TMI Tax Updates - e-Newsletter
November 1, 2013

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. REASSESSMENT AFTER FOUR YEARS UNDER INCOME TAX ACT, 1961

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Cyprus Notified as a notified Jurisdictional Area Under Section 94a of the Income-Tax Act, 1961 ; All Parties to the Transaction with a Person in Cyprus shall be Treated as Associated Enterprises and the Transaction shall be Treated as an International Transaction Resulting in Application of Transfer-Pricing Regulations Including Maintenance of Documentations

2. Change in Tariff Value of Crude Palm Oil, RBD Palm Oil, others Palm Oil, Crude Pamolein, RBD Palmolein, others Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Gold and Silver Notified

3. The Udhna Citizen Co-operative Bank Ltd., Surat, (Gujarat) now under RBI Directions till May 1, 2014

4. RBI Reference Rate for US $ and Euro

5. Index of Eight Core Industries (Base: 2004-05=100), September, 2013

Notifications

Customs

1. 107/2013 - dated 31-10-2013 - Cus (NT)

Amendment Notification No. 36/2001-Customs (N.T.), dated the 3rd August, 2001

DGFT

2. 49 (RE-2013)/2009-2014 - dated 1-11-2013 - FTP

Export Policy of Onions

Circulars / Instructions / Orders

FEMA

1. 68 - dated 1-11-2013

Foreign Direct Investment (FDI) in India –definition of ‘group company’

2. 65 - dated 31-10-2013

Exim Bank's Line of Credit of USD 19.72 million to the Government of the Republic of Mozambique

3. 66 - dated 31-10-2013

Exim Bank's Line of Credit of USD 149.72 million to the Government of the Republic of Mozambique

4. 67 - dated 31-10-2013

Exim Bank's Line of Credit of USD 47 million to the Government of the Republic of Mozambique

Highlights / Catch Notes

Income Tax

• High Court Rules Misfiled Tax Return Doesn't Justify Reassessment; No Valid Case for Reopening Assessment.

  Case-Laws - HC : Re-opening of assessment on non-filing of return – Assessee had filed returns, but through inadvertence, he had filed it before the wrong Assessing Officer. - no case for reassessment - HC
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• Limitation Period for Assessment Orders u/s 158BC Resumes After Order is Vacated, Must Conclude Within Legal Timeframe.

  Case-Laws - HC : Period of limitation for passing assessment order u/s 158BC - As soon as the order was vacated, the limitation will restart and will exhaust itself on the period of limitation provided under the Act – Barred by limitation - HC
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• High Court Rules: Income Below Taxable Limit After Deductions Not Undisclosed for Block Period u/s 158BB.

  Case-Laws - HC : Addition of undisclosed income of the block period u/s 158BB - non-filing of the return for the assessment year 1995-96 on the ground that after allowing the deduction under the Act income remains below the taxable limit cannot be treated as undisclosed income for the block period - HC
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• Court Confirms Additions u/s 69C; Rejects Claims of Assessing Officer Acting on Conjectures and Surmises.

  Case-Laws - HC : Additions made u/s 69C - unexplained expenditure – Whether the Assessing Officer had acted on conjectures and surmises – Held no, additions confirmed - HC
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• Penalty Upheld: Income Surrender Not Voluntary u/s 271(1)(c), No Intention to Declare True Income Found.

  Case-Laws - SC : Penalty u/s 271(1)(c) - it cannot be said that the surrender of income was voluntary - assessee had no intention to declare its true income - penalty confirmed - SC
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• Income Tax Appeal: Combining Firm Incomes with Assessee's Deemed Unjustified u/ss 60, 61, 63 of the IT Act.

  Case-Laws - AT : CIT(A) was not justified in upholding the action of the A.O. in clubbing the income of the said two partnership firms in the hands of the assessee by invoking the provisions of sections 60, 61, 63. - AT
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• Advance Payment as Business Receipt Isn't Automatic Income Due to TDS u/s 194C Alone.

  Case-Laws - AT : Advance payment received of Business receipts – Accrual of income - just because the amount was covered by the TDS as per the provisions of section 194C, the same cannot be considered as income - AT
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• Section 14A Disallowance Inapplicable: Investment Made Solely for Business in Loss-Making Company, No Dividend Income Expected.

  Case-Laws - AT : Disallowance u/s 14A - the investment was purely of business nature as the company in which the amount was invested was a loss making company and there was no question of earning any dividend income from such investment - no disallowance u/s 14A - AT
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• Deduction period u/s 10B starts from AY 1996-97 for EOUs operating as DTAs, aligning with production commencement.

  Case-Laws - AT : Deduction u/s 10B – exemption period when EOU acts as a DTA unit - 10 year period of deduction u/s 10B should commence from AY 1996-97 during which the assessee started its production/manufacture - AT
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• Reassessing Based on TDS Certificates Alone u/s 147 is Insufficient for Justification of Proceedings.

  Case-Laws - AT : Re-opening of assessment u/s 147 on the basis of TDS Certificates – Mere need to verify the discrepancy does not bring the matter within the scope of cases in which reassessment proceedings can be validly initiated - AT
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• Section 145A Amendment: Exclusion of Excise Duty from Closing Stock Leaves Net Tax Unchanged per ICAI Guidance.

  Case-Laws - AT : Addition made u/s 145A of the Income Tax Act – Excise duty excluded in the closing stock – After necessary adjustments made by the assessee, in pursuance of the guidance note issued by the ICAI, there is no difference in the net result from taxation point of view - AT
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• Penalty for Suppression of Capital Gains Reduced from 300% to 100% Due to Accountant's Error u/s 271(1)(C.

  Case-Laws - AT : Penalty u/s 271(1)(C) - Suppression of long term capital gains - penalty @ 300% is very much on higher side on account of mistake committed by the assessee's accountant - reduced to 100% - AT
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Customs

• Department Must Follow Rules 5-9 to Determine Value When Transaction Value is Rejected in International Trade.

  Case-Laws - AT : Transaction Value – In case the transaction value is rejected, then the department has to proceed sequentially through Rules 5 to 9 and determine the value in the course of international trade - AT
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• CHA Firm's License Revoked for Employee's Document Forgery Violating Regulations 13(a), 13(d), 19(8), and 19(10.

  Case-Laws - AT : Revocation of CHA Licence - the CHA firm is responsible for the forgery of documents by their employee. There is gross violation of Regulation 13(a), 13(d), 19(8) and 19(10) of CHALR, 2004 - AT
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Service Tax

• Cenvat Credit Eligibility for Pandal and Shamiyana Services Under Review; Partial Stay Granted Due to Usage Location Ambiguity.

  Case-Laws - AT : Eligibility for Cenvat credit - Pandal and shamiyana services - it is not clear whether Pandal & Shamiyana Services were used within the factory or elsewhere - stay granted partly - AT
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• Mutual Funds Classified as Goods, Qualify for Exemption from Commission Income Under Notification No. 13/2003-S.T.

  Case-Laws - AT : Exemption from commission income - Benefit of Notification NO. 13/2003-S.T. - Classification of goods - Benefit of Notification NO. 13/2003-S.T. is available to mutual funds since they are goods - AT
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• Can CENVAT Credit Be Claimed for Subcontractor Services at Unregistered Sites? Exploring Legal Entitlements and Challenges.

  Case-Laws - AT : CENVAT Credit of the services rendered by sub-contractor at the site where there was no Central Excise registration obtained by the appellant for manufacturing of final product, is an arguable issue - AT
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• Court Grants Partial Stay on Service Tax for Cargo Handling at Tata Chemicals Factory Under Dispute.

  Case-Laws - AT : Cargo Handling Services - appellant herein collected the salt and Soda ash in the factory of Tata Chemicals, packed them and stocked them in the factory as well as on the railway wagons - stay granted partly - AT
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• Court Remands Case on Service Tax Valuation for Airport Development Fees, Calls for Reassessment of Previous Rulings.

