TMI Tax Updates - e-Newsletter
November 12, 2012

Case Laws in this Newsletter:

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

Articles

1. A CAVEAT IN FESTIVE CELEBRATIONS

   By: Dr. Sanjiv Agarwal

2. NO SERVICE TAX ON AMOUNTS NOT RELATED TO TAXABLE SERVICES

   By: Meenu Garg

3. WHETHER HOLDER OF CHEQUE CAN INITIATE PROCEEDINGS OF PROSECUTION UNDER SECTION 138 OF NEGOTIABLE INSTRUMENT ACT, 1881 FOR THE SECOND TIME IF HE HAS NOT INITIATED ANY ACTION ON EARLIER CAUSE OF ACTION?

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. CCEA approves additional allocation of wheat and rice under Open Market Sale Scheme – Domestic

2. RFP for evaluation of Schemes under Indian Leather Development Programme (ILDP) - November, 2012

3. Protocol Amend the Convention between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Republic of India for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains

4. Handloom and Handicraft Sector Should be given Enabling Policy Support, says President

5. ‘‘Each possesses within himself two antagonistic and foolish counsellors, whom we call by the names of pleasure and pain…besides these two, each man possesses opinions about the future, which go by the general name of ‘expectations’; and of these, that which precedes pain bears the special name of ‘fear’, and that which precedes pleasure the special name of ‘confidence’.”

6. Relaxation in External Commercial Borrowing Policy for the Upcoming 2g Spectrum Auction

Notifications

Income Tax

1. Protocol - dated 30-10-2012 - IT

Protocol Amend the Convention between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Republic of India for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains

Highlights / Catch Notes

Income Tax

• High Court Judgments Override Special Bench Decisions for Section 80IB Deductions Under Income Tax Act.

  Case-Laws - AT : Deduction u/s. 80IB - when the judgments of High Court are available on this issue decision of Special bench of the Tribunal is no more relevant - AT
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• CIT Cannot Invoke Jurisdiction u/s 263 as Order is Erroneous but Not Harmful to Revenue's Interest.

  Case-Laws - AT : Revision - Since the order sought to revised u/s.263 was erroneous but not prejudicial to the interest of the revenue, jurisdiction u/s.263 could not have been invoked by the CIT - AT
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• Income Tax Rules: Temple Maintenance and Deity Worship Expenses Not Classified as Religious for Tax Purposes.

  Case-Laws - AT : Expenses incurred for worshipping of Lord Shiva, Hanuman, Goddess Durga and for maintenance of temple cannot be regarded to be for religious purpose. - AT
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• Shipping Income Not Taxable in India: Assessee's Non-Connected Ships to Permanent Establishment Avoid Taxation.

  Case-Laws - AT : International shipping profits - although the assessee company had a PE in India in the year under consideration, the ships i.e. the property in respect of which shipping income was paid to the assessee company being not effectively connected with that PE - income not taxable in India - AT
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• Non-Compete Fee Not Eligible for Depreciation Under Income Tax Act Section 32(1)(ii); Classified as Personal, Not Business Expense.

  Case-Laws - HC : Non-compete fee - Revenue v/s Capital - an agreement not to compete which is purely personal. - not eligible for depreciation u/s 32(1)(ii) - HC
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• Active Use of Property for Business Qualifies as "Own" Occupation for Tax Purposes on Unsold Flats.

  Case-Laws - HC : Annual letting value of unsold flats - The intention of the lawmakers was that occupation of one’s own property, in the course of business, and for the purpose of business, i.e. an active use of the property, (instead of mere passive possession) qualifies as “own” occupation for business purpose. - HC
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Indian Laws

• UK-India Agreement Updated: Avoiding Double Taxation & Preventing Fiscal Evasion on Income and Capital Gains.

  News : Protocol Amend the Convention between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Republic of India for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains
  Visit to Get Source

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• India's Gross Direct Tax Collections Rise 6.59% to Rs. 3,02,810 Crore from April to October 2012-13.

  News : Gross Direct Tax Collections up by 6.59 Percent During April-October 2012-13 and Stood at Rs. 3,02,810 Crore as against Rs. 2,84,081 Crore in the Same Period Last Year
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Wealth-tax

• Defining "Hindu" in Wealth-Tax Laws: Impact on Tax Assessments and Liabilities Explored Through Case Laws Analysis.

  Case-Laws - SC : What is Hindu?
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Case Laws:

• Income Tax

• 2012 (11) TMI 352
  Exemption u/s 80G – Religious purpose versus Charitable purpose – CIT he took the view that since the expenditure on religious object exceeds 5% of the total income of the assessee trust, therefore, he did not approve the assessee u/s 80G(5)(vi). – held that:- CIT must be aware of that the Hindu consists of a number of communities having the different gods who are being worshipped in a different manner, different rituals, different ethical codes. Even the worship of god is not essential for a person who has adopted Hinduism way of life. Thus, Hinduism holds within its fold men of divergent views and traditions who have very little in common except a vague faith in what may be called the fundamentals of the Hinduism. The word 'community' means a society of people living in the same place, under the same laws and regulations and who have common rights and privileges. This may apply to Christianity or moslem but not to Hinduism. Therefore, it cannot be said that Hindu is a separate community or a separate religion. Technically Hindu is neither a religion nor a community. Expenses incurred for worshipping of Lord Shiva, Hanuman, Goddess Durga and for maintenance of temple cannot be regarded to be for religious purpose. - CIT directed to grant approval to the assessee-trust u/s. 80G(5)(vi) of the Act. – in favor of assesse.

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• 2012 (11) TMI 351
  Non-charging of interest on non-performing advances on accrual basis - CIT(A) deleted the addition - assessee is a financial institution owned by the Government of Gujarat - Held that:- The interest on sticky loan which has accrued on the NPA were not accounted for in the profit and loss account by the assessee and as per the guidelines of the RBI such interest was chargeable in the accounting year in which it is credited to the P&L account for that year or when it was actually received by that institution whichever is earlier, as the provisions of the Act. In this case, the assessee neither have credited the interest to the profit and loss account of the relevant accounting period nor has actually received the same, and therefore the said addition was rightly deleted by the CIT(A) - in favour of assessee. Rejection of books of accounts - Held that:- Various observations of the statutory auditors were mainly in respect of system of accounting, procedural lapses and internal checks and controls. The management of the assessee has claimed that it had complied with all such observations of the statutory auditors and the same were reflected in the directors’ report in point no.III at page no.8 of the annual accounts of the assessee. On similar facts, the accounts books of the assessee were accepted by the department in the earlier years as well as in the subsequent assessment year 2006- 2007 - AO without bringing any material deficiencies in the books of the accounts to show as to how the appellant’s profit for the relevant period cannot be ascertained correctly on the basis of the books of accounts maintained by wrongly invoking the provisions of section 145(3) - in favour of assessee. Disallowance of depreciation - leased assets - Held that:- the Revenue have not gone into the terms and conditions of the lease agreements entered into by the assessee-company. There is no finding by the AO that these lease were only finance lease and not operating lease - set aside the issue to the file of the AO with direction to decide the issue afresh relying on Asea Brown Boveri Ltd. Versus AFCI [2004 (10) TMI 325 - SUPREME COURT OF INDIA] wherein held that in case of finance lease, it is the lessee who, for all practical purposes, is the owner of the assets - in favour of assessee for statistical purposes. Disallowance of penal interest - Held that:- Perusal of the Resolution no. JNV-1099-2023-A of the Govt. of Gujarat, Finance Department has prescribed rates of interest on loans for the public sector undertakings, which is clearly in the nature of “penal interest” and not in the nature of penalty. The assessee is in the business of finance and interest was paid by the assessee-company on account of late payment of amount payable to the State Government. There is no infringement of law and there is no act on the part of the assessee which can be said to be against the public policy. The penal interest in the nature of finance charges for late payment of instalment/amount could not be equated with penalty imposable due to some infringement of law. The use of the word “penal interest” as a nomenclature does not mean any penalty for infringement of law - in favour of assessee.

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• 2012 (11) TMI 350
  GP addition - Survey u/s.133A - CIT(A) deleted the addition - Held that:- The GP rate worked out by the A.O. in year under consideration @16.04% which was 23.01% in immediate preceding year. As assessee was maintaining other books i.e. purchase register, sales register, details of manufacturing cash book and ledger etc. & the books of account are audited which has been accepted by the other departments. When A.O. had not brought on record any particular defects in the books of account no reason to intervene in the order of the CIT(A) - in favour of assessee. Addition to stock - CIT(A) deleted the addition - Held that:- The discrepancy in stock of Rs.7,65,000/- had been included in the closing stock and credited in the P&L account by assessee - no reason to intervene in the order of the CIT(A) - in favour of assessee. Unaccounted scrap sale - CIT(A) deleted the addition - Held that:- Held that:- The assessee has included scrap sale in sale of boxes and made part of P&L account of the year under consideration - no reason to intervene in the order of the CIT(A) - in favour of assessee. Disallowance u/s.43B - Held that:- PPF amount had been paid within due date of filing return. Therefore, the A.O. is directed to verify the payment - in favour of assessee for statistical purposes.

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• 2012 (11) TMI 349
  Deduction u/s. 80IB - whether to be calculated after reducing the deduction u/s. 80HHC or on stand alone basis - Held that:- Assessee relied on decision of Associated Capsules P. Ltd. Versus DCIT [2011 (1) TMI 787 - BOMBAY HIGH COURT] & CIT Versus Millipore India P. Ltd. [2011 (2) TMI 1210 - KARNATAKA HIGH COURT] wherein held that the tribunal was not right in holding that as per Section 80-IA(1) has to be reduced from the profits of the business of the undertaking while computing deduction under any other section under Chapter VI – A of the Income Tax Act, 1961. CBDT Circular No. 772 dated December 23, 1998 stated that section 80-IA(9) has been introduced with a view to prevent the taxpayers from claiming repeated deductions in respect of the same amount of eligible income and that too in excess of the eligible profits. Bench has not considered two High Court decisions referred by the assessee which are in his favour & has relied on decision of Special bench of the Tribunal, thus when the judgments of High Court are available on this issue decision of Special bench of the Tribunal is no more relevant - This action of Hon’ble ITAT is against the principle of judicial hierarchy would constitute mistake apparent on record that requires to be modified - in favour of assessee.

