Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
November 27, 2012
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Commission versus Discount - TDS u/s 194H - discount on sale of SIM Cards and other BSNL products - Decisions in the matter of Vodafone Essar Cellular Ltd (2010 (8) TMI 691 - KERALA HIGH COURT) and Idea Cellular Ltd. (2010 (2) TMI 24 - DELHI HIGH COURT), Distinguished. - No TDS - AT
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Settlement of Case – scope of the term 'pending' case - proceeding for assessment/reassessment u/s 147 are specifically excluded from the purview of "case" as defined under Section 245A(b) - HC
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When the unabsorbed depreciation could not be set off as against the income from business or profession the same can be set off from income from other sources - HC
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Addition on account of accrued interest – There is uncertainty in realizing the principle itself. - no notional interest can be brought to tax. - AT
Customs
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Appeal before commissioner (appeals) - without authorization - it would be unconscionable to hold that the chartered accountant fitted in the meaning of principal officer. - AT
FEMA
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Foreign currency borrowings by successful bidders of 2G spectrum re-auction - special arrangements - Notification
Corporate Law
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The term, ‘suit’ would apply only to proceedings in a civil court and not actions for recovery proceedings filed by banks and financial institutions before a Tribunal, such as, the ‘DRT’. - HC
Service Tax
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Denial of service tax credit - service tax registration numbers of the suppliers are not available on invoices – rectifiable mistake - credit allowed - AT
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Business auxiliary service (BAS) - Export of service - VISA/Mastercard - payments received by the appellants for promoting the business of the brand name owners. - stay granted - AT
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Cenvat credit on the security service - at assessee’s pump house for pumping water, which is required as a coolant in their manufacturing operations – credit allowed - AT
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Taxability of reimbursable expenses on travel local accommodation - action of the appellant was bonafide and suppression cannot be alleged for invoking extended period of time for demanding such service tax - AT
Central Excise
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Petitioner challenged the levying of 5% excise duty with cess on the coal purchased by them from the Coal India Ltd. claiming that levying of such 5% of excise duty is illegal and instead ought to have been levied only 1.03% duty in terms of the Government of India’s Notification No. 1/2011-C.E., dated 1-3-2011 - decided against the petitioner - HC
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Duty and penalty – job worker - area based exemption - non filing of declaration - Notification No. 50/2003-C.E., dated 10-6-2003 - stay granted - AT
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Coal based captive power plant - Exemption Notification No. 6/2006-C.E. at Sr. No. 91 read with Notification No. 91/2004-Cus. - it is not necessary that the sub-contractor himself should take part in International Competitive Bidding - AT
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100% Export Oriented Unit – CENVAT credit cannot be utilized for paying Customs duty on imported goods and paying Excise duty on inputs which are cleared as such - AT
VAT
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Input tax credit - inputs used for generation of electrical energy in the Captive Thermal Plant which is used in the process of manufacture of finished product - tax credit allowed - HC
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Constitutional validity of levy of entry tax on imported goods - Plant, which is brought in knock down condition, is a combination of machinery - it is liable for entry tax. - HC
Case Laws:
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Income Tax
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2012 (11) TMI 815
Loss on Purchase and Sale of Shares - Business loss vs Speculation loss - held that:- The transaction of purchase and sale of shares would be held as speculative business only if the company was hit by the explanation to section 73 of the Act. The implication of the explanation is that if a company incurs a speculation loss in a manner deemed in the explanation such loss shall not be set off except against profit and gains, if any, of another speculation business But, the explanation has provided two exceptions. The first exception is available in the case of a company whose gross total income consists mainly of income which is chargeable under the head “interest on securities”, “income from house property”, “capital gain” and “income from other sources”. The second exception is in the case of a company whose principal business is business of banking or granting loans and advances. As seen from the facts of the present case, though the assessee made a plea that the it is carrying on multiple business as principal business, but the facts do not support the plea of the assessee. - held as speculation loss - Decided against the assessee. Claim of bad debts in respect of certain sales made to foreign companies - held that:- Debt arising in the course of business activity is to be considered as bad debt if it is written off in the books of account as per the provisions of section 36(2)(iii) of the Act. In the present case the assessee submitted that it had obtained permission from RBI. The assessee is directed to adduce necessary evidence as the assessee has failed on earlier occasion to furnish necessary evidence. - matter remanded back.
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2012 (11) TMI 814
Applicability of sec 172 vs sec 44B - Regular / Occasional Shipping Business – CIT(A) has decided that, Once a person claims that it is not engaged in occasional shipping business and wants to go out of the ambit of section 172, the recourse is provided in section 172(7) only and for that it has to opt for filling return u/s 139(1). Since, the appellant has opted for the option to be assessed u/s 172(7) by filing return of income u/s 139(1) even before 172(4) combined order was passed and also combined with the fact that they approached the AO at Mumbai to issue the 100% DTAA tax relief certificate showing their intent to be assessed under the regular provisions of the Act, that the appellant is in regular shipping business and liable to be assessed under other provisions of the Act including 44B, and not u/s 172(4). Held that:- M/s Balaji Shipping Lines FZCO, UAE has accepted the liability to be dealt with the provisions of section 172(7) of the Act. The jurisdictional AO may, therefore, verify the position and take such action as may be warranted in law in terms of section 172(7) to ensure that the income of the assessee from the 86 voyages does not escape assessment as per normal provisions of the Act. - Appeal of the revenue dismissed - Decided in favor of assessee.
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2012 (11) TMI 813
Commission versus Discount - TDS u/s 194H - Disallowance u/s 40(a)(ia) - discount on sale of SIM Cards and other BSNL products - Franchiseeship Agreement - assessee contended taht as the TDS has already been deducted, U/s. 194H, on the commission given by the BSNL. Therefore, there should not be any further TDS on the same said amount while forgoing certain percentage of the original commission by allowing discount to the sub-franchisee/retailer. - held that:- The same income cannot be taxed again in the hands of different recipients which are a matter of business conducted being the fast network availability of BSNL products was not considered by the learned CIT(A) to establish that the discount available to the second and third tier franchisees was a matter of availability of products at its maximum retail price and not because they had made income from the service provider. - Decided in favor of assessee. Decisions in the matter of Vodafone Essar Cellular Ltd (2010 (8) TMI 691 - KERALA HIGH COURT) and Idea Cellular Ltd. (2010 (2) TMI 24 - DELHI HIGH COURT), Distinguished. TDS u/s 194I - rent - show room and go-down - Form 15G - Mistakes in the form 15G submitted by the land lady - held that:- Mistakes in the form submitted by the land lady as provided under the Act remains a mere technical formality when the assessee cannot be subjected to disallowance of expenditure claimed as rent for its shop and godown which together were to be considered under the provisions of Section 194-I r.w.s 197A of the I.T. Act. Obviously the disallowance u/s.40(a)(ia) comes after considering the collection and recovery of tax by deduction of tax at source which the assessee has satisfied for non-deduction cannot result in disallowance of expenditure for no fault of the assessee. The remedy lies elsewhere. - Decided in favor of assessee.