  Case-Laws - AT : Airport service - Valuation - levy of service tax on Development fees (DF) recovered from passengers - matter remanded back for fresh decision - AT
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• Services Classified Under "Manpower Recruitment or Supply Agency Service" for Tax Purposes Include Vehicle Transfers.

  Case-Laws - AT : Manpower Recruitment or Supply Agency Service - Supply of drivers - prima facie the amount received for transferring the vehicles, chassis etc. would come under the head of ‘Manpower Recruitment or Supply Agency Service’ - AT
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• Government Road Construction: No Service Tax on Testing, Investigation, and Transport Services; Stay Granted.

  Case-Laws - AT : Services namely, Technical Testing and Analysis Service, Investigation Charges and Transportation Charges/Report and Document Charges etc. rendered in the context of road-construction by Government Agencies and service of road-construction - Exemption from service tax - stay granted - AT
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Central Excise

• High Court Confirms Assessee's Right to Cenvat Credit Refund for Stainless Steel Wire Processing u/r 16.

  Case-Laws - HC : Refund of unutilized cenvat credit - drawing of SS wire from SS rods - Meaning of Assessee Rule 16 of the Central Excise Rules – the petitioner is an “assessee” within the meaning of Rule 16 of the Rules and as such, would be entitled to avail of Cenvat credit in accordance with the Rules. - HC
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• Supreme Court Decision on SSI Exemption Overrides 1987 Departmental Clarification; Affects Tax Compliance for Packaging Materials.

  Case-Laws - AT : SSI Exemption – manufacture of packing material with brand name - validity of Departmental clarification in 1987 – This prevailed over the assesses till 27/02/10 in spite of the law declared by the Supreme Court in Kohinoor Elastics Pvt. Ltd. vs. CCE, Indore [2005 (8) TMI 115 - SUPREME COURT OF INDIA] - AT
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• No Cenvat Credit Reversal Needed for Written-Off Inputs Staying Within Factory Premises; Stay Granted.

  Case-Laws - AT : Reversal of Cenvat Credit on inputs written off - as long as the inputs on which the credit has been availed, are within the factory but the same are written off from the records, the credit is not required to be reversed - stay granted - AT
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• Assessees Not Required to Maintain Separate Accounts for Cenvat Credit on Inputs and Services, Simplifying Tax Management.

  Case-Laws - AT : Cenvat Credit - Requirement of Maintaining Separate Account for credit to be utilized in payment of Service Tax and / or Central excise duty - no separate account is required for credit of duty taken on inputs and input services and the assessee was allowed the benefit - AT
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• CENVAT Credit for Factory Catering Services Applies Regardless of Employee Count; Stay Granted in Case.

  Case-Laws - AT : CENVAT Credit - catering services – The effect of providing canteen within the factory is same whether the number of employees is more than 250 or less than 250 - stay granted - AT
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VAT

• Supreme Court upholds penalty for vehicle owner under amended Section 78(5); clarifies "person in-charge" in tax laws.

  Case-Laws - SC : Levy of penalty against the owner of the vehicle - Legislature seeks to clarify the expression “person in-charge of the goods“ occurring in Section 78(5) as it stood earlier by Act No.7 of 2002 - penalty confirmed - SC
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Case Laws:

• Income Tax

• 2013 (11) TMI 20
  Re-opening of assessment on non-filing of return – Held that:- Assessee had filed returns for the assessment years 1996-97 and 1997-98, but through inadvertence, he had filed it before the wrong Assessing Officer. The Assessing Officer, in the present case, over looked the fact that return of income was filed by the assessee - Fact remains that the assessee had filed returns. Therefore, reopening of assessment for the asst. years is bad in law – Decided against the Revenue.

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• 2013 (11) TMI 19
  Period of limitation for passing assessment order u/s 158BC of the Income Tax Act - Search was conducted at the assessee's address on 14.9.2002 and notice under Section 158BC of the Act was issued on 29.4.2003. Consequent thereto the return was filed by the assessee on 16.6.2003. The search proceeding was challenged by the assessee before the High Court by filing writ petition. The assessment proceedings were stayed vide interim order dated 12.2.2004. The interim order was vacated on 26.8.2009 – Held that:- Stay was vacated by the High Court on 26.8.2009. The A.O. took the date of vacation of the interim order to be the date, when it was received by him on 9.11.2009 and passed assessment order on 22.6.2010, which was clearly beyond two years as limitation would restart from 26.8.2009 and ended on 15.4.2010 - Section 158BC provides to complete assessment proceedings within two years. It further provides that period during which the proceedings have been stayed shall be excluded - Arrest of the limitation by an interim order passed by the High Court. As soon as the order was vacated, the limitation will restart and will exhaust itself on the period of limitation provided under the Act – Barred by limitation – Decided against the Revenue.

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• 2013 (11) TMI 18
  Addition of undisclosed income of the block period u/s 158BB of the Income Tax Act – Search was conducted on the premises of the Assessee - Added Rs. 30,000 as opening cash in hand on April 1, 1985, as undisclosed income for the assessment year 1986-87 on the ground that the assessee was not maintaining personal books of account – Held that:- Balance-sheet is a statement of affairs showing the assets and liabilities of the assessee as on a particular date ; it also incorporates opening balance of various assets and liabilities brought forward from earlier years along with net increase/decrease in each of the assets and liabilities during the year ; if the closing balance or cash in hand is disclosed income, the opening balance cannot be regarded to be undisclosed income – Reliance has been placed on the judgment in the case of CIT v. Shamlal Balram Gurbani [2000 (2) TMI 37 - BOMBAY High Court] – Decided against the Revenue. Non-filing of the return on the ground that the total income of the assessee remains below the taxable limit after allowing the deduction available under the law be the ground to hold the income to be undisclosed one – Held that:- Respondent-assessee was filing his return and return of the partnership firm, of which he is a partner, regularly and the learned Assessing Officer has assessed the income of the partnership firm as well as of the assessee and has not doubted any entry therein, therefore, non-filing of the return for the assessment year 1995-96 on the ground that after allowing the deduction under the Act income remains below the taxable limit cannot be treated as undisclosed income for the block period – Reliance has been placed on the judgments in the cases of CIT v. Vimla Khatri [2006 (1) TMI 117 - MADHYA PRADESH High Court] – Decided against the Revenue.

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• 2013 (11) TMI 17
  Scope of Committee of Disputes - Held that:- The Committee of Disputes was only to decide, whether or not government authority/public sector undertaking should be permitted to proceed with the appellate proceedings - the Revenue had sought permission, but the same was declined in November, 2009 - The decision taken by the Committee of Disputes dated 12th November, 2009, is not undone and has not become a nullity - If the contention of the Revenue is accepted, then in all case in which the Committee of Disputes had declined permission to prefer appeal/legal proceedings, during the period from 1994 onwards, can now be reopened - The matters which have been considered and decided by the Committee of Disputes and permission specifically denied cannot be reopened – Decided against Revenue.

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• 2013 (11) TMI 16
  Additions made u/s 69C of the Income Tax Act – Whether the Assessing Officer had acted on conjectures and surmises – Held that:- The assessee was in the best position to explain the expenditure incurred as per the books of account maintained, but could give an explanation only with regard to a part of the expenditure and not the entire expenditure. Both the authorities that is the Assessing Officer as well as the Tribunal considered the explanations offered and found them unsustainable - Cannot reappreciate the material on record and come to a different conclusion, unless the view expressed by the Assessing Officer and the Tribunal are perverse or are views that could not reasonably be arrived at – No any perversity in the conclusions arrived at by the authorities - Additions were made on the basis of conjectures and surmises is not true - The expenses were mentioned in the documents seized from the premises of the assessee and were admitted by the assessee. It was for the assessee to justify the expenditure incurred as business expenditure. He was able to do so for only a part thereof – Decided against the Assessee.