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• 2012 (11) TMI 348
  Exemption u/s. 11 - denial of claim as sum had been paid to founder members out of the corpus fund - Held that :- The amount was paid to the non-founder members on account of a dispute between the assessee society and them and there was a practical problem to keep these recipients of the amount within the committee of office bearers and the situation so warranted that had the assessee not paid this amount, the society could not have continued affecting the interest of larger number of students of the assessee. Being so, the assessee refunded this portion of money contributed by these two persons, and that refund of money cannot be considered as a benefit given to these persons - The fact whether defaulting office bearers are the founder members of the assessee trust or not has to examined. Regarding allowability of exemption u/s. 10(23C)(iiiad)/(vi) there is no allegation that the assessee is not imparting education. Firstly, there is no evidence that such benefit has been given to the founder member of the trust. Secondly, even if it is so, such instances would only hit the case of the assessee within the meaning of sections 11 to 13 and cannot be imported to deny exemption u/s. 10(23C)(iiiad) provided a clear finding on the basis of material on record is given that the assessee trust is not solely for the purpose of imparting education. Some disallowances of expenses or payments claimed by the assessee cannot be held to be a separate object for which the trust is existing thereby holding that the trust is not existing solely for education purposes. Mere certain lapses and disallowances cannot become basis for denying exemption u/s. 10(23C)(iiiad) - matter is restored to the file of the AO to have a fresh look on the entire subject - in favour of assessee for statistical purposes.

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• 2012 (11) TMI 347
  Transfer pricing adjustment - inclusion and exclusion of the various comparable companies by applying different filtration criteria - Held that:- The first criterion of filtration adopted by the TPO for selecting the comparable companies by applying a search criteria of "Sales trading / Total sales exceeding 75%" is correct and the second filtration criterion for selection of comparables should be the companies having export sales of around 13% of the total sales be adopted. With regard to the elimination of Oregon Commercials Ltd., by the TPO, it is found that the reasoning given by the TPO is not correct as the TPO has clearly relied on the data of that company for F.Y. 2003-04, which is clearly violative of Rule-10B(4), which prescribes that the data to be used for comparison shall relate to the financial year of International Transaction and data relating to not more than two years prior to such F.Y., therefore, the said company should be taken into consideration after adopting the above two selection criteria - restore the matter to the file of the TPO and direct him to compute the assessee's average gross profit margin in determining the ALP in accordance with the observations made above - Revenue's appeal partly allowed for statistical purposes.

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• 2012 (11) TMI 346
  Revision of orders by CIT(A) - computation of LTCG for claiming exemption u/s 11(1A) - AO's order is prejudicial as the investments had been made in the previous year prior to previous year in which the transfer of the capital asset took place - Held that:- The CIT has proceeded to apply the provisions of Sec.11(1A)(a)(ii) to the present case, thus it is clear that the capital asset is property held under trust wholly for charitable or religious purposes. As decided in CIT Vs. East India Charitable Trust [1992 (1) TMI 21 - CALCUTTA HIGH COURT] capital gain is also income of the trust and Sec.11(1A) is not the only way in which capital gain has to be applied for charitable purposes. It is one of the way of applying capital gain for charitable purpose. If capital gain is applied for charitable purpose of the Assessee not by acquiring a new asset but for other charitable purpose, then there is no reason why it should not be considered as application of income for charitable purpose enabling the Assessee to claim exemption u/s.11(1). In the present case there is no question of application for accumulation of income for being spent for charitable purpose in future because such application is already deemed to have been made in the previous year itself. Admittedly, even as per the order of assessment there was application for charitable purpose, even after disallowance of depreciation made by the AO, of a sum of Rs.1,60,23458 over and above the receipts of the Assessee during the previous year. The capital gain considered as not utilized for charitable purposes u/s.11(1A) is only a sum of Rs.1,21,61,909.33 Ps. The surplus utilization of Rs.1,60,23,458 should be sufficient to set off the capital gain not utilized for charitable purpose u/s.11(1A). Thus the net deficit in this AY to be carried forward for set off in the later years would be Rs.1,60,23,458 - Rs.1,21,61,909.33 Ps. Viz., Rs.38,61,909.67 Ps. Thus it can be fairly concluded that though the order of the AO was erroneous, the same was not prejudicial to the interest of the revenue as no part of the capital gain became taxable because of loss of exemption u/s.11(1A). Since the order sought to revised u/s.263 was erroneous but not prejudicial to the interest of the revenue, jurisdiction u/s.263 could not have been invoked by the CIT - direction to quash the order u/s.263 - in favour of assessee.

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• 2012 (11) TMI 345
  Extension of stay of outstanding demand - Held that:- As decided in CIT v. Ronuk Industries Ltd. [2010 (11) TMI 461 - BOMBAY HIGH COURT] where the delay in disposal of pending appeal is not attributable to the assessee, the Tribunal has the power the extend the stay beyond the period of 365 days even after the amendment of third proviso to Section 254(2A) of the Act w.e.f. 1.10.2008 - thus grant of stay beyond 60 days would be in the interest of natural justice - in favour of assessee.

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• 2012 (11) TMI 344
  Deduction u/s 80 IB(10) - CIT(A) allowed the claim on pro-rata basis - Held that:- There is no dispute to the fact that the project of the assessee was approved prior to 1.4.2005. However, the occupation certificate was received after 1.4.2005 by the assessee. On consideration of the facts as stated by authorities below and also found during the course of survey, it is not in dispute that assessee has allotted two adjoining flats either to same person or to the same family members to enable them to join together and have a bigger unit. Merely because the said flats had been shown in municipal plan to be separate but on physical examination and considering the surrounding circumstances, when it was found that adjoining flats were meant to be a single unit, which was more than the prescribed limit i.e. 1000 sq. ft, it can be fairly concluded that CIT(A) has rightly held them to a single unit irrespective of the fact that there are separate sale agreements entered into by the assessee. AO as well as CIT(A) have categorically stated that the completion certificate is issued by Municipal Corporation only when the plan is approved prior to commencement of project. Though, there is violation/change in the approved plan, assessee firm did not inform the Municipal Corporation nor there is evidence to show or intimation/application was made to Municipal Corporation regarding charges in the original plan. Ld CIT(A) has categorically stated that the partner of the assessee firm himself admitted during the survey action that they had not informed the Municipal Corporation regarding changes in original plan - Thus considering above facts need to agree with CIT(A) that it is not enough if there are documents evidencing an apparent situation, if such documents are made to cover up what could be inferred reasonably as unreal. The position will have to be viewed as per direct observation of the survey team and it was found that one combined flat being shows as two separate units. So, we uphold the findings of CIT(A) on this aspect. Inclusion of balconies and projections in the built up area - Held that:- CIT(A) has rightly stated that when the projections/elevations are just have 4”, 3”, 5” and 7” of the floor level, they implies that there are extended area and can be utilized as carpet area. Not only this, CIT(A) has also stated that the booking confirmation/particulars sheets that are made at the time of booking the flats give the exact area that is sold to the buyers and the books impounded and inventoried also give the picture to the actual area sold, and this includes all projections and other common areas. Therefore, agreeing with CIT(A) that the said extended area of projections/elevations/balconies are to be included while admeasuring all the flats and, accordingly, CIT(A) has rightly held that area of some of the flats exceeded the prescribed limit of 1000 sq. ft. . The authorities below have rightly held that assessee is not entitled for deduction in respect of the flats u/s.80IB of the Act. Whether deduction u/s.80IB can be given on prorata basis or not - Held that:- As decided in DCIT Versus Brigade Enterprises (P) Limited [2008 (8) TMI 453 - ITAT BANGALORE-A] relief could be given to the assessee on pro-rata basis where some of the units exceeded the area limit, thus upholding the order of CIT(A) that assessee is eligible for deduction on pro-rata basis in respect of the flats not exceeding 1000 sq. ft.

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• 2012 (11) TMI 343
  Salary income - Whether tax borne by the employee is not part of the pay? - Held that:- Though the assessee had paid tax of Rs. 50.00 lakhs, since the assesses was entitled to reimbursement of Rs. 35.00 lakhs from the Company, the salary income (Rs. 77.00 lakhs) received by the assesses had to be enhanced by Rs. 35.00 lakhs only and not the balance Rs. 15.00 lakhs which is paid by the assesses from the salary income. In these circumstances, the Tribunal was justified in holding that the tax amounting to Rs. 15.00 lakhs paid by the assessee from the salary income (not reimbursed by the company) could not be added to that income of the assessee - in favor of assessee. Notional interest on interest free deposit made for accommodation - part of perquisite of the assessee or not ? - Held that:- Allowed the claim of the assessee by following the decision of this Court in the case of M.A.E. Paes v. CIT [1997 (9) TMI 83 - BOMBAY HIGH COURT]

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• 2012 (11) TMI 342
  Setting aside Re-opening of Assessment - Held that:- No reasons have been given by the High Court for setting aside the re-opening of assessment - In the circumstances, the impugned Order of the High Court dated 23rd December, 2011, in Writ Petition No. 1807 of 2011, is set aside and the matter is remitted to the High Court for de novo consideration in accordance with law - civil appeal filed by the assessee is, accordingly, allowed with no order as to costs

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• 2012 (11) TMI 341
  Reassessment Proceedings – Assessee being in business of onions on commission basis in the notified market area of Market Committee, Amritsar. Order of Secretary, Market Committee, Amritsar, is without mentioning of any number and date of passing of such order. Such order cannot be sustained in the eyes of law and, therefore, the said order has been set aside. Held that:- Since the basis for which the reassessment proceedings were initiated has been set aside, there remains nothing with the Income Tax Department for the issuance of notice u/s 148 of the Act and the matter does not survive and therefore, the order of the AO is bound to collapse since the super structure erected on the foundation of illegal order cannot stand and accordingly the Ld. CIT(A) has rightly deleted the addition of Rs.61,42,981/- no infirmity in the order of CIT(A), who has rightly quashed the assessment made by the AO and has rightly deleted the addition so made - Thus, all the grounds of appeal of the Revenue for the A.Y. 2001-02 are dismissed – in favour of assessee

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• 2012 (11) TMI 340
  Assessment u/s 144 – Service of Notice - Following the judgement of Supreme Court in case of [CIT vs. Ramendra Nath Ghosh 1971 (8) TMI 26 - SUPREME COURT] held that:- where the assessee contended that he had no place of business at the relevant time and the serving officer did not mention the names and addresses of the persons who identified the place of business of the assessee nor did mention that he personally knew the place of the business of the assessee, the service of notice must be held to be not in accordance with law. AO did not properly assume jurisdiction u/s 143(2) of the Act and he rightly cancelled the assessment framed by the A.O - no interference is called for in the well reasoned order passed by first appellate authority - Therefore, present appeal filed by the Revenue is dismissed.

