TMI Tax Updates - e-Newsletter
December 1, 2012

Case Laws in this Newsletter:

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

TMI SMS

• When the charging Section itself is deleted without any saving clause, no recovery under the said Section can be made by resorting to Rule 96ZQ of the Rules -HC

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• Validity of Service of Notice in Block Assessment –the provisions of section 292B are not applicable in case no notice under section 143(2) has been issued -Tri

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• Levy of VAT on agreement for the building and construction of immovable property - constitutional validity upheld. - HC

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Articles

1. TAXATION OF FREE SERVICES AND GOODS

   By: Dr. Sanjiv Agarwal

News

1. Several Measures taken to Check the Menace of Counterfeiting of Banknotes

2. Regulatory Harmony in the Companies Bill, 2011

3. Quantum of UN-Claimed/Unpaid Dividends Lying with the Companies

4. Cases Handled by the Serious Fraud Investigation Office

5. Investigations by Serious Fraud Investigation Office

6. Provisions Regarding Corporate Social Responsibility

7. Keeping the Accounting Standards in Tune with the Times

8. Protecting the Interests of Small Investors

9. No Comparison between pay Structure of Central Government Employees and of Bank Employees

10. One-Time fee for Spectrum

11. Security Threat from Chinese Telecom Equipments

12. Steps being taken for Banking Assistance and Remunerative Prices to Farmers

13. PMO directs concerned ministries and departments for immediate operationalisation of Direct Cash Transfers

14. Directions under Section 35A of the Banking Regulation Act, 1949 (AACS) - The Bhuj Mercantile Co-operative Bank Ltd., Ahmedabad, (Gujarat)

15. 182-day Treasury Bills auction: Rs. 5,000 crore under regular auction

16. Foreign Companies in Insurance Sector

17. Approved Public/Private Insurance Companies

18. Penetration of Insurance Policy

19. Under India-UK Development Cooperation Programme, the United Kingdom through its Department for International Development (DFID) Provides Financial AID worth RS. 1689.42 crore for the Government Sector Programmes During 2011-12

20. Growth Rate below our Expectations: Says Finance Ministry

21. Estimates of Gross Domestic Product for the Second Quarter (July-September) of 2012-13

22. No Meeting between Union Finance Minister and Petroleum & Natural Gas Minister Yesterday on Subsidy for LPG Cylinders

23. Prices of Medicines

24. Revival of Fertilizer Factory at Gorakhpur

25. Availability of Fertilizers at Reasonable Prices

26. Unrestricted Export of wheat and non-basmati rice to be continued

27. RBI sets up Technical Committee to review Presentation of its Accounts

28. Investment by Foreign Companies in SME

29. Consumption and Production of Steel

30. Export of Steel from Japan and Korea

31. Reduction in Profit of SAIL

32. Government Earmarks Rs 540 Crore as Subsidy Requirement for Electrification of Villages Where Grid Connectivity is Either Not Feasible

33. Extension of Subsidised Farm Loans to Farmers

34. SEBI Revises Norms with Regard to Exchange Traded Funds to bring Efficiency in Margining of Index Exchange Traded Funds (ETFS) and Facilitate Efficient use of Margin Capital by Market Participants

35. Achievements made under MGPSY

36. Problem of emigrants

37. To Address the Issue of Rise in NPAs and Restructured Advances of Banks, and to Improve Effective Information Sharing Among Banks on Credit, Derivatives and Unhedged Foreign Currency Exposures, Banks are Advised to Put in Place by End-December 2012 an Effective Mechanism for Information Sharing

38. Status of NPAs in Different Banks

39. Outstanding Dues of State Governments to Nationalised Banks

40. Circuit Filter Limit at NSE

41. Loss due to Frauds

42. Norms For Loan Securitization by NBFCs

43. Rules on Loan Recasts

44. Central Government is Considering to Develop A Producer Price Index (PPI) to Reflect Price Movement at the Producer’s Level

45. Enforcement Directorate (ED) Seizes Property of 103 Persons Worth Rs. 2406.28 Lacs under FEMA in Last Two Years

46. TRAI releases Consultation Paper on “Review of implementation of the Quality of Service (Code of Practice for Metering and Billing Accuracy) Regulations, 2006 dated 21st March, 2006”

47. Meeting of the Cyber Regulation Advisory Committee Held Today

48. Open to the possibility of bringing Indian private banks in Pakistan: Anand Sharma Shri Sunil Munjal to Co-Chair Joint Business Council from India

49. Violation by Pharmaceutical Companies

50. Fresh Investments in Fertilizer Sector

51. General Anti-Avoidance Rules

Notifications

Customs

1. 50/2012 - dated 29-11-2012 - ADD

Extend the validity of Notification No. 98 /2008-Customs dated 27th August, 2008 for a further period of one year, i.e up to and inclusive of 28th November, 2013

2. 49/2012 - dated 26-11-2012 - ADD

Anti-dumping duty on the import of Caustic Soda, originating in or exported from Saudi Arabia, Iran. Japan and United States of America

3. 106/2012 - dated 30-11-2012 - Cus (NT)

Amends Notification No. 36/2001-Customs (N.T.), dated the 3rd August, 2001 - Change in Tariff Value of RBD Palmolein, Brass Scrap (All Grades) Poppy Seeds, Gold and Silver Notified

4. 103/2012 - dated 16-11-2012 - Cus (NT)

Appointment of Common Adjudicating Authority - M/s KLJ Resources Ltd., KLJ House, 63 Rama Marg, Najafgarh Road, New Delhi

5. 102/2012 - dated 16-11-2012 - Cus (NT)

Appointment of Common Adjudicating Authority - M/s KLJ Organic Ltd., KLJ House, 63 Rama Marg, Najafgarh Road, New Delhi,

Highlights / Catch Notes

Income Tax

• Taxpayer's Exemption u/s 54F for LTCG Deferment in 2006-07 Upheld; Tax Imposed in 2009-10.

  Case-Laws - AT : Exemption u/s 54F - Allegation of deferment of tax on LTCG - Capital gain arouse in AY 2006-07 - deposited in capital gain account scheme as on 30-10-2006 - offered to tax in AY 2009-10 - decided against revenue - AT
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• No additional depreciation for machinery used in milk standardization and pasteurization for ghee and curd production.

  Case-Laws - AT : Usage of pasteurised condensed milk is not necessary for the purpose of production of ghee and curd. Because the assessee used the standardised and pasteurised milk, we cannot grant the additional depreciation on the plant and machinery which are used for the purpose of standardisation and pasteurisation of milk. - AT
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• Society's 12AA registration denied; business activities and high fees questioned, affecting charitable status eligibility.

  Case-Laws - AT : Registration u/s 12AA - charitable activity - genuineness - The present society is doing its business and charging huge fees from the public which is in addition to the prescribed fee of the Punjab Govt. - registration refused. - AT
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• Section 292B Inapplicable: Lack of Notice u/s 143(2) Can Invalidate Tax Block Assessment Process.

  Case-Laws - AT : Validity of Service of Notice in Block Assessment – the provisions of section 292B are not applicable in the case no notice under section 143 (2) has been issued - AT
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• Assessee eligible for exemption u/s 10(23C)(iiiad) if annual receipts stay within prescribed limits.

  Case-Laws - AT : Exemption u/s10(23C)(iiiad) – when the assessee has been granted exemption u/s 10(22) with the same objectives, the assessee has to be granted exemption u/s 10(23C)(iiiad) if the annual receipt is within the limit prescribed - AT
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Customs

• Anti-dumping duty imposed on caustic soda imports from Saudi Arabia, Iran, Japan, and the US to protect local industries.

  Notifications : Anti-dumping duty on the import of Caustic Soda, originating in or exported from Saudi Arabia, Iran. Japan and United States of America - Notification
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Indian Laws

• High Court Dismisses Petition Against ICAI's Decision on Frivolous Complaint Against Chartered Accountant Ajay B. Garg.

  Case-Laws - HC : Petition against an Order of ICAI holding that the complaint filed by the Petitioner against Mr. Ajay B. Garg, a Chartered Accountant and the Member of the Institute of Chartered Accountants of India was frivolous - petition dismissed - HC
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Service Tax

• Service Tax Demand on Sponsorship Service Overturned Due to Exemption for Sports Events During Relevant Period.

  Case-Laws - AT : Service tax demand - sponsorship service - Activity is proved to be 'sponsored of the event service' but during the relevant time the 'sponsorship of the sports event' was fully exempt from service tax - AT
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• Court Upholds Extended 5-Year Limitation for Cenvat Credit on Exempted and Non-Exempted Services Misuse.

  Case-Laws - HC : Extended Period of limitation – utilization of Cenvat Credit for exempted and non exempted services - It was not a case of mere omission to give correct information - five years' period of limitation has been rightly invoked - HC
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Central Excise

• Court Remands Case on MRP Valuation and Differential Duty Interest for Footwear Products for Further Review.

  Case-Laws - AT : MRP valuation – Interest on differential duty liability due to alternation of MRP at Depot - footwear – matter remanded back - AT
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• Court Grants Modvat/CENVAT Credit for Cement Production Inputs, Including Explosives, Refractories, and Steel Castings.

  Case-Laws - HC : Manufacture of cement - Modvat / CENVAT Credit allowed in respect of explosives, grinding media, cylpebs, refractories (fire bricks) steel castings, ball bearings, electrodes, refractory cement, rubber - HC
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• Court Says No Reversal of Cenvat Credit Needed When Final Product Becomes Exempt from Excise Duty.

  Case-Laws - HC : Reversal of Cenvat Credit - goods exempted after availing cenvat credit on Inputs - even though the final product may be exempt from payment of excise, the assessee cannot be asked to reverse the Cenvat credit already taken by him - HC
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• Deleted Charging Section Without Saving Clause Bars Recovery u/r 96ZQ; Previously Concluded Matters Cannot Be Reopened.

  Case-Laws - HC : When the charging Section itself is deleted without any saving clause, no recovery under the said Section can be made by resorting to Rule 96ZQ of the Rules. - Even concluded matters can not be concluded thereafter - HC
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• Court Confirms Central Excise Officer's Authority to Issue 2009 Show Cause Notice; "Or" in Section 2(b) Interpreted.