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2012 (11) TMI 812
Disallowance u/s 14A – Expenditure incurred in relation to exempt income - CIT(A) has directed the AO to determine the quantum of disallowance with reference to the ratio of the total expenditure debited to P&L Account in proportion that the value of transaction in shares which has yielded exempt income bears to the value of total transaction in shares – Held that:- Matter should be go back to AO with a direction to readjudicate the issue as per the provisions of law by taking into consideration the decision in case of GODREJ AND BOYCE MFG. CO. LTD. (2010 (8) TMI 77 - BOMBAY HIGH COURT). Issue remand back to AO Disallowance u/s 40(a)(ia) – Held that:- Though for A.Y 2006-07 the issue has been restored back to the file of CIT(A) but it was the request of assessee that since the issue regarding disallowance under section 14A of the Act is being restored to the file of AO this matter may also be restored back to the file of AO with similar direction. Issue remand back to AO Capital or revenue expenditure – Disallow repairs and maintenance under various heads of accounts - aluminum patti work, net working charges, expenditure for administration department – Held that:- As concluding from the facts of the case that all these expenditure were incurred in the regular course of business, after hearing both the parties we see no justification in sustenance of such disallowance. Issue decides in favour of assessee Bad debts u/s 36 – Bad debts includes total debts amount or only brokerage in hand of share broker – Held that:- Following the decision in case of Shri Shreyas S. Morakhia (2012 (3) TMI 103 - BOMBAY HIGH COURT) that bad debt relating to transaction of shares in the hands of share broker is allowable u/s 36(1)(vii) r.w.s. 36(2) as the same is an amount which could not be recovered by the share broker from his client as brokerage receivable from client was part of the debt which was taken into account while computing the income. Issue decides in favour of assessee Disallowance of penalty u/s 37 – Nature of payment made to stock exchange - Whether payment made to stock exchange for violation of trading beyond exposure limit, late submission of margin certificate and delay in marking delivery of shares due to deficiency is in nature of penalty – Held that:- Following the decision in case of PRASAD & CO (2012 (2) TMI 124 - DELHI HIGH COURT) & in case of GOLDCREST CAPITAL MARKETS LTD. (2009 (1) TMI 553 - ITAT, MUMBAI) that NSE was an independent body and the bye laws made by it for the regulation of its members did not have the force of the law. Such bye-law could be, at the best be seen as private contracts entered between assessee and stock exchange and any violation, therefore, cannot be, in our opinion, equated with an offence or with an act prohibited by law, in the nature of assessee’s business, as a member of NSE payments related to switching on the terminals, switched off for not abiding by the regulations of such exchange, or for delay in settlement or furnishing of data can only be considered as incidental. Issue decides in favour of assessee
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2012 (11) TMI 811
Disallowance in respect of VSAT charges paid to Stock Exchange – For non-deduction of TDS u/s 40(a)(ia) – AO had disallowed the claim holding that the payment made were not for use of standard equipments but also involved technical services – Held that:- Following the decision in case of KOTAK SECURITIES LTD. (2008 (8) TMI 592 - ITAT MUMBAI) holding that VSAT, and leaseline charges, were reimbursement of expenses to the stock exchanges for use of standard facilities and transaction charges were not disallowable. Delete the addition. In favour of assessee Penalty u/s 37 - Addition on account of on account of short delivery charges, failure to raise requisite margin money, non-timely deposit of margin money paid to stock exchange – AO treat it as penalty - Held that:- Following the decision in case of Master Capital (2007 (2) TMI 241 - ITAT CHANDIGARH-A) that amount paid by the assessee, a share broker to the NSE for violation of trading beyond the exposer limit, late submission .of margin certificate and delay in making deliveries of shares due to deficiencies were deductible as a business expenditure, as the amount was paid during the course of business of the assessee’s business and there was no infraction of law. In favour of assessee Disallowance of Bad debts u/s 36 – Bad debts in relation to the value of shares transacted by the assessee as a stock broker on behalf of his clients – AO argued that bad debt can be allowed only to the extent brokerage earned on the transactions – Held that:- Following the decision in case of Shri Shreyas S. Morakhia (2012 (3) TMI 103 - BOMBAY HIGH COURT) that the brokerage having been credited to the P&L of the assessee, it was evident that a part of the debt was taken into account in computing the income of the assessee. The fact that the liability to pay the brokerage may arise at a point in time anterior to the liability to pay the value of the shares transacted would not make any material difference to the position. Both constitute a part of the debt which arises from the very same transaction involving the sale or, as the case may be, purchase of shares. Since both form a component part of the debt, the requirements of Sec. 36(2)(i) are fulfilled where a part thereof is taken into account in computing the income of the assessee. Therefore, the assessee was entitled to deduction by way of bad debts under section 36(1)(vii) read with section 36(2) in respect of the amount which could not be recovered from its clients in respect of transactions effected by him on behalf of his clients. Issue decides in favour of assessee Cost of acquisition of share of BSE - Corporatisation and demutualization - Assessee claim depreciation on BSE Card till A.Y. 2005-06 – Claim original cost of the Card as the cost of acquisition for the purpose of calculating LTCG and cost indexation benefit which was claimed by taking the cost in 1999-2000 – AO argued that the assessee was not entitled to claim of double deduction on the same asset under two provisions of IT Act. - CIT(A) has held that cost of acquisition of shares should be taken only at Rs.7500/- in the year 2005-06 and the other cost which is WDV of the shares as on 1/04/2005 should not be added to the cost and thus he has computed the long term capital gain at Rs. 3,86,91,391/ – Held that:- Following the decision in case of Omniscient Securities (P) Ltd. (2011 (3) TMI 896 - ITAT, MUMBAI) that while computing capital gain on such transfer the AO has calculated its cost of acquisition on the basis of the written down value and Re.1 which had paid per share at the time of issue of shares by BSE Ltd. Therefore, we hold that the AO had rightly computed the capital gain and CIT(A) has wrongly calculated the long term capital gain in the hands of assessee. Appeal in favour of assessee
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2012 (11) TMI 810
Interest on delayed refund – Period of for which interest granted - Assessee contended that the interest of refund should be allowed from the 1st of April of the F.Y. in which TDS was deducted, i.e. from 1-4-1984 and not from the date of regular assessment order - AO granted interest u/s 244(1)A on the refund from the date of regular assessment order till the date of granting of the refund - Held that:- As the contention of the assessee is not correct, that the judgment in case of Sandvik Asia Ltd. (2006 (1) TMI 55 - SUPREME COURT), has in any manner diluted the ratio and the proposition of law laid down in case of Modi Industries Ltd.( 1995 (9) TMI 324 - SUPREME COURT). In the case of Sandvik Asia Ltd. (supra), the Hon’ble Supreme Court, was besieged with the issue of withholding of refund without sanction of law. Issue decides in favour of assessee Interest on refund - Assessee contended that interest should be paid on the amount of refund delayed after the expiry of 3 months from date of ITAT’s order till the date of actual granting of refund – AO argued that the interest should have to be paid in after the expiry of three months from the date of ITAT order, till the date of passing of the order giving effect of the ITAT and further interest on balance amount of refund shall become payable from the date of issue of the refund - Held that:- As the view taken by some ITO that the date of the assessment order is to be taken as the “date of the order granting the refund” is not correct. Thus, in cases where interest is payable by the Central Government to assessee u/s 243, such interest is to be calculated upto the date of issue of the refund voucher. Therefore, assessee is entitled for interest for the amount of refund and interest withheld from the period after the expiry of 3 months from the date of order till the date of actual grant of refund voucher. Issue decides in favour of assessee.
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2012 (11) TMI 809
Revision Order u/s 263 by DIT – DTAA between India and USA – DIT has observed that the AO has not examined the ‘Base Agreement’ and has not examined the exact nature of the services - the AO has taken a possible view that it was not in the nature of Fees for technical or fees for including services provide by assessee with reference to any technical services rendered in relation to any product or software developed – Held that:- We can safely presume on the basis of Tribunal’s findings in favour of one of the party in agreement in this case that finding and view taken by the AO in accepting the assessee’s explanation is a better possible view. Following the decision in case of Malabar Industrial Co. Ltd. (2000 (2) TMI 10 - SUPREME COURT) that on one of the two courses permissible by law has been adopted by the AO and it has resulted in loss of the revenue and where two views are possible and the AO has taken one view with which CIT does not agree, it cannot be treated as erroneous or prejudicial to the Revenue, unless the view taken by the AO is unsustainable in law. Appeal decides in favour of assessee
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2012 (11) TMI 808
Reopening of assessment u/s 147 - bogus purchases - Held that:- The contention of the appellant that the AO had no definite material or information before invoking provisions of section 147 is not tenable - It is an admitted fact that the original return of the appellant was processed u/s 143(1)(a) only at ministerial staff level and no finding had been or even can be recorded, by the AO during such processing, about the genuineness of purchase constituting the reasons for issue of notice u/s 148. The AO was therefore, fully justified in invoking provisions of section 147 considering the case of ACIT v Rajesh Jhaveri Stock Brokers P Ltd.(2007 (5) TMI 197 - SUPREME COURT) mentioning that failure to take steps under section 143(3) will not render the Assessing Officer powerless to initiate reassessment proceedings even when intimation under section 143(1) - against assessee. Estimation of profit at 6% of purchase price - Held that:- As decided in System India Castings Versus Commissioner Of Income-Tax [1996 (9) TMI 37 - MADHYA PRADESH HIGH COURT] that if the transaction of purchase was found to be sham the AO would be justified in disallowing not only the purchase price but also related transaction charges and it was held that such was a finding of fact and no question of law arose against such. Accordingly AO's action making disallowance of 6% of purchase price at Rs.14,49,190/- being justified and reasonable is hereby confirmed - against assessee. Addition made for unexplained peak investment - set off allowed by the CIT(A) in respect of 6 % of addition of profit out of peak credit - Held that:- Addition on account of disallowance of 6 % on purchases made from Kothari Group which was allowed as set off by CIT(A) against the addition of peak investment made in respect of alternative purchases made by the assessee, it is found that the AO has disallowed 6% of total purchases made during the entire year from Kothari group, whereas addition has been made with respect to peak unexplained investment worked out as on a particular date in respect of alternative purchases made by the assessee, and not in respect of entire alternate purchases made by assessee - Under these facts and circumstances & agreeing with the contention of DR that the order of CIT(A) is not correct to the extent of allowing setting off entire 6% of profit which was added in respect of entire purchases made from Kothari Group against peak unexplained investment worked out on a particular date, therefore the order of the CIT(A) is needed to be modified and direct the AO to recompute the addition made on account of purchases up till the date of working out unexplained investment on such purchases - partly in favour of revenue.
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2012 (11) TMI 807
Disallowance of 25% of the total expenses u/s 144 - CIT(A)restricted it to 5% - Held that:- The assessee did not appear before the AO nor produced the relevant books of accounts or bi lls/vouchers before the AO or even before the ld. CIT(A). There is nothing to suggest as to whether or not the assessee preferred any appeal against the findings of the CIT(A) . . As under the scheme of s. 144 itself an assessment must be done only to the best of the officer's judgment and after taking into account all relevant materials which had been gathered , thus the proper thing for the CIT(A) to have done would have been to examine the relevant books and bills/vouchers and ascertain the relevancy and validity of the materials on the basis of which the AO added the amounts instead of deleting/reducing the additions - CIT(A) did not allow any opportunity to the AO before reducing the disallowances and concluding that completion of assessment u/s 144 was not proper. There is nothing to suggest that the CIT(A) undertook any independent enquiries or even called for any report from the AO in the light of his findings in the assessment order, even while being fully aware that assessment had been completed u/s 144 - set aside the order of the CIT(A) in order to enable him to decide the matter afresh - in favour of revenue by way of remand.
