TMI Tax Updates - e-Newsletter
December 18, 2013

Case Laws in this Newsletter:

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

Articles

1. INTROSPECTION ON WAIVER OF PENALTY UNDER PROVISIONS OF SECTION 80 OF THE FINANCE ACT, 1994

   By: SUBRAMANIAM M

2. TAXATION OF COMMERCIAL COACHING – SOME JUDICIAL INTERPRETATIONS

   By: Dr. Sanjiv Agarwal

News

1. Economy Headed Towards Gradual Recovery & Growth Stabilization Several Initiatives Taken to Revive Economy

2. Extension of Time to Sez Developers

3. Review of Operation of Price Stabilisation Fund

4. Exports to Emerging Economies

5. Indo-Pak Trade

6. Import of White Poppy Seeds

7. RBI Reference Rate for US $ and Euro

8. Mid-Quarter Monetary Policy Review: December 2013

9. Drive to Identify and Weed Out Companies Resorting to Multi-Level Marketing Schemes

10. ‘Ensuring Environmental Sustainability’ Included in the List of Activities for CSR Policies

11. Easy Exit Scheme for Defunct Companies

12. Contributions to Political Parties by Companies

13. Setting Up of National Company Law Tribunal

14. Insurance Cover for Public Deposits by Companies

15. Status of Corporate Performance

16. Transparent Guidelines for the Competition Commission of India

Notifications

DGFT

1. 58 (RE-2013)/2009-2014 - dated 18-12-2013 - FTP

Amendment in Para 9.28 of Foreign Trade Policy, 2009-2014

Circulars / Instructions / Orders

Income Tax

1. INSTRUCTION NO.18/2013 - dated 17-12-2013

Issue of Intimation under section 143(1) of Income Tax Act, 1961 beyond time-regarding.

2. 8/FT&TR/2013 - dated 16-12-2013

SECTION 144C OF THE INCOME-TAX ACT, 1961 - DISPUTE RESOLUTION PANEL (DRP) - HYDERABAD

3. 10/DV/2013 - dated 16-12-2013

CLARIFICATION REGARDING APPLICABILITY OF PROVISIONS OF SECTION 40(a)(ia) WITH REGARD TO AMOUNT NOT DEDUCTIBLE IN COMPUTING INCOME CHARGEABLE UNDER HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' ON CONFLICTING INTERPRETATIONS BY JUDICIAL AUTHORITIES

Highlights / Catch Notes

Income Tax

• Court Rules Finance Charges as Interest, Subject to Interest Tax Under Interest Tax Act, 1974.

  Case-Laws - HC : Levy of interest tax on interest under Interest Tax Act, 1974 - the transactins entered by the respondent assessee with the customer/hirer is a loan transaction and the finance charges were nothing but interest. - Decided against the assessee. - HC
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• No Income Tax Addition on Notional Income Until Amount is Received by Assessee; Future Taxation Possible.

  Case-Laws - HC : Accrual of interest - assessee has not received any amount till date. - No benefit has been received, so no addition can be made on the notional income. However, the department is always at liberty to charge tax as and when the amount will be received by the assessee - HC
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• Court Quashes CIT (Appeals) Notices for Overstepping Authority in Reopening Assessments Without Pending Appeals.

  Case-Laws - HC : Power of CIT(A) - CIT (Appeals) had not only stated to reopen the assessment in which the appeals are pending but also for the assessment in which either no appeal is pending or already stands disposed - notice and assessment quashed - HC
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• Appeal Delay Excused with Rs. 25,000 Donation to Victoria Memorial School for Blind in Mumbai.

  Case-Laws - HC : Condonation of delay in fining an appeal before CIT(A) - delay condoned subject to the appellant paying costs of Rs. 25,000/to the Victoria Memorial School for Blind at Mumbai - HC
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• High Court Rules Insufficient Grounds for CIT to Use Section 263 Against Assessee's Deduction and Depreciation Claims.

  Case-Laws - HC : Revision u/s 263 - There is no material at all for the CIT to exercise his jurisdiction under Section 263 to deny the assessee on the deduction as well as on the depreciation claim - HC
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• Assessing Officer, Not CIT(A), Evaluates Creditworthiness and Genuineness u/s 68 of Income Tax Act.