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• 2013 (11) TMI 15
  Disallowance because of violation of section 40A(3) of the Act read with Rule 6DD of the Income Tax Rules – Cash payment in excess of prescribed limit - Held that:- Suppliers of the assessee, who were delivering the goods to him invariably insisted on spot payment of cash to the lorry drivers. There is absolutely no evidence for this. The Tribunal went on to hold that since the suppliers do not have bank account in Vijayawada and because they could not rely upon the creditworthiness of the assessee, they did not extend any credit facilities to him. There was an insistence on payment for the supply of goods in cash. In this regard also, there is absolutely no material on record. The Tribunal has further come to the conclusion that, according to the assessee, he used to be ridiculed by the suppliers with regard to obtaining confirmations concerning the transactions. Again, there is absolutely no evidence in this regard - Reliance has been placed upon the judgment in the case of Late Smt. Jyothi Chellaram v. CIT [1988 (3) TMI 36 - ANDHRA PRADESH High Court] – Decided in favor of Revenue.

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• 2013 (11) TMI 14
  Penalty u/s 271(1)(c) of the Income Tax Act – Held that:- Surrender of income in this case is not voluntary in the sense that the offer of surrender was made in view of detection made by the AO in the search conducted in the sister concern of the assessee. In that situation, it cannot be said that the surrender of income was voluntary - The survey was conducted on the sister concern more than 10 months before the assessee filed its return of income. Had it been the intention of the assessee to make full and true disclosure of its income, it would have filed the return declaring an income inclusive of the amount which was surrendered later during the course of the assessment proceedings - it is clear that the assessee had no intention to declare its true income. It is the statutory duty of the assessee to record all its transactions in the books of account, to explain the source of payments made by it and to declare its true income in the return of income filed by it from year to year – Decided against the Assessee.

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• 2013 (11) TMI 13
  Clubbing of income of two partnership firms with the income of assessee - revocable transfer - Held that:- the concept of the partnership firm as governed by the Partnership Act as well as the scheme of taxation of the partnership firms which are recognized as separate entities for income tax purpose and having regard to the taxation purpose, we are of the view that the provisions of section 60 to 63 of the Act cannot be applied to club the income of two partnership firms namely M/s Sea Princess Investment and M/s Sea Princess Realty with the income of the assessee and the ld. CIT(A), in our opinion, was not justified in upholding the action of the A.O. in clubbing the income of the said two partnership firms in the hands of the assessee by invoking the said provisions. - Additions deleted - decided in favor of revenue. Disallowance made of various expenses on the ground that vehicle- wise and party-wise details could not be furnished by the assessee and also for want of the relevant details and supporting evidence – Held that:- Disallowance of vehicle expenses of 10% made by the A.O. without pointing out even a single instance of un- verifiable element involved in the said expenses was not sustainable – Decided in favor of Assessee. Nature of expenditure, Revenue or Capital - Professional fees paid by the assessee to the interior decorators etc., AO treating the same as capital expenditure to the extent of Rs. 26,21,380/- - Held that:- the temporary operational plan implemented by the assessee during the construction period really worked effectively resulting into profit of Rs. 7.60 and Rs. 12.03 in financial year 2005-06 and 2006-07 respectively as against the profit of Rs. 5.41 crores earned by the assessee company in A.Y. 2004-05. As regards the other small items of payment made by the assessee on account of professional fees, we are of the view that going by the nature of the corresponding services availed by the assessee as explained by the ld. counsel for the assessee, the said payments were made to upkeep and maintain the existing systems available in the hotel building and the same being in the nature of expenditure regularly incurred for the purpose of assessee's business of running a Five Star Hotel, the same cannot be treated as capital expenditure especially when it did not result in bringing into existence any new capital asset or any enduring advantage in the capital filed to the assessee – Decided in favor of Assessee. Deduction u/s 36(1)(v) of the Income Tax act – Held that:- Revenue authorities have misconstrued the provisions of section 36(1)(v) of the Act which requires that the contribution is paid by the employer to the gratuity fund and the payment made to the employees out of that fund is not relevant in this context. Since the payment was duly made by the assessee to the gratuity fund during the year under consideration as mentioned by the A.O - Conditions stipulated in section 36(1)(v) of the Act were fulfilled and the assessee was entitled to the deduction on account of gratuity so paid to the fund during the year under consideration – Decided in favor of Assessee. Nature of expenditure, revenue or capital – Repair and maintenance expenditure – Held that:- A perusal of the details furnished by the ld. counsel for the assessee shows that going by the nature and purpose of the impugned expenditure, the same is revenue expenditure as it does not result in bringing into existence any new asset or advantage of enduring nature in the capital field - However, keeping in view that there is no finding recorded either by the A.O. or the ld. CIT(A) specifically on this aspect, it is just and proper to restore this issue to the file of the A.O. to decide the same afresh after verifying the nature and purpose of the impugned expenditure – Decided in favor of Assessee for statistical purpose.

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• 2013 (11) TMI 12
  Advance payment received of Business receipts – Accrual of income - Addition on the ground that TDS has been deducted and assessee is claiming credit of TDS on certain portion of said advance - Held that:- the assessee relying on the decision of Hon’ble Delhi High Court in case of CIT Vs. Dinesh Kumar Goel, [2010 (10) TMI 287 - Delhi High Court] submitted that revenue is recognized only when the services are actually rendered. This principle will apply to the facts of the case under consideration as there is no evidence that the amount was received by the assessee for any particular services rendered so as to treat it as accrued income. As considered by the Coordinate bench of ITAT, Mumbai Bench in case of Smt. Varsha G. Salunke Vs. DCIT, [2005 (9) TMI 226 - ITAT BOMBAY-F], just because the amount was covered by the TDS as per the provisions of section 194C of the Act, the same cannot be considered as income. However, as per the provisions of section 199, the credit for the TDS can be given in the assessment year in which the income is shown to have been offered for assessment. Therefore, to the extent of giving credit for the amount of TDS claimed, the AO is free to examine and allow the credit in the year in which the advance got adjusted in the bills and necessary credit can be given in that year as per the provisions of the Act

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• 2013 (11) TMI 11
  Disallowance u/s 14A of the Income Tax Act – Held that:- Reliance has been placed on the case of M/s Spray Engineering Devices Ltd [2012 (7) TMI 587 - ITAT CHANDIGARH], which is squarely applicable in the present case - The decision making of a business man by way of strategy planning in allied line of business is a decision made in the course of carrying on the business and the Assessing officer cannot sit in judgment seat to comment upon the same. One the assessee has been found to have made a business investment by way of shares in related line of business, the said investment though held by way of shares in the said company cannot be subjected to disallowance under section 14A of the Act, which in any case is relatable to disallowance of the expenditure out of the exempt income earned by the assessee, by way of its investment in shares of other company. In the facts of the present case the investment was purely of business nature as the company in which the amount was invested was a loss making company and there was no question of earning any dividend income from such investment. In the totality of the facts and circumstances of the case, no merit in the order of the authorities. The assessee acquired controlling interest in those companies just to run these companies properly - Till date no dividend has been earned by the assessee as assessee is doing the business in these companies from the amounts invested through shares.- Therefore, no question of any disallowance u/s 14A of the Income Tax Act – Decided in favor of Assessee.

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• 2013 (11) TMI 10
  Addition u/s 68 as cash credit – Addition on account of transaction of sale of shares – Held that:- Reliance has been placed upon the judgment of Delhi High Court in the case of CIT Vs. Medshave Health Care Ltd. [2010 (2) TMI 120 - DELHI HIGH COURT] and Akshay Portfolio (P) Ltd. [2012 (10) TMI 320 - ITAT, DELHI] In the present case, assessee is share trading company. The impugned sale of shares to M/s S.J. Capital Ltd. and M/s B. Finlease India Pvt. Ltd. has been effected out of the stock in trade of the assessee. The payments for realization of sale of shares has been received through banking channels. All the corresponding entries are incorporated in the books of accounts – Transaction is genuine – Decided against the Revenue.

