Thus it will be open to the petitioner to file appeal against Ext.P5 within two weeks from today before the appellate Commissioner in which event, appellate Commissioner shall entertain the appeal and deal with the same along with Ext.P6 appeal, ignoring the delay that has occurred, in the meanwhile - in favour of assessee as directed.
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2012 (10) TMI 911
Demand of service tax – alleged that appellant has rendered the services of ‘clearing & forwarding agents’ - appellant submitted that they have provided only financial assistance in arranging supply of goods from Coal India Ltd. to their clients - They have not acted as the agents of the coal and in fact working as sub-agents of the agents of Coal India Ltd. - They have never physically dealt with principal goods - Held that:- Case were subsequently registered under the ‘business auxiliary service’ w.e.f. 1-9-2004, Revenue cannot contend that prior to said registration, they were providing clearing & forwarding agent services – in favor of assessee
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2012 (10) TMI 879
CENVAT Credit of Service Tax - canteen services - Held that:- As decided in CCE, Nagpur Versus Ultratech Cement Ltd. [2010 (10) TMI 13 - BOMBAY HIGH COURT] CENVAT Credit would be admissible to the full extent only if the full expenditure of canteen services is borne by the assessee. If any amount has been recovered for providing the food/canteen facilities from the employees, CENVAT Credit of Service Tax paid proportionate to the amount will have to be deducted for availment of credit. Remit the matter for the limited purpose of verification as to whether the canteen services were provided free of cost or any amount was recovered - in favour of assessee as directed.
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2012 (10) TMI 878
Input service - input services used for obtaining export incentives - Professional and Liaison fees – Held that:- Obtaining export incentives is directly relatable to manufacture. Manufacturer while manufacturing goods for export and for working out the cost takes into account the export incentives - service tax incurred in respect of services for obtaining export incentives can be definitely related to manufacturing activity - respondent is eligible for cenvat credit - in favor of assessee.
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2012 (10) TMI 877
Demand and penalty - Whether non-obtaining of Registration by the respondent amounts to suppression – limitation - Outdoor catering services - respondents contested the notice on merits as also on limitation - Commissioner (Appeals) held in favour of the respondents on the ground that for the period June, 2005 to March, 2006, benefit of Notification No. 21/04, dtd. 10.09.04 is available to the respondents – Held that:- Difference of opinion between members regarding following issues - Whether the Revenue's appeal is required to be allowed in respect of service tax only and part of the order vide which penalty stand set aside by Commissioner(Appeals) is required to be upheld - referred to third member.
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Central Excise
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2012 (10) TMI 915
Refund of cenvat credit - Period of limitation - 100% EOU - accumulated CENVAT credit at the time of debonding – refund claim was rejected as time barred as the refund related to period from 1.4.2005 to 31.3.2007 and the claim having been received on 9.4.2008 – Held that:- Claim for refund of CENVAT credit relating to export should be made on a quarter basis is more for administrative convenience and this is to discourage the exporters to prefer too many claims leading to voluminous work at the divisional level. This does not specify any time limit for claiming the refund of credit - refund of CENVAT credit can be allowed only after the export has taken place - refund claimed in any quarter should relate to CENVAT credit on inputs contained in goods exported during that quarter or earlier quarters and not in respect of goods to be exported - refund claim has been rejected is not sustainable - matter is remanded to the original authority
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2012 (10) TMI 914
Denial of Cenvat Credit - Following the decision of court in case of [CCE V/s. Creative Enterprises 2008 (7) TMI 311 - GUJARAT HIGH COURT] Held that:- Once the duty on final products has been accepted by the department, CENVAT credit availed need not be reversed even if the activity does not amount to manufacture - appeal allowed with consequential relief, if any - stay application is also disposed of.