  Case-Laws - HC : Addition u/s 68 - creditworthiness and the genuineness of the transactions - it is the satisfaction of the Assessing Officer but not of the Commissioner of Income Tax (Appeals) - HC
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• Court Upholds Appellant's Registration: Activities Still Genuine Despite Changes to 'Charitable Purpose' Definition u/s 12AA(3.

  Case-Laws - HC : Cancellation of registration under Section 12AA(3) on the ground that the activities of the appellant could not be said to be genuine after the amendment of the definition of 'charitable purpose'? - Decided in favor of assessee - HC
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• Section 80IC Deduction Allowed: Business Not in Prohibited Category, Res Judicata Principle Applied in Tax Assessment.

  Case-Laws - AT : Deduction u/s 80IC - prohibited category of business - principle of res-judicata - on the principle of consistency, learned CIT(A) was justified in directing the Assessing Officer to allow deduction - AT
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• Income Reported as Agricultural u/s 139(1) Cannot Be Altered in Assessment u/ss 153C, 153A, & 143(3).

  Case-Laws - AT : Income already accepted as an agricultural income in the original return of income furnished u/s 139(1) of the Act, cannot be disturbed in the assessment framed u/s 153C read with Section 153A/143(3) - AT
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• Section 263 Order Doesn't Stop CIT(A) from Hearing Taxpayer's Appeal on Disputed Assessment; Proceedings Are Independent.

  Case-Laws - AT : Rejection of appeals - The order passed u/s. 263 cannot come into the way of ld. CIT(A) to dispose the appeal filed by assessee against impugned assessment orders as these proceedings are independent proceedings - AT
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Service Tax

• Court Rules CD-ROMs with Live Virtual Class Not Taxable as 'Commercial Training and Coaching'.

  Case-Laws - AT : Service Tax demand - CD Roms sold which contained a kind of “live virtual class” - Prima facie these activities may not fall under the category of ‘Commercial Training and Coaching’ - AT
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• Refund Eligibility for SEZ Services: Section 11B Claim Valid Despite Notification 09/2009-ST Filing.

  Case-Laws - AT : Refund Claim of Service Tax paid on services consumed within the SEZ and services which were used in the authorized operations of the SEZ units - If the appellant is eligible for refund u/s 11B, then the same cannot be denied on the ground that the claim was made under Notification No. 09/2009-ST - AT
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• Carrier Fees in Business Auxiliary Services Subject to Service Tax, Confirms Recent Ruling Affecting Business Compliance.

  Case-Laws - AT : Business Auxiliary Service - carriage fee - Lease Circuit Service - whether charging carrier fees from different channels is covered under Business Auxiliary Service - Held Yes - AT
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• Court Denies Waiver of Pre-Deposit in Business Auxiliary Services Tax Case Lacking Comprehensive Financial Evidence.

  Case-Laws - AT : Waiver of pre deposit - Demand of service tax - Business Auxiliary Services - the case cannot decided solely for the reason that figures are taken from the expenditure side of the balance sheet - AT
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• Electricity Charges Excluded from Assessable Value for Service Tax in Renting Immovable Properties.

  Case-Laws - AT : Valuation - Electricity charges collected from the tenants cannot be formed part of the assessable value for the purpose of service tax as provider of renting of immovable properties - AT
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• Delay Condoned for Late Receipt of Order-in-Original in Service Tax Case.

  Case-Laws - AT : Condonation of delay - Order not received in time - the claim made by the appellant that they had not received the order-in-original and they had collected it on 22-3-2011 has to be accepted. - AT
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Central Excise

• Cenvat Credit Rules 6(2) & 6(3) can't impose impossible obligations or penalize for unachievable duties.

  Case-Laws - AT : Cenvat Credit - emergence of non-dutiable goods - The provisions of Rule 6(2) read with Rule 6(3) cannot be interpreted to cast an obligation on an assessee which is impossible and thereafter penalize him for failure to discharge an impossible obligation - AT
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• Importer Entitled to Cenvat Credit with Xerox Bill of Entry and Bank Certificate; Input Use Undisputed.