  Case-Laws - HC : Scope of the word “or“ in definition u/s 2(b) - jurisdiction of Central Excise Officer – Additional Director General/Commissioner, Central Excise had every jurisdiction to issue the show cause notice dated 01/10/2009 and no ground has been made out to quash the same. - HC
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VAT

• Court Upholds VAT on Building and Construction Agreements as Deemed Sales Under Tax Laws.

  Case-Laws - HC : Deemed sale – Levy of VAT on agreement for the building and construction of immovable property - constitutional validity upheld. - HC
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Case Laws:

• Income Tax

• 2012 (11) TMI 990
  Registration u/s 12AA - Charitable purpose - Section 2(15) - advancement of any other object of general public utility - Held that:- If the assessee conducts marathon in a commercial manner, then the trust cannot be said to be existing only for charitable purposes in view of the amended definition of the charitable purpose w.e.f. 1.4.2008 - DIT(E) is directed to examine whether receipt of fees from marathon is incidental to charitable object of the assessee or it is the main activity of the assessee and decide thereupon. If the assessee falls under the purview of amended provision of section 2(15), then registration is not to be granted - In the result, appeal of assessee is allowed for statistical purposes.

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• 2012 (11) TMI 989
  Repairs and Maintenance of Residential flats and office buildings - 'capital expenditure' - held that:- most of the expenditure is incurred on the existing buildings or structures in the nature of repairs for maintenance of the asset as such, except the expenditure incurred on Mohandev Building, item No.8, 9 and 10 listed in the CIT (A)'s order. As seen from the details the amount of Rs. 11.00 lakhs and Rs. 4,85,970/- were incurred in connection with the sofa, recreation central table etc., which seems to be for creation of new assets and cannot be considered as repairs of the existing assets. Likewise the amount of Rs. 3.00 lakhs was spent on electrical fittings and Rs. 1.00 lakhs was spent for design consultancy and supervision charges. Therefore, in our view this expenditure is in the nature of capital expenditure and therefore, we uphold the disallowance to that extent. - AO directed to allow depreciation on capital expenditure - Decided partly in favor of assessee. Disallowance of amount spent on computer software - held that:- this matter should be referred to AO for fresh adjudication in the light of the decision of the Special Bench of the Tribunal in the case of Amway India Enterprises v DCIT, [2008 (2) TMI 454 - ITAT DELHI], as was done in earler years - issue is restored to the file of AO for fresh adjudication in accordance with the law and the principles governing this issue and after giving due opportunity of being heard to assessee. Unclaimed liabilities - accrual of liability or cessation of liability during the year - diference of opening and closing balance of unclaimed liability account - held that:- As and when the parties seek the amount which cannot be recognized as income, assessee is refunding the amount and once client does not seek any adjustment the same is accepted as income of the year after the end of three years limitation period as per assessee's own accounting method. - No reason for supporting the action of AO in bringing to tax the entire credit in the account as income of the year without examining the principles governing the method of accounting followed by assessee and accrual of income. Addition u/s 92CA(3) - selection of comparable - Payment was made for purchase of software for use in the business of advertising and media services. - Assessee claimed deduction u/s 37(1) for purchase of software and reported it as related international transactions. - held that:- determination of ALP at nil cannot be sustained. - assessee could not furnish necessary documents evidencing service - in the interest of justice we restore the issue to the file of TPO to examine the said payment for customized software afresh and determine the appropriate method for arriving at the ALP after giving due opportunity to assessee.

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• 2012 (11) TMI 988
  Determination of Arm's Length Price - Transaction with Associate Enterprises - In the present case Assessee has adopted "Transactional Net Margin Method" as most appropriate method for determining its ALP of international transaction. It had used six comparable companies for bench marking its ALP on international transactions. However, out of six, the TPO rejected three comparables on the ground that their related party transactions were either more than 15% or turnover was more than Rs. 1,500 crore - TPO introduced his set of fresh nine comparables to bench mark the ALP of international transaction of the assessee. The arithmetic mean of the PLI of the 12 comparable companies (three of assessee and nine of TPO) worked out to 5.34%. Held that:- Value of international transaction of the assessee falls within safe harbour of +/- 5% of the ALP determined by the TPO. Accordingly, on this preliminary ground alone, the adjustment of Rs. 3,70,87,177 made towards ALP by the Assessing Officer is uncalled for and the same is hereby deleted - grounds raised by assessee are allowed. The contention of the revenue that adjustment arising our of ALP has to be made on the entire turnover instead of restricting the same to the international transaction with the A.E - Decided in favor of assessee. Disallowance of Expenditure on Computer Software - held that:- insofar as the directions on account of AMC for maintenance of software given by the DRP is concerned, the same appears to be very reasonable and no interference is called for - However, with regard to the other expenditure, the Assessing Officer is directed to verify this contention of the assessee in the light of the decision of the Special Bench of the Tribunal, Delhi, rendered in Amway India Enterprises v. DCIT, [2008 (2) TMI 454 - ITAT DELHI]- Thus, this ground is partly allowed for statistical purposes. Disallowance of Depreciation on laptop purchased - held that:- Assessee could not produce evidence for purchase of laptop - no merit in the contention of the assessee and the same is dismissed - Thus, this ground is dismissed.

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• 2012 (11) TMI 987
  Interest accrued - method of accounting - assessee submitted that when the Tribunal had remanded the main issue, at this stage, question of charging interest would not arise – Held that:- Tribunal has merely remanded the proceedings to the Assessing Officer for fresh consideration on the question whether the assessee followed mercantile system of accounting or cash. In that view of the matter no question of law arises. Charge of interest u/s 234D - assessee submitted that when the Tribunal had remanded the main issue, at this stage, question of charging interest would not arise. - held that:- question would have no relation to system of accounting followed by Shiva Specific Family Trust - Assessing Officer would decide the issue in accordance with law on the basis of material on record

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• 2012 (11) TMI 986
  Reopening of assessment - Escapement of Income - Treatment of Entrance fees - Capital Receipt vs Revenue Receipt - held that:- The question of treating such entrance fees either as capital receipt or revenue receipt, was not part of query at the time of original assessment and therefore, the angle of taxability of such a receipt being a receipt of revenue in nature, cannot be stated to be a part of the query. Dispute is with respect to taxabilty of receipt of Rs. 5,56,000/- towards entrance fees as Capital receipt at the time of original assessment. In the present case When the notice has been issued by the Assessing Officer within a period of four years from the end of relevant assessment year, and when Assessing Officer had not formed any opinion in the original assessment with respect to taxability of the amount in question, such notice cannot be stated to be without jurisdiction or invalid - In the result, the petition fails and is dismissed. - Decided against the assessee.

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• 2012 (11) TMI 985
  Relinquishment of tenancy rights - whether deductible expenditure for computation of capital gains u/s 48 - held that:- Revenue Authorities and the Tribunal have held that the expenditure was not incurred wholly and exclusively in connection with the transfer of the capital assets. sale deed was not a tripartite agreement and the amount expended by the assessee separately would not fall within the expression wholly and exclusively incurred in connection with the transfer. Karta of the assessee HUF and his brother were the directors of the said Company. The said Company was shown to be the tenant of substantial portion of the building. The Company, however, created a sub-tenancy on the same property in favour of the Bank of Baroda. Payment of Rs.15,00,000/- made to the Company by the assessee was only for reducing its tax liability and not for the purpose of executing the transaction of sale. Sect 48(1) of the Act provides for mode of computation and deduction while charging capital gain. Clause-I thereof in particular provides for a payment from the value of consideration received or accrued as a result of transfer of capital asset, expenditure incurred wholly and exclusively in connection with such transfer. The expenditure cannot be stated to be incurred wholly and exclusively in connection with such transfer - no error in order of Tribunal - In the result, the question is answered in the negative - decided against the assessee.

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• 2012 (11) TMI 984
  Addition u/s. 68 of the Act – huge capital was introduced by two partners of the firm and as source of capital was not found satisfactorily explained - Held that:- no addition u/s. 68 of the Act can be made in case where the partner introduces capital in firm and he is assessed to tax separately. - Fund in such event had only to be taxed in the individual case of the partner concerned and not in the case of firm - when the partner who invested the fund since is already assessed to tax separately, in the case of the firm there would not be any necessity for explanation of the fund – In favor of assessee

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• 2012 (11) TMI 983
  Exemption u/s 11 - grant in aid received by assessee - held that:- the income in the form of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or institution is not to be included in the total income of the previous year of the person in receipt of the income - Decided in favor of asessee. Carry forward unabsorbed application u/s 11 and 13 - excess of expenditure over income - Held that:- Income derived from the trust property has to be determined on commercial principles and if commercial principles for determining the income are applied, it is but natural that the adjustment of the expenses incurred by the trust for charitable and religious purposes in the earlier year against income earned by the trust in the subsequent year will have to be regarded as application of income of the trust for charitable and religious purposes in the subsequent year in which such adjustment has been made having regard to the benevolent provisions contained in section 11 of the Act and will have to be excluded from the income of the trust under section 11(1)(1) of the Act – In favor of assessee

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• 2012 (11) TMI 982
  Deduction u/s.80IA – small scale industrial undertaking – Held that:- In the case of Prabhudas Kishoredas Tobacco Products Private Limited. (2006 (1) TMI 68 - GUJARAT HIGH COURT ) it was hold that the use of tobacco which was used in the input do not retain its identity once the beedies are rolled and in relation to the assessee's status as unit of small scale industrial undertaking, the Court decided the issue in assessee's favour by holding that while ascertaining the monetary limit laid down in the provision, all assets of business be not taken into consideration, upholding the version of the Tribunal treating the activity carried out by the assessee amounting to manufacture of beedi. - In favor of assessee Disallowance u/s.40A(2)(b) - Alleged that interest paid to the persons at the rate of 22% excessive and unreasonable – Held that:- Amount is borrowed in earlier years at a stipulated rate of interest and which is still utilized for the purpose of business, the interest rate could not have been renegotiated. Even the lending rate by banks in respect of secured loan is as high as 19.5%. Therefore, rate of interest, paid by the assessee is quite reasonable - Since the rate of interest paid by the assessee is reasonable disallowance deleted