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2012 (10) TMI 910
Waiver of pre-deposit - manufacture of M.S Flats and M.S. Bars - demand on the ground that the applicants was showing higher consumption of electricity and the quantum of electric consumption during the two hours trial – Held that:- Contention of the applicant is that under the compounded levy scheme the applicant s annual capacity was fixed at 1187 MT per annum after due verification. As per the quantification of demand in the present proceedings the annual capacity of the mill comes to 8000 M.T. per annum which is not possible. This contention is not considered by the adjudicating authority though raised - pre-deposit waived - matter is remanded to the adjudicating authority for de novo adjudication
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2012 (10) TMI 909
Waiver of pre-deposit – demand of duty in respect of floor sweepings and defective cakes, which emerge during the process of manufacturing of their final products i.e. biscuits and cakes – Held that:- Floor sweepings, processed defective cakes etc. cannot be held to be excisable goods - defective cakes and floor sweepings which are sold in the market is nothing but waste and scrap and merely because they were being cleared as floor sweepings will not make them excisable goods - The same are not being manufactured by the appellant and emerged during the manufacturing of final products - these not are covered by Section 2(d) - there is no tariff heading in the Central Excise Tariff covering floor sweepings and defective cakes - pre-deposit waived
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2012 (10) TMI 908
Cenvat credit – removal of capital goods – reversal – Held that:- When capital goods are removed after being put to use, it cannot be considered that the goods are removed ‘as such’ and therefore, the provisions of Rule 3(5) of Cenvat Credit Rules, 2004 would not apply to such clearance and there is no need for reversing any Cenvat credit because they had actually used the capital goods in the manufacture of excisable goods - appellants have paid duty based on transaction value - appeal is allowed
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2012 (10) TMI 907
Cenvat credit on capital goods before registration - Held that:- Cenvat credit was availed of in the year 2006-07, when the assessee had not yet registered under Rule 9 of the Central Excise Rules, the assessee did not utilize the Cenvat credit - It is only after registration, in the subsequent year, they have utilized the entire Cenvat credit which was standing to their credit – cenvat credit allowed – in favor of assessee
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2012 (10) TMI 906
Demand along with interest and penalties - denial of benefit of exemption under Notification No.67/95-CE - Naphtha was cleared for home consumption on payment of Central Excise duty as well as at NIL rate of duty under the Notification No.67/95 for generation of electricity in their co-generation plant or Captive Power Plant (CPP) - Held that:- There was difference of opinion on the issue regarding the exemption on the quantity of Naphtha attributable to electricity generated in captive power plant/co-generation plant, used for allied activities like lighting in the artillery (sic) roads/yard, administrative building, canteen/cafeteria - Members having a difference of opinion; therefore the same is placed before the Hon'ble Vice President/HOD for appointing a 3 rd Member to decide the issue.
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2012 (10) TMI 905
LTU - Cenvat credit - single excise registration - alleged that original consent form did not mention the three units that came up after March 2006 and hence all the transfers of Cenvat credit from the newly set up unit to older units are without authority of law and should be paid back – Held that:- In all the returns filed and different correspondence with the Commissioner (LTU) they were disclosing the existence of the new units and in fact sought permissions for transfer of credit from new units to old units which were given - Revenue is trying to deny a substantial benefit for some flimsy reason - procedural flow involved is a curable defect and credit is not deniable adopting a hyper technical approach adopted by Revenue – stay granted.