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• 2012 (11) TMI 339
  Addition on account of Deposit Work – Held that:- There is no evidence on record to establish that the amount invested in FDRs belong to the Market Committee and not to the appellant and therefore, as per him, the interest earned by the assessee has been rightly assessed in the hands of the assessee - In view of the absence of evidence and also the precedent in assessee's own case, no justification to interfere with the order of the CIT(Appeals) - Ground raised by assessee is dismissed. Additions on account of sale of tender forms and establishment fees, paid to the contractor – Held that:- In the immediately preceding assessment year, the issue was decided against the assessee and following the same, impugned addition has been upheld. The said position continues even before us and there is no material brought on record by the appellant to the contrary - Ground raised by appellant are dismissed as being bereft of merit. Addition on account of sums received from HRDFA – Held that:- The appellant had shown these as capital receipts whereas the AO had treated it to be revenue receipts. The appellant has challenged he addition stating that the amount in question is a contribution received from a charitable trust whose income is exempt u/s 12A of the I.T. Act. However, there is no merit in this submission as the nature of the receipts in the hands of the appellant is revenue irrespective of the source from where it has been received. The AO's action in treating these receipts as revenue receipts is upheld - ground of appeal is dismissed. Addition on account of hiring charges, in respect of tools and Plants - Appellant had treated this income as capital receipts stating that these have been received in connection with the capital work undertaken by the appellant on behalf of the market committees. The AO however treated these to be a Revenue receipts. The appellant has not elaborated as to how the AO's action in treating these receipts as Revenue receipts is against law. Therefore, the action of the AO in treating the receipts form hire charges of tool & plants is revenue receipts is upheld - This ground of appeal is dismissed. Addition on account of honorarium paid to the Chairman – Held that:- Addition has been made on the ground of non-filing of the details, in the matter. In view of this, it would be fair and reasonable to restore the issue, to the file of the AO, for fresh adjudication of the issue, as per law, after obtaining necessary details, in the matter. The assessee is requested to render necessary cooperation to the AO, in the matter. However, it is incumbent upon the AO to afford reasonable opportunity to the assessee. Accordingly, this ground of appeal of the assessee is al lowed for statistical purposes - In the result, appeal of the assessee is partly allowed.

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• 2012 (11) TMI 338
  Determination of Net Profit rate – Applicability of sec 44AD - Held that:- Following the decision of the Special Bench of the Tribunal in the case of [M/s Arihant Builders (P) Limited Vs. ACIT 2012 (10) TMI 702 - ITAT AMRITSAR] Estimation of income at 8% of the turnover is reasonable because the Tribunal estimated the income ranging from 8% to 12.5 % depending upon the facts of the situation. Therefore, the order of the CIT(A) is hereby upheld and the income shall be estimated at 8% of the gross contract receipts - Accordingly, this ground of appeal of the assessee is dismissed. Miscellaneous Income vs Income from other Sources – Income received from sale of scrap and other building materials - Held that:- Order of the CIT(A) in holding that there is no such receipts having nexus with the contract receipts received by the assessee from execution of civil construction works. Hence, the addition made by the AO and sustained by the CIT(A) of Rs. 9,10,587/- under ‘income from other sources’ is confirmed - Thus, this ground of appeal is dismissed. Disallowance u/s 40(a)(ia) – Held that:- Disallowance of Rs. 1,00,200/- made by the AO and sustained by the CIT(A) is confirmed as due default on the part of the assessee under the TDS provisions, the mandatory provisions of section 40(a)(ia) of the Act are applicable and such disallowance is to be made separately even while estimating the profit on the contract receipts - this ground of appeal of the assessee is dismissed - In the result, appeal of the assessee is dismissed.

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• 2012 (11) TMI 337
  Power of Condonation of Delay in filing an application u/s 12AA – Held that:- Power of granting 100% exemption to the trust from the purview of income tax lies with the Central Government represented by the Chairman CBDT. Due to these reasons, the trust could not file the application for registration of trust within the stipulated time before the DIT(E) and the registration has not been granted with effect from 1997-98 till today. The assessee based on his bonafide belief had been approaching the wrong authorities for granting exemption. Authorities who are in the knowledge of things have not advised the assessee regarding the person to whom the application should have made nor did they forward the application to the correct authority, leading to the delay in filing of application to the correct authority by the assessee - Since there was a sufficient cause for delay in filing the application, The expression “sufficient cause " as decided in case of [Collector, Land Acquisition v Mst. Katiji And Others– 1987 (2) TMI 61 – SUPREME COURT] employed by the Legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which sub serves the ends of justice that being the life-purpose of the existence of the institution of courts. It is common knowledge that the court has been making a justifiably liberal approach in matters instituted in this court. But the message does not appear to have percolated down to all the other courts in the hierarchy - delay is condoned and remit the matter back to the file of the DIT(E), who shall decide upon the application of the assessee in considering the case in terms of section 12AA. Further the DIT(E) shall consider according registration with effect from the date of creation of the trust in accordance with law after providing reasonable opportunity of hearing to the assessee in the matter - In the result, both the appeals under consideration are treated as allowed for statistical purposes.

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• 2012 (11) TMI 336
  Amortization of premium on purchase of Government securities - Held that:- Amortization was made as per the prudential norms of the RBI. Following the Tribunal decision in the assessee's own case and considering that the assessee bank is following consistent and regular method of accounting system, there is no justification in interfering with the order of the Commissioner of Income-tax (Appeals) on this issue of amortization of premium on government securities. - Decision in M/s. Sir M. Visweswaraya Cooperative Bank Ltd., Versus Joint Commissioner of Income-tax, Range-3, Bangalore [2012 (9) TMI 774 - ITAT, BANGALORE] followed. Further, Premium amortized is claimed to be in respect of securities held under the category 'held to maturity'. The Assessing Officer has taken them as long term investments. In other words, he has accepted the assessee's claim that the securities are 'held to maturity'. That being so and having regard to the CBDT Instruction No.17 of 2008 dated.26.11.2008 as reproduced herein above, the premium paid on such government securities is required to be amortized over the period remaining to maturity - assessee is entitled to claim this deduction – appeal of assessee is allowed.

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• 2012 (11) TMI 335
  Condonation of delay of 60 days in filing appeal - Imposition of Penalty u/s 271(1)(c) - Held that:- Reason for delay was ill-health of Mother of Assessee - restore the matter back to the file of the CIT(A) with a direction to decide the grounds raised before him on merit. The assessee is also directed to cooperate with the CIT(A) in producing the details sought for by the first appellate authority for completing the proceedings after giving reasonable and adequate opportunity of hearing to the assessee - In the result, the assessee’s appeal is allowed for statistical purpose.

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• 2012 (11) TMI 334
  Addition of the machinery maintenance expenses - being capital expenses – Held that:- Incurring of the expenditure did not result any increase in the earning of the assessee - item were purely on repair and maintenance in nature and were like brackets, bearing, belts, chain, loader, electrical motor rewinding, face plates, gas cutter pipe, nuts and bolts, washers, champs, PVC pipes, pulley, MS plates, wire mesh, welding rods, wooden gutka, ruli, shafts, lever pin etc. - no part of the machinery can be independently used and constituted separate machine or which constitute substitution of an old asset by a new asset to categorize it as capital expenditure – in favor of assessee

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• 2012 (11) TMI 333
  Addition on account of unexplained share application money u/s 68 of the Income-tax Act – alleged that AO, seeking details of genuineness of the share application money, the assessee did not respond – Held that:- Just because the creditors /share applicants could not be found at the address given, it would not give the revenue the right to invoke section 68 - it is settled law that the assessee need not to prove the source of source - appellant filed copies of PAN, acknowledgement of filing of income tax returns of the companies, their bank account statements for the relevant period, i.e. for the period when the cheques were cleared – addition deleted – in favor of assessee

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• 2012 (11) TMI 332
  Proceedings u/s 263 - tax payable u/s 115JB - rebate under section 88E - disallowance as per the provisions Rule 8D of the IT Rules r.w.s. 14A - erroneous order – Held that:- Prerequisite for the exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue - Assessing Officer was also aware that assessee had claimed rebate u/s 80E in respect of securities transaction tax in return of income - AO accepted the method of working out the tax payable on the deemed total income u/s 115JB after providing rebate u/s 88E. - the order passed by Assessing Officer was neither erroneous nor prejudicial to the interest of revenue on this count. Other issue on which the CIT invoked the provisions of section 263 is not disallowing u/s 14A read with Rule 8D. The assessee himself has disallowed expenses of Rs.3,000/- of peons, conveyance, postage, etc. The Assessing Officer accepted the quantum of disallowance. CIT takes a view that the disallowances should be as per Rule 8D. Various Courts had held that the provisions of Rule 8D cannot be invoked retrospectively. These provisions are applicable prospectively only and w.e.f. assessment year 2008- 09 onwards. In the assessee’s case, the year involved is assessment year 2006-07. Thus, the view taken by the Assessing Officer by accepting the reasonable disallowance by not invoking the applicability of Rule 8D is a sustainable view in law. The Assessing Officer accepted the disallowance as made by assessee - order of Assessing Officer was neither erroneous nor prejudicial to the interest of revenue on this count also - CIT was not justified in invoking the provisions of section 263 of the Income-tax Act - appeal of the assessee is allowed.

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• 2012 (11) TMI 326
  International shipping profits - Indo-Swiss DTAA - whether a resident of Switzerland carried on the shipping business in India through a permanent establishment - Held that:- Having held that the taxability of international shipping profits is covered by Article 22, it is necessary to ascertain whether the assessee company which received such income being a resident of Switzerland carried on the shipping business in India through a permanent establishment situated therein and whether the property in respect of which such income was paid i.e. ships is effectively connected with such permanent establishment. After having perused the relevant clauses of the agreement between assessee company and M/s MSC Agency India Pvt. Ltd. finding in agreement with the view of the AO and the CIT(Appeals) that M/s MSC Agency India Pvt. Ltd. was legally and economically dependent agent of the assessee company and since the assessee company was managing and controlling some of its business operations in India through the said dependant agent, it constituted the permanent establishment of the assessee company in India in terms of the Indo-Swiss treaty. Unable to accept the contention raised by Shri Dastur in this regard that M/s MSC Agency India Pvt. Ltd. had limited right to perform its activities and it, therefore, cannot be regarded as habitually exercising an authority to negotiate and enter into contracts for and on behalf of the assessee company which, is contrary to the relevant clauses of the agreement between the assessee company and M/s MSC Agency India Pvt. Ltd. defining the scope and authority of M/s MSC Agency India Pvt. Ltd. and its commitment to work exclusively for the assessee company and not to accept the representation of any other principle for the same services in the same region without the written consent of the assessee company. Keeping in view the relevant portion of the OECD commentary on Model Tax Convention on Income and on Capital (condensed version) published in July, 2010 and the ratio of the decision of Special Bench of this Tribunal in the case of Sumitomo Mitsui Banking Corporation & Ors. v. DDIT (2012 (4) TMI 80 - ITAT MUMBAI) the right or property in respect of which the shipping income is earned by the assessee i.e. ships cannot be said to be effectively connected with the permanent establishment in India . Such income, therefore, will not fall under Article 22(2) but will fall under Article 22(1) and accordingly shall be taxable only in the State of residence of the assessee company i.e. Switzerland and not in India. In that view of the matter, the impugned order of the learned CIT(Appeals) is upheld holding that the international shipping profits of the assessee company are covered by Article 22 of the Indo-Swiss treaty and although the assessee company had a PE in India in the year under consideration, the ships i.e. the property in respect of which shipping income was paid to the assessee company being not effectively connected with that PE, the case of the assessee will be out of paragraph No. 2 of Article 22 and will fall in paragraph 1 of the said article. Consequently, the same will be taxable in the country of residence of the assessee company i.e. Switzerland and not in India - in favour of assessee.