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2012 (11) TMI 806
TDS on payment made for hiring of buses - Section 194-C OR Section 194-I - Held that:- The expression “carriage of goods and passengers by any mode of transport” finds place only in section 194 C and not in section 194-I. There is no direction that TDS on transport contracts will be made u/s 194-I instead of u/s 194C there is even no omission of clause © of Explanation III of subsection (2) of section 194C, after the aforesaid amendment in section 194-I in Explanatory Notes (Circular No. 1/2007 dated 17.04.2007). Thus according to well established rules of interpretation, specific provisions prevail over general provisions. Section 194C contains specific provisions for deduction of tax in the cases of transport contracts whereas Sec. 1941 contains general provisions for deduction of tax from rent in respect of hiring of machineries, plants etc. Therefore deduction was rightly made u/s 194C in this case As in this case the Transporters have not given the buses for exclusive use by the appellant the use is only for point to point transportation to students/staff to and from only for convenience sake & after the specified period of use, the buses are kept under the control of the operators and not of the appellant organization, thus it implies that the main object is transportation of passengers and not complete hiring of the particular vehicle, thus the payment made to the traveling agencies for vehicle hiring is covered by the provisions of section 194-C and not by the provision of section 194-I - in favour of assessee.
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2012 (11) TMI 805
Disallowance u/s.40(a)(ia) - CIT(A) deleted the addition - Held that:- The CIT(A) has recorded that the assessee has incurred certain expenses for advertisement and publicity, which have been reimbursed by the principal company and that no part of the expenses have been claimed by the appellant in its P&L account, and therefore the provisions of section 40(a)(ia) are not applicable and no disallowance could be made while computing the income of the appellant - as revenue unable to produce any fatcs to contrary no disallowance is warranted - in favour of assessee. Disallowance on account of foreign travel expenses as non-business purposes - CIT(A) deleted the addition - Held that:- The assessee also could not justify how the travelling by the directors would have enhanced or bought value to its own business and these expenses have any relevance to the business of the assessee and in reply to a specific question from the Bench as to the date-wise details of foreign visit by two directors of the assessee-company, the same could not be produced on behalf of the assessee. Onus is on the assessee to prove the business purpose of the expenses to claim deduction, as the same is out of its taxable income, which in this case, the assessee has failed to discharge. The assessee was expected atleast to maintain a date-wise detailed programme of the directors during their foreign traveling as letters of the two directors during the relevant period addressed to the assessee-company mentioning the places where they have visited does not inspire confidence - in favour of Revenue. Disallowance u/s.40A(2)(b) - CIT (A) restricted the addition to Rs.2,00,000/- as against Rs.6,00,000/- - Held that:- CIT(A) after considering entire facts and circumstances of the case and qualification of the lady directors and their contribution to the assessee-company has allowed salary at Rs.2 lakhs per annum each of the lady directors and disallowance was restricted to Rs.2 lakhs - no interference in his order on this issue is called for - against Revenue.
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2012 (11) TMI 804
Rejection of books – AO found discrepancies in gross receipts, non-payment of term loans and interest thereon, non-availability of inwards and outward register - Held that:- As concluding from the facts of the case assessee has not maintained books of account and other relevant documents, as are required under the Act. He has admitted that no in-ward or out-ward Stock Registers have been maintained for the storage. Therefore, no correct and true profits can be ascertained in absence of stock register. In favour of revenue Revenue on adhoc basis - 90% of net sanctioned capacity – Assessee earn income from hire charges of cold-storage - Cold Storage capacity being 3382.8 MT - AO, calculated the storage capacity of cold-storage at 67656 bags of 50kg each – Calculate revenue @ Rs. 40 per bag – Assessee contended that capacity utilization for such a plant was 34000 to 36000 bags, for which a storage rate of Rs.30/- to Rs.40/- per bag was received – Held that:- As concluding from the facts of the case it would be fair and reasonable to upheld the addition to the tune of Rs. 4,00,000/-, with a view to meet the ends of justice. Issue partly allowed in favour of assessee
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2012 (11) TMI 803
Condonation of delay - Delay in filing appeal with Tribunal - Assessee not file the appeal because higher of litigation expense over tax payable – Subsequently AO increase the demand by passing order u/s 154 – Assessee file an appeal before Tribunal – Held that:- Subsequently increase in demand is reasonable and sufficient cause for filing the appeal late. Delay condoned. In favour of assessee Exemption u/s 10(10C) – VRS - Assessee received salary and pension (including exgratia) – Violation of conditions u/s 10(10C) r.w.r. 2BA – Held that:- Following the decision in case of Shri Bikram Jit Passi (2012 (11) TMI 214 - ITAT, CHANDIGARH) that if AO had any doubt about the scheme he could have enquired from the employer. Assessee cannot be penalized and tax will be levied on him on the assumption that the scheme framed by employer is not in accordance with rule 2BA. Provision of Sec. 10(10C) should be interpreted in a manner beneficial to the optee for voluntary retirement. In favour of assessee
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2012 (11) TMI 802
Disallowance of salary u/s 40A(2)(b) - Reimbursements made to two sister concerns, who had deputed their employees for carrying out the work of the assessee – Held that:- As concluded from the facts of the case there is no whisper, much less any material on record, to suggest that the assessee has made payments for any consideration extraneous to the cost of the employees deputed to the assessee. It is quite apparent from the orders of the authorities below that there is no allegation to say that the assessee has paid to sister concerns anything over and above salaries due to the employees who were on assignment to the assessee company. Issue decides in favour of assessee Disallowance of salary for non-deduction of TDS u/s 40(a)(ia) - Held that:- Sec. 40(a)(ia) does not include expenditure on salaries. AO erred in invoking Sec 40(a)(ia) to disallow the impugned payment. Issue decides in favour of assessee Disallowance of interest – Interest expenditure in relation of giving interest free advances – Held that:- The AO has not pointed out to any instance of giving away interest free loan for non-business purpose either to relative or to sister concerns. Therefore, there cannot be any disallowance of interest u/s 36(1)(iii). Issue decides in favour of assessee
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2012 (11) TMI 801
Addition on account of Unexplained cash credit u/s 68 - Assessee could not furnish the requisite confirmations from the two creditors before AO – Held that:- As the assessee had produced necessary confirmation along with pass book & ROI’s before CIT(A) and AO also submit remand report on the same. There is no material or cogent reasoning made out by the Revenue with regard to the material on the basis of which the addition has been deleted. Issue decides in favour of assessee Addition on account of promissory notes/hundi u/s 69D – AO argued that amount has been borrowed in cash on a hundi, which were found in the course of search u/s 132 – Held that:- As the CIT(A) has concluded that promissory note in question is in the same language and form, as was considered by the Tribunal in the case of Himalaya Distributors (2008 (12) TMI 272 - ITAT PUNE-B) and, therefore, he concluded that having regard to the material in question, Sec 69D could not be invoked, since the documents found were not ‘hundis’. The assessee representative has not referred to any material which would require us to depart from the aforesaid findings. Issue decides against revenue
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2012 (11) TMI 800
Matter referring to TPO u/s 92CA – Opportunity to the assessee – Whether opportunity to assessee has to be given before referring matter for computation of arm's length price to the TPO – Held that:- There is no specific provisions for giving any opportunity to the assessee before reference to the TPO. It is for the AO when he considers it necessary or expedient so to do, he may refer the computation of arm's length price in relation to the said international transaction u/s 92C to the Transfer Pricing Officer. Issue decides in favour of revenue Disallowance of foreign travel expenditure – Held that:- Since the AO has not given any reason for disallowance of such expenses. What has been done by the AO is that he made a disallowance in the computational part without assigning any reason. Therefore, in the facts and circumstances of the case, disallowance made by the AO is not justified. Issue decides in favour of assessee
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2012 (11) TMI 799
Disallowance of interest expenses – alleged that assesses has advanced Rs.12 lacs to M/s. Millenium and Rs.20,65,000/- to M/s. Bajaj Chemical Products. On these advances no interest has been charged. The assessee is giving interest bearing funds without charging any interest - appellant submits that the loan to M/s. Millennium was given for very short period during the year. However, the principal amount had not received within the stipulated time and accordingly it was not prudent to charge interest – Held that:- AO had calculated notional interest presuming that the loan was given on the first day of accounting year, which is not correct. As the loan was given during the year, interest even on notional basis can be calculated for the days of use only though under the facts and circumstances, the same was not required - AO has not shown any nexus between interest bearing funds and the amount advanced at a lesser rate of interest. Thus, basically the nexus itself is not established - addition deleted – In favor of assessee Disallowance on account of payment of PF and ESIC – alleged that same were not paid within the due date provided in the relevant statute - Held that:- Amount in question has been paid before the due date of filing of return – disallowance deleted – In favor of assessee
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2012 (11) TMI 798
Addition on account of insurance premium paid under the “Keyman Insurance Scheme” on the life of its partner – AO observed that the assessee had claimed this amount as revenue expenditure which was not allowable since the benefit of the insurance is in the nature of capital receipt and so the expenditure would also be capital expenditure – Held that:- Premium paid for obtaining such insurance policy would be an expenditure allowable u/s 37(1) of the I.T. Act - as pet 1 Explanation to Section 10 (10D), "Keyman Insurance Policy means a Life insurance policy taken by a person on the life of another person who is or was the employee of the first mentioned person or is or was connected in any manner whatsoever with the business of first mentioned person - first mentioned person is the partnership firm while the policy has been taken on the life o! the partner who is the second mentioned person – addition deleted – In favor of assessee Disallowance on account of sales commission – alleged that the assessee was unable to provide the proof of services rendered – Held that:- Genuineness of the commission paid stands established and the AO has nowhere given a finding that the same was excessive or unreasonable - payment made to the parties is genuine, after verification from two persons to whom commission was paid. This finding of fact was not disputed by the Revenue – in favor of assessee Disallowance on account of salary payment – alleged that since the books of accounts were not produced having been destroyed in the floods, there was no way of verifying the genuineness of claim of salary which was mostly paid in cash – Held that:- Salary was being paid to staff and to the deliveryman and the salary was paid in cash since the staff normally did not have any Bank account - payment would be made by cash to the employees and there is no statutory requirement of salary to be paid by cheque, especially to lowly paid employees – addition deleted – in favor of assessee
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2012 (11) TMI 797