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• 2012 (11) TMI 981
  Disallowance of loss on sale of shares - assessee could not produce the confirmations from M/s.R.K. Consultancy and even the Assessing Officer has required the assessee to produce the said broker for examination - Once the confirmation is not produced and even broker is not produced for examination in respect of transaction carried on by him, the transaction cannot be treated as genuine – matter remanded to AO Addition being amount advanced to Shri Sanjay – Held that:- Receipt of Rs.4 crores, which the assessee claimed he had received by way of an advance from one Shri Sanjay Amin - He, however, could not produce confirmation of said Shri Sanjay Amin as he had left the country - assessee could not produce the confirmation and other details regarding to said person and that therefore the claim was disallowed - further materials produced by the assessee - without proper verification such material ought not to have been accepted - issue was remanded to the Revenue authorities

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• 2012 (11) TMI 950
  Exemption u/s 54F - Allegation of deferment of tax on LTCG - Capital gain arouse in AY 2006-07 - deposited in capital gain account scheme as on 30-10-2006 - offered to tax in AY 2009-10 - argument of Revenue is that assessee had no intention to construct a house in the one acre property. Land was agricultural in nature and assessee would have been aware that a residential construction was not possible in an agricultural property. - held that:- if the assessee had no intention to construct a house, he would not have got a plan prepared by an architect and submitted it to the local authority for approval along with a site plan. May be it true that due to Coastal Zone Regulations, no construction was possible in the said land. But we cannot say that assessee, when purchasing the land, was aware that on account of the Coastal Zone Regulation, he could not construct a residential house therein. Even Coastal Zone Regulations by itself does not deny the right of construction, but places a number of constraints for such construction. Having not obtained approval for the plan within three years, assessee had offered the same to Capital Gain Account Scheme in Assessment Year 2009-10. Assessee here, having offered capital gains for tax in Assessment Year 2009-10 as stipulated in proviso-1 of section 54F of the Act, could not be saddled with the same liability for the impugned Assessment Year as well. Ld. CIT(A) was justified in directing the Assessing Officer to grant the assessee deduction under section 54F of the Act for impugned Assessment Year. - Decided in favor of assessee.

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• 2012 (11) TMI 949
  Reopening of Assessment - Additional depreciation on machinery installed at milk chilling plant/processing centre, sales outlet, etc - Held that:- Although milk is required for the purpose of manufacturing of curd and ghee, standardised and pasteurised milk for the purpose of production of curd and ghee is a step removed from the business of production of curd and ghee. The curd and ghee could have been produced by the assessee from the milk without standardisation and pasteurisation. Usage of pasteurised condensed milk is not necessary for the purpose of production of ghee and curd. Because the assessee used the standardised and pasteurised milk, we cannot grant the additional depreciation on the plant and machinery which are used for the purpose of standardisation and pasteurisation of milk. Accordingly, even on merit we decide the issue against the assessee. The various case-law relied on by the assessee-company are delivered on their own context and cannot be applied to the facts of the present case. - decided against the assessee. Levy of Interest - levy of interest u/s. 234B and 234C of the Act is consequential and mandatory in the nature - this ground is dismissed - Appeal of assessee is dismissed. Allowability of foreign travel expenditure - held that:- , the assessee not furnished bifurcation of expenditure as related to business and pleasure trips - Being so, the CIT(A) directed the Assessing Officer to disallow 2/3 of expenditure. Before us also nothing has been furnished. However, the AR made as plea that the assessee could furnish details of foreign travel as relating to business trips as well as pleasure trips. - matter remitted back - appeal of assessee is partly allowed for statistical purposes.

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• 2012 (11) TMI 948
  Initiation of Re-assessment proceedings u/s 147 - change of opinion - held that:- To bring a case within the ambit of change of opinion, it is essential that firstly, some opinion should be formed on a particular issue. Such an opinion can be formed only when assessment is taken up. In a case when no assessment has been framed, there can be no point to form an opinion on an issue concerning the assessment. - Decided against the assessee. Principle of mutuality - The survey divulged that the assessee was also entering into transactions with non-members. - Loss of Mutuality - held that:- in a case of a non-mutual organization, a few transactions with the members do not convert its non-mutual status to mutual. In the like manner, the otherwise status of mutuality of an organization cannot be destroyed because of a few transaction with the non-members. What extent of participation by non-members destroys the otherwise mutual status of an organization or what extent of participation by members changes the otherwise status of non-mutuality depends on the consideration of the totality of facts and circumstances of each case. The mere fact that a person at the time of resignation or retirement is not entitled to share in the reserves of the organization, would not damage the mutuality so long as the persons who are entitled to share such reserves continue to be the members as a class. TDS u/s 234B where no TDS was deducted by the deductor - held that:- when the duty is cast on the payer to deduct tax at source, on failure of the payer to do so, no interest can be charged from the payee assessee u/s 234B. - Decided in favor of assessee. Allocation of expend tire by Head office - application of section 40C - Estimation of income at 5% of the gross amount recovered from non-members - held that:- There can be no dispute about the fact that any amount received by way of reimbursement, not containing any element of profit, is not liable to tax. - if there is certain reimbursement of expenses as such, without there being any mark up included in such reimbursement, there cannot be any question of earning any income liable to tax from such reimbursement. - this principle is not applicable in the the instant case. - Not only the basis of allocation of expenses but also that of the revenue, as done by the HO is not known to the assessee. Under such circumstances, the contention that the assessee was only recovering costs from its non-members and there was no profit element in it, is not open for verification. Sec 44C only talks of HO expenses, which mean executive and general administrative expenditure incurred by the assessee outside India including expenditure in respect of rent, rates, repairs etc. It is only the allocation of general and administrative expenses which is covered within the purview of section 44C. In the present case the basis of allocation of expenses is not known, but the basis of allocation of income is equally unknown at India level i.e. where neither the income side nor the expenditure side of the assessee's Income and expenditure account is fully capable of verification. It is in such circumstances that Rule 10 of Income-tax Rules, 1962 comes to the rescue of the Revenue for determination of income in the case of non-residents. It is this very rule which has been invoked by the Assessing Officer and also applied by the learned CIT(A) in estimating the income of the assessee - CIT(A) was more than justified in estimating the income at 5% of the gross receipts from non-members - In the result Revenue's appeal and assessee's cross objection stand dismissed.

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• 2012 (11) TMI 947
  Registration u/s 12AA - charitable activity - genuineness of the activities of the assessee-society -Society receives application from the common citizen for various services on behalf of the departments of State Govt, forwards the same to the concerned department and deliver back the same to the citizen within a specified time frame. The Society is charging prescribed fee from the citizen for providing services. - Held that:- After going through the aforesaid balance sheets as well as Income & Expenditure accounts of the assessee for the last three yeas, we have not found any expenditure incurred by the Society on charitable as well as public utility work. Almost all the expenditure has been incurred by the Society on printing and stationery, salary to their employees, Bank expenditure, Computer repair, Audit fee, Electricity Bill, Telephone, Electric repair, traveling, misc. expenditure, postage etc. Merely, mentioning about various objects in the nature of charitable activities in the Memorandum of Association, does not mean that the Society is doing any charitable activities for the general public utility and is entitled for registration under section 12AA of the Act. According to section 12AA of the Act, the Commissioner on receipt of application for registration of a trust or institution has to satisfy himself about the genuineness of activities of the trust or institution. The activities of the assessee-society are not charitable in nature within the meaning of provisions of section 2(15) of the Act and it does not qualify to treat as charitable institution. Since the assessee has not established that its society is formed with objects of any charitable purpose, then the question of discussion of citations relied upon by the Society does not arise. The present society is doing its business and charging huge fees from the public which is in addition to the prescribed fee of the Punjab Govt. Even otherwise, the fees charged by the present society is in addition to the burden forced upon the common-man. Because of this service has to be rendered by the Punjab Govt. free of cost to the public against the fee prescribed in the chart - Decided against the assessee.

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• 2012 (11) TMI 946
  Selection of case for scrutiny - held that:- procedure for selection of cases for scrutiny for noncorporate assessees is for the cases for taking into scrutiny during the financial year 2005-06 and selection in the financial year 2005-06 can only be taken for the preceding years to financial year 2005-06. Therefore, the Ld. CIT(A) is not justified in deciding the issue following the said procedure which is not available during the impugned financial year 2005-06 relevant to the assessment year 2006-07. - Decided in favor of assessee. Disallowance of Salary and Wages – genuineness of wages - Held that:- AO has treated the wages of one month as genuine and others as ingenuine. - In the absence of any explanation by the assessee, the authorities have to make best judgment assessment which should be honest and fair. - This view is fortified by the decision of the Hon’ble Supreme Court, in the case of Brij Bhushan Lal Praduman Kumar vs. CIT [1978 (10) TMI 2 - SUPREME COURT] Though arbitrariness cannot be avoided in such estimate, the same must not be capricious but should have a reasonable nexus to the available material and circumstances of the case - If the additions, as made by the AO are compared with the turnover of the assessee, the income of the assessee comes at 40.32% which is almost 4 to 5 times of the income shown in the past and also in the case of other contractors. Therefore, the assessment made by the AO is not based on the facts but an arbitrary assessment. - Deletion of addition by CIT(A) confirmed - Decided in favor of assessee. Addition made on account of bogus purchases of materiaL – Held that:- the AO was not justified in making specific addition without giving any opportunity to the assessee - no infirmity in the order of CIT(A) in this regard - C.O. of the assessee, the same is supportive in nature and therefore, did not require any adjudication and the same is dismissed accordingly - In the result, the appeal of the Revenue is partly allowed and C.O. of the assessee is dismissed.