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• 2012 (11) TMI 325
  Amortization of lease premium - Revenue v/s capital - Held that:- In the present case the lease arrangements are for a substantially long period i.e. 60-95 years. That the arrangements do not confer outright ownership rights to the lessee is besides the point as the enjoyment of the land as a lessee in such cases is substantially that of the owner itself. In other words, barring the right to alienate or outright sale of the property in unqualified manner, all rights of enjoyment in respect of leased properties are with the assessee. Furthermore, even though the stipulation in the deed – one of which (dated 25.07.1995 with MHIDC) was produced during the hearing by the assessee, clause 3(m) enjoins the lessee not to transfer either directly or indirectly, sell or encumber the lease benefits to any other party, the same stipulation enables transfer with "previous consent in writing of the Chief Executive Officer". Also that the conditions embodied in such lease deed are part of the general policies consciously adopted by the municipal and statutory authorities who manage and lease out such assets - no infirmity with the reasoning of the Tribunal no infirmity with the reasoning of the Tribunal - against assessee.

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• 2012 (11) TMI 324
  Non-compete fee - Revenue v/s Capital - Held that:- The appellant is in a joint-venture between M/s. Sharp & L&T. Apparently, the agreement entered into with the L&T in view of the changed relationship ensures that the latter does not enter into the same business. Although it is contended that the advantage is only by way of facilitation of the appellant's business and ensuring greater efficiency as well as profitability, on the other side, what can be seen is that the arrangement is to endure for a substantial period, i.e. 7 years. Coupled with the fact that the L&T has its own presence in consumer goods sector and would be, if it chooses - able to put up an effective competition for business engaged in by the assessee, there is no doubt that the amount is to ensure a certain position in the market by keeping-out L&T. Applying the test indicated in the Empire Jute Company Limited Versus Commissioner of Income-Tax (1980 (5) TMI 1 - SUPREME COURT) have emphasized that a single test, i.e. whether the payment results in an enduring benefit cannot be conclusive in a decision as to whether an expenditure qualifies as one falling or in the capital field - this Court is the opinion that the deduction cannot be claimed as a revenue expenditure, it clearly falls within the capital field - in favour of the Revenue. Whether a non-compete right acquired for seven years amounts to a depreciable intangible asset - Held that:- Each of the species of rights spelt-out in Section 32(1)(ii), i.e. know-how, patent, copyright, trademark, license or franchise as or any other right of a similar kind which confers a business or commercial or any other business or commercial right of similar nature has to be "intangible asset". The nature of these rights mentioned clearly spell-out an element of exclusivity which enures to the assessee as a sequel to the ownership - the 7 years period spelt-out by the non-competing covenant brings the advantage within the public policy embedded in Section 27 of the Contract Act, which enjoins a contract in restraint of trade would otherwise be void. very species of right spelt-out expressly by the Statute - i.e. of the intellectual property right and other advantages such as know-how, franchise, license etc. and even those considered by the Courts, such as goodwill can be said to be alienable. Such is not the case with an agreement not to compete which is purely personal. - Thus it is to concluded that the words "similar business or commercial rights" have to necessarily result in an intangible asset against the entire world asserted to qualify for depreciation under Section 32(1)(ii) - depreciation not allowed - in favour of the Revenue.

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• 2012 (11) TMI 323
  Annual letting value of unsold flats - flats lying under the head "Income from house property" - inventory of stock in trade v/s let out - Held that:- ALV is a method to arrive at a figure on the basis of which the impost is to be effectuated. The existence of an artificial method itself would not mean that levy is impermissible. Parliament has resorted to several other presumptive methods, for the purpose of calculation of income and collection of tax. Furthermore, application of ALV to determine the tax is regardless of whether actual income is received, it is premised on what constitutes a reasonable letting value, if the property were to be leased out in the marketplace - While there can be no quarrel with the proposition that “occupation” can be synonymous with physical possession, in law, when Parliament intended a property occupied by one who is carrying on business, to be exempted from the levy of income tax was that such property should be used for the purpose of business. The intention of the lawmakers was that occupation of one’s own property, in the course of business, and for the purpose of business, i.e. an active use of the property, (instead of mere passive possession) qualifies as “own” occupation for business purpose. Thus, this question is answered in favour of the revenue. Deduction u/s 32 AB on interest income - Held that:- As decided in Apollo Tyres Ltd v CIT [2002 (5) TMI 5 - SUPREME COURT] if a business qualifies for the benefit granted under Section 32AB, if an assessee carries on business covered by that provision, and has utilized any amount during the previous year for the purchase of new plant or machinery then it is entitled to a set off of a sum equal to 20 per cent of the profit of such eligible business accordance with sub-section (5) of Section 32AB. As the eligibility or entitlement of the assessee to claim the benefit, was never questioned in the proceedings before the lower authorities the question is answered in favour of the assessee. Admissibility of 100% depreciation for plant - Held that:- In view of the settled position decided in JCIT Vs. Anatronics General Co. (P) Ltd. [2000 (8) TMI 38 - DELHI HIGH COURT] that each bottle constituted plant and was eligible for 100% depreciation the value of the shuttering in the present case would have been written off within a couple of years, this Court is of the view that the impugned order and finding of the ITAT do not call for any interference - in favour of the assessee

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• 2012 (11) TMI 322
  Shares transferred for settlement of debt - difference between the fair market value and the cost of shares - Held that:- There was no transfer of shares but only a pledge of shares for the purposes of obtaining a loan. This short term loan of Rs. 50 crores was repaid on 24.12.2004 as is evident from audited accounts and annual reports for the assessment year 2004-05. Further the balance sheet filed for assessment year 2005-06 also shows that an amount of Rs. 50 crores shown under the head other loans as on 31/3/2004 was shown as nil as on 31/3/2005. In case it was not a loan there would have been no occasion to repay the amounts. Also the evidence in the form of transaction statement of Demat Account dated 24/12/2004 was produced at the time of hearing showing the return of 5-crores shares of Reliance Infocomm Limited to the respondent on 24/10/2012 i.e. the date when the loan was returned by the respondent to one Mukesh Ambani - in favour of assessee. Operating lease - Whether lease hold rights are acquired on periodic payments of lease rent received as advance rent - assessee has received IRC fees in one go - Held that:- The agreement dated 30/4/2003 entered into between Reliance Infocomm Ltd. and the respondent assessee concluded that Reliance Infocomm Ltd. in terms of the agreement had only a right to use the net work during the tenure of the 20 year agreement. Further that the agreement was liable to be terminated at the sole discretion of Reliance Infocomm Ltd. and consequently, the amount received as advance for 20 years lease period would have to be returned on such termination for the balance un-utilized period. Thus the respondent assessee had in terms of AS-19 & relying on J.K. Industries ltd. v. CIT [2007 (11) TMI 401 - SUPREME COURT OF INDIA] wherein theory of matching principles and application of accounting standards upheld, correctly spread the entire fee of Rs. 3037 crores over the period of 20 years and to pay tax thereon over the entire period - in favour of assessee.

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• 2012 (11) TMI 321
  Guarantee commission - CIT(A) deleted the addition - Held that:- As the directors have been paid guarantee commission to compensate them from the risk assumed by them in standing as guarantor for the bank loan taken by the assessee-company. It was also the case of the assessee that the bank has necessitated on such personal guarantee and accordingly personal guarantee was needed, thus CIT(A)'s order of deleting addition is confirmed - in favour of assessee. Foreign travel expenditure - CIT(A) deleted the addition - Held that:- Finding on fact has been given by CIT(A) that the assessee has furnished the purpose of the foreign visits of the Directors and the tour report has been submitted on their return which was found to be for the purpose of the business of the assessee - Since in assessee’s own case on last two occasions the Respected Coordinate Benches have taken a consistent view in assessee’s favour, therefore in the light of the ratio laid down therein for this year the view taken by CIT(A) is to be affirmed - in favour of assessee. Disallowance of warranty obligation - Held that:- Since the Tribunal is taking a consistent view that the warrant obligation happened to be a business liability and made on scientific basis as per the recurrence of the after sales obligation the amount was debited to P&L Account, therefore in the like manner for the year under consideration, we hereby consider it proper to affirm the factual as also legal finding of CIT(A) - in favour of assessee. Claim of bad debts - Disallowance of interest on inter-corporate deposits - CIT(A) allowed the claim - Held that:- The assessee has yet to place on record that the borrowers have gone under liquidation, that even after the best efforts of the assessee the impugned amount could not be recovered from them and that the Civil Suites filed have not resulted into any gain, then only the assessee can be allowed such claim - restore this issue back to the stage of the AO, so that the assessee can place on record the fate of the Court proceedings to establish the genuineness of the failure on the part of the borrowers - in favour of Revenue for statistical purposes.

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• 2012 (11) TMI 320
  Deduction u/s.80(IA)(4) - Held that:- As assessee's case is arguable & he had paid substantial tax (more than 80%) against the demand created by the A.O. the demand is stayed till the disposal of appeal which are coming up for hearing of 17.10.2012 in all the assessment years i.e. A.Y. 07-08, 08-09 & 09-10 or for the six month from the order of stay whichever is earlier. The assessee should not seek adjournment of hearing without compelling and justifiable reason and if a paper book is required to be filed by the assessee, the same should be filed well in advance & if these conditions are not fulfilled by the assessee, then, the stay will get vacated automatically - in favour of assessee as directed.

