Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
November 7, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Deduction u/s 80P - The RBI cancelled the license w.e.f. 30.10.2003. Thus, the assessee is neither a State Cooperative Society nor it is a Bank under the Banking Regulation Act, 1949 - deduction u/s 80P not available to assessee - AT
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Ad-hoc disallowance of 25% of the expenditure towards payment to junior artists, costumes, dresses, makeup, hairdressers, dubbing, song recording, mixing, dancers, co-ordination charges and setting expenses - A disallowance of 5% of the expenses claimed under these heads of expenses would meet the ends of justice - AT
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Whether payment made to employees in india falls under the category of ‘Fees for technical services’ – seconded agreement - Indo-UK Treaty - The 'make available' component - decided against revenue - AT
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Addition wrongly made u/s 68, instead of section 69 of the Income Tax Act – It is trite that as long as an action is authorized or governed by a provision, mere wrong mention of provision would be to no consequence - AT
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Disallowance u/s 40(a)(ia) - TDS - Non deposition / submission of Form 15H / 15G is not a ground to disallow expense u/s 40(a)(ia) - AT
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When there is only a change in the name of the company and all other things including the management of the company remains unchanged, then it cannot be said that the assessee has not commenced its business activities and in that event benefit under sec. 71 of the act cannot be denied to the assessee. - AT
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Depreciation on paintings which were part of furniture and fixtures - either hung in the office or given to the producer for the original shoots, or used in various setting - depreciation allowed - AT
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Addition of Explanation to sub-section (2) to Section 9 through Finance Act, 2010 with retrospective effect from 1.6.1976 will therefore have no effect on taxability of income earned by non-resident outside India in the course of his business or profession carried out outside India by him - AT
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Royalties and fees for included services - whether the bio-equivalence study is a research activity - applicant having no PE in India, such income would not be taxable in India by virtue of relevant provisions of DTAA between India and Canada - AT
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Taxability of the income in the hands of AOP (joint lessees) or in the hands of company formed with the sole purpose of management of the said piece of plots on behalf of the Joint Lessees (present assessee) - decided in favor of assessee - AT
Customs
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Classification of goods - Marketability of the sludge/sediment oil found in the Tank No. 8 of the vessel TT Theo Strous, brought for breaking by the appellant - revenue has discharged its burden - AT
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Import of old and used Digital Multifunctional Printer Copier/Scanner/Facsimile Machine with standard accessories - confiscation and penalty - subsequent introduction of the restriction on import cannot act prejudice to the imports already initiated. - AT
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Valuation of goods - inclusion of demurrage in the assessable value of the goods - the appellant cannot claim the benefit of the beneficial circular of 2001 - Prima facie case not in favour of assessee - AT
Service Tax
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Validity of CENVAT credit – duty paid documents - There is cooperation from the department whereas there is total non-cooperation from the appellant - stay granted partly - AT
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CENVAT credit - Appellant is availing the services of the sub-contractor for providing an output service on which he is discharging the Service Tax liability under the head Erection, Installation and Commissioning services. - stay granted - AT
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Adjustment excess tax paid under Rule 6(3) - first service tax was paid but later adjusted on the ground that other party is liable to pay service tax - stay granted - AT
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Business Auxiliary Service or Club / Association service - sale of Carbon Emission Reduction (CER) Certificates - The applicant received the sale proceeds and transferred the amount to the members after retaining 5% of the sale proceeds - Prima facie assessee is liable to pay service tax - AT
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Import of services - Payment to the foreign service-providers - On-site jobs services - levy of service tax on reverse charge basis - matter remanded back - AT
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Manpower recruitment and supply agency services - employees on deputation - As the applicant are deputing their employees to the other associate companies of UTI therefore has made out a strong case in their favour - AT
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Modification of Stay order - Similar matter referred to larger bench in another case - appellant has not been able to make out a case for modification of our stay order - AT
Central Excise
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Invoice on Different Address - Cenvat Credit – - On receipt of the goods the other unit endorsed the invoices in name of the assessee inasmuch as the inputs were meant for the assesses - credit allowed - AT
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Cenvat credit on GTA services – service tax paid on C & F services is admissible as credit in the case of 100% EOU in view of the fact that place of removal in the case of C & F exports or FOB exports would be the load port - AT
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Classification of Natural Marble / Granite – Chapter 25 OR Chapter 68 – If the classification of polished marbles is under Chapter 25, Granite slabs undergone the same process, prima facie will be covered under Chapter 25 - AT
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Eligibility of Cenvat credit – Input Service Distributor – Prima facie the procedure laid down for obtaining registration and then passing the credit as input Service Distributor cannot be overlooked and has to be adhered to - stay granted partly - AT
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Amount to be Deposited u/s 11D - no evidence has been produced to indicate that they have shown an amount of duty more than the what they have paid to department in such assessment documents and collected such higher amounts and hence no case is made out for seeking recovery under Section 11D - AT
Case Laws:
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Income Tax
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2013 (11) TMI 323
Deletion of addition of Rs.26 lacs made u/s.2(22)(e) of the Act on account of received loan/advance – Held that:- Assessee-company is not registered share-holder of Control Plus Oil & Gas Solution Pvt.Ltd. and, therefore, the provision of section 2 (22)(e) will not be applicable – Reliance has been placed upon the judgment in the case of ACIT vs. Bhaumik Colour Pvt.Ltd. reported at [2008 (11) TMI 273 - ITAT BOMBAY-E] – Decided against the Revenue. Deletion of addition of Rs.12,21,393/- made u/s.2(22)(e) of the Act on account of accumulated profits in the form of reserves and surplus – Held that:- Assessee-company had received loan of Rs.52,00,000/- from MJB India Technical Services Pvt.Ltd. He submitted that there are no accumulated profit in the case of MJB India Technical Services Pvt.Ltd., considering net of general reserve and debit balance in profit & loss account and, therefore, no amount can be considered u/s.2(22)(e) of the Act – Decided against the Revenue. Disallowance of Rs.12,33,628/- made by the AO u/s.14A r.w.r.8D – Held that:- Assessee-company has sufficient interest-free funds. The ld.counsel for the assessee has placed reliance on the decision of Hon’ble coordinate Bench (ITAT Ahmedabad) in the case of Torrent Financiers [2001 (6) TMI 165 - ITAT AHMEDABAD-A] - ld.Sr.DR could not controvert the finding of the Hon’ble coordinate Bench and nothing has been brought on record suggesting that the decision of the Hon’ble Tribunal in the case of Torrent Financiers(supra) is not applicable – Decided against the Revenue.
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2013 (11) TMI 322
Reasons to be recorded for re-opening u/s 148 of the Income Tax Act – Held that:- Reliance has been placed on the decision of Hon’ble Bombay High Court in the case of CIT Vs. Videsh Sanchar Nigar Ltd., [2011 (7) TMI 715 - Bombay High Court], wherein it was held that reasons recorded for reopening of the assessment though repeatedly asked by the assessee were furnished only after completion of the assessment - Since the reasons recorded for reopening of the assessment were not furnished to the assessee till the completion of assessment, the reassessment order cannot be upheld - Respectfully following the decision of the Hon’ble Bombay High Court, held that in the instant case, reassessment was made without communicating the reasons as recorded for issue notice of under section 148 of the Act, was bad in law – Decided against the Revenue.
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2013 (11) TMI 321
Addition u/s 68 of the Income Tax Act on account of bogus creditors – Held that:- Reliance has been placed on the judgment in the identical case of Vikas Purushottamlal Gupta[2013 (11) TMI 264 - ITAT PUNE], wherein it was held that addition of the total sundry creditors under the facts and circumstances of the case will give absurd result which is not possible in the type of trade the assessee is engaged in - Argument of the learned counsel for the assessee that 3% profit may be determined on the unproved trade creditors was not sustainable - Fit case for rejection of the book results and going for estimated addition - Under similar facts and circumstances various Benches of the Tribunal are adopting net profit rate of 1% of the turnover. Considering the totality of the facts and circumstances of the case, adoption of 1% Net profit on the turnover for various assessment years will be reasonable and will meet the ends of justice.