Penalty u/s 271(l)(c) of the IT Act - appellant submitted that it had not committed any default of concealing particulars of is income or furnishing inaccurate particulars of income; the penalty with regard to concealment was not applicable as the deduction u/s. 80HHC was duly claimed in the return of income on the basis of export achieved during the year and the deduction has been claimed on the basis of the certificate issued by the Chartered Accountant, who had duly verified all the export turnover figures – As per Circular No.2/2006, in respect of addition u/s 80HHC with respect to DEPB, the AO in fact should not have imposed the penalty at all - no penalty shall be levied or interest shall be charged in respect of any fresh demand raised consequent to the enactment of Taxation Laws (Amendment) Act, 2005, on account of variation in the returned/assessed income attributable to profits on sale of DEPB credits or DFRC - matter restored back to the file of the CIT(A)
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2012 (11) TMI 796
Disallowance u/s 40a(ia) – alleged that the appellant should have made deduction of TDS @ 2% as against 1% deducted by the appellant from freight payments – Held that:- Payment made by it to the truck operators was in the nature of sub contract and hence was rightly subjected to TDS @ 1% - assessee was required to deduct TDS at the rate of 1% only as in assessee’s case the provisions of section 194C(2) are attracted - there is no violation of section 40a(ia) on the part of the assessee. This ground of the assessee is allowed. Disallowance on account of amount paid towards Crossing Bhada [Secondary Freight] u/s 40a(ia) – alleged that no TDS has been deducted by the delivery agent to the trucks owners while making payment to them – Held that:- Full details/facts in respect of these two grounds are not on record - restore these issues to the file of the AO Disallowances u/s 40a(ia) on account of non-deduction of TDS on primary freight payment – Held that:- Payments related prior to 1s t October, 2004, are covered by the first proviso to section 194C(3) as it stood prior to substitution by the Finance (No.2) Act,2004 and were not therefore liable to deduction of tax at source - there is no violation of section 40a(ia) of the Act and therefore this ground of the assessee is also allowed
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2012 (11) TMI 795
Valuation of closing stock – Held that:- Assessee was prevented to file the requisite details in support of its valuation of closing stock, to the AO - same were filed before the learned CIT(A) but it appears that he has also not properly appreciated the same. Since the details filed before the learned CIT(A) were such that required verification at the end of the AO, we deem it proper that the matter be restored to the file of the AO for fresh adjudication
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2012 (11) TMI 794
Disallowance of transportation expenses – Held that:- Assessing Officer has also allowed the claim of above expenses, but by mistake in the computation of income added the above amount - addition of Rs.2,39,802 made on the above account delete Disallowance of telephone expenses – Held that:- Disallowance of 20% of telephone expenses made by AO on the ground that the payment was made in cash for which bills / vouchers were not available with the assessee. We, however, feel that the disallowance is on higher side and therefore, we restrict this disallowance to 10% of the expenses incurred by the assessee - appeal filed by the assessee is partly allowed for statistical purpose
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2012 (11) TMI 793
Addition made on account of reduction in the Gross Profit rate – Held that:- AO did not find any defect in the books of account maintained by the assessee nor did he find false with the explanation furnished by the assessee with regard to the deduction in the gross profit - AO has reached the conclusions without taking into account the quantity details furnished by the assessee along with the Tax audit report - book results can be rejected only if it is shown that the books maintained by the assessee are not reliable for deducing correct income - AO has not given any such finding – addition deleted – in favor of assessee Taxability of Sales tax subsidy received by the assessee – Held that:- Subsidy has been received from the Government for expansion of running business - assessee treated it as “Capital subsidy”, where as the AO considered it as “Revenue subsidy” - it is an incentive granted to the assessee under 1993 Package Scheme. The incentive has been provided for making addition fixed capital investment in building and plant and machinery – claim of assessee allowed Disallowance of payment made to Sabarmati Gaushala for purchase of Semen doses – alleged that the assessee could not prove any business connection in incurring this expenditure – Held that:- Appellant has incurred legitimate expense towards purchase of semen doses, which is veterinary item. These semen is injected to get the best quality of breed of milk bearing cattle - expenditure incurred has direct nexus with the objectives of the appellant society – in favor of assessee Disallowance of legal expenses – alleged that assessee could not file confirmation letter and also the basis for charging such a high amount – Held that:- Claim of Rs.24.50 lakhs pertaining to legal expenses was disallowed, the disallowance of Rs.19.50 lakhs has led to double addition which is not permissible under the Act. The Ld. CIT (A) was convinced with the submissions of the assessee and accordingly deleted addition of Rs.19,50,000/-, as it has led to double addition of the same amount - DR, however, submitted that the said claim of double addition needs verification - matter set aside to the AO for verification Disallowance of consultancy expenses – Held that:- AO disallowed the above said claim for the reason that the assessee could not file confirmation letter from the payees and also the basis of the fee charged by M/s Chirayu Consultancy - assessee filed copies of bill, confirmation letter, copy of payment voucher and copy of acknowledgement of return filed by them. The assessee claims that the said professionals have directly sent these documents to the assessing officer - AO has made the impugned addition for want of confirmation letters, which means that the said documents might not have reached the AO in time – matter remanded to AO
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2012 (11) TMI 792
Disallowance made from the expense claimed under the head Salary and Bonus – Held that:- Payments in cash were made to only casual and temporary workers. Hence on a conspectus of the matter, the Ld CIT (A) restricted the impugned addition to a lump sum figure of Rs.5.00 lakhs for the reason that there is a probability that a part of claim cannot be substantiated by the assessee - AO has doubted the genuineness of this expense for another reason, i.e., the assessee could produce 5 employees out of 10 persons called for by him - disallowance upheld Determination of GP Rate - held that:- There cannot be any dispute that the assessee cannot realize any profit when a particular item is replaced at free of cost during the warranty period. If such warranty claims are borne by the assessee, then it will certainly have impact on the rate of GP. - the non-maintenance of stock leads to certain other problems, like theft and pilferage and such incidents would also have impact on the rate of GP. - The AO has not factored in such kind of possibilities while working out the average rate of GP. Further the samples taken by the AO cannot be taken as representative samples, as he has not taken samples randomly over the entire year. - Thus, in our view, the rate of GP worked out by the AO also cannot be considered to be a perfect one. - the average rate of GP on sale of spare parts may be fixed at 9% and in our view the same would meet the ends of justice. Disallowance made from the expense claimed under the head Telephone expenses – assessee had disallowed 1/20th of the expenses claimed under this head towards personal use. The AO however enhanced the disallowance to 1/4th of the total claim – Held that:- Assessee himself had disallowed a part of telephone expenses towards personal use on ad-hoc basis. The said action of the assessee establishes the fact that the telephones were put to personal use also - 1/5th of the expenses claimed disallowed Disallowance made from the expense claimed under the head “Vehicle expenses” and also from depreciation claimed on Motor car towards personal use – Held that:- Assessee himself had disallowed a part of telephone expenses towards personal use on ad-hoc basis. The said action of the assessee establishes the fact that the telephones were put to personal use also - 1/5th of the expenses claimed disallowed Disallowance made from Discount and Rebate claim – alleged that the assessee has inflated the claim made under the head “Discount and Rebate” and accordingly disallowed 20% there of – Held that:- AO has failed to adduce the opportunity of cross examining the persons who have given contradictory statements - no merit in the impugned disallowance and accordingly deleted Disallowance made from the “Labour charges” claim - AO issued letters u/s 133(6) of the Act to four persons to whom an aggregate amount of Rs.10,66,468/- had been paid as labour charges. Since the said letters were returned back un-served, the AO disallowed the said claim – Held that:- Assessee is required to engage out side persons also, to carry out the repair works of vehicles - assessee had deducted tax at source u/s 194C of the Act on the above said payments - assessee had made majority portion of the impugned amount by way of Account Payee cheques. It was also noticed that out of four persons, one had expired, one of them had gone abroad and other two persons were not immediately traceable - AO was not justified in making the addition – addition deleted Disallowance of Employees’ share of PF – Held that:- Assessee submitted that a grace period of five more days are available under the PF Regulations and the impugned payments have been made within the grace period. It was also submitted that the payments made within the grace period are also considered as payments made within the due date - amounts paid beyond the grace period disallowed
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2012 (11) TMI 790
Whether reference made by the Assessing Officer to the DVO u/s. 55A is bad - Held that:- reference to DVO can only be made in cases where the value of capital asset shown by the assessee is less than its fair market value of land as on 1st April, 1981 shown by the assessee on the basis of approved valuers’s report being more than its fair market value, reference under S. 35A was not valid - reference made by the Assessing Officer to the DVO u/s. 55A in the peculiar facts and circumstances of the case is bad in law - in favour of the assessee Deduction of lawyer’s fee – Held that:- AO in the absence of any documentary proof has disallowed the claim of the assessee for the deduction of Lawyer fees of Rs.4,00,000/-, the assessee’s share being Rs.1,00,000/- from the sale proceeds of the property – matter remanded to AO
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2012 (11) TMI 785
Allegation of discrimination - From the salary of the employees, Opp. Party nos. 2 and 3 deduct income tax U/s.192 and deposit the same with the Central Government. - reimbursement of the tax deducted and paid on that part of the house rent allowance - allege that the company discriminate the members of the petitioner-Association in taking decision not to reimburse the tax deducted and paid on that part of the house rent allowance (hereinafter mentioned as ‘perquisites’), while it is reimbursing same to the non- executives by paying an equivalent amount known as “up-keep allowance”. - held that:- respondents directed to decide the claim of the petitioner as to whether the members of the petitioner-Association and non-executives belong to the same class and the executives are entitled to 5% “Up-keep Allowance” as the non-executives are getting after giving an opportunity of hearing to the petitioner, within a period of one month from the date of production of certified copy of this judgment. Whether accommodation provided to the Executives working under Opposite party no.1 could be regarded as part of their income on which tax could be deducted at source under Section 192 of the I.T. Act from the salary paid to the Executives. - held that:- it is open to the members of the petitioner-Association to make an application as provided under sub-section (1) of Section 197 to the Assessing Officer and satisfy him that no tax is deductible from the salary on account of the accommodation provided by the employer to them. In such event, the Assessing Officer has to examine the case of the petitioner and if he is satisfied that the members of the petitioner-Association are entitled to be issued with certificate of “No deduction of Income Tax” he shall issue such certificate and on production of such certificate before opposite party No.1, opposite party No.1 is bound not to deduct tax until such certificate is cancelled. Thus, a statutory remedy is available to the petitioner under Section 197 of the Act. Section 197 is a complete provision so far as deduction of tax at source is concerned.