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• 2012 (11) TMI 319
  Carting expenses - Non deduction of TDS - Addition u/s 40(a) (ia) - Held that:- As decided in CIT Vs Poompuhar Shipping Corporation Ltd. [2006 (1) TMI 60 - MADRAS HIGH COURT] that the payment of hire charges for taking temporary possession of the ships by the assessee-company would not fall within the provision of section 194C and hence no tax was required to be deducted.The hiring of ships for the purpose of using them in the assessee’s business did not amount to a contract for carrying out any work as contemplated in section 194C The assessee in the present case was hiring trucks for the purpose of his business of providing transportation services to his client M/s. HPCL. Section 194 C makes it clear that TDS is deductible only in the case when the recipient contractors renders the work of carriage of goods or passengers by any mode of transport other than railways. In this case it is evident that the assessee had only hired out the vehicles and rendered the services of transportation of goods i.e. LPG cylinders by itself at its own risk and reward. The contract executed between the appellant and M/s. HPCL contained specifically provides that the appellant shall not sub-let any work entrusted to him & the appellant is assigned the job of transportation and it had performed the job of transportation by itself - The Revenue has not brought out any material to establish that the owner of the vehicles have performed any work other than hiring their vehicles to the appellant - in favour of assessee.

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• 2012 (11) TMI 318
  Penalty u/s 271(1)(c) - disallowance of depreciation - Held that:- The genuineness of the purchase of the machinery has been established by the assessee as sale consideration of the machinery was paid through cheques as evident from the bank statements. In the subsequent years the chart of the depreciation submitted by assessee was stated to be allowed by the Revenue Department - it was not a false claim but an inadvertence claim of depreciation for the year under consideration - as decided in Price Waterhouse Coopers Pvt.Ltd. v/s CIT Kolkata - I [2012 (9) TMI 775 - SUPREME COURT] absence of due care does not lead to assessee is guilty of furnishing inaccurate particulars or concealment of income - in favour of assessee. Addition u/s.68 - Held that:- If the impugned amount was received in advance and later on it was returned, then the said party ought to be known to the assessee and thus the assessee was under obligation to furnish the identity, creditworthiness and the genuineness of the transaction which was not fulfilled by assessee so it is difficult to hold that the transactions was genuine. Primary onus as prescribed u/s.68 has not been discharged by the assessee, thus it is not the case that merely on presumption an addition has been made and penalty proceedings were invoked - against assessee.

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• 2012 (11) TMI 317
  Deduction u/s.80-IB - CIT(A) allowed the claim - Held that:- The A.O. has allowed deduction u/s 80-IB to the assessee in previous assessment years as per the order passed by him in that year u/s 143(3) & the A.O. cannot withdraw relief to a new industrial undertaking which has already been granted without disturbing such relief for earlier years - CIT(A) allowed the claim as revenue could not show that such relief was not allowed by the A.O. in earlier years or to show that such relief although allowed but was subsequently withdrawn. Fact was very much available in the record of the department that the assessee has established a new unit - in favour of assessee.

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• 2012 (11) TMI 316
  Unaccounted and unexplained cash - search - CIT(A) deleted the addition - Held that:- A.O. has only relied on the statement of Shri Damodarbhai Patel to make the addition in the hands of the assessee. The A.O. has not brought any material on record to prove that cash seized belonged to assessee. Shri Damodarbhai has in the statement stated that the cash belonged to Vanita Park project & on the basis of assessment records produced it is seen that Vanita Park project is developed by Mahavir Developers whose proprietor is Shri Mohanbhai Patel. Further the income from Vanita Park project is assessed in the hands of Shri Mohanbhai Patel. The D.R. could not controvert these facts or could controvert the findings of CIT (A) by bringing any material to the contrary on record - in favour of assessee.

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• 2012 (11) TMI 315
  Delay in filing of appeal - Held that:- Application of the assessee for the condonation of delay of 771 days states no reasonable cause for condonation of such a long delay of 771 days. Dismiss this appeal of the assessee following the case of CIT Versus Multiplan India (Private) Limited [1991 (5) TMI 120 - ITAT DELHI-D] wherein held that the Tribunal has not passed any order of dismissal of appeal on the basis of Rule 24 of the Tribunal Rules which presupposes admission of appeal under section 253 besides there was no question of hearing the respondent since none could be notified because of proper particulars not furnished so far - against assessee.

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• 2012 (11) TMI 314
  Quantum of Deduction u/s 80-I – revision u/s 263 - computation of gross total income - Held that:- Gross total income shall be arrived at after adjusting the losses of the other division against the profits derived from an industrial undertaking. It is true that under Section 80-I(6) for the purpose of calculating the deduction, the loss sustained in one of the units, cannot be taken into account because Sub-Section 6 contemplates that only the profits shall be taken into account as if it was the only source of income. However, Section 80A(2) and Section 80B (5) are declaratory in nature. They apply to all the Sections falling in Chapter VI-A. They impose a ceiling on the total amount of deduction and therefore the non-obstante clause in Section 80-I(6) cannot restrict the operation of Sections 80A(2) and 80B(5) which operate in different spheres. As observed earlier Section 80-I(6) deals with actual computation of deduction whereas Section 80- I(1) deals with the treatment to be given to such deductions in order to arrive at the total income of the assessee and therefore while interpreting Section 80-I(1), which also refers to gross total income as defined in Section 80B(5) - loss from the oil division was required to be adjusted before determining the gross total income and as the gross total income was 'Nil' the assessee was not entitled to claim deduction under Chapter VI-A which includes Section 80-I also – Order of the first appellate authority directing the AO to set off loss from windmill business against other heads of income of the assessee is justified and no interference is called for - In the result, the assessee’s appeal is allowed by setting aside the 263 order.

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• 2012 (11) TMI 313
  Unaccounted Cash – Held that:- There was no necessity for AO to invoke the presumption provided u/s 132(4A) of the Act in the hands of Shri Anup Kumar Shah. Further there is no compulsion under the Act that the AO should necessarily invoke the provisions of sec.132(4A) of the Act. Assessee has failed to furnish any credible explanation with regard to the unaccounted cash - Order of CIT(A) on this issue is set aside. Revision u/s 263 - erroneous decision - held that:- Ld CIT(A) has listed out the search materials, which have not been examined by the AO and which would have implication to the undisclosed income determined in the hands of the assessee. Thus, it is seen that the AO has failed to apply his mind on those materials and on account of that, the assessment order is rendered erroneous. Since the said issues involve huge tax effect, the assessment order is also rendered as prejudicial to the interests of the revenue. Whether CIT(A) entertain a appeal against an assessment order passed on the directions of the Administrative commissioner - held that:- it was not shown to us that the Ld CIT(A) has considered issues which have attained finality in the earlier proceeding. - the assessment order passed u/s 143(3) r.w.s. 263 can very well be appealed before the Ld CIT(A) in respect of the issues which have not already been decided by the appellate authority. - Decided in favor of revenue. Unaccounted Payments - rebuttable presumption u/s 132(4A) - Held that:- Considering the quantum of work undertaken by the company and the position of the officials, it would be reasonable, AO was justified in making the addition of Rs.30,25,850/-. Accordingly, we set aside the order of Ld CIT(A) on this issue and restore the addition made by the AO. Illegal payments - held that:- payments made to the officials of NHAI amounting to Rs.57.50 lakhs are illegal - no infirmity in the decision of CIT(A) in confirming the addition of Rs.57.50 lakhs. - it is seen that the assessee did not explain the entries found in the incriminating documents except stating that they have not made such payments. In this kind of situation the presumption provided u/s 132(4A) comes into operation and we notice that the assessee has failed to rebut the presumption. Payments not accounted in Books - Although assessee reiterated its claim that the transactions pertaining to Rs.12.50 lakhs belong to the Joint Venture concern, yet no material was produced to contradict the findings given by CIT(A) - no reason to interfere with the decision reached by CIT(A) on this issue - In the result,appeal of the revenue is allowed and Both the appeals of the assessee are dismissed.

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• 2012 (11) TMI 312
  Deletion of Addition in arm's length price made by AO – Held that:- Arm's length price as determined by the TPO by applying the profit margin rate of 3.13% as compared to assessee's profit margin of 1.01%, then also admittedly it falls within the +/- range of 5% as per second proviso to section 92C(2), which provides that if the variation between the arm's length price so determined and price at which the international transaction has actually been undertaken does not exceed five per cent of the latter, the price at which the international transaction has actually been undertaken shall be deemed to be the arm's length price - department's grounds of appeal are rejected - In the result, appeal filed by the department is dismissed.

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• 2012 (11) TMI 311
  Unexplained Investment u/s 68 – Share Application Money – Following the decision of court in case of [CIT vs. Oasis Hospitalities Pvt. Ltd., and Others 2011 (1) TMI 194 - DELHI HIGH COURT ] Furnishing of an affidavit by itself is not necessary proof to conclude that the transaction is genuine. It is well settled principle of law that to prove a credit entry in the books the assessee to establish three ingredients which (1) identity of investors (2) their creditworthiness and (3) genuineness of transaction - initial burden lies on the assessee to prove the genuineness of the transaction. In the present case, there is doubt regarding the identity of the share applicants and no material has been brought on record like balance-sheet or bank statements of the share applicants to show that they had capability to make investments in the shares. In the aforesaid factual background, sine the revenue authorities have not properly examined these aspects - restore the matter back to the AO who shall conduct such enquiry to find out as to whether the three companies which have invested in shares of the assessee really existed or not. If on enquiry, it is found that the companies did exist when they made investment and investment made by them are genuine,then no addition can be made u/s 68 of the Act. The AO may exercise his power to make enquiries with the concerned Registrar of companies to find out the real status of share applicants and after gathering all information, the AO shall complete the assessment after affording a reasonable opportunity of being heard to the assessee - In the result, the appeal filed by the Revenue is treated as allowed for statistical purpose.