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2012 (10) TMI 904
Rebate claim – export – respondent had cleared the goods from their factory for export describing the same as “menthol powder” – alleged that goods exported were not the same, which were cleared by the respondent from their factory after payment of duty – Held that:- Respondent have themselves prepared and signed the Commercial Invoice under which Menthol Powder-97% BP/USP were exported vide said Shipping Bill and Bill of Lading - respondent has not been able to meet the mandatory requirement of claiming rebate that the same goods which have been manufactured, suffered duty, have actually been exported - respondent has failed to establish that they have exported the very same duty paid goods vide shipping bill as cleared by ARE-1, hence, rebate claims not admissible
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2012 (10) TMI 903
Waiver of pre-deposit - manufacturer of cigarettes - cut tobacco is used for manufacture of cigarettes. During the course of manufacture of cigarettes using such cut tobacco, also the similar wastes occur – alleged that quantity of cut tobacco attributable to emergence of “tobacco refuse” would not be eligible for duty exemption under Notification No. 52/2002-C.E., - Held that:- Waste emerging cannot be treated as arising out of manufacture and cannot be treated as excisable goods - question of such refuse being treated as exempted product or as subject to nil rate of duty does not arise - exception contained in the Notification No. 52/2002-C.E. is not attracted - pre-deposit waived
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2012 (10) TMI 871
Excess quantity sugar as compared with the daily stock account - sold to the shareholders at concessional rate - confiscation of sugar allowed to be released on payment of fine and penalty equal to duty involved - Held that:- There was a clearance of 2500 quintals of sugar under one invoice and unfortunately the invoice is illegible and it could not be made out in whose name the invoice has been made. However, entire quantity of 2500 quintals of sugar has been cleared on payment of duty - the appellants have been very consistent in submitting that quantity of 2500 quintals of sugar was meant for sale to the share holders at concessional rate and 1500 quintals has been sold as such and 1000 quintals remained, the benefit of doubt in the absence of proper investigation has to go to the assessee. As the offence has to be treated as one of procedural irregularity and penalty equal to duty was not warranted - thus in the facts and circumstances of the case, the payment of duty on the goods and non-claiming of refund of the same, penalty under Rule 25 for procedural irregularity will be sufficient and since excess sugar was lying and subsequently cleared on payment of duty, redemption fine also is not warranted. The penalty of Rs.5,000/- u/r 25 would meet the ends of justice, while upholding the demand for duty on 1000 quintals of sugar found excess during the visit of the officers and accepting the submissions made by the assessee that no refund of duty will be claimed - partly in favour of assessee.
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2012 (10) TMI 870
CENVAT Credit on education and higher education cess - non eligibility to claim credit on payment made by 100% EOU on duty of Excise equal to aggregate duties of Customs - demand along with interest and equivalent penalty - Held that:- Even before the amendment to rules was introduced, the Tribunal had already taken a view that education cess paid in full has to be allowed as CENVAT Credit. It has nothing to do with the amendment. There is neither a request from the assessee nor is the issue as to whether the benefit of amendment made w.e.f. 07.09.2009, can be extended for the earlier period. The decision in the case of EMCURE PHARMACEUTICALS LTD. Versus COMMISSINOR OF C. EX., PUNE [2008 (1) TMI 147 - CESTAT, MUMBAI] had considered the statutory provisions in detail and had come to a conclusion and it cannot be said that there were decisions of a higher judicial forum or a provision of law or relevant facts which have been ignored or not considered, despite having been submitted. In such a situation, the decision cannot be said to be per incurium especially when the statute was amended subsequently - against revenue.
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2012 (10) TMI 869
Manufacture - classification - “Mayuri Henna Natural Black 50 gms”, “Mayuri Henna Natural Black 30 gms”, “Mayuri Henna Natural Brown 50 gms”, “Mayuri Henna Natural Brown 30 gms”, “Mayuri Henna Burgundy 50 gms”, “Mayuri Henna Burgundy 30 gms”, “Mayuri Henna Natural Henna 100 gms” – The assessee contended that Mere mixing of various powder products with the final good does not amount to manufacture - Held that:- As a different product has emerged as decided in case of Heena Export Corporation versus C.C.E. [1993 (2) TMI 185 - CEGAT, NEW DELHI] – Duty has to be deposited by the assessee - classifiable under Heading 33.05. - pre-deposit ordered
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2012 (10) TMI 868
Deduction on equalized basis – Held That:- As the Tribunal following the decision made earlier in respect of some other unit of assessee had allowed the same exclusively for excisable good. The matter was remanded back only for quantification of demand and segregation of expenses but the Com.(A) again going into question of admissibility of deduction was not admissible. The assessing officer cannot ignore and comment upon the correctness of the decision made earlier by the Tribunal and to decide it afresh – case remanded back to the original adjucating authority to segregate the expenses exclusively in respect of excisable goods as directed by the Tribunal in the earlier remand matter – in favour of assessee by way of remand.