  Case-Laws - AT : Cenvat credit – Credit taken on Xerox copy of triplicate Bill of Entry - Certificate issued by Bank - when the receipt of inputs and its final use in the manufacturing activity is not disputed, then the importer cannot be denied the Cenvat credit - AT
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• Export Goods Tax-Free: No Taxes on Inputs for Manufacturing; Refund Claims and Cenvat Credit Must Be Honored.

  Case-Laws - AT : For export of goods, no tax is charged and there are also provisions of receiving inputs and services without payment of any duty or tax which are consumed in the manufacture of goods for export - refund claims and Cenvat credit cannot be denied - AT
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• Demand for Duty on Waste and Scrap Barred by Limitation Due to Lack of Malafide Intent Notification.

  Case-Laws - AT : Payment of duty on waste and scrap of inputs and capital goods – Mere non-information to the Revenue, cannot be held to be a circumstances reflecting upon the malafide of the assessee - the view that demand is barred by limitation - AT
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• In determining the annual capacity of a stenter, the length of galleries should not be considered.

  Case-Laws - AT : Length of Galleries to be taken into consideration or not while fining the annual capacity of stenter – the length of galleries are not to be taken into consideration - AT
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• Valuation of Rebuilt Grinding Rollers Must Follow Rule 8 Principles u/r 11 for Compliance with Excise Regulations.

  Case-Laws - AT : Valuation of goods used in rebuilding/re-conditioning work of old/used/defective Grinding Rollers, Liners, etc. - even if it is held that Rule 8 will not apply, then even under Rule 11, the principles envisaged in Rule 8 should be followed - AT
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• Rule 4(2)(b) Cenvat Credit: 50% Credit on Capital Goods Available Without Dutiability Condition.

  Case-Laws - AT : Denial of 50% of the credit taken in subsequent financial year - There is no condition provided under Rule 4(2)(b) of the Cenvat Credit Rules that the credit of remaining 50% of duty paid on capital goods is to be availed in case the capital goods have been used in the manufacture of dutiable product - AT
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Case Laws:

• Income Tax

• 2013 (12) TMI 866
  Computation of relief u/s 80I - Deduction of Relief u/s 80HH from gross total income - Recomputation of allowable deduction – Precedential value of J.P. Tobacco Products (P) Ltd Vs. C.I.T. – Held that:- Following Commissioner of Income Tax Vs. Lucky Laboratories Ltd [2005 (8) TMI 80 - ALLAHABAD High Court] and Madhya Pradesh High Court in J.P. Tobacco Products P. Ltd v. CIT [1996 (8) TMI 29 - MADHYA PRADESH High Court] - both the sections are independent and, therefore, the deductions could be claimed both under sections 80-HH and 80-I on the gross total income. Validity of change in method of charging depreciation from straight line to WDV – Computation of Liability u/s 115J of the Income tax act – Held that:- Following Apollo Tyres Vs. CIT [2002 (5) TMI 5 - SUPREME Court] - while computing the income under Section 115J of the Income-tax Act, the Assessing Officer has only power to examine whether the books of account were certified by the authorities under the Companies Act as having been properly maintained in accordance with the Companies Act - the Assessing Officer thereafter has limited powers of making increases and reductions as provided for in the Explanation to the said section - the Assessing Officer does not have the jurisdiction to go beyond the net profits shown in the profit and loss account, except to the extent provided in the Explanation to Section 115J of the Income-tax Act - the accounts maintained by the assessee are certified by the auditors – Thus, the book adjustment made by the Assessing Officer being contrary and liable to be set aside - Under the Companies Act, 1956, both straight line method and written down value method are recognized – Decided against the revenue.