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• 2012 (11) TMI 945
  Protective assessment – Held that:- No demand shall arise in consequence to the protective assessment, i.e., until the substantive assessment survives. In fact, if the amount was withdrawn by the assessee on 28/11/1996, while the amount recovered from VR is on 27/11/1996 , the question of ownership of Rs. 39 lacs and odd apart, the same possibly explain the cash found in search with VR - assessee shall co-operate with the A.O. in the matter, who shall finalise the assessment in a time bound manner. That is to say, save or except where the appeal in the case of VR is pending before the Hon'ble High Court, within six months from the end of the month of the receipt of this order by the Revenue. Determination and Adjudication - Held that:- Matter becoming infructuous in view of the finding of absence of jurisdiction- no merit in the Revenue’s challenge to the same inasmuch as there has been no decision of the said authority on merits - no infirmity in principle stands found in the impugned order, and which therefore stands endorsed to that extent - only order to which our attention was drawn, and which found on record, is dated 17/1/2005, so that the date mentioned has been considered to be on account of a mistake, and read as Rs.17/1/2005 in framing the present order - In the result, the Revenue’s appeal is dismissed.

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• 2012 (11) TMI 944
  Best Judgement Assessment u/s 144 – Held that:- Assessee is a habitual defaulter, not disclosing his correct turnover, year after year, he can be subject to assessment under the verification procedure. But that would not in any manner entitle the Revenue to proceed de hors the material on record or arbitrarily. There are other provisions under the Act, which is a complete code in itself, which can be applied to bring the assessee’s undisclosed income – which though has to be assessed reasonably, to tax. No doubt, each year is a separate and independent year. However, the Revenue having not brought on record any material to show any distinguishing feature for the current year vis-à-vis a preceding year, at any stage, including before us, viz., the nature of the work done; the cost of materials; the price realized, etc., or even a non-consideration of any of the relevant materials by the tribunal while determining the facts for AY 2005-06 - no basis for adopting a different measure, both qua the net profit rate and the working capital component involved, i.e., other than the corresponding accepted rates for that year - In the result, the Revenue’s appeal is dismissed.

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• 2012 (11) TMI 943
  Validity of Service of Notice in Block Assessment – held that:- Irregularity in proper service of notice which can be treated as curable under section 292B of the income tax act is only in the cases where the notice under section 143 (2) was issued properly and within the period of limitation and the assessee did not raise any objection regarding the service of the notice during the assessment proceedings and also participated in the assessment proceedings then at a later stage the assessee is precluded from raising such objection. Therefore, the provisions of section 292B are not applicable in the case where the Assessing Officer has not at all issued notice under section 143 (2) within the period as prescribed. Requirement of section 143 (2) cannot be dispensed with as it is mandatory and therefore, the notice under section 143 (2) issued after the expiry of prescribed period is an uncurable defect and consequently, the block assessment is erroneous and not sustainable - block assessment in the case in hand is without jurisdiction and consequently, the same is set aside. Undisclosed Income as per section 158 BB – Held that:- As Block assessment being invalid is set aside; therefore, no need to go into the merits of the issue of addition. Consequently the appeal filed by the revenue is liable to be dismissed - In the result appeal filed by the assessee is allowed whereas the appeal filed by the revenue is dismissed.

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• 2012 (11) TMI 942
  Evasion of Payment of Taxes – Prorective Assessment – Setting Aside Revision order of CIT(A) - Whether Capital gains should be taxed as a whole in one assessment year 2007-08 or the capital gains should be bifurcated and assessed to tax for two assessment years 2007-08 and 2008-09 on sale of Property through Sale of shares when sale is a comprehensive business deal - held that:- Assets, rights and privileges of the property ultimately being transferred through the sale of shares would be taking a final shape only in the previous year relevant to the assessment year 2009-10. It is in anticipation of the fulfillment of all these efforts that the assessees have entered into an agreement with WET as a business proposition. The agreement is not an agreement for sale simplicitor. It is a comprehensive business deal. Entire land and property was transferred by CHD to WET in the previous year relevant to the assessment year 2007-08. As already held by CIT(A), only 50% shares of CHD were sold by the assessees to WET. Capital gains arising out of the transfer of balance shares have also been offered by the assessees for the following assessment year 2008-09. Therefore, in these circumstances it is not proper on the part of the Assessing Officer to treat that the entire transaction was complete in the previous year relevant to the assessment year 2007-08 itself. In the present case, there is no attempt to evade payment of taxes, as the assessee have already offered capital gains for taxation in two assessment years 2007-08 and 2008-09.” - there is no necessity of making protective assessments on that ground for the assessment year 2008-09 - revision orders passed by the CIT(A) have become infructuous - orders are therefore, set aside - In result, appeals filed by Revenue are dismissed and appeals filed by assessee is allowed.

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• 2012 (11) TMI 941
  Exemption u/s10(23C)(iiiad) – Held that:- Assessee is carrying only the activity of education and training, even though other incidental objectives are mentioned in the trust deed. It is also not disputed that the assessee had been filing returns from assessment year 1991-92 onwards up to assessment year 2006- 07 and the claims made by the assessee u/s 10(23C)(iiiad) had been accepted by the department for assessment year 1996-97 u/s 143(3) of the Act. when the assessee has been granted exemption u/s 10(22) with the same objectives, the assessee has to be granted exemption u/s 10(23C)(iiiad) if the annual receipt is within the limit prescribed. further,if the assessee meets the requirement of imparting education which can be training of any nature and if only such activity is carried on, the institution should be held eligible for deduction u/s 10(23C)(iiiad) of the Act – there is no infirmity in the order of the first appellate authority in granting exemption u/s 10(23C)(iiiad) of the Act and same is confirmed. Disallowance u/s 11(1)(a) - Application of Income outside India – Held that: - issue is only academic – not dealing with the same as already granted exemption u/s 10(23C)(iiiad) of the Act - In the result, the revenue’s appeal is dismissed.

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• 2012 (11) TMI 940
  Ex-parte assessment made u/s.144 of the Income Tax Act - notice under section 142(1) of the Act – alleged that there was no compliance on behalf of the assessee to any of the notices issued by the AO – Held that:- Director of the Company was incharge of the company’s day to day affairs at Mumbai. The other directors were residing at Calcutta – he was diagnosed as suffering from cancer and, therefore, could not attend the proceedings before the AO. That is the reason why the final show cause notice dated 10/11/2008 was sent by the AO to the Kolkatta address of the other directors – said director ultimately died on 19/4/2010 and that was the time when the proceedings before CIT(A) had come up for hearing - direct the assessee to make proper compliance before the AO to enable the AO to decide the issue afresh - appeals allowed for statistical purposes

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• 2012 (11) TMI 939
  Validity of initiation of reassessment proceedings – Held that:- There is no allegation by the Assessing Officer that income has escaped assessment by reasons of failure of the assessee to disclose material facts fully and truly. Since, reassessment proceedings were being initiated after expiry of 4 years from the end of assessment year, this was condition precedent for valid initiation of reassessment proceedings - reopening of assessment beyond the period of four years could not be sustained Reopening on the ground of non deduction of TDS - Payments to foreign parties for licence to use of software - view taken by the Department that it is mandatory for the assessee to Deduct Tax at Source on such payments for licence to use software as they are in the nature “Royalty” - assesses has made payments to foreign parties for licence to use of software – Held that:- there could be no reassessment either on the basis of a subsequent decision of the Tribunal or on the Assessing Officer’s own interpretation. In either case, it would be a mere change of opinion, so that the notice was not valid. Disallowance under section 40(a) of the Act – Held that:- Since the initiation of reassessment proceedings have been held to be invalid and the orders of reassessment have been annulled - it is not necessary to deal with the appeals of the revenue on merits - appeals dismissed

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• 2012 (11) TMI 938
  Addition u/s 68 - creditworthiness of the parties who advanced the loans – Held that:- CIT(A) deleted the addition on the ground that genuineness is not doubted by the AO - it is not known as to why a housewife will take a loan from somebody or even from her brother, just in order to advance loan to the assessee and why she takes so much of risk when this investment is not safe - findings of the AO show that he has doubted the genuineness of the transactions, therefore, the observations of the CIT(A) that the AO has not doubted the genuineness of the transactions are not proper - CIT(A) without considering the issue properly, deleted the addition made by the AO – matter remanded to AO

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• 2012 (11) TMI 937
  Penalty u/s 271(1)( c) – diversion/shifting of expenses of sister concern to the assessee - travelling expenses and business promotion expenses – Held that:- Expenditure disallowed represents the expenses debited by the assessee company in its account books with regard to the tours undertaken by the directors of the group companies of the assessee and it is an admitted fact that the disallowed expenses were not incurred by the assessee company for its business purposes - assessee could not explain any valid reason for debiting the expenses incurred by the directors of the other companies for the business purpose of the group companies and which do not relate to the business of the assessee company - assessee has not controverted the facts of payments of the expenses by credit card of the persons, who are not the director of the assessee company - it is a case of diversion/shifting of expenses of sister concern to the assessee with a view to reduce the tax liability. The act of the assessee in claiming the said expenditure shows dis-honest motive and therefore, attracts the penal provisions of sec. 271(1)( c) of the IT Act

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• 2012 (11) TMI 936
  Levy of penalty u/s.271(1)(c) - bona fide mistake – Held that:- Penalty under section 271(1)(c) of the Income-tax Act, 1961, was imposed only when there was some element of deliberate default and not a mere mistake. The finding had been recorded on the facts that the furnishing of inaccurate particulars was simply a mistake and not a deliberate attempt to evade tax - simply because a mistake has been committed on the advise of the auditor, then such addition cannot lead to the action of imposition of penalty Addition of dividend – Held that:- Normal dividend was exempt u/s. 10[34] and it is very much possible that dividend from the co-operative bank was also treated as normal dividend. This also seems to be a case of bona fide belief and in such circumstances penalty is not attracted - when assessee is making some claim on bona fide basis or under the wrong advise of the counsel then penalty cannot be levied - assessee’s appeal is allowed.