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• 2012 (11) TMI 310
  Re-opening of Assessment - Held that:- Reopening is merely change of opinion of the Assessing Officer and he should have tangible material for forming an opinion that there has been an escapement of income.`Reason to believe’ will not include mere change of opinion. Respectfully following the ratio laid down by the Hon’ble Delhi High Court in the case of [CIT vs Kelvinator India Ltd. 2002 (4) TMI 37 - DELHI HIGH COURT ], order of the CIT(A) is upheld in treating the reassessment made by the AO u/s 148 is null and void. Further,an audit opinion in regard to the application or interpretation of law cannot be treated as information for reopening the assessment u/s 147(b) of the Act, as held by the Hon’ble Supreme Court in the case of [CIT Vs. Lucas TVS Ltd., 2000(12) TMI 102 - SUPREME COURT] held that information with the meaning of section 147(b) includes information as to true and correct state of law as well which should come from a competent legislature or judicial order or judicial authority - grounds raised by the revenue in this regard are dismissed - In the result, appeal of the revenue is dismissed. Deduction u/s 80HHC – Assessee had adopted incorrect adjusted export turnover and adjusted total turnover and also the eligible profits for working out deduction u/s 80HHC. The assessee adopted eligible profits without reducing 90% of other income admitted as ‘conversion charges’ and ‘technical consultancy charges’ amounting to Rs. 21,87,459/- as required under Explanation (baa) to section 80HHC. Thus resulted in excess claim of deduction u/s 80HHC – Held that:- There is no escapement of Income - Reopening is merely change of opinion of the Ao - decided in favour of assessee.

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• 2012 (11) TMI 309
  Short term capital gain vs Business Income - Held that:- Assessee had actually maintained distinct portfolios no assistance of the past results other then the results of the final accounts. Since factual aspects do indicate towards the assessee being an investor consistency aspect has also to be ascertained as well. Moreover, since the assessee is having income from day trading, speculation, derivatives, the correlation of transactions viz a viz the investments shown, has to be examined to verify the contentions - matter remitted back to the AO, who shall reexamine the modus operandi and the conduct of the assessee, in line with the preceding years and also apply the tests as prescribed by the Board, in Instruction No. 1827 dated 31-08-1989 (filed in the APB) to come to the correct conclusion – Order of the CIT(A) is set aside and direct the AO to re-examine the issue afresh, after giving reasonable and adequate opportunity to the assessee - appeal is allowed for statistical purposes. Disallowance u/s 14A - Held that:- As the issue whether Income is Business Income - Application of sec.14A has to be decided accordingly - Order of the CIT(A) is set aside and direct the AO to re-examine the issue afresh, after giving reasonable and adequate opportunity to the assessee and accordingly applicability - appeal is allowed for statistical purposes.

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• 2012 (11) TMI 308
  Disallowance made u/s 14A of the Income-tax Act – alleged that assessee reflected tax free dividend income and incurred financial charges, it did not offer any disallowance u/s 14A of the Act - applicability of Rule 8D – Held that:- Assessing officer will have to determine the amount of expenditure incurred in relation to income which does not form part of the total income under the said Act. He is required to do so on the basis of a reasonable and acceptable method of apportionment - whether or not borrowed funds had indeed been utilised in investment in shares for earning exempt income - appeal is allowed but partly for statistical purposes

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• 2012 (11) TMI 307
  Taxability – offshore supply - foreign company was engaged in the execution of various projects in India - company has executed five contracts - For the purpose of executing the five contracts mentioned above, LGCL had set up a project office in India - It was also claimed by the assessee during the assessment proceedings that the “Power Grid Corporation of India Limited (PGCIL) imported certain materials from LGCL, Korea - PGCIL deducted tax at source while making payments to LGCL – Held that:- There were no operation qua the agreement for supply of equipment, which was carried out in India, and therefore, no income could be deemed to have accrued or arisen in India whether directly or indirectly or through any business connection in India - credit of TDS deducted allowed - in favour of the assessee

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• 2012 (11) TMI 293
  Denial of registration applied for u/s 12A - DIT (Exemption) arrived at a view that the activities of the assessee trust were not in conformity with the terms of object of the trust being educational, medical, advancement of music, art, drama, dance and literatures etc - Trust formed on 19/12/2011, applied for grant of registration 25/01/2012 - Held that:- Aforesaid shows that the Trust is at infant stage and the Trust needs to be registered under the provisions of the Act in order to derive benefit under it. legal position is that activities of the trust have to be considered if such registration is sought much later than the formation of the trust or after expiry of the earlier registration granted in favour of the trust. Therefore in a case of this nature where the trust has approached the authority for registration u/s 12A within a short span of its formation, the above-mentioned criteria namely, the objects of the trust for which it was formed will have to be examined to be satisfied about its genuineness and activities of the trust cannot be the criterion, since it is yet to commence its activities. In view of aforesaid, and considering the objects of the trust, DIT(Exemption) is directed to grant registration on its application u/s 12A and 12 AA - Decided in favor of assessee

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• Customs

• 2012 (11) TMI 366
  Anti-dumping duty - date of applicability of new notification no. 73/03 - appellant imported vitrified/porcelain tiles from China during the period February to April, 2003 - goods assessed provisionally under Notification no. 50/2002 dated 2.5.2002, which expired on 1.11.2002, in anticipation of final Anti Dumping Notification - demand raised on imports levying duty under Notification no. 73/03 dated 1.5.2003 w.e.f. date of imposition of provisional anti dumping duty i.e 2.05.2002 - assessee contesting the same - Held that:- Under provisions of Rule 20(2) of Anti Dumping Duty Rules, the Government has the power to impose final anti dumping duty from the date of imposition of the provisional anti dumping duty - Decided against assessee

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• 2012 (11) TMI 365
  Demand of duty and interest – rejection of declared transaction value - upward revision of transaction value based on the value of contemporaneous imports of identical /similar items as available in NIDB – Held that:- Declared transaction value can be rejected only if the conditions specified in Rule 4(2) of the Customs Valuation Rules are not satisfied and in this case, no cogent evidence in this regard has been produced by the Department – demand rejected

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• 2012 (11) TMI 364
  Under valuation of part of imported goods - loading of value on the imported goods made by the adjudicating authority on the basis of contemporaneous imports made at Chennai Port - Held that:- No case has been booked against the appellant against those imports made at JNPT Port and therefore, the value of the imports made at JNPT Port are to be considered as contemporaneous imports. Contemporaneous imports made at Chennai Port, are observed as non-comparable. Therefore, loading the value on the basis of contemporaneous imports at Chennai Port are not sustainable. Order set aside Country of origin - packing box of goods mentioned country of origin as Japan instead of China as mentioned in the B/E - Held that:- It is found that appellant has produced letter issued by their supplier contending themselves to be actual manufacturer and that impugned goods were meant for supply to Japan and as Japan refused to take delivery of the goods, therefore, these goods were exported to the appellant and contended that the country of origin shown on the box as Japan is their mistake. Revenue has not controverted these two letters nor they have denied the genuineness. Therefore, the appellant has discharged their onus of proving that the country of origin is China.

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• 2012 (11) TMI 306
  Demand of duty - Held that:- As the appellants are yet to receive some documents and they have not been afforded the reasonable opportunity to defend themselves against the show-cause notice wherein the impugned demands have proposed to be recovered from them, therefore, there is a violation of principles of natural justice. Set aside the impugned order and remand back to the adjudicating authority to adjudicate afresh after giving the documents mentioned to the appellants keeping all issues open.

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• 2012 (11) TMI 305
  Penalty u/s 114 – Following the decision of court in case of [Nichrome India Ltd. vs CCE 2009 (7) TMI 648 - CESTAT, MUMBAI] Held that:- There is no mens rea required for imposition of penalty under Section 114. Any action or omission on the part of any person which makes the goods liable to confiscation attracts penalty. Therefore, imposition of penalty on the exporter and the CHA for the omission on their part in exporting the goods before grant of LEO was in accordance with law. Value of goods under export is only about Rs. 8 lakhs, penalty reduced from Rs.1.00 lakh to Rs.40,000/- each on the exporter, M/s Electrotherm India Ltd. and on the CHA, M/s Sahil Freight Express Pvt. Ltd - order of the lower authority is upheld.

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• 2012 (11) TMI 304
  Conviction - Criminal Appeal - accused was found in possession of foreign currencies – Held that:- accused being found in possession of the foreign currency is to the knowledge of the accused - sanctioning officer has stated that he has verified and has accepted the case of the DRI of P.W.3 finding in his investigation the accused in possession of foreign currency along with Indian currencies and Travellers cheques - revision petition dismissed

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• Corporate Laws

• 2012 (11) TMI 363
  Transfer after the commencement of winding up - Held that:- Though the occupant has been found to be in possession of the said property the circumstances in which she was so placed are unclear. The occupant has relied on the alleged letter dated 14th November, 2007 where there is a reference to the occupant having been placed in possession of the said property by HTPL. The occupant has however not produced any possession receipt that may have been executed between the parties which would indicate the basis on which the possession was handed over. The occupant merely relied on an alleged letter dated 31st December, 2007 addressed by the Company to MIDC seeking their no objection for the transfer of the said property to the occupant as a Chief Promoter of the proposed Society. Apart from the fact that the said letter does not disclose any agreement in favour of the occupant in her personal capacity or the terms and conditions of any such alleged agreement, it is a settled position that such a letter would not constitute an agreement in writing for the purpose of Section 53A. The Official Liquidator is correct in his submission that Section 53A of the Transfer of Property Act has no application in the present case in the absence of any agreement in writing from which the terms of the alleged transaction is capable of being ascertained with reasonable certainty. The occupant has not made out any case for validating the alleged transfer of the said property in her favour by the Company in liquidation. The Official Liquidator is therefore directed to take physical possession of the said property for the benefit of the creditors and workers of the Company in liquidation - pending the Official Liquidator taking possession of the said property for two weeks on the request of occupant who shall not part with possession of the said property or induct any third party therein.

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• 2012 (11) TMI 303
  Stay of Winding up proceedings – additional excavation done by the respondent - Respondent claimed that the company took benefit of excavation work hence, they were obliged to make payment for the additional quantity in accordance with the provisions of Section 73 of the Indian Contract Act. Claim in the arbitration would relate to the identical amount being value of the final bill that was sought to be passed by the appellant company. It is admitted position arbitration is still pending and awaiting its disposal. Held that:- In the instant case, the subject matter of the claim was itself pending and awaiting decision of the arbitrator. Pursuant to our order the appellant already secured the entire claim through bank guarantee. Respondent is permitted to withdraw the amount through encashment of bank guarantee by giving counter guarantee for the same. The Registrar would hold the same till disposal of the arbitration proceeding and would get it renewed from time to time - This is not a fit and proper case to wind up the appellant company - Order of admission of the winding up proceeding is set aside.