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• 2013 (12) TMI 865
  Deletion on account of bad debts – AO restricted the brokerage passing through profit and loss account – Held that:- Following CIT Vs. D.B. (India) Securities [2009 (7) TMI 894 - DELHI HIGH COURT] – the unrecovered amount by the share broker on behalf of its sub-broker has to be treated as debt and deduction is allowable - the shares remaining in the possession of the assessee can be sold in the market for whatever consideration and adjusted against the balance outstanding payable by the debtors and the net figure which results thereafter, has to be allowed as bad debt. Further in DCIT Vs. Shreyas S.Morakhia [2010 (7) TMI 455 - ITAT MUMBAI] - the sum receivable by share broker from clients for transactions undertaken on their behalf is a trading debt - Unrecovered part has to be allowed as deduction – Thus, the assessee is entitled to deduction in respect of the amount becoming unrecoverable from its clients - the deduction has to be restricted to the amount determined after reducing the sum recoverable from sale proceeds of shares with assessee, if any – Order set aside and the matter remitted back to the AO for fresh adjudication – decided against Revenue. Deletion of disallowance on account of Transaction charges – Held that:- Following CIT v. Kotak Securities Limited [2011 (10) TMI 24 - Bombay High Court] – The transaction charges paid by the assessee constitute 'fees for technical services' covered under Section 194J of the Act – Thus, the assessee was liable to deduct tax at source while crediting the transaction charges – order set aside and the matter remitted back to the AO – Decided in favour of Revenue. Addition u/s 40(a)(ia) of Income Tax Act – Assessee contended that no amount was outstanding at the end of the year – Held that:- Following CIT v. Crescent Export Syndicate [2013 (5) TMI 510 - CALCUTTA HIGH COURT] - unless the amount is payable at the end of the year, no disallowance can be made u/s 40(a)(i) of the Act - there is no merit in the ground raised by the assessee in its cross objection – Decided against Assessee.

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• 2013 (12) TMI 848
  Levy of interest tax on interest under Interest Tax Act, 1974 - Nature of finance charges as well as interest received - whether ITAT was legally justified in holding that hire purchase transactions of the assessee were not loan transactions - Held that:- TAT has failed to examine the agreement in totality and the documents to discover the real nature of the transaction which was emphasised by the CBDT vide Circular No. 760 and also by Hon'ble Supreme Court in the case of Sundaram Finance Ltd.(1965 (11) TMI 123 - SUPREME COURT OF INDIA) - the transactins entered by the respondent assessee with the customer/hirer is a loan transaction and the finance charges were nothing but interest. - Decided against the assessee. Reassessment proceedings - Held that:- Particular company or firm receive notices and make their signatures endorsing the receipt and the Department officials do not enquire about their authority or power of attorney. What is relevant is the conduct of the assessee in acquiescing in such practice. If the assessee continues to give impression that such official or employees are duly and regularly representing it, then the Departemntal Officials are bond to be led or misled by such conduct. This representation of the assessee is further found to be supported by the conduct of the assessee in making compliance of the notice on the basis of such receipt. In the present case, it is established on record that the assessee had filed return in compliance to the notice, which was received on its behalf by is employees. Not only this, the assessee continued to be represented during assessment proceedings and never raised any objection on this count. - Decided against the assessee.

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• 2013 (12) TMI 847
  Accrual of interest - whether interest income was chargeable only after the compliance of the agreement - Held that:- Hon'ble Supreme Court in the case of C.I.T. vs. Bokaro Steel Ltd. [1998 (12) TMI 4 - SUPREME Court] has observed that it is real income, which is exigible and hypothetical or notional income is not taxable. In the instant case, member of the AOP have never received any amount except Rs.25 lac at the time of agreement dated 28.8.1989. More than two decades have passed but the assessee has never received any fruits. It appears that the assessee has not received any amount till date. No benefit has been received, so no addition can be made on the notional income. However, the department is always at liberty to charge tax as and when the amount will be received by the assessee. - Decided against the revenue.

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• 2013 (12) TMI 846
  Penalty u/s 271(1)(c) - CIT(A) and ITAT deleted the penalty - Held that:- The question of mens rea and interference with the penalty imposed would arise only if concealment deliberate in nature is found to be established. Once the concurrent findings with regard to excess stock being deducted is held not to be a concealment at all we cannot accept the submission of revenue. - Decided against the revenue.