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Customs
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2012 (11) TMI 830
Refund of Special Additional Duty denied - appeal rejected as appellant not authorized to file - Held that:- The appeal before the Commissioner (Appeals) was filed by a chartered accountant of the company without authorization as it would be unconscionable to hold that the chartered accountant fitted in the meaning of principal officer. - The very fact with the present appeal of the company has been filed by one of its directors would indicate that the appellant has become wiser after noting the relevant provisions of the CESTAT (Procedure) Rules 1982, which also require an appeal of any company to be filed by its principal officer . The appellant has not produced a copy of the memo of appeal filed with the Commissioner (Appeals) to prove that the subject appeal was filed by Shri Satish Kumar as authorized representative of the company - against assessee.
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2012 (11) TMI 829
Refund - method of calculation of the refund - Notification No. 94/96-Cus. - exemption of the goods to the extent of drawback received. - Revenue has taken the stand that while sanctioning the refund, benefit of CENVAT credit that may be available to the appellant has to be deducted from the amount of refund payable to the appellant – Held that:- Deduction of CENVAT credit amount by sanctioning refund does not appear to be correct since no provision of law where the future CENVAT credit admissible can be taken into account while calculating the customs duty payable under Notification No. 94/96-Cus - appellant has made out a prima facie case in their favour - requirement of pre-deposit is waived
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2012 (11) TMI 828
Writ Appeal - conversion from DEPB scheme to Duty drawback scheme - appellant/petitioner is an exporter of coir products and originally he sought to have the benefit under the DEPB scheme - earlier HC in a writ petition of the petitioner [2012 (9) TMI 347 - KERALA HIGH COURT] directed the department to consider the claim - Pursuant to the said verdict, the matter was considered by the competent authority, who passed order dated 20-9-2011 whereby the claim was rejected Held that:- there was no declaration that the writ petitioner was entitled to have the benefit though such a relief was prayed for in the said Writ Petition. According to the respondents, the writ petitioner is not entitled to have the benefit as sought for, which resulted in Ext. P7 order. If the writ petitioner/appellant is aggrieved of the said order, it is open to the party to have it challenged by way of availing the statutory remedy by way of appeal under Section 129A of the Customs Act.
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2012 (11) TMI 783
Waiver of pre deposit of penalties - Custom House Agents (CHA) penalised for non declaration of material facts regarding the goods which were sought to be exported by M/s. Goralal Arya Impex Pvt. Limited. - Held that:- As appellant did not appear before the adjudicating authority nor filed reply to show cause notice given to him, thus in order to ensure that appellant appears before the adjudicating authority and co-operates is directed to deposit an amount of Rs. 1,00,000/- within eight weeks from today and report compliance. Appellants/applicants undertakes to file reply of show cause notice within six weeks from today.
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2012 (11) TMI 782
CHA licence – qualification - application for issue of CHA licence was rejected on the ground that since she is only a graduates not having a professional degree i.e. CA/MBA/LLB/Diploma in Customs clearance work, or a G-Card, in terms of Regulation 6(a) of CHALR-04 she was required to have passed the examination as prescribed under Regulation 8 of CHALR-04 – Held that:- Board’s Circular No. 9/10, has clarified that those applicants who have passed the examination referred to Regulation 9 of CHALR-84, but were not given licence under the said regulation were required to appear in the examination and qualify the same under Regulation 8 of CHALR-04 in respect of additional subjects as provided in Notification No. 30/10-Cus. (N.T.), dated 8-4-2010 and the persons who qualify in the aforesaid examination shall be deemed to have passed the examination under Regulation 8 of CHALR-04 and would be considered for grant of CHA licence in terms of Regulation 9 of CHALR-04. The Commissioner’s other objection that an applicant who had passed examination from one Custom House cannot be considered for the grant of CHA licence from another Customs House is without any basis as the examination under Regulation 8 of the CHALR-04 and earlier under Regulation 9 of the CHALR-84 is conducted by Directorate General of Inspection and it would not be correct to refuse the CHA licence on the ground that the examination has been passed from some other Commissioner’s jurisdiction. - matter remanded back for de novo decision.
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2012 (11) TMI 781
Interest on refund - importer filed a refund claim on 18-4-2006 before Development Commissioner, KASEZ. - This was transferred to Customs and finally the refund was sanctioned on 23-9-2009 but the claim for interest on the deposit with effect from three months after the date of filing of refund claim has been rejected - refund claim for interest has been rejected on the ground that the security deposit for provisional release is made as per the orders of the adjudicating authority – Held that:- Appellant is entitled to interest considering the date of filing the refund claim as 28-4-2006.
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Corporate Laws
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2012 (11) TMI 827
Whether a secured creditor of a registered company enjoys equal rights as an unsecured of a company to have its winding-up petition - Held that:- A secured creditor of a company has the legislative mandate to present a winding-up petition on the several grounds recognised in Section 433 including on the basis of the company’s inability to pay its debts. The issue here is whether a secured creditor, which founds its petition only on Section 434(1)(a) to raise the presumption of the company’s inability to pay its debts, would be able to establish the legal fiction without demonstrating the inefficacy or inadequacy of its security that the expression “neglected to pay the sum, or to secure or compound for it to the reasonable satisfaction of the creditor” in the relevant provision envisages. The rules in insolvency were to apply to companies which had been wound up in the event the value of the assets of the company was insufficient to meet the claims of its creditors, but such rule applied only to cases of winding-up on the ground of insolvency. It is beyond question that most rules of insolvency apply in the assessment of the entitlement of the creditors of a company in liquidation. But that is of no relevance in the present case. The company has not been wound up; indeed, we are two steps removed from such a situation since the present assessment is as to whether this petition made by a secured creditor, relying exclusively on Section 434(1)(a) for the court to presume the inability of the company to pay its debts, should be admitted for being advertised in the absence of the petitioning creditor having asserted or established the inefficacy or the inadequacy of the securities that it enjoys. The rules in insolvency were to apply to companies which had been wound up in the event the value of the assets of the company was insufficient to meet the claims of its creditors, but such rule applied only to cases of winding-up on the ground of insolvency. It is beyond question that most rules of insolvency apply in the assessment of the entitlement of the creditors of a company in liquidation. But that is of no relevance in the present case. The company has not been wound up, indeed, we are two steps removed from such a situation since the present assessment is as to whether this petition made by a secured creditor, relying exclusively on Section 434(1)(a) of the Act for the court to presume the inability of the company to pay its debts, should be admitted for being advertised in the absence of the petitioning creditor having asserted or established the inefficacy or the inadequacy of the securities that it enjoys. The inevitable conclusion from the discussion herein that a secured creditor of a company which has not established the inefficacy or the inadequacy of the security held by it may maintain a petition for winding up the company but such petition, if founded solely on the legal fiction under Section 434(1)(a) of the Act, will not qualify either to be admitted or for any order of winding-up to be passed thereon. Since the petitioning creditor here has neither averred nor otherwise established that the security that it enjoys is inefficacious or inadequate to meet its claim against the company, the petition cannot be admitted. Petition is permanently stayed with liberty to the petitioner to launch fresh winding-up proceedings upon exhausting its remedies against the securities that it enjoys. As a consequence an application under Section 450 of the Companies Act, is dismissed. The interim order subsisting on such application is vacated with immediate effect and the official liquidator is discharged as the provisional liquidator of the company. There will no order as to costs in either case.
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2012 (11) TMI 780
Amalgamation - held that:- Scheme of Amalgamation would, have the benefits of increasing efficiency by pooling of resources and their optimum utilization, thereby availing synergies from combined resources and will enable the company concerned to rationalize and streamline their management, businesses and finances and the businesses will be carried on more economically and profitably after the proposed amalgamation - prayer to dispense with the convening of the meetings of Equity Shareholders of Petitioner No.1/Transferor Company-2 and Petitioner No.2/Transferee Company is accepted. Since there is no secured creditor of the Petitioner No.1/Transferor Company-2, no occasion arises to dispense with convening of the meeting.However, separate meetings of the Un-secured Creditors of the petitioner-companies be convened as per schedule.