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2012 (10) TMI 867
Eligibility of cenvat credit in respect of steel items – Held that:- Steel items have not been used in the construction of the captive power plant, but in the manufacture of capital goods namely electrolysis cell which in turn is used for producing Potassium Chlorate - respondents are eligible for cenvat credit
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2012 (10) TMI 866
Rebate claim - period of limitation– claim is with regard to the rebate of the excise duty already paid by the manufacturer under Rule 18 – Held that:- Notification issued under Rule 18 of the Central Excise Rules which prescribes no time limit alone is applicable and Section 11B of Central Excise Act which prescribes 6 months time for claiming rebate would not be applicable to deny the rebate claim of the petitioner - respondent is directed to pay the rebate amount claimed by the petitioner
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2012 (10) TMI 865
Waiver of duty demanded - applicant manufactured paper and paper products - applicant clears the paper in reel form and send the said paper in reel form to job workers for conversion into sheets and the converted sheets are sent directly from the job worker’s premises to the customers - applicant raises bills without the ‘reel discount’ and the said amount is treated as conversion charges - department has included the said amount referred to as reel discount in the assessable value and demanded the differential duty – Held that:- Goods cleared to the job workers are in reel form. The duty requires to be paid at the time of clearance in the form in which the goods are removed - substantial supplies are being effected in reel form at the same price, and, therefore, the enhancement of assessable value is not, prima facie, sustainable in respect of the paper in reel form cleared for conversion - pre-deposit waived
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2012 (10) TMI 864
SSI Exemption - Clubbing of clearance - clearances made in the name of all the seven units - Notification no. 83/83 - whether limited company is a separate entity and clearances of the said company could not have been clubbed with the clearance of other entities – Held that:- There is no ruling by the court that clearances of a limited company cannot be clubbed with clearances of any other entity under any circumstances for the purpose of deciding the exemption limit under Notification 175/86-C.E. - clubbing of clearance of the seven units in the hands of Heemanshu Traders is warranted. Application for rectification of mistake - held that:- while considering the ROM applications in the context of the directions of the High Court of Gujarat there is no scope to negate the clubbing of the clearances of the six partnership firms.
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2012 (10) TMI 863
Export - claims of rebate - alleged that the applicants exported their finished goods before permission of input-out ratio was granted by the competent authority – Held that:- Fundamental requirement for claiming rebate of duty paid on inputs is that the use of duty paid inputs in the manufacture of export goods is proved beyond doubt. Applicant has failed to submit any records proving use of said duty paid inputs in the manufacture of export goods. The said lapse can not be treated as a procedural lapse, as it is the substantial requirement of use of duty paid inputs in the manufacture of export goods is not complied with - rebate claims rejected as the same were not admissible under Rule 18 of the Central Excise Rules, 2002
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2012 (10) TMI 862
Rebate claims - export - 100% EOU, exported the goods and filed rebate claims w.r.t. duty paid on exported goods. - The original authority sanctioned the rebate claim. - Respondent being 100% EOU were not required to export the goods on payment of duty in terms of absolute exemption provided in the Notification No. 24/2003-C.E. – Held that:- Notification No. 24/2003-C.E., dated 31-3-2003 was issued under Section 5A(1) of Central Excise Act, 1944, exempts goods manufactured by 100% EOU and cleared for export from whole of duty unconditionally. Therefore in view of provisions of sub-section (1A) of Section 5A, the applicant manufacturer cannot pay duty. - There is no condition in the notification for availing exemption to goods manufactured by 100% EOU and cleared for export, the provisions of subsection (1A) of section 5A are applicable and no duty was required to be paid on such exported goods. As such rebate claim is not admissible in terms of rule 18 of Central Excise Rules, 2002 read with Notification No. 19/2004-C.E. (N.T.) - decided against the assessee.