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• 2013 (11) TMI 9
  100% EOU - Deduction u/s 10B of the Income Tax Act – exemption period when EOU acts as a DTA unit - Held that:- 10 year period of deduction u/s 10B should commence from AY 1996-97 during which the assessee started its production/manufacture - extension of existing unit cannot be treated as a new unit. - following the decision in CCL PRODUCTS [2011 (12) TMI 413 - ITAT, Hyderabad] – Decided against the Assessee. Disallowance of brought forward loss – Held that:- Deduction u/s 10B should be allowed first from the income and thereafter from the remaining income set off of brought forward loss and unabsorbed depreciation should be allowed – since the matter is pending before the High Court, matter remanded back to AO for decision in accordance with HC decision.

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• 2013 (11) TMI 8
  Re-opening of assessment u/s 147 on the basis of TDS Certificates – Held that:- There was no other fresh tangible material before the Assessing Officer apart from the TDS certificates submitted with the return for forming a belief that income has escaped assessment - Assessment could not have been reopened only on the basis of difference in the TDS certificate and receipts shown in the P & L A/c – Reliance has been placed on the judgment of Kolkata Bench of Hon’ble Tribunal in the case of Meheria Reid & co. Vs. ITO [2013 (2) TMI 348 - ITAT KOLKATA], wherein it has been held that assessment has been reopened on the ground that there is discrepancy between professional income declared by the assessee and the professional income as per TDS certificates and that it requires verification to find out whether any taxable income has escaped assessment – There is nothing in the reasons to indicate that there is escapement of income – A variation in these two figures does not necessarily lead to escapement of income – Mere need to verify the discrepancy does not bring the matter within the scope of cases in which reassessment proceedings can be validly initiated – There is subtle, though significant, distinction between reason to believe and reason to suspect – While the former is good enough to hold that income has escaped assessment and initiate suitable remedial measures in respect thereof, the latter can, at best, be the ground to verify and examine the matter further. In the present case, assessee has shown receipt of Rs. 1,20,35,798/- in its books of accounts is of no consequence as such figure has not been taken into account by the Assessing Officer while computing the income. As would be evident from the assessment order, the Assessing Officer is only considering receipt of Rs. 85,33,333/- as mentioned in the TDS certificate. Thus, considering the totality of facts and the circumstances of the case, the addition of Rs. 50,98,000 to the income of the assessee for the impugned assessment year is legally not sustainable and accordingly – Decided in favor of Assessee.

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• 2013 (11) TMI 7
  Technical consultancy charges not to be included in export turnover for computation of deduction u/s 10A of the Income Tax Act – Held that:- Assessing Officer is directed to verify this fact and if on verification it is found that the assessee has not included the said amount while computing the deduction u/s 10A then there is no question of reducing it from export turnover for the purpose of computing deduction u/s 10A of the Act. Even otherwise also, the alternative contention of the assessee is not without substance. When any amount being in the nature of freight, telecommunication charges or insurance attributable to the delivery of the articles or things or computer software outside India are to be excluded from the export turnover, then the same is also required to be excluded from the total turnover for the purpose of computing deduction u/s 10A of the Act – Reliance has been placed on the judgment in the case of CIT Vs. Gem Plus Jewellery India Ltd. [2010 (6) TMI 65 - BOMBAY HIGH COURT] Addition made on account of statutory disallowance is eligible for deduction u/s 10A of the Income Tax Act – Held that:- Reliance has been placed on the judgment in the case of CIT Vs. Gem Plus Jewellery India Ltd. [2010 (6) TMI 65 - BOMBAY HIGH COURT] - Held that the additions made to the income of the assessee by virtue of disallowance made u/s 43B of the Act, amounts to increase in the business profit of the assessee and therefore assessee is entitled to claim exemption u/s 10A with regard to the addition made on account of statutory disallowance – Also, disallowance made u/s 40(a)(ia) for non deduction of TDS would result in increase in business profit of the assessee, hence the assessee would be entitled to claim deduction u/s 10A with reference to such addition made on account of disallowance u/s 40(a)(ia) – Decided in favor of Assessee.

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• 2013 (11) TMI 6
  Penalty u/s 271(1)(c) of the Income Tax Act – Held that:- Addition made due to difference in production sheet and excise records. From the facts of the case, we find that this discrepancy arose because proper reconciliation of records could not be arrived at by the assessee due to the cumbersome process of production – Therefore, relying upon the judgment in the case of Navjivan Oil Mills v. CIT, [2001 (7) TMI 81 - GUJARAT High Court], this is not a fit case for levy of penalty – No penalty - Decided in favor of Assessee.

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• 2013 (11) TMI 5
  Addition made u/s 145A of the Income Tax Act – Excise duty excluded in the closing stock – Held that:- Excise duty of 15.19 Crores was paid by the assessee-company before the due date of filing of return - From the working given by the assessee it is clear that treatment given by the assessee about excise duty is revenue neutral - Also perused the accounts prepared by the company following the inclusive method as well as the exclusive method - After necessary adjustments made by the assessee, in pursuance of the guidance note issued by the ICAI, there is no difference in the net result from taxation point of view – Reliance has been placed on the judgment of assessee’s sister concern case R.R.Kabel [2012 (7) TMI 38 - ITAT MUMBAI] – Decided in favor of Assessee.

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• 2013 (11) TMI 4
  Assessment u/s 153A of the Act - How the assessment to be done when there in pendency and no incriminating documents found – Held that:- Assessment to be done on the original figures of final assessment – Reliance has been placed upon the case of ACIT vs Pratibha Industries Ltd. [2012 (12) TMI 760 - ITAT MUMBAI], wherein, it has been held that in case there is no incriminating material, in such a case assessment u/s 143(3) read with 153A shall be made at the original figure of finalized assessment - Directed the AO to frame the assessment afresh.

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• 2013 (11) TMI 3
  Rebate u/s 88E allowable in the book profit computed u/s 115JB of the Income Tax Act – Held that:- Comparison between tax determined under normal provisions of the income tax act and that determined under section 115JB shall be made for the purpose of determining applicability of the provisions of section 115JB, on gross basis before allowing rebate u/s 88E from the income tax determined under normal provisions of income tax Act and rebate u/s 88E would also be available to the assessee against the tax payable u/s. 115JB of the Income tax Act. The appellant shall be required to make payment of higher of the two amounts. Such proposition is inevitable from the format of the Return of Income (ITR-6) as prescribed – Decided against the Revenue.