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2013 (11) TMI 320
Deduction u/s 80P of the Income Tax Act - Assessee was registered under Multi State Cooperative Societies Act, 1984 and was subsequently notified by Government of Maharashtra as a State Cooperative Bank. The Reserve Bank of India also gave the assessee license under the Banking Regulations Act, 1949 - The RBI cancelled the license w.e.f. 30.10.2003. Thus, the assessee is neither a State Cooperative Society nor it is a Bank under the Banking Regulation Act, 1949 - Assessee filed the return of income declaring the total income "NIL" after making claim of deduction u/s 80P(2)(a)(i) of the Act – Held that:- Assessee was disallowed deduction u/s 80P, as he was prohibited to do banking business by cancellation of licence by RBI. Applicability of provisions of section 176(3)A of the Income Tax Act – Held that:- Question of considering the discontinuation of business does not arise. What happened in the assessee’s case is only cancellation of license to do the banking business, but the assessee is not prevented in doing any other business by the cooperative society. Only the activity of banking was prohibited. Even otherwise, the issue is not whether the income is to be brought to tax as business income or not. The issue is whether the incomes arising out of investment is eligible for deduction under section 80P(2)(a)(i) as of banking business. Therefore, provisions of section 176(3)A does not help the case of assessee. Penalty u/s 271(1)(c) of the Income Tax Act – Held that:- Management of the society knows that the income earned does not qualify the 'banking income' and so is the A.B. Mansinghka & Co., Auditors of the assessee - It is the case, where the assessee has not adopted the advise of the experts(auditors) and proceeded to claim deduction u/s 80P(2) of the Act - Normally, the case is other way around and they(auditors) issue certificates advising the claim of deduction u/s 80P - But in this case, Auditors advised that the impugned income is ineligible to be classified as banking income. But the assessee made a false claim of deduction and decided to provide false explanation in the penalty proceedings u/s 271(1)(c) of the Act – Decided against the Assessee.
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2013 (11) TMI 319
Allowability of deduction u/s 37(1) – contractual liability for the services rendered – The existence of the agreement between the parities has not disputed by the authorities below but the payment in question has been disallowed on the ground that no service was rendered by RCEPL and consequently it was held that the expenditure was not for the purpose of business - Held that:- Production equipments are basic requirement of any film and utility/use of the equipments generally does not vary due to high or low Budget of the film. The Budget of the film mainly depends on other factors like artist who perform in the film, shooting site and subject/theme of the film etc. The authorities below have not brought on record as how the use of equipments in production of film is different in higher Budget or low Budget movies so as to result a significant variation in the hire charges expenses - Further the duration of the film remains almost same i.e. 2:30 to 3:00 hrs. - The assessee produced the confirmation of RCEPL in this respect and no finding has been given that the confirmation is false - The assessee filed the bills of transportation of equipment issued in the name of RCEPL. The genuineness of the bills is subject matter of the assessment proceedings of RCEPL. Even otherwise the AO has not given the finding that these bills are bogus - deduction allowed – Decided in favor of assessee. Addition on account of wastage of 13,300 metres of negative films (raw) – Held that:- At the time of loading raw stock in the camera, some part in the beginning gets wasted. Similarly, some part at the end of the camera of raw stock also has to be left blank. Thus, these left out part would never be processed - One scene are shot from different angles. Out of all such angles, the one which director finds appropriate is processed. Accordingly, raw stock used for shooting of other angles is waste. c. Major part of the movie "KAAL" was shot in the forest area of Bangkok as well as of India. At such place, huge stock of raw films have to be maintained as this are isolated area and if there is a shortage of raw stock, the same could not be procured from the nearest area. Thus, excess stock may get damaged, if the same is not utilized in short span of time - Also weather is an important factor i.e. in foggy climate, reels of raw stock gets damaged and hence not useful for further use. If raw stock left in the camera is less than 100 metres, then the same has to be left as it is, as one bigger shot cannot be recorded in the size of les than 100 metres of stock. f. So far as proper shot as per satisfaction of director is not taken, re-takes of the same shot is taken. To that extent, raw stock used for retakes except the final one, is waste - Though the wastage in the case is higher than the normal wastage in ordinary circumstances however, keeping in view the peculiar facts as noted above the disallowance is not justified hence, deleted – Decided in favor of Assessee. Ad-hoc disallowance of 25% of the expenditure towards payment to junior artists, costumes, dresses, makeup, hairdressers, dubbing, song recording, mixing, dancers, co-ordination charges and setting expenses – Held that:- Expenditure on these items is essential in the production of film and therefore, when the assessee has produced the bills and vouchers then there is no reason to hold that the expenditure is bogus – It has been agreed with explanation of the assessee that the continuity report, call sheet and rehearsal book are the documents maintained for the purpose of shooting and not being part of the accounts book. These records are for internal management of work of shooting and once the shooting of a film is over there is no purpose to keep such a record which is otherwise not feasible – A disallowance of 5% of the expenses claimed under these heads of expenses would meet the ends of justice – Decided in favor of Assessee. Disallowance of expenses by the CIT(A) under Rule 9A and thereby enhanced the assessment – Held that:- Reliance has been placed upon the judgment in the case of Mukta Arts Pvt. Ltd.[ 2006 (1) TMI 170 - ITAT BOMBAY-E] - Rule 9A is an outcome of exercise of power given to the Central Board of Direct Taxes under section 295(1) of the Income-tax Act, 1961. Thus it is a piece of delegated legislation and must function within the parameters fixed by Legislature by laying down the law, the policy and the standard which Legislature wants to maintain in the application and enforcement of the legislative enactment and be consistent therewith. It, therefore, follows that an ancillary channel, at any rate, cannot neither abridge rights or privileges granted by the statute itself nor confer any special benefits, rights or privileges beyond the provisions of the Act or in contradiction to the provisions of the legislative enactment because the object subordinate legislation is to carry out the statutory provisions effectively and not to neutralize or contradict them. If delegated legislation results into any such situations that would amount to legislation itself and which cannot be abdicated by the Legislature. In this view of the matter, it is not within the power of the Central Board of Direct Taxes to create a legal fiction like rule 9A in the fashion as contended by learned counsel for the assessee because this interpretation would go beyond the legislative policy enacted in the form of section 37(2), 37(2A), 37(3) etc. of the Act and make rule 9A void - The negative covenant/restricted provisions like section 37(2A) have been enacted with the object of restricting the deduction of expenditure which is otherwise allowable under section 37. It is a fact that expenditure incurred after the issue of certification by the Censor Board on account of advertisement and publicity and cost of positive prints are allowable under section 37(1) and, therefore, such expenses come within the purview of section 37(3) of the Act expenditure on and cost of positive prints has to satisfy the conditions of section 37 for allowance. Thus, there appears no reasonable basis to allow the same expenditure incurred before happening of an event i.e., up to the date of issue of certificate by the Censor Board in total without any restriction whatsoever and allow the expenditure of the same nature incurred after the issuance of certificate by the Censor Board subject to restrictive provisions of section 37 of the Act - Expenditure incurred in respect of preparation of positive prints as well as advertisement and publicity are allowable – Decided in favor of Assessee.
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2013 (11) TMI 318
Allowability of claim of expenditure on account of foreign travel of wives of the Director and President of the company – Held that:- Hon’ble High Court of Bombay in case of Alfa Laval India Ltd. [2005 (7) TMI 48 - BOMBAY High Court] have held that the expenditure on foreign travel of Director’s wife may be allowed depending upon the status of the parties, nature and character of trade or venture, the purpose for which the expenditures were incurred and the objects sought to be achieved by incurring such expenses - Issue requires examination in the light of judgment of Hon’ble High Court of Bombay in case of Alfa Laval India Ltd. (Supra) – Matter restored to the file of AO. Addition on account of arrears of depreciation while computing the book profit u/s 115JB of the Income Tax Act – Held that:- Reliance has been placed on judgment of Hon’ble High Court of Bombay in case of Kinetic Motor Company Ltd. [2003 (1) TMI 47 - BOMBAY High Court], wherein it was held that the accounts prepared and certified in accordance with part 2 and part 3 of schedule VI of the companies Act could not be tinkered with and AO had no jurisdiction to go beyond the net profit shown in the such accounts – Therefore, such addition was deleted – Decided against the Revenue.