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2012 (11) TMI 779
Recovery proceedings - order of Debt Recovery Appellate Tribunal - condonation of delay - principal debtor - Liability of the surety / guarantors – Period of limitation - petitioner contended that it is not the principal debtor and that another entity, being State Trading Corporation of India Ltd. is the principal debtor, given the nature of the transaction – Held that:- . Rule 5A gives a leeway to the DRT to entertain an application for review, only if, it is filed latest, by the sixtieth day from the date of the order of which review is sought. There is in sub rule (2) of Rule 5A, an express bar imposed on the DRT in entertaining review applications after the expiry of sixty (60) days. - There is, therefore, possibly no scope even for entertaining an application for condonation of delay by invoking Section 5 of the Limitation Act, 1963 (in short Limitation Act). Provisions of Section 24 of the RDDB Act, which provides, that the provisions of the Limitation Act shall as far as may be applied to an application made to a Tribunal. Undoubtedly, the application adverted to in the said provision refers to the OA filed by a bank/financial institution to seek recovery of its debt and not interlocutory applications, such as, one for review. - It is, therefore, perhaps the legislature’s intention to apply the provisions of the Limitation Act to a limited extent and "as far as may be" to the original action for recovery of debt. This would not translate, perhaps, in the provisions of Section 5 of the Limitation Act being made applicable to an application for review of an order passed in an OA. It is interesting to note that there is no provision for review in the RDDB Act. Petitioners have not taken the trouble of filing an application for condonation of delay under section 5 of the Limitation Act - Issue no.1 is decided in favour of the respondent and against the petitioners. Scope of the term 'Suit' - held that:- the word ‘suit’ cannot be understood in its broad and generic sense to include any action before a legal forum involving an adjudicatory process. - If that were so, the legislature which is deemed to have knowledge of existing statute would have made the necessary provision, like it did, in inserting in the first limb of section 22 of SICA, where the expression proceedings for winding up of an industrial company or execution, distress, etc. is followed by the expression or "the like" against the properties of the industrial company. - There is no such broad suffix placed alongside the term ‘suit’. The term suit would thus have to be confined, in the context of sub section (1) of section 22 of SICA, to those actions which are dealt with under the Code and not in the comprehensive or overarching sense so as to apply to any original proceedings before any legal forum as was sought to be contended before us. - The term, ‘suit’ in our opinion would apply only to proceedings in a civil court and not actions for recovery proceedings filed by banks and financial institutions before a Tribunal, such as, the ‘DRT’. Liability of the surety is co-extensive with that of the principal debtor if the latter liability is scaled down the liability of the surety will accordingly stand reduced or even extinguished. The principle in so far as this aspect is concerned is pivoted on the fact that the liability of a guarantor i.e., the surety being co-extensive is both joint and several. Therefore, a creditor need not sue a principal debtor in order to bring an action against a guarantor - decided against the petitioners
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FEMA
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2012 (11) TMI 831
Pre-arrest bail – Purchase of land by Non resident - Violation of provisions of FEMA (Foreign Exchange Management Act) - William Singh Sandhu is a citizen of United States of America and is not an Indian citizen. There are restrictions in law on his right to purchase agricultural land in India. He has purchased agricultural land in India by giving the address of Gurvinder Singh as his address. William Singh Sandhu has already been arrested in the case and is said to have been released on regular bail. - While Gurvinder Singh is the attorney of the vendor who has no grouse in the matter, the other petitioner is the attesting witness of the sale deed - custodial interrogation of the petitioners is required in this case - case is based on documentary evidence for its proof. When William Singh Sandhu, the main accused has already been arrested and released on bail, the petitioners appear to be entitled to pre-arrest bail - interim anticipatory bail to petitioner allowed
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2012 (11) TMI 784
Money transactions - whether offence under FEMA is made out or not – Held that:- Investigation is still at the initial stage, the FIR cannot be quashed at the threshold - allegations in the FIR itself are to the effect that the petitioner is indulging in hawala money transactions remitting the money from foreign country through illegal channels - Court cannot comment on the merits of the case at this stage without there being any clarification and the evidence on of record - no ground is made out at this stage for quashing of the impugned FIR.
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Service Tax
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2012 (11) TMI 834
Taxability of reimbursable expenses on travel local accommodation, etc. incurred by a Consulting Engineer – Following the decision of court in case of [Malabar Pvt Services Vs CCE 2007 (10) TMI 135 – CESTAT] Held that:- Such expenses would not form part of assessable value of services rendered by Consulting Engineers. In view of the clarification issued by CBEC and the decisions relied by the appellants, action of the appellant was bonafide and suppression cannot be alleged for invoking extended period of time for demanding such service tax - appeal allowed on this ground.
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2012 (11) TMI 833
Cenvat credit on the security service - at assessee’s pump house for pumping water, which is required as a coolant in their manufacturing operations – Held that:- Without water, the manufacturing operations cannot be carried out and the water has to be pumped from Kundalika river, which is situated away from their factory and there is a pump house for undertaking this activity. The security services provided there is integrally connected to the manufacturing activity at the appellant's factory - they are entitled for the credit
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2012 (11) TMI 832
Waiver of pre-deposit - credit card business – business auxiliary service (BAS) - VISA/Mastercard - payments received by the appellants for promoting the business of the brand name owners. - held that:- the appellants were promoting the business of VISA/MasterCard and the impugned payments were for that. - So we are prima facie not in agreement with the first leg of the argument that the activity was only that of brand name promotion taxable from 1-07-2010. The service could qualify both as promoting the business of Visa/Mastercard and also as providing service on behalf of Visa/Mastercard. Export of services - held that:- this issue is presently under consideration in the case of Microsoft Coprn. (India) (P.) Ltd. v. CST [2011 (11) TMI 60 - CESTAT, NEW DELHI] before Delhi Bench. The matter stands referred to a third Member to resolve the difference in opinion between the Members of the Bench which heard the matter. - At this stage the benefit of the difference in views could go to the appellant. So at this stage we go by the location of the service provider and take a tentative conclusion that the services were exported. - Stay granted.
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2012 (11) TMI 818
Denial of service tax credit on the ground - service tax registration numbers of the suppliers are not available on invoices – Duty paying document - Held that:- Non-mention of the registration number of the service providers can be rectified by obtaining certificates showing service tax registration number in respect of these invoices which can be duly authenticated by the concerned jurisdictional Central Excise officers and submitted by the appellants - order shall stand modified and the service tax credit in respect of these invoices will stand allowed
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2012 (11) TMI 788
Extended period of limitation - Demand of service tax - the plea of limitation was raised for the first time before the Commissioner (Appeals). - held that:- the adjudicating authority did not have occasion to consider any plea of limitation. - The appellate authority chose to consider that plea, and held in favour of the assessee and, that too, without going into the merits of the case. This action of the learned Commissioner (Appeals) has no justification in law and hence his order requires to be set aside. - Issue remanded back to commissioner (appeals) with a request for fresh decision on the assessee s appeal on merits in accordance with law and the principles of natural justice. On the question whether limitation could be lawfully pleaded for the first time by the assessee before the first appellate authority, the learned Commissioner (Appeals) shall hear both sides with due notice. Needless to say that, in the event of this issue being held in favour of the assessee/appellant on legally sustainable grounds, the plea of limitation shall be examined with reference to relevant date defined under Section 73(1) of the Finance Act 1994 and in the light of applicable case law.
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2012 (11) TMI 787
Tour Operator Services - appellants providing the services using their own vehicles and also using hired vehicles belonging to third parties - benefit of Notification No. 15/2007 – Held that:- the activities of the appellant will fall under the category of Tour Operator Services' even when they use vehicles belonging to third parties Extended period of limitation - held that:- appellant failed to disclose the service charges, in respect of services rendered using vehicles of third parties, in the returns filed by them. - they have collected the service tax from their customers. - Extended period of limitation to be invoked - in favor of revenue. Penalty - held that:- when penalty under Section 78 is sustained, there is no justification for sustaining a separate penalty under section 76. Notification 15/2007 has, for the period from 01.04.2000 onwards, has exempted service tax on value in excess of 40% of the gross amount - held that: - direct the original authority to requantify the tax liability and interest and the penalty under section 78 after allowing the benefit of exemption
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2012 (11) TMI 786
Waiver of pre-deposit - Denial of CENVAT credit on the ground that the services are not used in or in relation to manufacturing activity – Held that:- Services in relation to Convention services, Memberships of Clubs & Association Services, Health Club & Fitness Centre Services and House Keeping services are not entitled for input service credit - applicants are directed to make a pre-deposit
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2012 (11) TMI 776
Simultaneous penalty u/s 76 and 78 - Business Auxiliary services - Held that:- Confirming the amount of Service Tax along with interest has not contested by the assessee. As decided in CCE versus First Flight Courier Ltd. [2011 (1) TMI 52 - HIGH COURT OF PUNJAB AND HARYANA] that if penalty stand imposed u/s 78 imposition of separate penalty under Section 76 is not justified. Thus upholding the imposition of penalty to the extent of 100% under Section 78, the penalty u/s 76 is set aside. Option extended to the assessee to deposit 25% of the penalty within a period of 30 days of passing of impugned order u/s 78 with the penalty shall stand reduced to that amount. Imposition of penalty of Rs.1000/- under Section 77 is however upheld.
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Central Excise
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2012 (11) TMI 826
Cenvat credit on the duty paid on PVC resin - denial of claim on clandestine removal - Held that:- The entire case of the Revenue is based upon the shortages detected at the time of visit of officers, and statement of Shri M K Jain, their authorized representative who was a new employee to the appellant and as such, was not aware of the Central Excise procedures. He in his statement has accepted the shortages only and has nowhere admitted any clandestine activity on the part of the appellant & was not aware of the reasons for such shortages. As Revenue has not further conducted any investigation so as to find out the alleged buyers of the said raw material or final product & no questions were put to Shri Jain as to what has happened to material found short. Thus admission on the part of assessee about the short found raw material by itself is no ground for arriving at an adverse finding against the assessee. As decided in Commissioner of Central Excise Kanpur vs. Minakshi Castings [2011 (8) TMI 896 - ALLAHABAD HIGH COURT] shortages of finished stock without evidence of clandestine removal cannot lead to inference of evasion of duty - in favour of assessee.