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• 2012 (11) TMI 935
  Disallowance of warranty provision - The disallowance was made on the ground that the expenditure has not crystallized and hence provisions for performance guaranty amounted contingent liability. - held that:- Deduction allowed. Addition u/s 68 - one-timepayment paid by the customer for initial start up of the contract - held that:- As such, the Assessing Officer’s decision of holding it as revenue receipt was not arrived at after examining the relevant documents and agreements in this regard. The orders of both the Assessing Officer and learned CIT(A) in this regard do not speak of the basic facts as to the nature of arrangement/agreement between the assessee and client and relevant facts regarding payment of Rs. 8 lakhs in this regard. - matter remanded back. Liability of exchange loss – alleged that expenditure has not crystallized – Held that:- Foreign exchange loss is on the revenue items – assessee submits that this issue is covered in favour of the assessee by the decision of Woodward Governor India P. Ltd. (2009 (4) TMI 4 - SUPREME COURT ) – matter remanded to AO Claim of interest u/s. 244A on the refund of taxes due – Held that:- First appellate authority has not dealt with this issue – matter remanded to AO

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• 2012 (11) TMI 934
  Addition on account of unexplained cash deposit – Held that:- Partners of the assessee firm are also partners of the firm M/s Adarsh Octroi Services, Mumbai - amount of Rs.5,25,000/- each was withdrawn by Shri Rafique Shakur Shekhani and Shri Sayed Rasul Shaikh partners of the firm on 15.4.2005 from their partnership firm M/s M/s Adarsh Octroi Services, Mumbai as per copy of cash book filed and the same amount was deposited by both the partners with the assessee firm on the same date - Rs.2,500/- each was deposited by Shri Rafique Shakur Shekhani and Shri Sayed Rasul Shaikh on 23.2.2006 out of their previous withdrawals from the same firm - partners have proved the source of deposits and in the absence of any contrary material placed on record by the Revenue that there is no such corresponding withdrawals in the firm M/s M/s Adarsh Octroi Services or withdrawals made by the partners of the firm have been utilized for some other purpose and not for making deposits in the assessee’s firm - assessee is not required to prove the source of source – addition deleted Unexplained cash deposits – Held that:- CIT(A) after examining the regular cash book maintained by the assessee wherein the relevant entries are duly recorded, has accepted the above deposits in the banks accounts - it is not the case of the Revenue that the entries recorded in the cash book are not genuine or the AO has rejected the accounts maintained by the assessee, we hold that the ld. CIT(A) was fully justified in deleting the addition

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• 2012 (11) TMI 933
  Deduction u/s 80IB on disallowances made u/s 40(a)(ia) due to default in TDS – Held that:- AO has treated the disallowance u/s 40(a)(ia) as income from business and it is not the case of the Revenue that the income derived by the assessee is other than the business income from developing and building housing project - assessee is entitled to deduction u/s 80IB(10) in respect of total profits including the profits computed as business profits of the housing project for the year under appeal - Revenue’s appeal stands dismissed.

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• 2012 (11) TMI 932
  Disallowance u/s 14A of the Act – Held that:- When Rule 8D was not applicable, the Assessing Officer has to enforce the provisions of sub section (1) of section 14A. For that purpose, the Assessing Officer is duty bound to determine the expenditure which has been incurred in relation to income which does not form part of the total income under the Act. The Assessing Officer must adopt a reasonable basis or method consistent with all the relevant facts and circumstances after furnishing a reasonable opportunity to the assessee to place all germane material on the record - matter remanded to the file of the Assessing Officer

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• 2012 (11) TMI 931
  Cancellation of registration u/s.12A of the Income-tax Act – alleged that assessee Trust/institution is having mixed objects i.e. partly charitable and partly religious – Held that:- Following the case of Calicut Islamic Cultural Society vs. ACTI (2008 (7) TMI 621 - ITAT COCHIN) and Society of Presentation Sisters (2009 (9) TMI 75 - ITAT COCHIN ) - directed to grant registration to the assessee u/s.12AA – In favor of assessee

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• 2012 (11) TMI 930
  Capital gain - receipt of gain on sale of shares - business income or capital gains - held that:- The modus-operandi adopted by the joint bidders was to float three SPVs in the form of companies and to obtain the allotment of land in the name of these companies. Shares were allotted to them in these companies and within five days of allotment, the assessee along with its joint bidders i.e., Naman group sold their shares in SPVs entity NCPL to K. Raheja Corp. Pvt. Ltd. From the above facts, it is clear that what was undertaken by the assessee was a business activity and not an investment in a capital asset. - Held as taxable as business income - Decided in favor of assessee. Taxability of notional income on sale of shares - The Assessing Officer has notionally calculated the profits which the assessee, according to the Assessing Officer, ought to have earned in the sale of these shares and brought the same to tax. - held that:- When the assessee has not charged or earned any income during the impugned assessment year, in our considered opinion, it is not right on the part of the authorities to assume a particular income and then bring it to charge on the ground that certain income has accrued or arisen in the case of the assessee. Under sections 22 & 23 of the Income-tax Act when income is assessed under the head Income from house property”, the Act specifically provides for deeming of income No such parallel provision is available when income is assessed under other heads. The addition made by the A.O on account of short term capital gain of Rs. 2,31,47,564, is purely notional neither accrued nor received by appellant and not in accordance with the judicial precedents and the same is deleted - Decided in favor of assessee.

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• 2012 (11) TMI 929
  Addition - unexplained cash credit - search - duplicate books of accounts were found and seized during the course of search from an ex-employee of such group – Held that:- Explanation was that it was received from Dr. Devdut who was residing at USA who brought gold in India and sold to meet the social obligations - substantive addition was already made in the hands of L.T. Shroff Group which had accepted ownership of the amount and paid tax - Tribunal has, therefore, rightly deleted the amount added by the Assessing Officer on protective basis in wake of substantive addition Addition on account of unexplained income of the assessee being the amount lying in the name of minor daughter of the assessee – Held that:- This was declared cash of the wife of the assessee at the time of permanent settlement in India after their migration from Pakistan - explanation accepted and addition deleted

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• 2012 (11) TMI 928
  Penalty u/s.217(1)(c) of the Act on disclosure made by the assessee during the course of survey – Held that:- There was no variation in the returned income and therefore, there was no basis for levying of penalty - only reason why the Assessing Officer had justified in levying of penalty was the material found during the course of survey indicating unaccounted receivables - neither explanation 5 to section 271(1)(c) was applicable nor was it a case where the assessee had not declared the surrendered income in the returned income within the due date – penalty deleted

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• Customs

• 2012 (11) TMI 998
  Confiscation and redemption fine and penalty - importation of Heavy Melting Steel Scrap - appellant not obtained pre-shipment certificate – Held that:- According to the Foreign Trade Policy during the relevant time, pre-shipment certificate was essential for import of shredded heavy melting scrap - pre-shipment certificate was not produced and in the second case, the requirement of shredding has been fulfilled - appellant has suffered heavy demurrage charges, a lenient view is called for - redemption fine and penalty imposed on the Heavy Melting Scrap reduced

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• 2012 (11) TMI 997
  Conversion of two Free Shipping Bills into Export Promotion Scheme Shipping Bills – Held that:- No dispute as regards description, value and fact that goods were being exported for fulfillment of export obligation - no allegation of fraud against the assessee and there is no allegation of manipulation also - essential requirements for conversion of Shipping Bills from one scheme to another have been fulfilled by the appellant - conversion was allowed on the ground that in the ARE-1 form, there was a certification from the Superintendent certifying that the export took place under his supervision and the documents were existing at the time of export - Commissioner of Customs directed to allow conversion of the Free Shipping Bills to the Export Promotion Scheme Shipping Bills as requested.

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• 2012 (11) TMI 970
  Penalty – evasion of duty – anti-dumping duty – import of machine – invoice packing list and certificate of origin showed that they had imported the injection moulding machine of Malaysian origin – Held that:- On examination of the machine, it was found that the machine carried various marks indicating country of origin to be China - Notification 47/09 dated 12.5.09 which imposed anti-dumping duty @ 223% ad varolem on various goods including injection moulding machines imported from China - appellant has produced a false certificate of origin with an intent to evade payment of anti-dumping duty, the penalties on the appellants are justified Confiscation of the goods and also imposition of redemption fine of Rs.5 lakhs in lieu of confiscation upheld. A penalty of Rs.15 lakhs each has been imposed on the appellant firm and its partner, Mr.Ashok Jain, under the provisions of Section 112(a) read with Section 114AA of the Customs Act, 1962 - partner, Shri Ashok Jain is the main person behind the attempt to evade import duty. Therefore, he is also liable to penalty under the above provisions as the act has been committed with a deliberate intent to evade payment of duty

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• 2012 (11) TMI 969
  Duty on stores on the vessel - vessel in this case was converted from coastal run to foreign run and it has gone to Singapore for dry docking – Held that:- Department could not show any discrepancy pointed out by the Customs Officer Boarding the vessel, in case of store lists - duty is not demandable on stores of Indian origin. The Appellant did not press for issue relating to inclusion of freight and insurance in the assessable value of stores of foreign origin - demand of duty on ship stores of Indian origin set aside - appeal is allowed

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• 2012 (11) TMI 968
  Import under DEPB Scheme – import of non-calcined Petroleum Coke – denial of benefits of Notification No. 89/2005-Cus. – Held that:- Commodity “Coke” had been made a part of original public notice - Commissioner while exercising the powers, under the notification used the word ‘substituted’ and therefore it can be held that the newly added import commodity namely “Coke” had been a part of original Public Notice No. 1/2002-Cus., dated 27-11-2002 - Inevitably it was intended to rectify the mistake and thus have given a retrospective effect legitimizing all import of “Coke” including those affected prior to 27-7-2009 - duty debited/paid at the time of respective provisional assessment in DEPB/TRA/cash is held valid and the benefit of duty exemption under DEPB Scheme under Notification No. 89/2005-Cus., dated 4-10-2005 to be granted

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• Corporate Laws

• 2012 (11) TMI 967
  Scheme of Amalgamation - Scheme of Arrangement between Sports Station (India) Private Limited (hereinafter referred to as Transferor Company) with SSIPL Lifestyle Private Limited (hereinafter referred to as Transferee Company). - held that:- No Objection has been received from any other party.- In view of the approval accorded by the Shareholders and Creditors of the Petitioner companies; representation/reports filed by the Regional Director, Northern Region, Ministry of Corporate Affairs, to the proposed Scheme of Arrangement, there appears to be no impediment to the grant of sanction to the Scheme of Arrangement under sections 391 to 394 and sections 100 to 103 of the Companies Act, 1956. The Petitioner Companies will comply with the statutory requirements in accordance with law.- Upon the sanction becoming effective from the appointed date of Amalgamation, that is 1st April, 2012, the transferor company shall stand dissolved without undergoing the process of winding up.