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2013 (11) TMI 317
Whether payment made to employees in india falls under the category of ‘Fees for technical services’ – seconded agreement - Indo-UK Treaty - The 'make available' component - Held that:- Merely providing the employees or assisting the assessee in the business and in the area of consultancy, management etc. would not constitue make available of the services of any technical or consultancy in nature – Reliance has been placed on the judgment of Hon’ble Karnatka High Court in the case of De Beers India Minerals (P.) Ltd. [2012 (5) TMI 191 - KARNATAKA HIGH COURT] - The Hon'ble High Court has observed in para 13 that as per the definition for fee for technical services means payment of any kind to any person in consideration for service or services of technical nature if such services make available technical knowledge, experience, skill know-how or process which enables the person acquiring the services to apply technology contained therein. Thus, expatriation of employee under seconded agreement without transfer of technology would not fall under the term make available as per the article 13(4)(c) of Indo-UK DTAA - Payment in question does not fall under the term fee for technical services as per provisions of Indo-UK DTAA. TDS to be deducted by assessee for payment made of salary to its employees - Assessee company is a Joint Venture Co. between Marks & Spencer PLC and Reliance Retail Limited - The assessee paid ₹ 4,86,6187/- to Marks and Spencer PLC towards salary expenditure of 4 employees deputed to the assessee for providing assistant in the area of management of setting of the business, retail operations, property selection & evaluation, production marketing – Held that:- Payment towards part reimbursement of the salary expenditure which clearly shows that there is not element of profit in the said payment. This claim of the assessee is also supported by the various clauses of the agreement and seconded agreement. Further the entire amount of salary received by these personnel has been subjected to tax in India at the highest average rate of tax. Therefore, there is no question of any default on the part of the assessee. It is pertinent to mention that payment by the assessee is actually payment made to the employees deputed in India under seconded agreement but routed through Marks and Spencer PLC UK. Since the said payment to the employees is already subjected to tax in India, therefore, there is no question of treating the assessee in default for non-deduction of tax at source – Decided against the Revenue.
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2013 (11) TMI 316
Addition wrongly made u/s 68, instead of section 69 of the Income Tax Act – Held that:- Factual position of the cash being received - If in assessee’s view section 69 is applicable, so be it. It is trite that as long as an action is authorized or governed by a provision, mere wrong mention of provision would be to no consequence. Further, it is the correct legal position that is relevant, and is to be applied, and not the view that the parties may take of their rights in the matter [CIT v. C. Parakh & Co. (India) Ltd. [1956 (3) TMI 1 - SUPREME Court] – Decided against the Assessee.
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2013 (11) TMI 315
Addition u/s 68 of the Income Tax Act - Credit in the bank account treated as sales of the assessee instead of income of the assessee – Held that:- Purchase of Rs. 2,94,44,341/- by M/s. SOL from Shri. T.Kishan has been proved. Shri T.Kishen has confirmed the supply of assets and most of the assets were found on a physical verification. In this view of the finding of the ITAT in the case of SOL, even the type 2 sales amounting to Rs. 2,94,44,341/- found in the course of search, would appear to represent actual sale of goods by the Assessee. The Assessing Officer has assessed profit of 4.38% on the undisclosed sale of Rs. 2,09,66,145/-. The CIT(A) has reduced the rate of profit on this amount to 4% and the department has accepted the same. There is no reason to treat the other portion of the undisclosed sale of Rs. 2,94,44,341/- differently. Therefore the order of the ClT(A) holding that only profit @4% on the turnover of Rs. 2,94,44,341/- should be assessed is reasonable and liable to be upheld – Decided against the Revenue.
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2013 (11) TMI 314
Penalty u/s 271(1)(c) of the Income Tax Act – Assessee sold shares at a loss and claimed for it – Held that:- Bald plea of the AO and also by the DR before us that the assessee has claimed a loss cannot by itself justify the exigibility of penalty under section 271(1)(c) - It is a fact that the assessee was unable to produce the details of the shares of the two companies before the AO but, before the CIT(A), the assessee was able to produce the balance sheet and profit & loss account of the two impugned companies, whose shares, the assessee has sold at a loss. As has been held by the CIT(A), the book value could not be the sole criteria for deciding the fair market value of the shares sold. The co-ordinate Bench in the case of Rupee Finance & Management (P) Ltd., reported in [2007 (2) TMI 240 - ITAT BOMBAY-J], Mumbai, ITAT held that in case of transfer of shares to a group company at cost price, difference between fair market value of the shares and their cost price cannot be brought to tax as capital gains. Since, there being no material to show that the assessee had received more consideration then recorded in the books. Disallowance of the loss claimed has been non-filing of appeal against the order of the AO, cannot, by itself, justify that penalty is exigible and leviable on the assessee, despite the fact that the assessee has placed all the material facts before the AO. There could have been various reasons for non filing of the appeal, which fact could not lead to a conclusion of furnishing of inaccurate particulars of income or concealing particulars of such income - The issue is also fortified by decision of the Hon'ble Supreme Court in the case of Reliance Petro Products Pvt. Ltd., reported in [2010 (3) TMI 80 - SUPREME COURT] – Decided against the Revenue.
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2013 (11) TMI 313
Addition of Rs.72,50,000/- on account of undisclosed cash credit u/s 68 of the Income Tax Act - Noted by the AO in the assessment order that the assessee has shown cash deposit in its bank account with Dena Bank in SB account no.425320 during in the period from 11.12.2008 to 9.3.2009 of Rs.72,50,000/- – Held that:- Assessee has furnished copy of profit & loss account of the assessee for the present year, as per which, the assessee has shown sale of Rs.69,96,200/- and against such sale, the assessee has not claimed any expenditure on account of purchase or opening stock. Hence, it is seen that this sale of Rs.69.90 lakhs is in fact offered to tax by the assessee in the present year, and even if, there was no disclosure in survey in present case on account of excess stock, then also it has to be accepted that the assessee has declared an amount of Rs.69.96 lakhs in the present year, as income on account of sale without claiming any deduction on account of purchase or opening stock. The cash generated on account of this sale explains the source of cash deposited in bank, and therefore, the addition made by the AO on account of such cash deposits is deleted – Decided against the Revenue. Addition of R. Rs.1,17,04,500/- made u/s.68 of the IT Act as the assessee failed to furnish satisfactory proofs regarding the source of investment in RBI bonds – Held that:- Investment was made in the financial year 2003- 2004 relevant to the asstt.year 2004-2005, and such investment was duly disclosed by the assessee in the balance sheet filed along with return of income of all earlier years, and therefore, even if the assessee is not able to explain the source of investment in the year of investment, then also no addition is justified in the present year. However, the AO is well within its power to reopen the assessment of the year of investment, if he has material in his possession that such investment is out of income which had escaped assessment. The AO may take suitable action in that year as per the provision of law, but in any case, no addition is justified in the present year, and therefore, the ground of the Revenue is rejected – Decided against the Revenue. For computation of capital gains, the value stated in the Balance sheet or the value determined by DVO to be taken - Deleting the addition as the facts that the cost of acquisition shown in the balance sheet and in the computation of income as well as the value determined by the valuation officer is contradictory and the report of the DVO was received after the assessment was completed and the AO did not get opportunity to examine the same – Held that:- As per the valuation done by Sub-Registrar of Sanand, total market value in the present year was worked out at Rs.34.92 lakhs, as against the sale proceeds declared by the assessee at Rs.55 lakhs. When the sale proceedings in the present year is higher by substantial amount, as compared to the valuation done by Sub-Registrar, Sanand, the cost of acquisition can also be higher, and moreover, there is no basis of adopting backward indexation to work out the cost of acquisition when the cost of acquisition is duly declared by the assessee in the year of acquisition, and in subsequent years. No specific defect is pointed out by the AO in the claim of the assessee about cost of construction shown by the assessee and the AO was proceeded to estimate such cost without establishing any defect in the cost declared by the assessee. This is without basis and hence, cannot be sustained. This allegation is also not acceptable that in the year of acquisition or in the subsequent year, the assessee claimed or declared higher value of cost of construction in order to claim higher deduction in the year of sale, because at that point of time, it is not known to the assessee as to when he will sell the property – Decided against the Revenue.