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• Service Tax

• 2012 (11) TMI 370
  Outdoor catering services - application for waiver of pre-deposit of Service Tax interest thereof and penalties - Held that:- The adjudicating authority has confirmed the demands which are beyond his jurisdiction and falls within the jurisdiction of various other Commissionerates. No notification or circular issued by Board authorizing or directing the Ahmedabad-I Commissioner to issue Show Cause Notice and adjudicate the same. Finding strong force in the contentions raised by the assessee that for the demand within the Ahmedabad-I, re-quantification needs to be done as the appellant's claim of selling the biscuits, namkin etc has been accepted by the adjudicating authority, but he has not given any due weightage to such submission and for calculation of gross value of tax liability - in favour of revenue by way of remand.

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• 2012 (11) TMI 369
  Cenvat Credit - Waiver of Pre-deosit of Duty - Appellant bank has been providing banking and financial service and paying service tax on such services - The appeellant contended that revised return for one of the return periods involved was filed beyond the time-limit prescribed in the Rules but whether there was any need to file revised return at all for taking credit of service tax paid by the branch in the books maintained by the Circle office it causes no loss to Revenue. Held that :- Waiver of pre-deposit of dues arising from the impugned order and stay collection of such dues during the pendency of the appeal - in favour of appellant.

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• 2012 (11) TMI 368
  waiver of pre-deposit of service tax of Rs. 3,58,38,984/- along with interest - Commercial Training and Coaching Services - The appellant contended that as per Service Tax vide letter dated 7.12.2006 clarified by the department that the applicant are not covered under ‘Commercial Training' for the purpose of levy of Service and extended period of limitation is not invokable. Held that:- Pre-deposit of the entire amount of service tax along with interest has been waived during the pendency of the appeal - in favour of assessee.

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• 2012 (11) TMI 353
  Refund of tax on Port service – alleged that the authorization letter of the Port as required under Section 65(105)(zn) of the Finance Act, 1994 and the Notification No. 41/2007-S.T., dated 6-10-2007, was not produced – Held that:- That is required to be seen for sanctioning of refund is, whether service tax has been paid or not; whether service has been used or not and whether service falls in the services covered by the notification or not. Once these three aspects are satisfied, the officer sanctioning the refund cannot go into other issues to reject refund claimed – refund allowed

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• 2012 (11) TMI 330
  Delay in filing appeal - Held that:- The appellant has justified the delay which was unintentional and has occurred on account of circumstances beyond control of the applicant. Dismissal of appeal for non compliance of the stay order passed - Held that:- As appellant has deposited an amount of Rs. 2,20,000/- towards the dues as has been confirmed by the adjudicating authority it is a fit case to set-aside the impugned order and remit the matter back to the first appellate authority who has dismissed the appeal for non-compliance with the pre-deposit which has been paid - in favour of assessee by way or remand.

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• 2012 (11) TMI 329
  CENVAT credit of Service tax paid on GTA service which was availed for clearance of their final products from the place of removal to customers’ premises - denial of benefit on the ground that the service used by them for such transportation of goods was not an ‘input service’ as defined under Rule 2(l) of the CENVAT Credit Rules, 2004 – Held that:- As per the amended definition of ‘input service’, any service used by the manufacturer of final product, whether directly or indirectly, in or in relation to the manufacture of final product and clearance of final product up to the place of removal is an ‘input service’ on which CENVAT credit could be claimed for a period after 31-3-2008 - service so used is not coming within the ambit of the definition of ‘input service’ for the period after 31-3-2008 - appellant is not entitled to claim CENVAT credit on the GTA service used by them for transportation of their final product from the place of removal for any period after 31-3-2008 - appellant cannot claim CENVAT credit for the period after 31-3-2008 and therefore Appeal No. E/361/2010 can only be partly allowed - amount of CENVAT credit admissible to the appellant has to be requantified and the interest payable by them will also have to be redetermined - matter remanded to the original authority

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• 2012 (11) TMI 328
  Waiver of pre-deposit of duty - Commercial or Industrial activity - Held that laying of pipeline is an infrastructure facility and a civic amenity the state provides in public interest and not an activity of commerce or industry - No liability to pay tax arises - pre-deposit of entire amount of service tax, interest and penalty waived - in favour of appellant.

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• 2012 (11) TMI 302
  Delay in appeal - refund of service tax as per notification No. 41/200-S.T. dated 6-10-2007 - excise v/s service tax - Held that:- Just because the refund claim has been filed before the Assistant Commissioner of Central Excise, it does not become the matter relating to Central Excise, thus unable to agree that sub-section (3) of Section 85 is only for service tax demands. Notification No. 41/2007-S.T. has been issued in exercise of powers vested under Section 93 of Finance Act, 1994 and therefore it cannot be said that notification is Centra1 Excise Notification. The refund has been claimed as per the provisions of this notification. The refund claim is related to service tax. Under these circumstances the provisions of Section 85 of Finance Act, 1994, would be applicable. And the Original Adjudicating Authority should have issued the preamble applicable to the service tax matters. Commissioner has calculated 90 days whereas Section 85 speaks of three months. Therefore, the calculation itself is made in an incorrect manner - the appeals are required to be remanded to the Commissioner (Appeals) to consider the matters afresh treating the matters as relating to Service Tax - in favour of assessee by way of remand.

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• Central Excise

• 2012 (11) TMI 362
  Refund claim rejected - presumption of unjust enrichment - Held that:- As decided in GAIL India Ltd., Vs. CCE, Gwalior [2010 (10) TMI 445 - CESTAT, NEW DELHI] Chartered Accountant's certification that books of accounts disclose certain amount to be outstanding and recoverable is different from certifying the fact of non-collection of duty from the buyers and such a certificate would be only a corroborative piece of evidence but it cannot itself be a main piece of evidence regarding the fact which is required to be proved by the party. As in the present case the amount has not been shown as receivables in the books of accounts but has been treated as expenses in the balance sheet. No other evidence also appears to have been adduced by the appellant in support of the claim that the amount has not been recovered from the buyers. In the absence of such an evidence, the claim of the appellant that he has crossed the bar of unjust enrichment cannot be sustained.

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• 2012 (11) TMI 361
  Application for waiver of pre-deposit was adjourned seven times - Held that:- The intention of applicant was just to delay the decision of application for waiver of pre-deposit of dues. In this case as the duty and penalty amount is more than Rs.6 crores the applicant is directed to deposit an amount of Rs.50,000/- as cost with the Jurisdictional Commissioner of Central Excise, Nashik within a period of two weeks. The application for restoration will be taken up for hearing on 7.11.2012.

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• 2012 (11) TMI 360
  Restoration of appeal - denying the benefit of Notification No. 08/2003-CE dated 1.3.2003 - Held that:- In view of the clear provisions of the Notification No. 08/2003-CE applicants have not made out a case for total waiver of duty as they were manufacturing and clearing goods with the brand name of Godrej which does not belong to the applicants. The applicants are directed to deposit the amount of duty of Rs.3,41,639/- within a period of six weeks and in view of the financial hardship as pleaded, the pre-deposit of interest and penalty is waived for hearing of the appeal - matter is remanded to the Commissioner (Appeals) to decide the appeal on merits, on showing the pre-deposit of the above mentioned amount.

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• 2012 (11) TMI 359
  Cenvat credit – denial of credit availed by the applicant on the ground that process undertaken by the applicant does not amount to manufacture – Held that:- Applicants availed the credit and paid the duty - in case the activity of assessee does not amount to manufacture there can be no question of levy of duty, and if duty is levied, Modvat credit cannot be denied by holding that there is no manufacture - as the applicant had paid more duty than the credit availed - pre-deposit of dues are waived

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• 2012 (11) TMI 358
  Extended period of limitation – royalty payment to parent company – valuation – manufacture of Lifts and Elevators and Parts thereof – alleged that they had entered into works contract with the customers for erection and installation of lifts and elevator - there was no assessable value available for the final products sold to the customers in respect of components manufactured factory and cleared for captive consumption at site - Since the components/parts manufactured by the appellants are being used captively the value thereof is required to be determined under the Valuation Rules and the value is being determined on the basis of costing basis after adding the profit element in the cost - while determining the cost of production the royalty charges are required to be limited upto the manufacturing stage only and the other activities like sales, erection and service are not to be taken into account while computing the cost of production of the components used captively - appellant has not declared to the department that they were paying royalty charges to their parent company - extended period has rightly been invoked by the adjudicating authority and consequently the penalty is rightly imposed under Section 11AC of the Act - matter remanded back to Commissioner for de novo adjudication - Appeal is disposed of by way of remand

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• 2012 (11) TMI 357
  Classification – whether Coil Transfer Car is classifiable under the Heading 86.06 Railway or Tramway Goods Vans and Wagaons not self-propelled instead of under Heading No. 84.55 - Held that:- ‘Car’ is classifiable under chapter heading 86.06 sub-heading 8606.00, as ‘Car’ is used only for transfer of coils in the rolling mill from one place to other place - Tribunal has not committed any error in classifying the ‘Coil Transfer Car’ under heading 86.06

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• 2012 (11) TMI 356
  Interest - supplementary invoices - price revision - appellants had raised supplementary invoices on their OE customers on account of price revision of goods supplied to them with retrospective effect – Held that:- Appellants had discharged Central Excise duty on such supplementary invoices, but they had not paid any interest on such differential duty eventhough the price revision pertained to clearances made much earlier to the date of raising such supplementary invoices - assessee was liable to pay interest for duty paid after clearance of goods, eventhough the non-payment was not intentional. Decision of Apex Court in Commissioner v. SKF India Ltd. [2009 (7) TMI 6 - SUPREME COURT] followed.