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CST, VAT & Sales Tax
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2012 (10) TMI 921
Registration as dealer in Trading in live chicken - denial as one rented room for doing business is not enough to stock the commodity dealt with - Held that:- In Ext.P5, the order rejecting his application for registration there is no mention about the allegation regarding the inadequacy of the storage space mentioned in Ext.P3 moreover, the petitioner's contention that he proposes to sell live chicken to dealers in Mahi, is also not dealt with in Ext.P5. On the other hand Ext.P5 stated that since sale is proposed to be effected to dealers in Karnataka and Tamil Nadu where live chicken is a non-taxable item, first respondent again says that registration is unnecessary. Also a fresh allegation is made that the application made by the petitioner is only under Section 7(1) and not under Section 7 (1) & (2) of the CST Act. Not only there is non-consideration of the contentions, but also an allegation which was not put to the petitioner is relied on. These reasons render Ext.P5 vitiated and need to be set aside - first respondent directed to reconsider the matter with notice to the petitioner and pass orders on Ext.P3 - in favour of assessee.
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2012 (10) TMI 880
Writ petition for payment of dues in installments and remission/waiver of interest - Held that:- Amount of Rs.5,169/- crores towards principal amount of the dues be paid by the appellant with interest at the rate of 10% p.a. effective from 17th January, 2012 (the date of the judgment of this Court) in eight equal quarterly installments, the first of such quarterly installment being payable on 2nd January, 2013, and the remaining installments being payable every quarter on the 2nd day of the concerned month (i.e. after expiry of the quarter or three months) and interest of 10% p.a. would be calculated on the reducing balance remaining payable by the appellants to the State Government - appeal is allowed with no order as to costs.
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Indian Laws
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2012 (10) TMI 920
Levy sugar price - non-consideration of higher SAP - writ of prohibition against the respondents for acting on the basis of 1983 Order being contrary to Section 3 (3C) of U.P. Sugarcane Cess Act, 1956 - Held that:- Since the petitioners have raised a specific plea qua the importance of SAP being higher than the price fixed by the Central Government for procurement of sugarcane and that is an aspect which has been held to have a material bearing on the price fixation by the Central Government in view of the judgement of the Supreme Court in Mahalakshmi Sugar Mills Company Versus Commissioner of Income-Tax, Delhi (1980 (4) TMI 1 - SUPREME COURT), the petitioners cannot be precluded from raising this plea merely on the ground that other petitioners while challenging the pricing of 1982-83 had not raised this plea and the challenge having been repelled by the Hon‟ble Supreme Court, it is not open to the petitioners to raise such a plea. We are of the view that clearly all principles of sub silentio would apply (term used in the technical sense, when a particular point of law involved in a decision is not perceived by a court or present to its mind) No reason for the apprehension expressed on behalf of the respondents that such a course of action would open a Pandora’s Box as others would follow. However, if others have not raised this plea and apparently there are no other matters pending the benefit would only go to a party who has chosen to take such a plea from the beginning and whose petition is still pending. This is what was done in Mahalakshmi Sugar Mills case (supra) while granting relief only to petitioners therein. Thus, the effect of SAP would have to be examined by the Central Government in re-fixing the levy sugar price for the year 1982-83 at least qua the petitioners.
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2012 (10) TMI 881
Review petition as Union of India was not duly served with the notice of the proceedings in any of the petition for special leave to appeal which were subsequently converted into civil appeals - Held that:- Union of India was not given an opportunity to represent its case due to mistake on the part of the Registry. Applying the well settled principles governing a review petition and giving anxious and careful consideration to the facts and circumstances of this case the review petition filed by the Union of India should be admitted - review petitions filed by JSW Steel Ltd, M/s Kalyani Steels Ltd, M/s Kalyani Steel Mills Ltd. and the State of Karnataka are concerned, no order has been passed until the review petition of the Union of India is heard.
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