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2013 (11) TMI 312
Sanction of JCIT for re-opening u/s 148 of the Income tax act - Re-opening of assessment u/s 148 of the Income Tax Act – Held that:- In the normal course a notice under section 148 could not have been issued beyond 31.3.2009, but verification of assessment records revealed that the date of issue was 15.06.2009. Now, since it is a case of reopening beyond 4 years, in addition to minimum quantum of income that is escaped, sanction of Joint Commissioner or Additional Commissioner is required, which is lacking here. That is, though there is no problem with the quantum of income escaped, there is a problem in not getting sanction of the Joint Commissioner or Additional Commissioner for issue of notice under section 148 - Assumption of jurisdiction under section 148 for the assessment year 2004-05 is without authority of law and as such invalid – Decided against the Revenue. Departmental appeals should be dismissed on account of low tax effect when applying the circular dt. 9.2.2011 - Tax effect for the individual appeal for each assessment year is less than Rs. 3 lakhs – Held that:- Reliance has been placed on the judgment of the Hon’ble Supreme Court in the case of CIT vs. Atma Ram Properties (P) Ltd. [2012 (9) TMI 542 – SUPREME COURT], wherein it was held that CBDT circular should not be applied ipso facto particularly when the matter has cascading effect. Cases in which common principle may be involved in subsequent large number of matters cannot be dismissed by applying the circular ipso facto. In view of his observation of the Apex Court, tax effect of all the appeals put together should be considered while applying the circular. In the circumstances, total tax effect of all the appeals put together in all the cases is more than Rs.3 lakhs and therefore we do not accept the contention of the learned A.R – Decided in favor of Revenue.
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2013 (11) TMI 311
Disallowance u/s 40(a)(ia) - Non submission of Form 15H/15G u/s 197A with the office of CIT by the assessee within prescribed limit – Held that:- Reliance has been placed on the decision of Hon’ble Gujarat High Court in case of CIT vs. Valibhai Khanbhai Mankad [2012 (12) TMI 413 - GUJARAT HIGH COURT] - When on the basis of the record it is not disputed that the requirements of further proviso were fulfilled, the assesses was not required to make any deduction at source on the payments made to the sub-contractors. If that be our conclusion, application of section 40(a)(ia) would not arise since, as already noticed, section 40(a)(ia) would apply when there is a requirement of deduction of tax at source and such requirement is either not fulfilled or having deducted tax at source is not deposited within prescribed time - Non deposition / submission of Form 15H / 15G is not a ground to disallow expense u/s 40(a)(ia) – Decided in favor of Assessee. Disallowance of brokerage expenditure of Rs. 2,75,000/- - Held that:- Appellant had submitted the all details of recipients with address and PAN to the A.O. during the course of assessment proceeding. He had deducted the TDS on brokerage. The working of brokerage has been provided - Thus, the liability of brokerage has crystallized on the basis of sale made by the assessee. Thus, it is not a simple provision but calculated on the basis of sale made by the assessee – Decided in favor of Assessee.
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2013 (11) TMI 310
Denial of set-off of losses with income u/s 71 - intra head adjustments - Change in the name of company - AO observed from the Director’s annual report that there is not merely a change in the name but a total change in line of business and denied the set-off u/s 71 – Allowance of administrative expenses out of the Interest income - Held that:- When there is only a change in the name of the company and all other things including the management of the company remains unchanged, then it cannot be said that the assessee has not commenced its business activities and in that event benefit under sec. 71 of the act cannot be denied to the assessee. Only because the assessee has not reported any income from business in the assessment year under dispute, it cannot automatically lead to the conclusion that it has stopped its earlier business activities. Further, on perusal of the assessment order passed for the assessment year 2009-2010, it appears that the Assessing Officer has allowed set off of administrative and other expenses against interest income while completing assessment under section 143(3) of the Act. Therefore, in the aforesaid view of the matter, the expenditure claimed cannot be disallowed and has to be set off against the interest income earned during the assessment year under dispute – Decided in favor of Assessee.
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2013 (11) TMI 309
Disallowance u/s 40(a)(ia) - Deduction of TDS u/s 194C instead of u/s 194I or 194J – Held that:- It is not a case of non-deduction of tax or no-deduction of tax as per the import of section 40(a)(ia) of the Act - When tax was deducted by the assessee, even under bonafide impression under wrong provisions of TDS, the provisions of section 40(a)(ia) can not be invoked. This principle is being followed uniformly by various co-ordinate Benches and has the approval of Calcutta High Court in the case of CIT vs. M/s. S.K. Tekriwal [2012 (12) TMI 873 - CALCUTTA HIGH COURT] relied on by the assessee. – Decided in favor of Assessee. Disallowance of depreciation on paintings which were part of furniture and fixtures - Assessee is in the business of production and distribution of advertising films and over and above it also provides assistance like making availability of locations, equipments, models and crew to the foreign as well as domestic companies – Held that:- It was submitted that hiring of the paintings for original shoots was unaffordable. Therefore, they have purchased and utilized the paintings which were either hung in the office or given to the producer for the original shoots, or used in various setting. Therefore, the claim was that paintings are also part of furniture – following the decision in Burnside Investments & Holdings Ltd. vs. Dy. CIT [1996 (12) TMI 117 - ITAT MADRAS-B], depreciation on paintings as part of furniture and fittings allowed - Decided in favor of Assessee. Disallowance of 25% of expenditure paid in cash on adhoc basis – Held that:- Assessee’s business requires on site expenditure for various production shootings, wardrobe expenses etc. As seen from the claims 95% of the expenditure was by way of cheques and AO allowed the entire amount as such. Therefore, disallowance of 25% of the cash expenses is not warranted. However, since expenditure is un verifiable in nature, disallowance can be restricted to 5% of the cash expenses which should meet ends of justice – Decided in favor of Assessee.
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2013 (11) TMI 308
Deduction u/s 80IA – setting of unit in industrially backward area - Held that:- Allowed the assessee's claim of deduction u/s.80IA relying on the order passed by the ITAT in assessee's own case for the assessment year 2004-05. The Tribunal in the said order has followed another order in assessee's own case for assessment year 2005-06 - Nothing has been brought on record to show that the said decision of the Tribunal has been reversed/modified by the Hon'ble Karnataka High Court. Hence, as on date, the decision holding the field is that of the Tribunal for the assessment year 2004-05 – No any change in facts and circumstances in the present assessment year also. In such facts and circumstances, no any infirmity in the order of the Commissioner of Income-tax (Appeals) – Decided against the Revenue.
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2013 (11) TMI 307
Disallowance u/s 40(a)(ia) of the Income Tax Act for want of deduction of tax at source on commission paid to foreign agents – Held that:- Disallowance under Section 40a(i) for a reason that assessee could not take benefit of Circular No.786 dated 7.2.2000. However, the subsequent Circular No.7/2009 dated 22.10.2009, which allegedly withdrew the benefits given to an assessee under Circular No.786 dated 7.2.2000 and Circular No.23 dated 23.7.1969, were not there, when assessee made payments to non-resident agents since the relevant previous year was 2007-08. Once assessee held a bonafide belief that the payments made to non-residents, were not taxable in India, then it could not be fastened with a liability to deduct tax under Section 195 of the Act. In any case, Assessing Officer has not given any finding that the non-residents had rendered any services which were in the nature of technical services. There is nothing on record to show that any technical knowledge was made available to the assessee through the services rendered by the non-residents, which assessee could make use of in future. In any case, sub-clause (b) of clause (vii) of Section 9(1) of the Act clearly mentions that fees paid in respect of services utilized in a business or profession carried on by such person outside India or for the purpose of making or earning income from any source outside India, would not come within the purview of income by way of fees for technical services. Addition of Explanation to sub-section (2) to Section 9 through Finance Act, 2010 with retrospective effect from 1.6.1976 will therefore have no effect on taxability of income earned by non-resident outside India in the course of his business or profession carried out outside India by him – Decided against the Revenue.