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• 2012 (11) TMI 966
  Liquidation of company - auction - sale of the Company as a ‘going concern’ - marketability of the land - applicant in this application stated that purchaser requires necessary time for making further enquiries relating to the land of the Company. Accordingly a direction upon the Official Liquidator was prayed for, thereby directing him to make further inquiries with regard to the proceedings pending before the Sub-Divisional Land and Land Reforms Officer – Held that:- State Government have no power to resume the land in question, nor they get any right by way of adding explanation to the aforementioned section - Official Liquidator is authorised and empower to the sale land in question - there is no defect or any dispute about the marketability of the property in question which was sold in auction. However, the applicant is granted one week’s time to pay the balance dues

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• FEMA

• 2012 (11) TMI 971
  Whether appeals before the Tribunal against the order of the adjudicating authority had to be treated by the Tribunal under the provisions of FERA or FEMA – Held that:- Order has been passed in the adjudication proceeding on 11th October, 2007 under the FERA after cognizance had been taken under the provisions of FERA. In view of this, the correctness, legality and proprietary of the order passed by the adjudicating authority has to be challenged in continuation of the proceeding under the FERA and has to be adjudicated under the provisions of FERA - cognizance having been taken within the sunset period and the adjudication proceeding carried out under the provisions of FERA, substantive provisions of FERA would alone be applicable - appeal filed before it was to be governed under the provisions of FERA Whether Tribunal has power to condone the delay beyond the period of 90 days - provisions of Section 35 of the Central Excise Act - Held that:- Provision of law stipulates a period of 60 days for filing an appeal; under the proviso another 30 days can be added to this period; the delay in filing the appeal can be condoned after the expiry of the 60 days yet the period of delay could not be condoned beyond 90 days - there is a complete exclusion of Section 5 of the Limitation Act - Tribunal has no power to condone the delay beyond the period of 90 days while dealing appeals under the FERA - appeals are dismissed

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• Service Tax

• 2012 (11) TMI 1000
  Demand of service tax under 'construction of complex' as defined under section 65(91a) of Finance Act - Appellants have undertaken construction work of 15 residential houses under a contract with M.P. Housing Board – Held that:- Submission of the appellant is that the entry covers only such building where each of the building has got more than 12 residential units. They have built 15 independent houses and not a complex - service tax can be demanded under section 65(105)(zzzh) only if the building concerned has more than 12 residential units in the building and such levy will not apply in cases where in one compound has many buildings, each having not more than 12 residential units – In favor of assessee

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• 2012 (11) TMI 999
  Refund claim - Notification No. 05/2006 CE - denial of the refund already granted by the original authority is on the ground that two of the services viz. management consultant services and maintenance or repair services (in connection with DG sets) are not input services in relation to the services rendered by them viz. ITSS – Held that:- management consultant service was utilized for rendering the business with efficiency and it was prerequisite to render the business efficiently especially to cater to the export market and therefore, should be treated as 'input services' - services could be treated as 'input services' in respect of services rendered by the appellant - waiver of pre-deposit allowed

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• 2012 (11) TMI 994
  Input services - vastu consultancy - Denial of Cenvat credit of Service Tax in relation to civil construction work in the factory - setting up of labour hutments, kisan sheds is for providing temporary residential facility to the workers as also for the cane growers – Held that:- Vastu is in relation to the construction activity and as such, if construction activity has been held to be admissible services by the Commissioner, the vastu consultancy is also required to be held accordingly. As regards dismantling of building structure - before raising new construction for setting up of the factory, it is necessary to clear the place including dismantling of old structure stand thereon and such services are essentially included under the limb of setting up of a factory. As such, I find that the denial of credit by the adjudicating authority on the above services was not correct and proper. Extended period of limitation – Held that:- Credit so availed was part of the total credit availed by the assessee and was being duly reflected in the returns so filed. The appellant cannot be held guilty of suppression or mis-statement with an intent to evade payment of duty - a positive act with a mala fide intention is the requisite criteria for invocation of longer period of limitation. In the absence of the same, assessee cannot be held guilty of any malafide - entire demand having been raised after the normal period of limitation is time-barred.

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• 2012 (11) TMI 979
  Waiver of pre-deposit - valuation - inclusion of electricity charges - Renting of Immovable Property Service - held that:- Supply of Electricity is ‘goods' and the same shall not form part of taxable service as clarified by the Notification no. 12/2003 - applicant has made out a prima facie case for 100% waiver of the service tax confirmed and penalty imposed - Requirement of pre-deposit of the service tax, interest and penalty is waived and stay recovery thereof during the pendency of the appeal.

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• 2012 (11) TMI 976
  Service tax demand - sponsorship service - applicants entered with an agreement with Board of Control for Cricket in India for organising the IPL tournament wherein the applicants are the sponsors for Umpire under a 'Sponsor Agreement' – Held that:- Activity is proved to be 'sponsored of the event service' but during the relevant time the 'sponsorship of the sports event' was fully exempt from service tax - in the case of DLF Ltd. (2012 (5) TMI 404 - CESTAT, NEW DELHI ) it was held that the IPL 20-20 tournament is a sports event, applicants are exempt from the levy of service tax as per Section 65(105)(zzzn) of the Finance Act, 1004 – pre-deposit waived

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• 2012 (11) TMI 975
  Demand of service tax – reimbursement of expenses - under the category of Manpower Recruitment & Supply Agency Service - denial of credit - separate Returns have not been filed as required under Rule 9(9) of CENVAT Credit Rules, 2004 – Held that:- the activities of the appellant may not deserve to be considered as 'supply of manpower' but as rendering of 'information technology software service' and in the light of the stay granted in the case of ASM Technologies Ltd. (2012 (11) TMI 974 - CESTAT, BANGALORE), the appellants are eligible for waiver of pre-deposit. As regards, the denial of CENVAT credit, we have not been shown that there is a requirement of filing separate Returns under Rule 9(9) of the CENVAT Credit Rules, 2004 and therefore, there is no warrant to order pre-deposit.-deposit As regards the reimbursable expenses relating to employees deputed to USA, undisputedly, the activities have taken place in USA and, therefore, the liability to service tax may not arise – stay allowed

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• 2012 (11) TMI 974
  Waiver of pre-deposit - Manpower Recruitment or Supply Agency Service – reimbursement of expenses - employees were deputed to the premises of the clients and they were working under the direct supervision of Project Managers working with the appellant and the intellectual property relating to the software developed continued to rest with them and if any right was to be passed on to the clients, the same was required to be specifically assigned to the clients subject to the conditions mentioned in the agreements. – held that:- the activities may fall under the category of ‘Information Technology Services' and may not be classifiable under the category of ‘Manpower Recruitment or Supply Agency Service'. – stay granted.

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• 2012 (11) TMI 955
  Extended Period of limitation – utilization of Cenvat Credit for exempted and non exempted services - The appellant was of the view that Rule 3(5) of the Rules of 2002 was not applicable to it because the appellant was not providing exempted service or non-taxable service. Thus, the appellant was utilizing the Service Tax Credit availed on various input services for payment of service tax on output telephone service without any restriction of 35% specified in Rule 3(5) of the Rules of 2002 – Held that:- Failure to make such disclosure in return or submitting entire fact by any letter accompanying its return appears to be a case of willful suppression - When the return contains a declaration as to the self assessment particulars stating that the assessee had paid service tax correctly in terms of provisions of the Act and Rules made thereunder such declaration becomes faulty in absence of bona fide statement either on the return or made through a letter accompanying the return. It was not a case of mere omission to give correct information; it was devised deliberately so to evade tax liability - limit of exemption was known and provisions of Rule 3(5) of the Rules of 2002 are clear. Thus, it was deliberate suppression of facts - five years' period of limitation has been rightly invoked

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• 2012 (11) TMI 952
  Application for condonation of delay – appeal against the order of CESTAT - Held that:- the first order dismissing the appeal is only as a sequel to dismissing the application for condonation of delay in preferring the appeal and the appellant though had filed application seeking for condonation, that application was not prosecuted with diligence and therefore the Tribunal was left with no choice but to dismiss the application for condonation of delay and as a consequence dismissed the appeal and also the application for stay etc. The order passed by the Tribunal is not per se one dismissing the main appeal for non prosecution but is only a dismissal of the appeal as a consequence of dismissal of the application for condonation of delay. There was no valid or tenable appeal of the appellant which was an appeal which required or deserved attention under section 35C of the Act. It would have become a valid appeal only if the appellant should have succeeded in its efforts to get the delay in preferring the appeal condoned - appeal dismissed

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• Central Excise

• 2012 (11) TMI 996
  Rebate - manufacture of man-made fabrics – alleged that appellant is not entitled for Cenvat credit on the hangers and booklet inasmuch as they have not been used as inputs in or in relation to the manufacture of the final products – Held that:- Hangers are nothing but packing material in which the fabrics have been placed and, therefore, they are inputs as per Rule 2(k) of the Cenvat Credit Rules, 2004 and rightly eligible for the Cenvat Credit. As regards, the booklet containing the designs, the same has been used in the manufacture of fabrics exported; without the designs, the fabrics could not have been manufactured. Therefore, drawings and designs are essential inputs in or in relation to the manufacture of the final products. Therefore, they qualify as inputs eligible for Cenvat Credit under rule 2(k) of the Cenvat Credit Rules, 2004. Even it is held that they are not inputs, these goods have been exported along with fabrics as such on payment of duty and, therefore, on export of goods they are rightly entitled for the credit

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• 2012 (11) TMI 995
  Waiver of pre-deposit - penalty under Rule 25 of Central Excise Rules - whether the appellant is required to be visited with penalty under Rule 25 of the Central Excise Rules, 2002 for not discharging the duty liability on the P & P Medicaments, cleared by them by applying pro-rata value of sale pack cleared by them – Held that:- Appellant had cleared physician samples by following the principles of cost control method as provided in Rule 8 of the Central Excise (Valuation) Rules. The law that the physicians samples needs to be valued proportionately with the sale pack - If two views were possible for the valuation of physician samples, appellant s choosing a particular view, cannot be faulted with – demand of duty liability and interest thereof, is rejected - penalty under the provisions of Rule 25 of Central Excise Rules, be set-aside