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• 2013 (11) TMI 2
  Disallowance of Tender deposits written off - Held that:- Admittedly such write off is related to various small amount deposits as EMD. The submission of tenders floated by the prospective buyers of assessee products and such deposit is the pre condition to get the business hence such deposits cannot be treated in isolation of business. The genuineness of such deposits is not in dispute, nor its write off - loss was incidental to business and was allowable under section 28 r.w.s. 37(1) of the Act - Decided in favour of Assesse. Disallowance of closing stock - Items not consumed same year - Held that:- Since there was a change of method of accounting in assessment year 1986-87, which was held to be a genuine change of method of accounting, the consumable items like coal and oil were allowed to be written off in the year of purchase itself - Decided in favour of assessee. Deduction u/s 80HHC - Inclusion of sale of scrap in total turnover - Held that:- AO included the income received on sale of product scrap to the total turnover. It is fairly admitted that this issue is held against assessee in the earlier years consistently from assessment year 1988-89 onwards. Taxability of advance licence benefit - Whether the advance licence and the DEPB receivable by the assessee are liable to be assessed to tax in the year in which the licence is granted to the licensee or liable to be taxed in the year in which the benefits actually accrue after the imports are effected - Held that:- said amounts are liable to be taxed in the year in which the benefits actually accrue to the assessee and not in the year in which the licence is granted - AO is directed to do the needful in accordance with the orders on the issue in the earlier year and make necessary adjustment, if any required in the computation of income under the head business and also u/s 80HHC - Following decision of Jamshri Rajitsinghji Spinning And Weaving Mills Limited. Versus Inspecting Assistant Commissioner [1991 (12) TMI 83 - ITAT BOMBAY-A] - Decided in favour of assessee. Deduction of interest on DPEA liability - contingent liability or accrued expense - Held that:- DPEA liability will be allowable, in the year in which such liability accrues - this liability is not a tax, duty, cess or fee under any law leviable - Additional claim for DPEA would be admissible on the same footing on accrual basis - Regarding determination of profits for the purpose of section 80- I, as and when any order of higher judicial forum comes, the Assessing Officer shall give effect to such order - Interest liability accrues from year to year and, therefore, such liability may be allowed on this basis during each assessment year - Matter restored back to AO - Decided in favour of Assessee. Disallowance of amount paid under the Kar Vivad Samadhan Scheme - AO disallowed it as penalty - Held that:- After perusing the certificate issued in this regard under the Kar Vivad Samadhan Scheme, we could not ascertain whether the penalty was paid for any violation of Excise Act or for technical violation which may not be strictly come under the infraction of law. Since the original nature of the penalty, it was settled under the Kar Vivad Samadhan Scheme is not ascertainable, to that extent the issue is to be examined by AO. In case the penalty settled does not involve any infraction of law, the amount of Rs.66,573 is to be allowed as revenue deduction. With reference to the amount of interest of Rs.4,908, this being an interest the sum is allowable as deduction. AO is directed to examine the facts and allow the same - Decided in favour of assessee. Working out indirect cost in the case of export of trading goods - Held that:- The legislature has amended the provisions of Section 80HHC with retrospective effect. According to such amendment, the loss in trading goods requires to be adjusted against profits from export of manufactured goods. Computation of indirect cost is necessary ingredient for computing the export profit from trading goods as well as manufactured goods. The assessing officer has not made any observation on this aspect of the issue. However, such exercise may not be required to be made if the loss in traded goods as per the computation of assessee itself is more than the profits from export of manufactured goods in as much as in such situation, the assessee would not be entitled to deduction u/s 80HHC as per the amended provisions. On the other hand, if the profits from export of manufactured goods, as per the calculation of assessee, is more than the loss in traded goods export, then the assessing officer would be required to determine the indirect cost. Accordingly, we set aside the order of the learned CIT(A) on this aspect of the issue and remit the matter to the file of assessing officer for fresh deduction for both the years. The assessee would be at liberty to furnish all the details regarding this aspect of the issue. Disallowance u/s 14A - O invoked section 14A to disallow 5% of the expenditure - Held that:-assessee has own surplus funds from the sale of Family Products Undertakings as a going concern on 1.10.1994 and these securities were purchased out of the funds and there is not interest cost. Moreover since only three interest warrants were received, no expenditure can be attributed to the same. Decided partly in favor of assessee and partly in favor of revenue.

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• 2013 (11) TMI 1
  Penalty u/s 271(1)(C) - Suppression of long term capital gains - Inaccurate particulars of income furnished - Held that:- After taking into account the cost inflation index for the year 1991-92 & 1996-97, the assessee has declared income from long term capital gain at Rs. 1,14,96,713/-. The Assessing Officer perused the registered deeds in respect of these properties purchased & sold and found that the assessee's share in these properties was 1/4th and the total cost of acquisition of the assessee should have been 2,80,312/4=70,078/-. It was also noticed that the assessee has purchased this property on 29.05.1998 whereas while computing capital gain, it has been mentioned to be purchased in the year 1991-92 and thus has computed capital gain by taking the cost inflation index. These discrepancies were pointed out to the assessee by the Assessing Officer but assessee did not tender any explanation in this regard and he himself admitted in the penalty proceeding that overstatement of cost of acquisition (Rs. 11,07,453/- instead of Rs. 5,06,604/-) of the land sold during the relevant year was a mistake and was not done with a mala fide intention to evade tax. Assessing Officer imposed the penalty after adopting the prescribed procedure under the law @ 300% and the same was confirmed by learned First Appellate Authority. Explanation filed by the assessee state that the overstatement of cost of acquisition of the land sold during the relevant year was the mistake of his accountant - Therefore, penalty @ 300% is very much on higher side on account of mistake committed by the assessee's accountant - The assessee has not produced any evidence supporting the mistake of his accountant - assessee has filed inaccurate particular of income to evade the tax due and has also admitted before the Assessing Officer that overstatement of cost of acquisition of the land sold during the relevant year was a mistake of his accountant - Penalty reduced to 100% - Decided partly in favour of assessee.

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• Customs

• 2013 (11) TMI 39
  Demand of duty in the absence of proof of realization of export proceedings (foreign exchange) towards export of goods – Waiver of pre-deposit - The appellant claims to have paid export duty on the goods on the basis of the transaction value which is claimed to have been realized from the foreign buyer – Held that:- Prima facie, the demand raised on the appellant and estimating the respective amounts of duty at the respective rates in the absence of evidence of the claim made by the assessee on the basis of BRC appears to be factually and legally correct - no plea of financial hardships supported by any evidence - the appellant was directed to pre-deposit an amount – upon such submission there will be waiver and stay in respect of the balance amount of duty – Partial stay granted.

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• 2013 (11) TMI 38
  Provisional Assessment - Transaction Value – Waiver of Pre-deposit - The goods were provisionally assessed and cleared on executing a bond and bank guarantee - Later on the department sought to finalise the provisional assessments and issued notices to the appellants for the same proposing to enhance the value – Held that:- The allegation of the department remains a mere allegation without any basis and that cannot be the reason for enhancement of values - no evidence has been adduced by the department to show that the values declared by the appellants are lower than the contemporaneous value of imports - No attempt has been made to collect data with regard to the prices declared for poppy seeds imported from various countries including Turkey and to compare the prices and arrive at a conclusion that the value declared in the present transaction cannot be accepted - In case the transaction value is rejected, then the department has to proceed sequentially through Rules 5 to 9 and determine the value in the course of international trade - Prices reported in journals/magazines and adoption of the same for the purpose of valuation is not one of the prescribed methods under Rule 5 to 9 and therefore they cannot be adopted or restored to. Prima facie the appellants have made out a strong case in their favour for grant of stay - The appellants have also agreed to keep the bank guarantees alive which they had executed at the time of provisional assessments - Pre-deposit of dues was waived against the appellant and stay recovery during the pendency of the appeals – stay granted.

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• 2013 (11) TMI 37
  Cash Seizure - Deferment of release of cash seized by seizure memo - Held that:- unable to appreciate as to why the petitioner did not seek for release of cash in the writ petition filed earlier and as to why he has taken six years' time to make an application for release of cash and has relied upon the provisions which are not attracted in the case - Commissioner of Central Excise, Meerut has not rejected the application for release of cash. He has only deferred the application until the adjudication is complete - petitioner had not filed the reply to the show cause notice for last five years, we do not propose to interfere in the matter - Decided against assessee.

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• 2013 (11) TMI 36
  Cash Seizure - Deferment of release of cash seized by seizure memo - Held that:- unable to appreciate as to why the petitioner did not seek for release of cash in the writ petition filed earlier and as to why he has taken six years' time to make an application for release of cash and has relied upon the provisions which are not attracted in the case - Commissioner of Central Excise, Meerut has not rejected the application for release of cash. He has only deferred the application until the adjudication is complete - petitioner had not filed the reply to the show cause notice for last five years, we do not propose to interfere in the matter - Decided against assessee.

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• 2013 (11) TMI 35
  Rectification of the Order – Held that:- The Revenue has now filed misc. application stating that the delay was not for 279 days and it was only for 22 days as there was calculation error, thus, there was a mistake apparent on the face of the order - the Revenue has filed the rectification application after a period of six months from the date of the said order - In view of the provisions contained under Section 129 (B) (2) of Customs Act, 1962 the Tribunal can rectify the mistake apparent on the face of the order – In the present case, the application was filed after six months, thus the same is not maintainable. - rectification application dismissed. - Decided against the revenue.