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2013 (11) TMI 306
Undisclosed receipts - Freight payment made on behalf of the suppliers of the goods - Held that:- assessee acts as an agent for the sellers of vegetables from different parts of the country cannot be faulted with. However on the submissions that the assessee has deducted TDS of an amount higher than Rs.14,091/- which infact was the amount reflected in scheduled "G" of Tax Audit Report referred only to belated payments no findings have been recorded by the CIT(A). Similarly, what was the total amount of TDS deducted by the assessee on payments exceeding Rs.20,000/- and what were the sum total of the freight account which pertained to payments less than Rs.20,000/-, no finding has been recorded. It is also seen that the assessee has also advanced general arguments referring to trade practice and has assailed the finding in the assessment order qua the TDS but what was the actual amount on which no TDS was required to be deducted has not been addressed by the assessee. Mere assertion that it was more than Rs.14,091/- is not sufficient. The position in law qua the requirement of deduction of TDS u/s 194C for less than and more than Rs.20,000/- is clear but what was the actual position on facts has not been addressed. It is seen that the assessee has relied upon the position of 2008-09 assessment year wherein no such addition has been made the argument of the DR that evidences filed may not have been insufficient and any way merely because the AO has not addressed the aspect and this year it has been addressed in detail and thus the argument that each year is a separate year has merit however consistency on the issue to our minds also has equal merit in the eyes of law. No specific findings has been given by the CIT(A) on this assertions. The position in law is clear but the position on fact has to be demonstrated on the ground level. Accordingly since the issue of freight payments would be a recurring issue, the past position needs to be ascertained. Accordingly on account of these factual discrepancies/deficiencies on which the Ld. CIT(A) has not come to any finding - Decided in favour Revenue - matter remanded back.
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2013 (11) TMI 305
Reopening of assessment u/s 147 - Change of opinion or tangible documents - Held that:- The AO cannot reopen the assessment by re-appreciating or re-appraising the same set of facts and materials which were considered at the time of original assessment. If the AO while completing the original assessment proceedings has considered the agreement between the assessee and M/s Suresh Productions with regard to the assignment of rights of the film "Nee Premakai" and has completed the assessment after considering the same, the same material cannot form the basis for reopening the assessment as it will amount to change of opinion - Following decision of CIT vs. Usha International Limited [2012 (9) TMI 767 - DELHI HIGH COURT] and CIT Vs. Kelvinator India Ltd. [2010 (1) TMI 11 - SUPREME COURT OF INDIA], matter remanded back to CIT(A) for re-examination of the facts and issues.
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2013 (11) TMI 304
Royalties and fees for included services - whether the bio-equivalence study is a research activity - Non deduction of TDS - DTAA between India and Canada - Held that:- Applicant, tax resident of Canada, only providing final results to its Indian clients by using highly sophisticated bio-analytical know-how, without providing any access whatsoever to the clients to such know-how, fee received by it is business income and not fee for technical/included services or royalty and applicant having no PE in India, such income would not be taxable in India by virtue of relevant provisions of DTAA between India and Canada. - Decided against the revenue.
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2013 (11) TMI 303
Taxability of the income in the hands of AOP (joint lessees) or in the hands of company formed with the sole purpose of management of the said piece of plots on behalf of the Joint Lessees (present assessee) - income from (a) Income from house property; (b) Income from capital gains; (c) Income from other sources; – Held that:- For all the services provided by the assessee to the Joint Lessees, the assessee was receiving management charges which have rightly been declared in its return of income. We find force in the contention of the Counsel that the assessee cannot be held responsible for the failure of returning income by the Joint Lessees. Liability of filing the return clearly laid upon the Joint Lessees - Joint Lessees have filed the return as "Joint Lessees of Industrial Estates" in the status of AOP for Assessment Year 2008-09 and 2009-2010. If the Joint Lessees did not file return for Assessment Year 2005-06, 2006-07 & 2007-08, it was for the Revenue Authorities to explore other possible ways as per the provisions of law to assess the income in the hands of the Joint Lessees. Be that as it may, these incomes cannot be taxed in the hands of the assessee by any stretch of imagination – Decided against the Revenue.
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Customs
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2013 (11) TMI 342
Classification of goods - Marketability of the sludge/sediment oil found in the Tank No. 8 of the vessel TT Theo Strous, brought for breaking by the appellant - Held that:- appellant herein is a ship breaker and had imported ship for breaking and filed bill of entry “import of vessel and contents therein for ship breaking”. In my considered view, the goods that land in India are considered as import, their question of marketability need not be gone into, as the customs duty is leviable on the goods which are imported into India - question of classification does arise as Chemical Test Report indicates that the sludge/sediment (oil) is mixture of hydrocarbon with small water contents which is 4% of the total sludge/sediment found in the ship. Be that as it may, I find that in this case, Revenue has discharged the burden of marketability by producing two bills of entry filed by similarly placed ship breakers, who had procured ship for breaking and had the very same item sludge/sediment oil, which was declared by the said ship breakers in bills of entry dated 28-5-1998 and 29-5-1998, as mentioned hereinabove. If that be so, the marketability of the said product imported, may not be required, but has been proved to be marketable by the trade or commerce of the industry in which the appellant is operating. I also find that there are Government licensed recyclers who are permitted to procure this kind of oil and recycle the same, have given the certificate that said sludge/sediment oil is procured by them and recycled. In my view, though the marketability question does not arise for the goods imported, the Revenue has discharged the said burden. Sludge/sediment oil in the present case is required to be dealt with as marketable and classifiable under Chapter 27, due to the composition of their being found in the chemical examiner’s certificate as mixture of hydrocarbons and held to be marketable - Decided against the assessee. Valuation to the said sludge which has arrived at by the revenue seems to be disputed by the appellant before the lower authorities and the value adopted by the Revenue has not been justified. In my view, since the valuation of the said sludge/sediment is disputed, the correct duty liability needs to be worked out - matter remanded back on the issue of valuation.
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2013 (11) TMI 341
Stay application - Mis declaration of goods - Held that:- As regards the application filed by Shri Amar Patel for waiver of pre-deposit of penalty imposed, we find that the lower authorities have recorded a finding that he is a master-mind behind the mis-declaration of the goods in the name of M/s United Agency. The role played by Shri Amar Patel vis-a-vis the findings and the defences raised by the appellant needs to be considered which will require some time and can be done only at the time of final disposal of appeals - Prima facie case not in favour of assessee - Stay granted partly.
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2013 (11) TMI 340
Modification/rectification of mistake in Stay Order - request for re-testing - Re-export of goods - Held that:- In the miscellaneous application, there is only one prayer of the appellant, which is to direct the lower authorities to draw the samples from the consignments which are lying with the custodian of the goods, and it is seen that the appellants have made a request vide their letter dt.21.7.2011 for re-testing of the samples. On perusal of the said application dt.21.07.2011, we find that the appellant had specifically requested the adjudicating authority to consider their prayer of re-testing of the said consignment by independent authority. The adjudicating authority has not recorded any findings for re-test nor has he rejected the said prayer - no prejudice will be caused to other side, if re-drawing the samples from the consignment in question in this appeal is ordered and sending the same for re-testing to IIT and or ONGC Dehradun. We do so and direct that samples be drawn and sent for analysis to IIT and/or ONGC Dehradun - Decided in favour of assessee.