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• 2012 (11) TMI 993
  Waiver of pre-deposit - applicant manufactured and cleared Pan Masala Gutka and had not paid duty as per the provisions of Pan Masala Packing Machines Rules, 2008 – Held that:- As per rule 6, the manufacturer has to file a declaration stating therein the number of packing machines - when the applicants filed the declaration stating therein that there is no packing machine for manufacture of Pan Masala Gutka and in absence of any verification to that extent - applicants have made out a strong case in their favour - pre-deposit of duty, interest and penalty waived

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• 2012 (11) TMI 992
  Interest on differential duty – Held that:- Appellant assessee is liable to discharge interest liability on the Central Excise duty paid by issuing supplementary invoices for the increased price of the final products cleared by them to their suppliers – against assessee

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• 2012 (11) TMI 991
  Whether the duty paid by the job worker on goods, received back by the appellant can be availed as Cenvat credit by the appellant – Held that:- Once the duty has been paid by job worker on goods sent back to appellant, there is no reason to deny benefit of Cenvat credit to the appellant – In favor of assessee

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• 2012 (11) TMI 965
  Determination of Transaction value - Freight Charges on equalised basis are more than actual charges - Duty demand of Rs. 94,843/- with interest and penalty imposed by making addition of difference in freight charges on actual and equalised basis. Held that:- Transaction value being the value at point of removal (factory of assessee) being exclusive of freight charges the inclusion of differential freight charges in the transaction value is not sustainable in law - Appeal is accepted - in favour of assessee.

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• 2012 (11) TMI 964
  MRP valuation – Interest on differential duty liability due to alternation of MRP at Depot - footwear – submission of the appellants that alteration of MRP on the impugned goods amount to manufacture and therefore the liability to pay duty on the altered MRP arises only in the month of March 2006 – Held that:- Argument that alteration in the MRP would amount to manufacture, would also necessitate taking a new registration by the appellants for their depot and the duty payment has to be made on the impugned goods after taking credit in respect of the duty paid on the footwear bearing lesser MRP when earlier cleared from the factory - argument was not advanced earlier and the duty liability has to be worked out allowing credit on the duty paid earlier - matter remanded to the original authority for examination

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• 2012 (11) TMI 963
  Cenvat Crdit on bogus Invoice - alleged that appellant forged documents for availing cenvat credit – high value inputs i.e. Aluminium – Held that:- No goods were transported and on their request, supplier had only provided some blank GRs with registration number of some trucks owned by them - As regards the invoices issued by M/s. Aspen Online, a company controlled by Shri Rajesh Mahajan and his wife, on the basis of which cenvat credit of about Rs. 11 Lakhs has been taken by M/s. Alliance Alloys, inquiry with the owners of the trucks, whose registration number are mentioned on the invoices, revealed that those trucks had not been used for transportation All these grades of Aluminium could be manufactured directly from Aluminium scrap of the appropriate ISRI code without use of high value of Aluminium products like CR sheets/coils, rods, etc. - appellant has wrongly availed cenvat credit by forging and fabricating the documents – application for waiver of the duty demand, interest and penalty dismissed

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• 2012 (11) TMI 962
  Maintainability of Writ petition against the interim order of tribunal - Waiver of pre-deposit of Duty, Interest and Penalty - prima facie case and undue hardship - held that:- Section 35G of the Act, 1944 provides for an appeal against any order passed by the Appellate Tribunal. - Thus, the litigant cannot be permitted to seek redressal of his grievances by invoking the forum of judicial review under the writ jurisdiction on the ground that there may not be any question of law as required under section 35G of the Act. Sub section (5) and (6) of Section 35G deal with the substantial questions of law. In view of the availability of statutory appellate forum, this Court is of the view that the writ petition is not maintainable against the impugned order. - Writ petition dismissed.

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• 2012 (11) TMI 961
  MODVAT Credit - manufacture of cement - explosives, grinding media, cylpebs, refractories (fire bricks) steel castings, ball bearings, electrodes, refractory cement, rubber and articles - Following the decision of court in case of [Commissioner of Central Excise, Coimbatore & Others vs JAWAHAR MILLS LTD. 2001 (7) TMI 118 - SUPREME COURT OF INDIA] held that:- Goods for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final product would be "capital goods", and, therefore, qualify for availing MODVAT credit. In the case on hand, on examining the above stated articles, it is found that all the articles – explosives are used for manufacture of cement and in absence of any of the above stated goods, manufacture of cement is not possible. Applying the 'user test' as laid down by the Supreme Court in the above referred case, the decision of the Tribunal is just, proper and legal - reference is answered accordingly.

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• 2012 (11) TMI 960
  Imposition of Penalty - held that:- Modvat credit of Welding Electrodes, as an input or as a capital good, is not permissible. In view of absence of evidence to the effect that Welding Electrodes were used for fabrication of capital goods and in view of the said larger Bench decision, the claim of the assessee in respect of allowance of modvat credit on such Welding Electrodes was rejected, but, at the same time, claim of the Department for penalty was rejected on the ground that the case was contentious and similar cases were being agitated before many forums Inasmuch as, the case was covered by Sub-Rule (1) of Rule 13 of the said Rules, in view of the finding recorded by the Tribunal to the effect that the assessee was not entitled to modvat credit on Welding Electrodes, it became obligatory on the part of the Tribunal to impose at least the minimum penalty of Rs.10,000/-, as prescribed in Sub-Rule (1) of Rule 13 of the said Rules, and that having not been done, we impose the same with a direction to pay the same within a period of three months from today.

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• 2012 (11) TMI 959
  Period of limitation - demand of duty as no manufacturing activity to bring into existence gauze fabrics - Held that:- it is true that in the show cause notice it was conveyed that the respondent had not registered itself with a view to evading duty and that therefore larger period of limitation would be invoked. It may be that such issue of allegation was not in so many words denied by the respondent. However, in the show cause notice and during personal hearing before the Commissioner, the central defence of the respondent was that the respondent undertook no manufacturing activity to bring into existence gauze fabrics. Further that before further process, such fabric could not be marketed. On such twin grounds, the assessee held a belief that no duty was required to be paid. It was also pointed out that the assessee did not avail of any Cenvat credit on the inputs used. Under the circumstances, the respondent had put up a case of bonafide belief. Also the Commissioner upheld such view of the assessee, larger period of limitation could not be applied - in favour of assessee.

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• 2012 (11) TMI 958
  Demand and penalty - gutkha - additional evidence before tribunal - revenue submitted that, it is well settled in law in terms of Section 32L of the Act that material placed before the Settlement Commission and an admission made by an assessee who could have the jurisdiction of the Settlement Commission can very well be used in any proceeding against the assessee under the Act and therefore when the very basis of the order for adjudication was such admission made by the very assessee before the Settlement Commission, it is not open to the assessee to go back on the same as it binds the assessee. - Alternatively, it is submitted that conduct of the assessee also does not behold acceptance as such material is sought to be placed more than three years after the event, that it was sought to be placed for the first time only before the Tribunal though proceeding was before the adjudicating authority and the appellate authority for more than three years etc. Tribunal has such power and jurisdiction and even assuming that it could have itself admitted the additional evidence and could have disposed of the appeal, but if the Tribunal thought it was proper for the adjudicating authority to examine the material, it is an order reserving full freedom for the adjudicating authority and therefore we are of the opinion that it does not call for interference in an appeal under Section 35G of the Act which can only be on a question of law erroneously decided by the Tribunal - Decided against the revenue. Held that:-

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• 2012 (11) TMI 957
  Reversal of Cenvat Credit - goods exempted after availing cenvat credit on Inputs - Held that:- Manufacturer is not required to reverse/pay the amount equivalent to the CENVAT credit taken by him in respect of inputs which are proved to have been used in the manufacture of goods which have been cleared under exemption from excise duty. - As decided by Court in case of [COMMISSIONER OF C. EX., CHANDIGARH Versus SABOO ALLOYS PVT. LTD. 2009 (12) TMI 125 - HIGH COURT OF HIMACHAL PRADESH] even though the final product may be exempt from payment of excise, the assessee cannot be asked to reverse the Cenvat credit already taken by him - Decided in favour of Assessee.

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• 2012 (11) TMI 956
  Condonation of Delay- Held that:- Delay is condoned subject to payment of cost assessed at 100 GMs to be paid by the appellant within a period of fortnight from the date of receipt of the copy of this order. If the cost is not paid as directed above then appropriate order shall be passed by Court.

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• 2012 (11) TMI 954
  Effect of omission of Section 3A - Whether any obligation or liability incurred under Section 3A of the Act is saved by Section 6 of the General Clauses Act - held that:- in view of the language contained in the notification dated 1st March, 2001, the same can only afford protection to action already taken while Rule 96ZQ was in force, but cannot justify initiation of a new proceeding which will not be a thing done or omitted to be done under the rule but a new act of initiating a proceeding after the rule had ceased to exist. Any obligation or liability etc. acquired, accrued or incurred under Section 3A of the Act would not be saved by Section 6 of the General Clauses Act. When the charging Section itself is deleted without any saving clause, no recovery under the said Section can be made by resorting to Rule 96ZQ of the Rules. Action, if any, can be taken only under the regular provisions of the Act. Even in case of proceedings initiated prior to the omission of Rule 96ZQ, 96ZP and 96ZO of the Rules, if the same were not concluded prior to the omission of Section 3A of the Act, there was no power to proceed further and conclude the same. Under the circumstances, any action taken under Rules 96ZQ, 96ZO and 96ZP of the Rules after Section 3A of the Act came to be omitted from the statute book without any saving clause, would be without authority of law and as such any orders passed in respect thereof after the omission of Section 3A of the Act would be non est. Virus of penalty provision - held that:- manufacturers of goods specified under Section 3A of the Act are evidently subjected to harsh treatment of unreasonable penalty under Rule 96ZQ(5)(ii) compared to manufacturers of other excisable goods. Moreover, considering the nature of the penalty prescribed even for one day’s delay, it is apparent that the said provision would amount to imposition of an unreasonable restriction on the petitioners right to conduct business thereby rendering the said provision as violative of Article 19(1)(g) of the Constitution. - In the light of the above discussion, this court is of the view that clause (ii) of sub-rule (5) of Rule 96ZQ of the Rules is ultra vires Articles 14 and 19(1)(g) of the Constitution of India as well as Section 37 of the Central Excise Act and is beyond the authority of the rule making power of the Central Government and as such, is required to be struck down.