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2012 (11) TMI 825
Refund of unutilized Cenvat credit - inputs used in manufacture of Polyester Staple Fiber (PSF) exported under Bond/Letter of Undertaking - Held that:- As examined in SHELL INDIA MARKETS PVT. LTD. Versus COMMISSIONER OF C. EX., BANGALORE [2012 (10) TMI 34 - KARNATAKA HIGH COURT] it is necessary to verify not only that particular input service is consumed for providing particular output service but also that eligible service received under various invoices have actually gone into consumption for providing impugned exported output service and not utilized for other purposes. Though these observations of Hon’ble High Court are in respect of input services, these are squarely applicable to inputs also as under Rule 5 of the Cenvat Credit Rules inputs and input services are treated at equal footing. Thus refund of Cenvat credit in respect of inputs is admissible if those inputs have actually gone into consumption of exported goods. The matter needs to be remanded back to the original authority for adjudicating the matter afresh in view of the decision of the in the case of Shell India Markets Pvt. Ltd. (supra).
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2012 (11) TMI 824
Notification No. 162/86-CE - bodies built on the motor vehicle chassis - benefit denied as available on goods classified under Chapter heading 87.02, 87.03 and 87.04 - assessee deemed to be covered under the heading 87.07 - Held that:- As decided in AMBALA COACH BUILDERS Versus COMMISSIONER OF C. EX., NEW DELHI [2000 (5) TMI 70 - CEGAT, COURT NO. II, NEW DELHI] a practice prevalent regarding levy of duty of excise on the bodies built by independent body builders on the motor vehicle chassis under Headings 87.02 to 87.04 instead of Heading 87.07 and that such bodies were liable to a higher amount of duty of excise than what was levied according to the said practice during the period from 1-5-1991 to 28-2-2001. The Central Government by the said Notification has directed that the duty payable in excess shall not be required to be paid in respect of bodies built by independent body builders on the motor vehicle chassis on which the duty of excise was short-levied during the aforesaid period in accordance with the said practice. As the demand in the present matter relates to the period specified in Section 11C. Notification and the appellants have paid duty under Headings 87.02/87.04 they are eligible to the benefit of the Notification. Accordingly, they are not liable to pay any duty - in favour of assessee.
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2012 (11) TMI 823
Conodonation of delay - Waiver of pre-deposit of duty demand, interest and penalty - Delay of 20 days beyond the prescribed period of 60 days in filing Appeal - held that:- Proprietor of the appellant firm was indisposed due to illness and also that his counsel could not file appeal in time because of unfortunate demise of his relative. - delay is condoned in filing of appeal and set aside the impugned order passed by the Commissioner (Appeals) and remand the matter back to the Commissioner (Appeals) for de novo adjudication on merits after giving opportunity of being heard the appellant.
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2012 (11) TMI 822
Demand and penalty – shortage of input – allegation of clandestine removal of goods – Held that:- Merely because the assessee chooses not to contest the demand on account of shortages, so as to avoid litigations, by itself, does not mean that allegation of clandestine removal stand established against him, especially in the absence of any corroborative evidence to that effect - no justifiable reasons to impose penalty upon the appellant
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2012 (11) TMI 821
Duty and penalty – job worker - area based exemption - non filing of declaration - Notification No. 50/2003-C.E., dated 10-6-2003 read with Notification No. 76/2003-C.E. – Held that:- appellant having its factory in Himachal Pradesh which is covered by the notification should not be denied the benefit of notification on the said technical ground. - the appellant having a belief that the activity carried out by the appellant does not amount to manufacture, could not have filed a declaration for availing the benefit of said exemption notification. - the principal manufacturer i.e. M/s. Khaitan Electrical Ltd. located in that area is itself enjoying the benefit of notification in question, denial of the same to his job worker would not be in the interest of justice. Waiver of pre-deposit – Held that:- Appellants have pleaded financial hardship that their factory closed, the proprietor is without any job is dependent on his children for day to day requirement - factory is lying closed and no contrary has been brought on record as regards financial position of the proprietor - unconditional stay granted - pre-deposit of duty waived
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2012 (11) TMI 820
Demand of duty - manufacture of excisable as well as exempted goods - common inputs and are used in both dutiable and exempted goods – Held that:- In the absence of non maintenance of separate accounts in respect of duty and exempted goods as per the provisions of Rule 6 of the Cenvat Credit Rules, 2002 lower authorities have held that the appellant is required to pay an amount equal to 8%/10% of the total value of the exempted goods - appellant was following the procedure even before the retrospective amendment came into picture - demands of an amount equivalent to 8%/10% of the value of the exempted goods is incorrect and unsustainable - order is set aside and the appeal is allowed
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2012 (11) TMI 819
Benefit of Notification No. 56/95 - Power Driven Pump Sets – Held that:- Board’s Circular not only deals with classification but also underlines that I.C. Engine may be treated as an integral part of P.D. Pump. Moreover, diesel engine is an I.C. engine - Notification No. 56/95, dated 16-3-1995 exempts power-driven pumps primarily designed for handling water, namely, centrifugal pumps (horizontal or vertical), deep tube-well turbine pumps, submersible pumps, axial flow and mixed flow vertical pumps - Revenue’s Appeals are dismissed.
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2012 (11) TMI 817
Challenge to the levy of excise duty on coal - Petitioner challenged the levying of 5% excise duty with cess on the coal purchased by them from the Coal India Ltd. claiming that levying of such 5% of excise duty is illegal and instead ought to have been levied only 1.03% duty in terms of the Government of India’s Notification No. 1/2011-C.E., dated 1-3-2011. – Held that:- Coal attracts excise duty at the rate of 5% plus cess w.e.f. 1-3-2011. However, the aforesaid excise duty will be exempted and leviable only to the extent of 1% ad valorem plus cess, in the event credit of duty on inputs has not been taken under the provisions of CENVAT Credit Rules, 2004 as also provided under the Government of India’s Notification dated 1-3-2011. Since Coal India Ltd. as a manufacturer of “coal” has decided to avail credit of duty on inputs under the provisions of CENVAT Credit Rules, 2004, the exemption provided under Notification No. 1/2011-C.E, dated 1-3-2011 will not be applicable. Therefore, excise duty at the rate of 5% would be leviable on “coal”. The writ petitioners who are mere traders and not manufacturers, obviously, cannot claim CENVAT Credit under the CENVAT Credit Rules, 2004 and accordingly, has to pay the excise duty on coal at the rate of 5% plus cess on duty as a purchaser. - Decided against the petitioner.
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2012 (11) TMI 816
Condonation of delay of 140 days in filing appeal - order-in-appeal was passed on 14-1-2011 - factory was taken over by the bank for recovery of certain dues and was in the possession of the bank as is clear from the documentary evidence produced on record – Held that:- Limitation period expired around 18-4-2011. Before the expiry of the said period, the appellant entered into correspondence with the office of Commissioner (Appeals) for supply of the copy of order - fact itself reflects upon the non-receipt of the order by the appellant - there was still a period of one month available to appellant to file the appeal and if the Commissioner (Appeals) would have served a copy of the order immediately to the appellant on 17-3-2011, the appellant could have filed appeal well in time - date of communication of the order should be taken as 19-7-2011 when the same was subsequently supplied by the office of Commissioner (Appeals) - COD allowed
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2012 (11) TMI 778
Re-credit entries in Cenvat Credit account - Commissioner (Appeals) rejected the appeal as original adjudicating authority has not considered the said issue - Held that:- If the appellant is not contesting the confirmation of demand, consequent readjustment in Cenvat credit flows out of the same & if the original adjudicating authority inspite of appellants having made a request has not considered the said plea, and has not passed any orders on the same, the Commissioner (Appeals) should have considered and passed the orders instead of rejecting the appeal. As appellants have paid back the rebate amount they are entitled to make re-credit entries in their Cenvat Credit account - in favour of assessee.
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2012 (11) TMI 777
Cenvat credit in respect of short found clinker - denial of claim on ground of clandestine removal - Held that:- As it is for the revenue to establish the case of clandestine removal by production of concrete and tangible evidence apart from loose papers, which on the face of it cannot be related to the appellants business accounts and the sole statement of Director, there is no other evidence to reflect upon the clandestine activities of the appellants. The appellants have also taken a stand that it is beyond their capacity to manufacture more than 1000 MT per month and as such the Revenue's allegation that they cleared more quantity in the month of February, 2004 cannot be accepted. Set aside the confirmation of demand against the appellant and imposition of penalties imposed upon them - in favour of assessee.
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2012 (11) TMI 775
Shortages in the stock of Sponge iron - Held that:- The weighment of the sponge iron was not actually done but the same was based upon the basis of weight of 1 cubic feet of sponge iron, thus it can be safely concluded that shortages arrived at by the officers were not real but were deceitful being based upon calculative method. No justification in demand of duty in respect of sponge iron - in favour of assessee.
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2012 (11) TMI 774
ROM - confiscation of land, building, plant, machinery of a manufacturer – Held that:- As regards, the additional ground that the order is silent on the question of confiscation of plant and machinery and imposition of redemption fine in lieu of confiscation of ₹ 5,00,000/- under Rule 173Q(2) of Central Excise Rules, 1944, we find that there is merit in the appellant’s plea, as while in the appeal memo, the question of confiscation of plant and machinery has also been challenged, the final order passed by the Tribunal is silent about the same. However, for this omission there is no need to recall the final order and the same is being decided now. This is a case of evasion of duty by clearances of goods, in a clandestine manner without payment of duty and also by mis-declaring the MRP under the guise of exchange scheme and thereby contravening various provisions of the Central Excise Act, 1944 and of the rules made thereunder, which attract penalty under Clause (d) of sub-rule (1) of Rule 173Q and as discussed above, the duty involved is more than ₹ 1,00,000/-. Confiscation of land, building, plant, machinery of the appellant company under Rule 173Q has been correctly ordered and looking to the nature of the offence, the quantum of redemption fine is not excessive. The same is accordingly upheld.