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2013 (11) TMI 339
Import of old and used Digital Multifunctional Printer Copier/Scanner/Facsimile Machine with standard accessories - confiscation and penalty - Held that:- reason for confiscation of the imported goods or for imposition of penalties upon the appellant is that at the time of filing of bill of entry, the goods were restricted items. Admittedly prior to 5-6-2012, the items in question were importable under OGL. The other admitted fact is that the bill of lading is dated prior to 5-6-2012, in both the cases. As such, when the goods were exported and loaded in the ship, they were exported admittedly not restricted items - issue is settled laying down that subsequent introduction of the restriction on import cannot act prejudice to the imports already initiated. As such, we find that confiscation of the goods or imposition of penalty on this count is not justified - Following decision of Priyanka Overseas Pvt. Ltd. v. Union of India [1990 (11) TMI 145 - SUPREME COURT OF INDIA], Paras Textiles v. CC, New Delhi [2008 (9) TMI 746 - CESTAT, NEW DELHI] and Om Petro Chemical v. Union of India [2001 (12) TMI 306 - DELHI HIGH COURT] - Decided in favour of assessee. Undervaluation of goods - Held that:- both the appellants are not challenging the same inasmuch as the differential duty is much on the lower side. As such, we find that the imported goods are liable to confiscation and appellants are liable to penalty on the said count of undervaluation of goods. However, keeping in view, the differential duty involved in the case of M/s. Bhagwan Electro Photocopiers was to the extent of Rs. 1,35,000/-, we reduce the redemption fine to Rs. 1,00,000/- and personal penalty to Rs. 50,000/-. Similarly, in the case of M/s. Best Mega International, the differential duty is to the extent of Rs. 40,000/- we reduce the redemption fine to Rs. 20,000/- and penalty to Rs. 15,000 - Decided partly in favour of assessee.
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2013 (11) TMI 338
Valuation of goods - inclusion of demurrage in the assessable value of the goods - Held that:- Both sides have also referred to certain relevant circulars of CBEC. A circular dated 2.3.2001 clarified the issue in favour of importers. A subsequent circular required field formations to defer the issue till final clarification. This final clarification was expressed in circular dated 26.9.2006 and the same was to the effect that demurrage was to be included in the assessable value. The subject import in the instant case was in the year 2004, at a time when the board purported to keep all the provisional assessments of the period prior to 2001 pending till final clarification on the issue. In other words, in the present case, the appellant cannot claim the benefit of the beneficial circular of 2001 - Prima facie case not in favour of assessee - Stay granted partly.
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2013 (11) TMI 337
Stay application - Import of crude oil - Sl. No. 32 of Notification No. 21/02-Cus - Held that:- appellant at the time of clearance of crude palm oil from the blended stock did not follow the First In First Out (FIFO) method or the Last In First Out (LIFO) method. The removal from the storage tank is said to be on an arbitrary basis and the same resulted in removal of imported palm oil for sale rather than for refining as required under the Notification. The adjudicating authority worked out the quantity of palm oil so removed on a proportionate basis and computed the demand. The learned counsel has claimed that, at any point of removal of goods from the storage tank, there was sufficient quantity of locally procured stock left in the tank. He has also submitted that this fact was accepted by the adjudicating authority. However, we have not found these submissions to constitute sufficient challenge to the computation of demand done by the adjudicating authority. After a perusal of the grounds of the appeal, we have not found a satisfactory explanation from the appellant vis-a-vis the basis of demand. The appellant has not pleaded financial hardships either - Prima facie case not in favour of assessee - Stay granted partly.
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2013 (11) TMI 336
Confiscation of currency - Penalty u/s 114 - Held that:- It is not in dispute that Mr. Fazal Akrami has been found to have abetted the offence committed by the present appellant. The abettor was required to predeposit 50% of the penalty. The main offender can therefore be directed to predeposit a higher amount. However, after considering the submissions of both sides, we are of the view that the appellant should predeposit only 50% of the penalty imposed on him - Stay denied.
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2013 (11) TMI 335
Stay application - Ex parte order passed - Appeal gainst order dismissed on ground of limitation - Held that:- It is a matter of fact that the Order-in-Original was passed on 20.1.2009 and issued to the appellants on 4.3.2009 through Speed Post. It is an admitted fact that service through Speed Post is not a proper service. Therefore, it is presumed that the Order-in-Original was not served on the appellants. When the Order-in-Original was not served on the appellants and they came to know about the passing of the Order-in-Original after getting recovery notice and applied for supply of Order-in-Original and immediately on receiving the Order-in-Original they filed appeal within 60 days, therefore, they filed the appeal within time. Therefore, the impugned order is set aside. Further, we find that the adjudication order itself is an ex-parte one. Therefore, it could be proper in the interest of justice to remand the matter to the original adjudicating authority to consider the contention of the appellants on merits. Therefore, we allow the appeal by way of remand to the adjudicating authority with a direction to the appellants to appear before the adjudicating authority within 30 days to fix the date of final hearing, from the date of communication of this order - Decided in favour of assessee.
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Corporate Laws
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2013 (11) TMI 334
Disposal of assets and clearance of dues - liquidation of company - Validity of Report – The Committee appointed by the Court to examine the workmen's claims should be rejected and this exercise be undertaken by another Committee with the participation of the two CAs - The Court sets aside the report submitted by the Committee which examined the workmen's claims and directs that all the workmen's claims that have thus far been lodged with the OL will be examined afresh - The Committee will endeavour to complete its exercise within a period of two months. Directions Issued - Whether the direction should be issued at this stage on the application filed by the OL - Held that:- If and when the stage reached for disbursal of any further amounts with the DRT, it will be done only after hearing the OL and strictly in accordance and, in particular, the scheme of Section 529A of the Act - any monies that remained for disbursal as a result of the final orders in the proceedings arising from the orders of the DRT setting aside the sale to the AP and any fresh sums that might be received hereafter should be placed under the control of the OL and be disbursed only by the OL subject to the supervision of the Court - what required to be done was to associate the OL both at the stage of bringing the properties of the company in liquidation to sale as well as at the stage of the disbursal of the amounts. Jurisdiction of the Court - The question as to the jurisdiction of the Company Court vis-ŕ-vis the powers of the DRT in relation to the company in liquidation was examined - The matter came to be referred to a three-Judge Bench as a result of the apparent conflict - The company in question was already under liquidation pursuant to the order passed by the Company Court - It was held by the Supreme Court that "whether the assets were realised by a secured creditor even if it be by proceeding under the SFC Act or under the Recovery of Debts Act, the distribution of the assets could only be in terms of Section 529 A of the Act and by recognising the right of the liquidator to calculate the workmen's dues and collect it for distribution among them pari pasu with the secured creditors. The OL had certainly to be associated in all the proceedings of sale by public auction or otherwise of the properties of the company in liquidation and the orders of the DRT - the DRT had issued notices to the OL at every stage - since 2012, the OL had been participating in the proceedings before the DRT and now before the DRAT - Therefore, there may be no apprehension that the orders might be passed in the proceedings under the RDDB Act without the participation of the OL – It was for the OL to diligently pursue those proceedings. The exercise of disbursal of the sums by the DRT can be undertaken only with the participation of the OL - It was the OL who will settle the claims of the workmen and of all the secured, preferential and unsecured creditors - This disbursal of the amounts should happen only with the full participation of the OL. There was an opportunity for the OL to have participated at that stage, but for the reasons best known to him, he did not choose to do so - The payments made to the Customs authorities in terms of the MoU also cannot be interfered with unless the sale was set aside or an appellate court holds that the amount cannot be forfeited - it should be returned to the AP – The action will have to await the outcome of the orders passed in those proceedings.
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Service Tax
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2013 (11) TMI 353
Waiver of pre deposit - CENVAT credit - Held that:- invoices raised by IHCL specifically states that service tax liability has been discharged by them under Section 65 (105) (r) of the Finance Act, 1994. On perusal of the said sub Section, we find that the category indicated is Management Consultancy Services which is the category on which 100% tax paid is allowed as credit to the assessee. We also find strong force in the contentions raised by the learned counsel that the stay order in the case of M/s. Newlight Hotels and Resorts Limited deals with an identical issue. Since this Bench has already taken a view on an identical issue, respectfully following the same, we hold that the appellant has made out a prima-facie strong case for the waiver of pre-deposit of the amounts involved - stay granted.
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2013 (11) TMI 352
Import of services - reverse charnge - services of Management Consultancy and Business Auxiliary Services received by them from abroad. - Waiver of pre deposit - Held that:- amount deposited by the appellant as enough deposit to hear and dispose the appeals. Accordingly, the applications for the waiver of pre-deposit of the balance amounts involved are allowed and recovery thereof stayed till the disposal of appeals - stay granted.