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• 2012 (11) TMI 953
  Grant of bail - criminal case - Prevention of Corruption Act – alleged that Commissioner and Superintendent of Central Excise were involved in obtaining illegal gratification by corrupt and illegal means from the businessmen – Held that:- there was a clear well-designed and planed conspiracy to conduct illegal raid on the business premises of Aggarwals. This conspiracy was hatched by all the accused persons/petitioners. There is prima facie evidence on record in the shape of statements of Mr. S.K. Singh that the raid was illegal and unauthorized. Though the transcript of taped conversation cannot be used as a substantive piece of evidence, but having seen the transcript of the conversation that took place between the accused persons/petitioners before and after the raid, it would be prima facie seen that it was all planned to extort money from Aggarwals under the fear of raid The arrest of Srivastava would be nothing but extension of trap arrest. Prima facie Section 6A(2) was attracted and this being a non obstante section, provisions of sub-section (1) mandating approval of the Central Government were not applicable. The petitioners A.K. Srivastava and Lallan Ojha are senior officers of the Central Excise Department. Most of the witnesses who have been cited by the prosecution are officials of their department and some of the officials cited as witnesses are their juniors and subordinates. It is every likelihood that in case they are released on bail, they would be able to influence the witnesses. This is presumably because of this apprehension that the prosecution has chosen to get the statements of two drivers and one Superintendent recorded under Section 164 Cr.PC before the Magistrate. The apprehension of CBI in this regard seems to be well founded in the given facts and position of these two petitioners. The pleas that the petitioners are in custody for about three months now and the charge-sheet has been filed are also no ground to admit them on bail. - bail applications dismissed.

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• 2012 (11) TMI 951
  Writ petition - Central Excise Officer - scope of the word "or" in definition u/s 2(b) - jurisdiction – issue of show cause notice - proceedings for determining the liability under Section 11A – Held that:- In the present case, the issue which has been raised by the learned counsel for the petitioner is that Dr. Devender Singh, who was working as Additional Director General/Commissioner was not authorised to issue the show cause notice dated 01/10/2009, since he was not a Central Excise Officer because no notification having been issued and published in the Official Gazette as required under Rule 3(1) of the 2002, Rules. We have already considered the issue and held that Dr. Devender Singh, Additional Director General, Directorate General of Central Excise Intelligence having been authorised to act as a Commissioner, Central Excise was a Central Excise Officer, within the meaning of Section 2(b) of the Act, 1944 and was fully authorised to issue the show cause notice. Present is not a case, where there is any lack of jurisdiction in the Commissioner in issuing the show cause notice. The submission of the learned counsel for the petitioner that prior permission of the adjudicating authority is required before issuing the show cause notice dated 01/10/2009 is without any substance. Additional Director General/Commissioner, Central Excise had every jurisdiction to issue the show cause notice dated 01/10/2009 and no ground has been made out to quash the same.

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• CST, VAT & Sales Tax

• 2012 (11) TMI 978
  Deemed sale – Writ Petition - constitutional validity of section 2(24) of the Maharashtra Value Added Tax Act - challenge of the petitioners is that by Amending the provisions of section 2(24) the State Legislature has brought within the ambit and purview of the expression "sale", an agreement for the building and construction of immovable property which is not a works contract – Held that:- The effect of the amendment to section 2(24) is to clarify the legislative intent that a transfer of property in goods involved in the execution of works contract including agreement for building and construction of immovable property would fall within the description of a "sale of goods" within the meaning of the provision. - In order to meet the description contained in clause (b), State legislation must provide for a tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract. Such a transfer shall be deemed to be a sale by a person making the transfer and a purchase of those goods by the person to whom the transfer is made. The amendment made by the State Legislature does not transgress the limitations which have been imposed by article 366(29A)(b) of the Constitution. The amended definition of the expression "sale" in clause (b)(ii) of the Explanation to section 2(24) brings, within the ambit of that expression transactions of that nature which are referable to article 366(29A)(b). The transactions which the Legislature had in mind involve works contracts. What the State Legislatures can tax under the expanded definition contained in clause (b) of article 366(29A) must meet the governing requirements of that clause. There must be a transfer of property in goods involved in the execution of a works contract. The relevant clause in section 2(24) is valid because it does not transgress the boundaries set out in article 366(29A). Whether there is a works contract in a given case is for assessing authorities to determine. As noted earlier, it is not possible to provide a comprehensive or all-encompassing list of what contracts constitute works contracts. Section 2(24) properly construed, even after its amendment, reaches out to those cases which-fall within the ambit of article 366(29A). Explanation (b)(ii) to section 2(24) in other words covers those transactions where there is a transfer of property in goods, whether as goods or in any other form, involved in the execution of a works contract. Regarding validity of composition scheme - held that:- A composition scheme is made available at the option of the registered dealer. There is no compulsion or obligation upon a registered dealer to settle. The court may in an extreme instance interfere in the exercise of its powers of judicial review only where the terms of a composition scheme are ex facie arbitrary and extraneous so as to be violative of article 14. That has not been established before the court in this case. There is no merit in the challenge to the Constitutional validity of the composition scheme. The definition of the expression "works contract" in section "2(ja) of the Central Sales Tax Act, 1956, which has been introduced by Act 18 of 2005 with effect from May 13, 2005 is only for the purposes of that Act. The State law in the present case does not infringe the provisions of clauses (a) and (b) of article 286(3), for the aforesaid reason. Constitution validity of levy of levy of VAT on transfer of goods involved in execution of building and construction of immovable property upheld.

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• 2012 (11) TMI 977
  Amnesty Scheme - settlement of the liabilities under the KGST Act - Held that:- Benefit of the Amnesty Scheme was in fact extended to the petitioner and that on account of his failure to comply with the conditions of the Amnesty, offer of amnesty was revoked on 9/10/09. If the amnesty has already been extended and the same was revoked for the default committed in complying with its conditions, this Court now cannot direct consideration of Ext.P4 application made by the petitioner for the same relief. Therefore, consideration of Ext.P4 also cannot be ordered - Writ petition is dismissed. Petitioner submits that subsequently yet another application was made and the application is pending consideration of the authorities. It is clarified that this judgment will not stand in the way of the authorities in considering the application, if any, made by the petitioner in accordance with law, if they are otherwise eligible for the same.

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• Indian Laws

• 2012 (11) TMI 973
  Writ petition - Essential Commodities Act – West Bengal Public Distribution System, (Maintenance and Control) Order 2003 - whether there was any manipulation by the writ petitioner in obtaining the licence under the 2003 Control Order, by suppressing the identity of the intervenor and Wahuda Rasul as partners of Damodar Enterprise. - Held that:- The Control Order prescribes that in relation to an allegation of violation of condition of licence, the SDC is required to issue the notice to show cause. This implies that there should be prima facie satisfaction on the part of the SDC that there has been such violation, and then only notice seeking explanation shall be issued. Explanation is also required to be given to the SDC. He is to apply his mind over the explanation, give his own comments. The DC must have comments of the SDC before deciding the issue finally, upon giving opportunity of hearing to the distributor. This is the prescription of the Control Order. Deviation from this course ex-facie would be without the authority of law, being contrary to the provisions of the statue. Any step taken in violation of the statutory provision, particularly where there is overtaking on the part of the authorities in the decision making hierarchy, cannot be protected as being mere irregularity. It would be impermissible to legitimize an action on the part of an authority in initiating a proceeding which the statute mandates another authority to initiate on the ground that such action would cause no prejudice to the person against whom such action is initiated. Such show cause notice has been issued by DC without having jurisdiction to do so, and no further step ought to be taken in pursuance of the same. - Notices quashed. Regarding intervenor - held that:- business of distribution never involved the intervenor, and he cannot compel the food and supplies department to allow him to act as a licencee - intervenor cannot implement a partnership agreement by making complaint before the food and supplies authorities - District Controller had no jurisdiction to issue such notice. The appropriate authority under the 2003 Control Order however shall be at liberty to institute a proceeding afresh, if such authority is of prima facie opinion that there has been any violation of the provisions of the Control Order or any condition stipulated therein - writ petition is allowed

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• 2012 (11) TMI 972
  Petition against an Order of ICAI holding that the complaint filed by the Petitioner against Mr. Ajay B. Garg, a Chartered Accountant and the Member of the Institute of Chartered Accountants of India was frivolous - Settlement of accounts of Firm - Principle of Natural Justice - According to the Petitioner, the Lucknow office of the Petitioner firm had prepared base accounts as on 30th November, 2004 and circulated amongst the partners for their comments. M/s. Atlanta Ltd. thereafter made the changes in the accounts without consent of the Petitioner which were detrimental to the interest of the Petitioner. It is the case of the Petitioner that the 1st Respondent did not take proper care while certifying the accounts of the said firm for the broken period of financial year 2004-05. Held that:- Dispute between the partners is in respect of the accounts of the firm was referred to the arbitrator who was an independent person and the said arbitrator looking to the entire evidence has accepted the balance-sheet audited by the 1st Respondent as correct,there is no reason to interfere with the prima facie view of the Institute on the complaint filed by the Petitioner. The fact that the Award made by the arbitratior has been set aside subsequently and restored to the file of the arbitrator for fresh Award, would not vitiate the prima facie view taken by the Institute during the period the Award was subsisting. In view thereof,there is no need to go into the issue raised by the Petitioner regarding the alleged violation of principles of natural justice and/or alleged procedure while conducting enquiry by the Institute in these proceedings - Award for a limited purpose so as to find out whether there was any substance in the complaint made by the Petitioner against the 1st Respondent and have not expressed our view on merits of the award - Rule is discharged.

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