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• 2013 (11) TMI 34
  Revocation of CHA Licence - Forfeiture of the security deposit - failure to comply with the provisions of CHALR, 2004 - Export of restricted item - Appellant contends that his signature were forged on shipping bills - Held that:- the appellant had knowledge of the forging of the documents and deliberately suppressed the fact to the customs authorities - appellant gave signed blank forms to their Tuticorin Branch without knowing the importer or exporter which would show that the Manager of the CHA of Tuticorin acted under the instruction of the Chennai office. Thus, the CHA firm is responsible for the forgery of documents by their employee. There is gross violation of Regulation 13(a), 13(d), 19(8) and 19(10) of CHALR, 2004 - Following decision of Commissioner of Customs Vs. Worldwide Cargo Movers [2006 (11) TMI 281 - BOMBAY HIGH COURT], Commissioner of Customs Vs. H.B. Cargo Services [2011 (3) TMI 816 - ANDHRA PRADESH HIGH COURT] and Sri Kamakshi Agency Vs. Commissioner of Customs [2000 (11) TMI 144 - HIGH COURT OF JUDICATURE AT MADRAS] - Decided against CHA.

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• 2013 (11) TMI 33
  Stay application - Duty demand - Held that:- It appears from the records that the appellant has furnished bank guarantees for the total amount of Rs.14.22 crores and also a fixed deposit of Rs.1.01 crore to secure the Revenue. Further, from submissions of both sides, it appears that there is ad interim stay granted by this bench vide miscellaneous order dated 10.12.2010 which indicates that there was a direction to keep the bank guarantee alive till the final disposal of the stay application and there was a further stipulation that no coercive action be taken till the disposal of the stay application. - the stay of recovery can continue till the final disposal of the appeal which, in any case, is going to take place in the near future - Stay granted.

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• 2013 (11) TMI 32
  Reduction of penalty - Over valuation of goods exported - Held that:- Revenue has been seriously prejudiced as role of C.H.A. is well known to the Commissioner of Customs in customs area which is very sensitive zone. The Appellate Authority should be conscious of the fact that customs matters should not be looked lightly which otherwise endangers the economy. This we say reading Para 5 of appellate order when we noticed that fake transaction was made in respect of subject goods which made the goods liable to confiscation - Notice is hereby issued to the appellant to show cause as to the reason why penalty imposed in adjudication shall not be restored. Appellant is directed to file its reply on 27th May, 2013, with a copy to other side. We direct the A.R. to ascertain whether there is appeal preferred by M/s. Twist International which is the main exporter - stay application rejected.

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• Corporate Laws

• 2013 (11) TMI 31
  Meeting of secured creditors - Whether interest of the workers would be prejudiced if the scheme of arrangement is sanctioned - Held that:- Attention not drawn to any Rule in the Companies (Court) Rules mandating the Company Court to direct, at the first motion stage, that the workmen ought to be heard in relation to their objections to the maintainability of the application. The reason is simple. Dues payable to workmen are treated on par with dues payable to secured creditors and in this sense the workmen are treated on par with secured creditors. If the workmen have any objection to the scheme or compromise, they can voice the same i the meeting of the secured creditors to be held under the directions of the Company Court. They also have a right to voice their objections at the second motion stage and this right was not seriously contested by the learned counsel for the applicant. Thus, in the absence of any statutory provision and having regard to the fact that the workmen, as part of the secured creditors, can voice their objections in the secured creditors' meeting and also at the second motion stage, objection raised for the workmen maintainability of the application are rejected - Decided against petitioner.

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• Service Tax

• 2013 (11) TMI 51
  Eligibility for Cenvat credit - Pandal and shamiyana services - Waiver of Pre-deposit –Whether the appellants are eligible for the Cenvat Credit of service tax paid by them in respect of service tax paid by them in respect of Pandal & Shamiyana Services – Held that:- From the invoices submitted by the appellant that it is not clear whether Pandal & Shamiyana Services were used within the factory or elsewhere - Prima facie, there is no case for the complete waiver of pre-deposit - the appellant directed to deposit Rs. 1 lakh as pre-deposit – upon such submission rest of the duty to be waived till the disposal – Partial stay granted.

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• 2013 (11) TMI 50
  Stay application - Refund of Cenavt - Assessee 100% Export Oriented Unit - Service Tax Registration Certificate not submitted - Held That:- Registration not compulsory for refund - Export of software not a taxable service still refund cannot be denied - Assessee to produce the invoice, bills, receipts to substantiate their claim - Following decision of Portal India Wireless Solutions Pvt. Ltd. Vs. CST, Bangalore [2011 (9) TMI 450 - KARNATAKA HIGH COURT] - Stay on refund denied.

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• 2013 (11) TMI 49
  Exemption from commission income - Benefit of Notification NO. 13/2003-S.T. - Classification of goods - Distribution of mutual funds - Held that:- Benefit of Notification NO. 13/2003-S.T. is available to mutual funds since they are goods. The hon'ble High Court of Andhra Pradesh in the case of Karvy Securities Ltd. [2004 (9) TMI 604 - ANDHRA PRADESH HIGH COURT], has set aside the circular dated 05/11/2003 issued by the CBEC and there is no stay obtained by the Revenue against the said order of the hon'ble High Court of Andhra Pradesh. In view of the above, the decision of the hon'ble High Court of Andhra Pradesh is the law prevailing today - Decided against Revenue.

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• 2013 (11) TMI 48
  Waiver of pre deposit - evidence of amount deposited earlier - Held that:- applicant is a public sector undertaking of West Bengal Government and the Ld. Advocate appearing for the applicant categorically claims that they have already paid an amount of Rs.5.50 crores and submitted a detailed summary of the payments enclosing payment challans. We do not find any reason in not accepting the said submission being borne out on records unless contrary evidence is placed before us by the Department. In these circumstances, we are of the view that deposit of Rs.5.50 crores could be considered as sufficient for the purpose of hearing the appeal. Consequently, the pre-deposit of balance dues adjudged is waived and its recovery stayed during pendency of the appeal. However, we make it clear that in the event the Department finds that the deposits claimed to have been made is found to be incorrect, they are at liberty to approach the Tribunal for appropriate order - stay granted.

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• 2013 (11) TMI 47
  Stay of refund - Refund of service tax - transport of export goods through national waterway, inland water and coastal shipping under (zzzzl) was inserted in notification 17/2009-ST vide notification 40/09-ST dated 30.09.2009. - Held that:- Undisputedly, the period involved in this case is August - September, 2009, the impugned services was inserted in the Notification 17/2009 vide Notification 40/2009 with effect from 30.09.2009 is also not in dispute. In these circumstances, I find that the notification would not be available to the applicant for grant of refund of service tax. Thus, revenue has been able to make out a case for staying the operation of the ld. Commissioner(Appeal)'s order and the same is stayed - Stay on refund granted.

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• 2013 (11) TMI 46
  CENVAT credit - Service Tax paid by the sub-contractor - Held that:- Liability has arisen on the appellant on the ground that he has availed in-eligible CENVAT Credit of Service Tax paid by the sub-contractor. The main thrust of the arguments of the assessee is that they have manufactured the final product for which the services were received by them. It is also his submission that the decision of the Tribunal in the case of Polycab Industries [2010 (6) TMI 156 - CESTAT, AHMEDABAD] will cover the issue in their favour. We are of the view that the issue involved in this case is debatable one, in as much as the appellant’s availment of CENVAT Credit of the services rendered by sub-contractor at the site where there was no Central Excise registration obtained by the appellant for manufacturing of final product, is an arguable issue. The decision referred to by also does not give any detailed reasoning to come to a conclusion that the said decision will apply in the case in hand - stay granted partly.

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• 2013 (11) TMI 45
  Cargo Handling Services - appellant herein collected the salt and Soda ash in the factory of Tata Chemicals, packed them and stocked them in the factory as well as on the railway wagons. - Held that:- Service Tax liability on Cargo handling services would not be applicable in this case as is held by Hon'ble High Court of Jharkhand in the case of Modi Construction Co [2011 (4) TMI 598 - JHARKHAND HIGH COURT]. At the same time, we also find that the appellant has been raising bills on Tata Chemicals Ltd for cleaning activity undertaken by them in the factory premises, which is evident from the bills which indicate the description of removal of dust and debris and cleaning of tar roads etc. Since there is no amount which has been bifurcated which attribute to the cleaning services, we find that the appellant needs to be put to some condition to hear and dispose the appeal - stay granted partly.