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2013 (11) TMI 351
Validity of CENVAT credit – duty paid documents - Whether the appellants have availed CENVAT credit properly or not and whether service tax was paid by including all the elements which are required to be included for demand of service tax – Held that:- There is cooperation from the department whereas there is total non-cooperation from the appellant - the documents which according to the appellant are available have not been verified and appellants have not produced the same before the original adjudicating authority or before the Tribunal because of huge volume has to be considered and the matter has to be remanded to the original adjudicating authority for the purpose of verification as to whether documents on the basis of which CENVAT credit has been taken are available and credit taken is correct. It is justifiable that the matter has to be remanded to the original adjudicating authority – but taking into account the attitude of the appellants, it is impossible to remand the matter without putting them to terms - the appellant is directed to deposit another amount of Rs.50,00,000 and report compliance to the original adjudicating authority who shall after noting compliance, get the documents verified and proceed for fresh adjudication – stay granted partly.
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2013 (11) TMI 350
Demand of service tax - Advertisement Agency Service - huge variation in the value of the taxable service declared in the ST 3 return and the receipts as per their annual financial statements which indicated short payment of service tax and the applicants were not able to give any explanations for such short declaration in ST-3 returns - Held that:- Applicant could not have taken credit of any service which was not paid for by them and which did not form part of the value of the service rendered by them and we find that though the profit shown is only Rs. 6 lakhs, the company is running and the total revenue is of the order of Rs.60 lakhs and their plea of financial hardship cannot be acceded to, fully. Therefore, we direct the applicant to deposit an amount of Rs. 15 lakhs within six weeks and report compliance on 23.8.13. - stay granted partly.
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2013 (11) TMI 349
CENVAT credit - services of erection commissioning and installation services being provided by the sub-contractors - Waiver of pre deposit - Held that:- It is undisputed that the appellant is a manufacturer of Diesel Generating Sets and is also undertaking erection, installation and maintenance services of the said DG sets as and when requested by the client. It is also undisputed that the appellant is not rendering the services of erection, installation and maintenance of all the DG sets manufactured and sold by them. It is also undisputed that the appellant is hiring sub-contractors for doing the basic work at the site for such erection, installation of the DG sets and the said sub-contractor, after completing the services at the site, raises the bill on the appellant by paying Service Tax on the said amount. The appellant takes the credit of this Service Tax and raises further bill on the purchaser of the DG sets for the services of erection, installation, commissioning etc - Appellant is availing the services of the sub-contractor for providing an output service on which he is discharging the Service Tax liability under the head Erection, Installation and Commissioning services. In our view, the appellant has made out a case for waiver of pre-deposit of the amounts involved - stay granted.
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2013 (11) TMI 348
Adjustment excess tax paid under Rule 6(3) - Stay application - Subsequently, they recognized that actual telephone service was being provided by M/s. Aircel Cellular Limited, and they were also paying service tax on the same service. So the applicant paid the consideration along with service tax to M/s. Aircel Cellular Limited, by way of credit notes. However, they adjusted the excess payment made in by them to government against tax due for subsequent months in terms of Rule 6 (3) of Service Tax Rules, 1994. - Held that:- Prima facie, we are of the view that there is no loss of revenue involved in this particular case. Since in a similar matter, the Tribunal has already remanded the case to the lower authority for de-novo adjudication it is proper that this appeal is admitted without any pre-deposit. It is so ordered. Further there shall be stay on collection of such dues during pendency of the appeal - Stay granted.
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2013 (11) TMI 347
Business Auxiliary Service or Club / Association service - sale of Carbon Emission Reduction (CER) Certificates - The applicant received the sale proceeds and transferred the amount to the members after retaining 5% of the sale proceeds. - Held that:- it is not a case of mere sale and purchase of the certificate between the applicant-association and the Sweden Company as per agreement. The state of affairs would show that the applicant-association on behalf of their members sold their certificates to the Sweden Company and earned 5% commission in the transaction. The submission of the learned counsel that it is an activity of the association for its members and strongly relied upon the decision of the Honble Jharkhand High Court in case of Ranchi Club Ltd. Versus Chief Commissioner of Central Excise & Service Tax [2012 (6) TMI 636 - Jharkhand High Court]. The Hon’ble High Court observed that if club provides any service to its members may be in any form, including as mandap keeper, then it is not a service by one to another in the light of the decisions of the Hon’ble Supreme Court. In our considered view, the activities of the applicant in the present case are rendering service on behalf of the members in their business, and earned commission, which would not come within the purview of normal course of activities of club or association. Prima facie assessee is liable to pay service tax - stay granted partly.
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2013 (11) TMI 346
Import of services - Payment to the foreign service-providers - On-site jobs services - levy of service tax on reverse charge basis - Held that:- As per the agreement entered into with the related companies of the appellant abroad, they have to render the services for the appellant's clients situated abroad. For such services rendered abroad, VAT/GST liabilities are also discharged abroad at the time of supply of services. If that be so, the question of subjecting same transaction to service tax in India at the hands of the appellant would not arise - the CBEC in a case relating to IT Software Services had clarified that, on-site services rendered abroad would not be treated as services provided from India. In other words, the question of subjecting such transactions under service tax in India would also not arise. This Tribunal in identical circumstances, in the case of Tech Mahindra Ltd., [2013 (4) TMI 104 - CESTAT MUMBAI], had held that, on-site services rendered abroad cannot be considered as exports for the reason that such services are not provided from India. Similarly, in the case of Tata Technologies Ltd., [2012 (4) TMI 196 - CESTAT, MUMBAI], this Tribunal had concluded that such on-site services would not be liable to service tax in India and had accordingly, remanded the matter back to the adjudicating authority for de novo consideration - In the impugned order these issues have not been examined at all by the adjudicating authority. Therefore, we are of the view that the matter has to be remanded back to the adjudicating authority for fresh consideration of all the issues involved i.e. whether the on-site activities undertaken abroad is liable to service in India, especially when VAT/GST liability had been discharged abroad. The appellant is also directed to produce evidences towards discharge of VAT/GST liability on the services rendered abroad - Decided in favour of assessee.
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2013 (11) TMI 345
Manpower recruitment and supply agency services - employees on deputation - waiver of pre-deposit, interest and penalty - Held that:- As the applicant are deputing their employees to the other associate companies of UTI therefore has made out a strong case in their favour in view of the stay order passed by the Tribunal in the case of ITC [2012 (7) TMI 744 - CESTAT, NEW DELHI] therefore, pre-deposit of the dues are waived and recovery, thereof, stayed during the pendency of the appeal - Following decision of UTI ASSET MANAGEMENT CO LTD. Versus COMMISSIONER OF SERVICE TAX, MUMBAI - I [2013 (1) TMI 405 - CESTAT MUMBAI] stay granted.
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2013 (11) TMI 344
Modification of Stay order - Similar matter referred to larger bench in another case - whether the coaching or training given by institutions for "higher learning" would be covered by definition or not; - Held that:- appellant has not been able to make out a case for modification of our stay order dated 5.4.2013. However, in the interest of justice, we allow the appellant to make pre-deposit as directed in our stay order dated 5.4.2013 within eight weeks from today and report compliance on 10.9.2013. Subject to compliance of the requirement as directed above, there shall be waiver of pre-deposit and stay against recovery of the balance dues during pendency of the appeal - Decided partly against assessee.
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2013 (11) TMI 343
Condonation of delay - Held that:- There is no point to keep the Application pending awaiting the report from the Commissioner’s Office. However, we find that the Applicant has substantiated their claim by filing an affidavit dated 26.06.2013 that the Order was communicated to them on 09.02.2010. In absence of any contrary evidence produced by the Department, we do not find any reason not to accept the claim of the Applicant - Decided in favour of assessee. Stay application - Held that:- service tax amount has been appropriated in the impugned Order passed by the Deputy Commissioner. In these circumstances, predeposit of the penalty is waived and its recovery stayed during pendency of the Appeal. The Stay Petition is allowed - Stay granted.
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Central Excise
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2013 (11) TMI 333
Invoice on Different Address - Availment of Cenvat Credit – Held that:- Following Plastic products Engg. Co. Vs, CCE, Ahmedabad [2009 (4) TMI 747 - CESTAT, AHMEDABAD] - Wrong communication of name and address of the unit, by the supplier, who has sent the raw material to the correct unit, will not result in denial of credit - On receipt of the goods the other unit endorsed the invoices in name of the assessee inasmuch as the inputs were meant for the assesses – Decided against Revenue.