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• 2012 (11) TMI 355
  Demand of duty - During the course of manufacturing finished products, plastic flakes are generated, which are recycled in the process by converting them into plastic granules – alleged that assessee is liable to discharge duty on the flakes, which are converted into granules, since they are intermediate products – Held that:- They have discharged more duty on the reprocessed granules than the amount of duty that they would have discharged on the flakes, if they would have removed the said plastic flakes from the factory premises - appeal filed by the Revenue is rejected

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• 2012 (11) TMI 354
  Demand of duty – whether activity amounts to manufacture – Held that:- Putting together different items of food in one tray does not amount to manufacture - appellants are not giving any impression that the items like cheese, jam etc. are manufactured by the appellants - no ground for demanding excise duty for the activity of putting together different items of food in a tray, and serving it with their label inserted in the pouch of cultery to be used Their name card put in the cutlery package can at best convey a message that catering is done by the Appellants and not that the goods are manufactured by the Appellants – waiver of pre-deposit allowed

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• 2012 (11) TMI 301
  Forfeiture of monthly payment facility - Cenvat Credit account partly for payment of duties- Held that:- In the order dated 15/10/2009 passed by this Tribunal there is no reference to forfeiture of the facility under Rule 8 (3A) ordered by the Assistant Commissioner, which implies that this issue was not challenged before the Tribunal and therefore, the forfeiture of monthly payment facility and cenvat credit availment attained finality. What was decided by this Tribunal was only the rate of interest liable to be paid and the amount of penalty imposed. Therefore, the appellant cannot agitate now the forfeiture of facility of paying duty using Cenvat Account under Rule 8 (3A). As during the subsequent period, when the provisions relating forfeiture was operational, the appellant could not have utilized the Cenvat Credit account for payment of duty at all. In that view, the appellant was wrong in utilizing the Cenvat credit amount for payment of duty and this amount has to be made good by the appellant by payment in cash/PLA. In as much as the appellant has not paid this amount and there is a delay in payment, the appellant is also liable to pay interest thereon under Section 11AB and the appellant has to pay interest on the defaulted amount in PLA account. As regards the penalty of Rs.2 lakhs imposed u/r 25 can be imposed when the goods are held liable to confiscation. As neither in the show-cause notice nor in the orders passed by the lower authority any finding that the goods are liable to confiscation and consequently without giving a positive finding in this regard, penalty could not have been imposed. Further maximum penalty imposable under the said rule is equal to the duty involved or Rs.2000/- whichever is higher. Therefore, imposition of penalty of Rs.2 lakhs which is far in excess of the duty involved is bad in law and cannot be sustained. Accordingly the same is set aside.

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• 2012 (11) TMI 300
  CENVAT credit - manufacture of paper and paper products - input services - denial of claim on non availment of Notification No.17/2009 dated 07/07/2009 - Held that:- This exemption is subject to certain conditions that in a case where the exporter avails Cenvat credit, he cannot avail the benefit of exemption. There is no bar stipulated in the said notification that he cannot avail Cenvat credit and the availment of Cenvat credit will be entirely governed by the terms and conditions of the Cenvat credit rules. The fact that input or input services, on which duty/tax has been paid, have been received and used in the manufacture of excisable goods which have been exported is not in dispute. The said notification being a conditional exemption notification, it is for the manufacturer to decide whether to avail the said exemption or not. Thus there is no merit in the department contention the appellant should have availed the benefit of notification No.17/2009 - in favour of assessee.

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• 2012 (11) TMI 299
  Cenvat credit – alleged that capital goods, on which appellant availed modvat credit, were exclusively used for manufacture of non dutiable intermediate product – Held that:- In case where capital goods/inputs were used in the process of manufacture of intermediate exempted products, which is further used in the manufacture of dutiable final products, cannot be denied

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• 2012 (11) TMI 298
  Waiver of pre-deposit - classification of coconut oil packed and sold in the packages of the quantity of 200 ml and below – whether classifiable under Chapter 33 of the Central Excise Tariff as preparation for use on hair or under Chapter 15 of the Central Excise Tariff which covers edible oil – Held that:- After 28-2-2005 coconut oil packed and sold in the packing of the capacity upto 500 ml are classifiable under Chapter 15 of the Central Excise Tariff – pre-deposit waived – Against revenue

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• 2012 (11) TMI 297
  Application for recall of Final Order – Held that:- Neither the appearance was caused nor adjournment request was made, but appearance could not be caused by the Advocate on the ground of personal difficulty - reason reflects lapse on the part of the Advocate, but in the interest of justice - it is fit case for recalling of order of the dismissal - ROA application is allowed

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• 2012 (11) TMI 296
  Deduction of sales tax from the assessable value - alleged that they are contesting element of sales tax before Sales Tax Authority, and therefore, the demand for differential duty was confirmed – Held that:- Explanation to Section 4(4)(d)(ii) only refers to the amount of duty of excise payable on excisable goods - test to be applied is that of the "actual value of the duty payable" and, therefore, there is no merit in the argument advanced on behalf of the Assessee that the Explanation is restricted to the duty of excise. This principle can therefore, apply also to actual value of any other tax including TOT payable. Even without the explanation, the scheme of Section 4(4)(d)(ii) shows that in computing the assessable value, one has to go by the actual value of the duty payable, and therefore, only the reduced duty was deductible from the value of the goods - Appellants could not produce any evidence that their liability was at any stage converted into tax liability so far as the sales tax is concerned - appeal dismissed

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• 2012 (11) TMI 295
  Penalty for contravention of the provisions of Notification No. 42/2001-C.E. issued under Rule 19 – alleged that Appellant clearing their export consignment under self-sealing and self-certification procedure must have intimated the Jurisdictional Central Excise Officers 24 hours in advance – Held that:- There is no provision that the intimation regarding clearance under self-sealing and self-certification procedure must be sent to the Jurisdictional Central Excise officers in advance - All which is required is that the designated official of the exporter company self-certify on all the copies of the ARE-1, that the goods has been sealed in their presence and send the original and duplicate copies of the ARE-1 to the Jurisdictional Superintendent within 24 hours of the removal of the goods - order imposing penalty on the appellant for contravention of the provisions of notification issued under Rule 19 is not sustainable - appeal is allowed.

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• 2012 (11) TMI 294
  Extended period of limitation - Demand of duty along with interest and equivalent amount of penalty – shortage of input - appellants are engaged in the manufacture of seats and other interiors required for vehicles of M/s Mahindra & Mahindra Ltd - M/s. Mahindra & Mahindra Ltd. had given tooling development cost, engineering and designing charges to the appellant – alleged that these costs were not amortized by the appellant in the assessable value of the seats and other parts manufactured by them - he also received certain inputs free of cost and its value was not considered by the appellant for the purpose of determining assessable value - appellant had also written off modvatable inputs totally from the stock without reversing MODVAT/CENVAT credit pertaining to such inputs. Held that:- Extended period of time has been correctly invoked to demand ineligible cenvat credit taken in respect of inputs found short and which have been written off in the books of accounts – amount of tooling advance received by the appellant from M/s Mahindra & Mahindra is includible in the assessable value of the goods supplied to them in terms of Section 4(3)(d) of the Central Excise Act itself. Merely because, the demand has been confirmed under rule 11 read with section 4 (3) (d), it does not become infructuous. Value of inputs received free of cost by the appellant from M/s Mahindra & Mahindra is required to be included in the assessable value of goods supplied to them and the extended period for demand of differential duty has been rightly invoked. Extended period of time has been correctly invoked to demand ineligible cenvat credit taken in respect of inputs found short, which have been written off in the books of accounts.

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• CST, VAT & Sales Tax

• 2012 (11) TMI 371
  Penalty under section 10A of the Central Sales Tax Act – on the opposite party-dealer in respect of the purchase of cable and light fittings against form C – alleged that while issuing form C for purchase of the aforesaid goods, the opposite party-dealer wrongly declared that it was authorized under its certificate of registration under the Central Sales Tax Act, 1956, to purchase the said goods against form C – Held that:- Treated "cables and light fittings" as covered under the items mentioned in the registration certificate, but such observations when read in the light of the entire order show that the Tribunal was of the view that the word "consumbers" as used in the registration certificate could be given interpretation as including "cables and light fittings" meant for light work in execution of works contract, and therefore, the belief of the opposite party-dealer that the "cables and light fittings" imported by the opposite party-dealer were covered under its registration certificate, was bona fide belief - opposite party-dealer made the representation under bona fide belief that the goods in question were covered under its registration certificate - Trade Tax Tribunal was legally justified in quashing the penalty order passed under section 10A of the Central Sales Tax Act, 1956

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• 2012 (11) TMI 331
  Penalty under Rajasthan Sales Tax Act, 1994 - Possession or movement of goods took place - breach of section 78(2)(a) - penalty on 'the person in-charge', which included the owner – Held that:- Under section 78(2) the words used are 'person in-charge of a vehicle or carrier of goods in movement' whereas the words in section 78(5) which comes after sub-section (4) refers to 'person in-charge of the goods'. The words 'in movement' do not find place in section 78(5) and therefore, the expression 'person in-charge of goods' under section 78(5) was wider than the expression 'person in-charge of goods in movement' under section 78(2)(a). Consequently, the expression 'person in-charge of the goods' under section 78(5) who is given an opportunity of being heard in the enquiry would include the 'owner of the goods' Following the decision in Assistant Commercial Taxes Officer v. Bajaj Electricals Ltd. [2008 (11) TMI 374 - SUPREME COURT OF INDIA], decided against the assessee.

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• Indian Laws

• 2012 (11) TMI 367
  Whether the Original Application filed by the Bank of India before the Tribunal is based on the same cause of action for which the Bank of India had filed the Suit before the Singapore High Court ? - Held that:- It is clear from the facts hereinabove that the cause of action which led to the filing of the Suit in the Singapore High Court was the banking facilities made available by the Bank of India to the Singapore Company in terms of the sanction letter dated 3rd May, 2001 issued by the Bank and the other terms and conditions stipulated therein, while the cause of action for filing the Original Application was the non payment of the amount by the Indian Company after accepting the Bill of Exchange dated 20th June, 2001. Thus, the causes of action for filing the Suit in the Singapore High Court and the Original Application before the Tribunal are different and if this be so, O2 R2 CPC would not bar the Bank of India from afterwards filing the Original Application. It is not necessary for the Court to examine the contention of learned counsel for the Bank of India that the Bank of India had to institute the proceedings against the Indian Company, which was the acceptor of the Bill of Exchange, otherwise the liability of the Singapore Company to pay the amount to the Bank of India in terms of the sanction letter would stand discharged. The Tribunal, therefore, committed an illegality in dismissing the Original Application filed by the Bank of India for the reason that the relief claimed in the Original Application could have been claimed by the Bank of India in the Singapore High Court and the Bank could not afterwards sue for this relief and the Appellate Tribunal was justified in setting aside the judgment of the Tribunal and directing the Tribunal to decide the matter on merits.

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• 2012 (11) TMI 327
  Occupancy rights in the land - Held that:- The phrase, ‘any person’ should be given the widest possible import, and the words may cover persons other than those mentioned in various other provisions of the statute. But, if the statutory provisions suggest, that the legislature itself has intended to give a restricted meaning to the phrase, ‘any person’, then it is not open to the court to give a wide or un-restricted meaning to the words, ‘any person’. Provisions of Section 10 of the Tenancy Act put a complete embargo on a hisedar/joint-owner to claim occupancy rights. There is no agreement between the appellants and Gram Panchyat creating any tenancy in their favour. Granting the relief to the appellants would amount to ignoring the existence of Section 10 itself and it would be against all norms of interpretation which requires that statutory provisions must be interpreted in such a manner as not to render any of its provision otiose unless there are compelling reasons for the court to resort to that extreme contingent.

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