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• 2013 (11) TMI 44
  Airport service - Valuation - levy of service tax on Development fees recovered from passengers - Demand of service tax - Held that:- none of the issues, germane to the exigibility to service tax has been considered by the adjudicating authority at all. Therefore, the matter needs fresh consideration. Accordingly, we remand the matter back to the adjudicating authority for de novo consideration of the various issues involved as discussed above, taking into account, inter alia, the decisions of the Hon'ble Apex Court in the case of Cochin International Airport Ltd. [2009 (7) TMI 120 - KERALA HIGH COURT], Acer India Ltd. [2004 (9) TMI 106 - SUPREME COURT OF INDIA] and the various instructions issued by the CBE&C and thereafter, pass a fresh order after granting the appellant a reasonable opportunity of being heard. The appellant is also directed to co-operate with the department and make their submissions without resorting to any dilatory tactics. Since the revenue involved is significant, we direct the adjudicating authority to pass a denovo order within a period of three months from the date of communication of this order. - matter remanded back

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• 2013 (11) TMI 43
  Manpower Recruitment or Supply Agency Service - Supply of drivers for transportation - Waiver of pre deposit - Classification of service - Held that:- Prima facie, we find that the Applicant are engaged in transporting/transferring the chassis from the factory of M/s. TELCO to its various destinations. The Applicant received the value of services on the basis of distance for which the chassis were transferred by them. We do not find merit in the observation of the ld. Commissioner that since drivers were supplied by the Applicant for movement of the chassis, vehicles etc., therefore, the amount received for transferring the vehicles, chassis etc. would come under the head of ‘Manpower Recruitment or Supply Agency Service’. We also take note of the fact that the Applicant had been registered from October, 2006 under the category of Business Support Service and discharging service tax on the said services rendered. In these circumstances, we are of view that the Applicant could able to make out a prima facie case for total waiver of predeposit of the dues adjudged. - Stay granted

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• 2013 (11) TMI 42
  Stay application - Penalty u/s 78 - services namely, Technical Testing and Analysis Service, Investigation Charges and Transportation Charges/Report and Document Charges etc. rendered in the context of road-construction by Government Agencies and service of road-construction - Exemption from service tax - Scope of Circular No.80/10/04-ST dated 17.09.2004 and Circular F.No. B-I/6/2005-TRU dated 27.07.2005. - Held that:- It is evident from perusal of para 13.13.4 of the Circular dated 17.09.2004 that the definition of construction service specifically excludes construction of roads, airports, railways, transport terminals, bridges, tunnels under long distance pipelines, dams etc. In so far as the liability to pay service tax on Business Support Service is concerned, it is amply clear from the Contract entered into between the Applicant and the third party that the Applicant were appointed as service-provider for maintenance of the building and for providing alleged services. Prima facie, the classification of the said services under the category of Business Support Service does not appear to be correct. We find that in this case, service tax has been demanded on the basis of income during the relevant period on account of various heads in the balance sheet. From the proceedings before the lower authorities, it is not clear as to whether the services were provided as part of construction of road being not examined. The individual contracts quoted by the ld. Consultant have also not been analyzed and the same will be examined during the final hearing. In these circumstances, we are of the view that the Applicant could able to make out a prima facie case for full waiver of predeposit of the dues adjudged and its recovery stayed during the pendency of the Appeal - Stay granted.

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• 2013 (11) TMI 41
  Valuation - inclusion of reimbursement of expenses - Manpower Recruitment of Supply Agency - inclusion of Lease value which includes Lease rent for Land, plant & machinery and other infrastructure. - Penalty u/s 78 - Held that:- Rule 5(1) of service tax (Determination of value) Rule 2006 has been held ultra vires Section 67 of the Finance Act, 1994 and this Rule can not be relied on by the adjudicating authority. Similarly tax is demanded on Manpower Recruitment or Supply Agency service value of which is required to be segregated from total lease amount. Without expressing any view on merit of the case we remand the matter back to commissioner of Central Excise for fresh adjudication in light of decision of Delhi High Court in case of Intercontinental Consultants & Technocrats Pvt. Ltd. (2012 (12) TMI 150 - DELHI HIGH COURT) after affording a opportunity of hearing of the appellants - matter remanded back.

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• Central Excise

• 2013 (11) TMI 30
  Restoration of Appeal - Rejection from Committee of Disputes to entertain the appeal – Held that:- Following Electronics Corporation of India Ltd. v. Union of India [2011 (2) TMI 3 - Supreme Court] - the Committee on Disputes (COD) was held to have outlived its utility consequent upon which the Supreme Court recalled its earlier directions on the subject – The order of the Tribunal restoring the appeal was passed in the facts of the present case – Decided against Petitioner.

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• 2013 (11) TMI 29
  Refund of unutilized cenvat credit - drawing of SS wire from SS rods - Meaning of Assessee Rule 16 of the Central Excise Rules – Whether the judgment in the case of Commissioner of Central Excise v. Technoweld Industries Industries [2003 (3) TMI 123 - SUPREME COURT OF INDIA] was applicable – dispute for the period from 29-5-2003 to 8-7-2004. - Held that:- Held that:- The persons like the petitioners are termed to be “assessee” within the meaning of Rule 16 of the Rules - Rule 16 of the Rules lays down that where any goods on which duty had been paid at the time of removal are brought to any factory for being re-made, refined, re-conditioned or for any other reason, the assessee shall state the particulars of such receipt in his records and shall be entitled to take Cenvat credit of the duty paid as if such goods are received as inputs under the Cenvat Credit Rules, 2002 and utilize this credit according to the Rules - By virtue of the amendment, the petitioner is an “assessee” within the meaning of Rule 16 of the Rules and as such, would be entitled to avail of Cenvat credit in accordance with the Rules. In the light of the amendment in the statutory provisions, the order dated 8-6-2005 passed by the Commissioner (Appeals) as well as the orders in-original dated 20-12-2004 passed by the adjudicating authority are clearly contrary to the statutory provisions and cannot sustained –, the refund claims of the petitioners shall stand restored to the file of the adjudicating authority - Decided in favour of Petitioner.

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• 2013 (11) TMI 28
  Modification of Stay Order – Waiver of Pre-deposit – Held that:- If there is no change in circumstances, modification application should not be entertained – Following Baron International Ltd. Vs Union of India [2003 (9) TMI 97 - HIGH COURT OF JUDICATURE AT BOMBAY] - Judicial discipline requires that the Tribunal follow a consistent policy and if there is contrary decision of another Bench it has to be either followed or referred to Larger Bench - At the time of consideration of stay application, if there is a favourable decision in the case of the appellant, the same will have to be considered and a view has to be taken that appellant has made out a prima facie case - In this case, if the decision of the Tribunal were published/brought to our notice, then the decision would have been different, since a view would have been taken that appellant has made out a prima facie case that even subsequent reversal would be sufficient. After coming to know about the decision of the Tribunal, the appellants have reversed the proportionate credit with interest and according to the learned counsel, they have addressed the Commissioner to intimate the correctness or otherwise of the amount and if there is any differential amount, they have assured that they will pay the amount - the appellants have fulfilled the requirement as per the decision of the Tribunal in Bombay Bench - Therefore, the appellant has made out a prima facie case for waiver - the appellant has also made out a case for modification of stay order passed by this Bench - the requirement of pre-deposit waived and modification of the stay order allowed and stay against recovery of the dues granted during the pendency of the appeal – Stay granted.

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• 2013 (11) TMI 27
  Valuation - Misdeclaration of Facts - Differential Duty - Extended period of limitation - Revenue was of the view that the value of “Design and Engineering Work” was not included in the assessable value of “Mounted Storage Vessels” manufactured and cleared by the appellant – Held that:- There was no need for the appellant to suppress or mis-declare of any facts as the appellant could have taken CENVAT credit which was more than the duty payable as worked out by the department - it cannot be said that the appellant has committed suppression or mis-declaration, fraud, collusion, etc. to evade payment of duty - by not availing the CENVAT credit, the revenue realisation is nearly more than Rs. 10 lakhs extra - the entire demand is time-barred – the order set aside – Decided in favour of Assessee.