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2012 (11) TMI 773
Admissibility of Modvat Credit - Whether Modvat Credit is admissible on glass bottles and plastic crates used for packing material for erated water when the value thereof is not included (i.e. bottles/crates as such neither declared nor could be ascertained) in assessable value of the final product, i.e., erated water - Held that:- the point, referred to above, is required to be answered by this Court. - Tribunal has to make a statement of the case to Court within a period of four weeks from the date of communication of this order for further consideration .
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2012 (11) TMI 772
Valuation - what should be the value of in respect of inputs on which CENVAT/MODVAT Credit has been taken, are removed as such by the appellant to their sister concerns for use in the manufacture of final product – Held that:- Appellant had removed only the inputs as such and had reversed the CENVAT Credit taken on such inputs - no processing of whatsoever nature was done on such inputs - amount of Cenvat credit taken by the assessee, of the duty paid on the invoice value as shown in the invoice can be considered as correct assessable value and duty liability to be discharged – in favor of assessee. Decision in the case of Eicher Tractors v. C.C.E., Jaipur - [2005 (9) TMI 340 - CESTAT, NEW DELHI], followed.
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2012 (11) TMI 771
Whether the respondent-assessee is required to reverse 8% of the total value of the exempted goods which are exported by him – Held that:- Respondent-assessee herein has exported the goods by filing AR-4/ARE-1 form with the authorities and indicating the products exported - products were exported by the respondent-assessee by debiting amount in bond executed by them, a fact which is not disputed by the lower authorities - product which has been cleared by the appellant by debiting under bond with the authorities would be an act, would be covered by the law - order is upheld and the appeal filed by the Revenue is rejected
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2012 (11) TMI 770
Coal based captive power plant - Exemption Notification No. 6/2006-C.E. at Sr. No. 91 read with Notification No. 91/2004-Cus. - ICB - denial of exemption for various reasons – Held that:- it is not necessary that the sub-contractor himself should take part in International Competitive Bidding in such situations to claim exemption under Notification No. 91/2004-Cus. For this we take note of the fact DGFT has given advance licence to the appellants though they have not taken part in the bidding. Further what is “final goods” for one manufacturer is raw material or component for another manufacturer and the materials supplied by the Appellants are material required by the company responsible for setting up the power plant. Prima facie, we are also not in agreement that they could not have availed the exemption prior to the date they were granted advance authorisation licence for import of raw material required by them. Further the argument of the appellants regarding relief under Chapter 8 of the Import Export Policy also has strong merit. - pre deposit waived.
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2012 (11) TMI 769
Waiver of pre-deposit - reversal of cenvat credit along with interest and penalty - denial of cenvat credit to the appellant on the special additional duty on the imported goods – alleged that appellant had taken the cenvat credit and special additional duty paid in the month of December 2008, January 2009 and February 2009 which is beyond the period of one year and hence as per the provisions of Rule 4 of Cenvat Credit Rules – Held that:- Provisions of Rule 4(1) of Cenvat Credit Rules, talks about availment of credit, immediately, on receipt of the inputs and it is his submission that there is no dispute regarding the receipt of the duty paid inputs - in the case of SGS India Pvt. Ltd. (2011 (3) TMI 759 - CESTAT, MUMBAI ) prima-facie cover the issue in favour of the assessee - pre-deposit waived
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2012 (11) TMI 768
Demand of duty - Debonding – re-export - applicants are 100% EOU - Standard conditions that the applicable customs and central excise duty would be paid on imported and indigenous capital goods, finished goods, raw materials, consumables, components etc. in stock - Held that:- Appellants has discharged 76% of the export obligation. Therefore, it cannot be said that they had not put to use the capital goods procured free of duty. In any case, it is seen that no de-bonding order has been issued by the competent authorities. In that case, the capital goods are still deemed to be under bond - duty demand is premature - pre deposit waived.
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2012 (11) TMI 767
100% Export Oriented Unit – utilization of cenvat credit - Some quantities of imported duty free inputs and indigenously procured inputs have been cleared as such to DTA without using them for manufacture of final products in the E.O.U. – Held that:- Rule 17 of the Central Excise Rules referred to excisable goods manufactured by 100% E.O.U. and the same cannot apply to inputs cleared as such and that too for inputs imported and cleared as such - CENVAT credit cannot be utilized for paying Customs duty on imported goods and paying Excise duty on inputs which are cleared as such when such inputs were procured without payment of duty and therefore without credit being taken on such inputs. Rule 3(4) of the CENVAT Credit Rules specifically refers to the purpose for which the CENVAT credit by an assessee can be utilized. The claim on behalf of the appellant that the inputs cleared by them as such should be treated as on par with final products on the ground that they are required to pay duty on them is also, prima facie, not acceptable. The CENVAT Credit Rules clearly distinguish items like “inputs”, “capital goods” and “final products”. There appears no scope for entertaining a belief that inputs cleared as such by the manufacturer-assessee could be treated as clearances of final products. - prima facie against assessee - pre deposit of Rs. one crore only ordered.
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CST, VAT & Sales Tax
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2012 (11) TMI 835
Input - Input tax credit - Whether tax paid on the inputs for generating power can be set off against the tax payable on sale of aluminum, aluminum ingot and sheet etc when electrical energy is necessary to produce/manufacture and sale of aluminum, aluminum ingot and sheet etc – Held that:- The process of manufacturing of aluminum reveals that energy is required in such process of manufacturing. Electrical energy which is generated with the use of coal and other materials is only an intermediate product which is used in the process of manufacturing of final product viz. aluminum, aluminum ingots and sheets etc. Coal, alum, caustic soda and other consumables purchased from market on payment of tax and used for generation of electrical energy in the Captive Thermal Plant of the petitioner which is used in the process of manufacture of finished product viz. aluminum, aluminum ingots and sheets etc. taxable under the OVAT Act. are input as defined under Section 2(25) of the OVAT Act and the tax which has been paid on such purchases can be claimed as input tax credit under Section 2(27) of the OVAT Act against the tax payable on sale of finished products i.e. aluminum, aluminum ingots and sheets etc. - Decided in favor of assessee. Whether imposition of penalty under Section 43(2) of the OVAT Act can only be levied if the escapement is without any reasonable cause - held that:- VAT is indirect tax on consumption of goods. It is the form of collecting sales tax under which tax is collected in each stage on the value added to the goods. The basic object of VAT Scheme is to provide voluntary and self-compliance. It goes without saying that to plug the leakage of revenue, the Legislature enacted law authorizing imposition of penalty for infraction of any statutory provision. penalty proceedings are quasi-judicial in nature. Quantification of penalty under Section 43 of the OVAT Act is dependent upon the tax assessed under that Section. Once the Assessing Officer comes to the conclusion that the dealer is indulged in fraudulent activities and assesses him under Section 43 of the OVAT Act, there is no need for the Assessing Officer to make further investigation to find out whether the escapement is without reasonable cause for the purpose of imposition of penalty under Section 43(2) of the OVAT Act. The Hon’ble Supreme Court in the case of [Union of India & Others vs Dharamendra Textile Processors 2008 (9) TMI 52 - SUPREME COURT] held that wilful concealment is not an essential ingredient for attracting civil liability or penalty - In the result, writ petitions are allowed.
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2012 (11) TMI 789
Constitutional validity of levy of entry tax on imported goods - Entry Tax under Orissa Entry Tax Act,1999 - Whether the imposition of tax on goods purchased from outside the country is ultra vires the Constitution - held that:- The Act is a tax in lieu of octroi incident of which are similar to that of entry tax. When the levy of octroi on imported goods was upheld by different courts, there is no reason why entry tax on the imported goods cannot be upheld. - The entry tax is, thus, in essence a tax in lieu of octroi duty. Therefore, the decisions rendered in the context of levy of octroi are applicable to this case. - as the entry tax has been levied on such goods which cross custom barriers by invoking the powers conferred on the State Legislature covered under Entry 52 of List II of the Seventh Schedule, there is no encroachment of the powers of the Parliament. - Decided in favor of revenue. Entry tax on goods from import from outside the country - Whether the interpretation of provision of the Orissa Entry Tax Act itself shows that entry tax is not leviable on the goods imported from outside the country - Held that:- By applying the principle of interpretation of the taxing law that charging section is not to be controlled by subservient components, the definition “entry of goods” cannot be taken help to urge that the entry tax on imported goods cannot be levied. - the argument that entry tax is not leviable on the goods imported through buyers is attractive but is without substance. - Decided in favor of revenue. Levy of entry tax on plant and machinery, which are brought from USA to establish a factory at Balgopalpur for production of papers - held that:- Plant, which is brought in knock down condition, is a combination of machinery in a systematic manner so as to produce goods and, therefore, it is coming within the definition of machinery and, hence, it is liable for entry tax. - Decided in favor of revenue. Raw materials and spares - certain raw materials and spares, as described in paragraph-6, which have been imported and purchased from other States out of the country by M/s IFGL Refractories (W.P.(c) No.7 of 2008)having carefully examined the items described in the 3rd sub- paragraph of paragraph 6 - held that:- items not included in the schedule are not liable to entry tax. - Decided in favor of assessee.
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