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2013 (11) TMI 332
Cenvat credit on GTA services – Transportation of Goods - Input service of C&F agent - Whether the respondent would be eligible for Cenvat credit of service tax paid on GTA services availed for transportation of the goods from the factory to the port from where the goods were placed on board the vessel for export to their overseas buyer – Held that:- Commissioner (Appeals). CCE, Rajkot Vs, Adani Pharmachem Pvt. Ltd. [2008 (8) TMI 307 - CESTAT AHMEDABAD ] - As per Board’s circular No. 97/8/2007-ST dated 23.8.2007 had held the services obtained at the port as cenvatable services - service tax paid on C & F services is admissible as credit in the case of 100% EOU in view of the fact that place of removal in the case of C & F exports or FOB exports would be the load port – Decided against Revenue.
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2013 (11) TMI 331
Eligibility for Cenvat Credit - Whether welding electrodes used for repair and maintenance and M.S. Plates, Shapes, Sections, Channels, Plates, HR Plates also used for repair and maintenance of existing plant and machinery are eligible for Cenvat credit or not – Held that:- Following UOI vs. Hindustan Zinc Ltd. [2006 (5) TMI 44 - HIGH COURT RAJASTHAN ] - the welding electrodes used for repair and maintenance of plants and machinery are eligible for Cenvat credit - M.S. Plates used for repair and maintenance of plants and machinery are eligible for Cenvat credit – order set aside - Decided in favour of Assessee.
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2013 (11) TMI 330
Classification of Natural Marble / Granite – Chapter 25 OR Chapter 68 – Waiver of Pre-deposit – Held that:- In respect of Natural Marble, if the classification is accepted by the department, it would apply to the classification of product Granite also, as Chapter note is same - If the classification of polished marbles is under Chapter 25, Granite slabs undergone the same process, prima facie will be covered under Chapter 25 - appellant has made out a prima-facie case for the wavier of pre-deposit of amounts involved - the applications for the waiver of pre-deposit of the amounts involved allowed and recovery stayed till the disposal of appeals – Stay granted.
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2013 (11) TMI 329
Clandestine removal of Goods – Waiver of Pre-deposit - Revenue was of the view that the goods manufactured by the appellant, cleared without discharging duty liability – Held that:- Following M/s. Hakikat Auto Industries [2013 (10) TMI 956 - CESTAT AHMEDABAD] - the appellant directed to deposit an amount which is approximately 50% of the demand of the duty – there was no reason to take a different view in this case - the appellant directed to deposit an amount which is equal to 50% of the amount of duty confirmed by the adjudicating authority – upon such submission rest of the duty to be waived till the disposal – Partial stay granted.
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2013 (11) TMI 328
Condonation of Delay – Delay of 88 Days – Held that:- Delay was due to oversight in non-production of the order - due to oversight they could not follow-up the matter and later on when the department issued notice for recovery they came to know that appeal was not filed, they took appropriate action and filed the appeal - the delay of 88 days has been explained by the individuals responsible for the matters in the Company - the application for condonation of delay allowed – Decided in favour of Assessee.
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2013 (11) TMI 327
Supplies to SEZ from DTA – Waiver of Pre-deposit of Duty and Penalty u/s 11AC - Clearance to be treated as “dutiable goods” or “exempted goods” - Held that:- Following Sujana Metal Products Ltd. vs. CCE, Hyderabad [2011 (9) TMI 724 - CESTAT, BANGALORE] - The definition of the term “export” under the SEZ Act shall prevail over the definition of term “export” under the Customs Act - supplies made to SEZ from DTA units shall be treated as export - supplies made to SEZ are held to be “export” provisions of Rule 6 of CCR does not arise at all - Exception provided under Rule 6(6) of Cenvat Credit Rules, 2004 shall be applicable to supply of exempted goods both to SEZ units and SEZ developers/promoters - the applicant has made out a prima facie case for total waiver of pre-deposit of dues - all dues waived and its recovery stayed during pendency of the Appeal – stay granted.
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2013 (11) TMI 326
Eligibility of Cenvat credit – Input Service Distributor – Waiver of Pre-deposit - Revenue was of the view that the Cenvat Credit on input services could be passed on by an Input Service Distributor only after availing the registration and not before that as it has been made mandatory for a Registration under the Service Tax (Registration of Special Category of Persons) Rules, 2005 before distribution of the credit – Held that:- Prima facie the Applicant (Mining Division) is required to get themselves registered and distribute the credit thereafter - The claim of the applicant that even though the Service Tax was paid and the services received by their mining division prior to the date of registration as ‘Input Service Distributor’ the said credit could be distributed in favour of units as they were eligible to the said credit on the ground that the services were used in or in relation to the manufacture of their finished goods a plea would be examined at the time of disposal of the Appeal. Prima facie the procedure laid down for obtaining registration and then passing the credit as input Service Distributor cannot be overlooked and has to be adhered to - the question of eligibility or otherwise to such credit comes later and could be examined at the time of hearing - The Applicant’s to deposit Rupees Fifty Lakhs as pre-deposit – upon such submission rest of the duty to be waived till the disposal – Partial stay granted.
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2013 (11) TMI 325
Extended Period of Limitation – Waiver of Pre-deposit of Interest – Differential Duty u/s 11A (2B) of CE Act – Held that:- The contention of Counsel as to no duty liability arises, needs to be gone into detail, which can be done only at the time of final disposal of the appeals –the contention that the show cause notice is invoking extended period is correct as decided in GUJARAT STATE FERTILISERS & CHEM. LTD. Versus COMMR. OF C. EX., VADODARA-I [2013 (9) TMI 581 - CESTAT AHMEDABAD] - the extended period cannot be invoked - the show cause notice also provides the period which is within limitation - Since we are unable to come to a conclusion what will be the amount which will fall within the limitation period, we direct - the appellant directed to deposit an amount of Rupees Seventy Five Lakhs as pre-deposit –upon such submission rest of the duty to be waived till the disposal – Partial stay granted.
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2013 (11) TMI 324
Amount to be Deposited u/s 11D - Waiver of pre-deposit - Whether the Applicant is required to deposit the amount collected by them from their customers by revising their contracts including the loss of 8% collected in lieu of Duty – Held that:- Following Mayfair Polymers Pvt. Ltd. Vs. CCE, Ahmedabad [2007 (9) TMI 519 - CESTAT, AHMEDABAD] - While the contract might have indicated the ruling rates of excise, the excise duty collected should be with reference to the document mentioned in section 12A of the Central Excise Act viz. Document relating to assessment as well as invoice and other like documents where the assessee was required to indicate the excise duty payable at the time of clearances of the goods - no evidence has been produced to indicate that they have shown an amount of duty more than the what they have paid to department in such assessment documents and collected such higher amounts and hence no case is made out for seeking recovery under Section 11D - The applicants had made out a prima facie case for total waiver of pre deposit of dues - pre deposit of dues waived and stayed during the pendency of the appeal – stay granted.
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CST, VAT & Sales Tax
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2013 (11) TMI 354
Penalty u/s 12 - Whether the Tribunal is well in the facts and circumstances of the case in not considering the fact that the levy of penalty under Section 12(3)(c) of the Act is possible only when the assessment is made under Section 12(2) of the Act and in the present case, the assessment is made under Section 12(1) of the Act and hence the levy of penalty under Section 12(3)(c) of the Act is beyond jurisdiction - Held that:- proceedings initiated to revise the order of assessment for levy of penalty as though the petitioner had opted for monthly return under Rule 18 could not be sustained. Taking note of the fact that the assessee had not raised a dispute as regards the levy of penalty in respect of 74 days delay in filing the annual return, we hold that that the present order levying penalty as though the petitioner had opted for filing monthly return cannot be sustained. In the circumstances the original order of levying penalty dated 12.11.1997 remains undisturbed. The revised order in so far as it seeks to levy penalty in respect of monthly returns stands set aside - Decided in favour of assessee.
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