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• 2013 (11) TMI 26
  Job Work - Activity Manufacture OR Not – levy of service tax or duty of excise - loss of original identity - conversion of pipes/tubes - Waiver of Pre-deposit - Held that:- For the period subsequent to 16/06/2005, the order of the Commissioner (Appeals) has attained finality since there is no challenge to the order of the Commissioner (Appeals) by both the sides that appellant is liable to pay service tax on the processes undertaken by them on job work basis for others - The challenge to the Commissioner (Appeals) order is only with regard to the period prior to 16/06/2005 - unless it is shown that the processes undertaken by the appellants when job work is done on the pipes are different from the situation when they undertake the processes on their own account, the Department cannot be said to have a prima facie case - the appellant has been able to make out a strong prima facie case in their favour for waiver - there shall be waiver of pre-deposit and stay against recovery during the pendency of appeal – stay granted.

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• 2013 (11) TMI 25
  Demand of duty, interest and penalty - company under liquidation – Waiver of Interest and Penalty - Appellant assembled computers without payment of duty by the appellant-company - Hon’ble High Court of Karnataka vide their order dated 28.3.2012 had ordered for winding up of the company in accordance with law and have also directed the official liquidator to take charge of the assets of the company and take steps for realization of the same – Held that:- It is very clear that the appeal filed by the appellant-company gets abated – Nevertheless if the appeal abates it would mean that the order under challenge gets revived and the demand is enforceable - it would be appropriate that a copy of the order should be sent to the Registrar of the Hon’ble High Court for sending it to the official liquidator for appropriate action by him - unless official liquidator files an appeal for restoration of the appeal, the appeal which is abated ceases to be a matter. Regarding penalties on directors - held that:- penalty of Rs.10,000/- each on the Directors is nominal and no financial difficulty has been pleaded before us. The total duty evaded according to the appeal memorandum is Rs.17,79,472/- and having regard to the amount of duty evaded - amount of penalty ordered to be pre-deposited.

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• 2013 (11) TMI 24
  SSI Exemption – manufacture of packing material with brand name - validity of Departmental clarification in 1987 – Waiver of Pre-deposit – Held that:- The present case is a case where without the notification barring exemption assesses were made to believe that branded goods manufactured by them shall be exempt from duty in terms of Circular No. 345 dated 29/10/87 - The appellant cannot take a plea that the Circular dated 29/10/87 withdrawn on 01/9/08 shall hold the field of exemption - But the peculiar circumstance in this case noticeable is from Notification No. 4/2010 which is part of the legislation denies exemption amending the Notification No. 8/2003 - This prevailed over the assesses till 27/02/10 in spite of the law declared by the Supreme Court in Kohinoor Elastics Pvt. Ltd. vs. CCE, Indore [2005 (8) TMI 115 - SUPREME COURT OF INDIA] - Keeping the difficulty aforesaid there shall be waiver of pre-deposit till 31st January 2014 or disposal of appeal, whichever period is earlier - stay granted.

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• 2013 (11) TMI 23
  Reversal of Cenvat Credit on inputs written off - Waiver of Pre-deposit of Duty and Interest – Held that:- The provision of Rule 3 (5) (B) require reversal of Cenvat credit in respect of raw materials which were written off, was introduced with effect from 01.05.2007 - as long as the inputs on which the credit has been availed, are within the factory but the same are written off from the records, the credit is not required to be reversed - the revenue has not alleged any clandestine removal of the cenvatable inputs - the applicant has a good prima facie case so as to dispense with the condition of pre-deposit of duty and interest - Penalty and recovery stayed during the pendency of the appeal – Stay granted.

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• 2013 (11) TMI 22
  Cenvat Credit - Requirement of Maintaining Separate Account for credit to be utilized in payment of Service Tax and / or Central excise duty - Held that:- There is no need for maintaining separate accounts and the credit of service tax paid by the contractors and utilized for payment of excise duty by the appellant allowed - Following CCE Coimbatore Vs Lakshmi Technology and Engineering Industries Ltd. [2011 (2) TMI 1275 - CESTAT, CHENNAI] - no separate account is required for credit of duty taken on inputs and input services and the assessee was allowed the benefit – Decided in favour of Assessee.

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• 2013 (11) TMI 21
  CENVAT Credit - catering services – Waiver of Pre-deposit - Whether the appellant is eligible for the benefit of CENVAT credit of service tax paid on outdoor catering services - Revenue was of the view that there is no obligation cast on the appellant to provide canteen facilities to the employees - Held that:- CCE, Nagpur Vs. Ultratech Cement Ltd. [2010 (10) TMI 13 - BOMBAY HIGH COURT] – The effect of providing canteen within the factory is same whether the number of employees is more than 250 or less than 250 - providing catering services in the factory premises will improve their manufacturing efficiency and the credit in respect of catering services allowed - There are two orders in favour of the assessee out of three orders passed by three different Benches of Tribunal – thus there shall be waiver of pre-deposit and stay against recovery of the dues during the pendency of appeal – stay granted.

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• CST, VAT & Sales Tax

• 2013 (11) TMI 53
  Suppressed sales turnover - Discrepency in books of accounts - Non maintenance of records for inter state purchases - Penalty u/s 12(3) - Held that:- A reading of the order of the Assessing Officer, the Appellate Assistant Commissioner and the Tribunal shows the inconsistent stand taken by the assessee. While before the assessing officer the assessee denied having any transaction with the Delhi parties, before the Tribunal, the assessee accepted the purchase effected from these sources. Thus, the extracts and the stock variation clearly pointed out the nature of dealing of the assessee warranting equal addition, as had been done by the Appellate Assistant Commissioner - Tribunal passed a very mechanical order, extracted the arguments and accepted the plea of the assessee on the face value to delete the equal time addition. Although, normally, on a revision this Court does interfere with the order of the Tribunal, where there are findings of the Tribunal, which is the highest fact finding authority in the hierarchy of appeal and revision authorities, when the order of the Tribunal lacks any material to base its view and when there is no discussion at all as to why it thought fit to cancel the estimated addition, on the face of the materials available, as had been found by the Assessing Officer, as well as the Appellate Assistant Commissioner, we uphold the contention of the Revenue - Decided against assessee.

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• 2013 (11) TMI 52
  Levy of penalty against the owner of the vehicle - Amendment made in Section 78(5) vide Act No.7 of 2002 - Held that:- M/s. Guljag Industries (supra) finds support from the amendment made in Section 78(5) vide Act No.7 of 2002 w.e.f. 22.3.2002 by which the expression "person in-charge of the goods" under the old Section 78(5) is substituted by the words "the owner of the goods or a person authorized in writing by such owner or person in-charge of the goods". It is once again emphasized that Act No.7 of 2002 is an exercise in substitution. Therefore, the Legislature seeks to clarify the expression "person in-charge of the goods" occurring in Section 78(5) as it stood earlier by Act No.7 of 2002. In fact, it is interesting to note that even under Section 22A(3) of the 1954 Act, penalty was leviable on the "owner of the goods" for possession of goods not covered by the Goods Vehicle Record - Following decision of Guljag Industries Versus COMMERCIAL TAXES OFFICER [2007 (8) TMI 344 - SUPREME Court] - Decided against assessee.

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• Indian Laws

• 2013 (11) TMI 40
  Presence of the Petitioner while opening of Authenticated Document – Held that:- Petitioner contended that If the Investigating Officer intends to get those documents opened, he can open it in the Court, in absence of the petitioner who would be represented by his lawyer and the petitioner will have no objection if it is opened and is handed over to the Investigating Officer and therefore, any direction given to the petitioner to remain present is unwarranted - There is no justification on the part of the Court to ask the petitioner to remain present at the time of opening of those envelopes - the order dated 23-9-2011 and also the order dated 28-10-2009 set aside – Decided in favour of Applicant.

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