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• 2013 (12) TMI 845
  Power of CIT(A) to reopen the assessment and enhance the income liable to tax u/s 251(1)(a) during appellate proceedings - Held that:- It is seen that the CIT (Appeals) had not only stated to reopen the assessment in which the appeals are pending but also for the assessment in which either no appeal is pending or already stands disposed. In our considered view, the impugned show cause notices seeking to reopen the assessment in respect of all the years seems to be in excess of the power of the CIT (Appeals) under Section 251(1)(a). Since the CIT (Appeals) has expressed doubts that the petitioner is not a company and is seeking to reopen assessment of the petitioner-company over the years, we are of the view that the impugned show cause notices are in excess of jurisdiction and are liable to be quashed. However, it is open to the CIT (Appeals) to issue a fresh show cause notice in accordance with law. - Writ petition allowed - Decided in favor of assessee.

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• 2013 (12) TMI 844
  Condonation of delay in fining an appeal before CIT(A) - Held that:- It is true that the appellant's mother died on 23 December 2008 and the assessment order was passed on 21 December 2009 and therefore, there was considerable time gap between two events. Similarly the appeal was filed on 15 November 2010. Thus, there was considerable time gap. However, each person reacts differently to the shocks which life administers from time to time. There can be no uniform standard of reaction by all persons to the unfortunate events. However, in the appeal filed before the Tribunal, the applicant sought to put the blame on the consultant who is no longer alive. This was indeed unfair and the Tribunal appears to have been of view that he ought not to have blamed the consultant who passed away before the Tribunal heard the appeal. We agree with the above view of the Tribunal. In the peculiar facts and the circumstances of the case, we are of the view that interests of justice would be served if delay is condoned and the appeal is heard on merits by the CIT(A) subject to payment of costs as directed hereafter. This order is passed subject to the appellant paying costs of Rs.25,000/to the Victoria Memorial School for Blind at Mumbai within two weeks from today, the appeal shall be entertained by CIT(A) after the receipt issued by Victoria Memorial School for Blind is produced before the CIT(A). - Decided in favor of assessee.

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• 2013 (12) TMI 843
  Revision u/s 263 - Challenge to the power of CIT on the ground that when the block assessment itself was made only after the approval of the Commissioner of Income Tax as required under Chapter XIV-B, the self-same authority could not assume authority once again even as against the assessment years 1995-96 and 1996-97 on issues which were already subject matter of consideration in the block assessment. - Held that:- the transactions were reflected in the books of accounts and they were all genuine transactions and that the order of the Tribunal on the block assessment appeal having become final, the sole reliance on the findings in the block assessment thus not being available to the Revenue, on merits, we have no hesitation in holding that the Tribunal had committed serious error in not considering the facts in a proper perspective. It is rather ironical that the Tribunal ignored the findings of its own order in the block assessment appeal, which clearly points out to the genuineness of the transactions and the disclosure of the transactions in the books of accounts and consequently on the sustainability of the claim on the depreciation, which was also the subject matter of consideration in the block assessment. There is no material at all for the Commissioner of Income Tax to exercise his jurisdiction under Section 263 of the Income Tax Act to deny the assessee on the deduction as well as on the depreciation claim considered by the Assessing Officer in the assessment relating to the assessment years 1995-96 and 1996-97. - Decided in favor of assessee.

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• 2013 (12) TMI 842
  Deduction under Section 80HHC on sale of DEPB - Held that:- allowance of relief under Section 80HHC(3)of the Act only the profit and not entire sales proceeds arising out of the DEPB is required to be reduced / considered. - Applying the law laid down by the Hon’ble Supreme Court in the case of Topman Exports (Topman Exports), the question raised / formulated in the present appeals is answered in favour of assessee.

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• 2013 (12) TMI 841
  Deduction u/s 80IA - export benefit adjustments - Held that:- considering the ratio laid down by Hon’ble the Supreme Court in the case of Liberty India (2009 (8) TMI 63 - SUPREME COURT) to the facts of the present case, the ITAT has materially erred in holding that the export benefit adjustment amounting to Rs.1,79,05,996/- should be included while computing deduction under Section 80IA of the Income Tax Act. - Decided in favor of revenue.

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• 2013 (12) TMI 840
  Cash Credit u/s 68 - whether source of source should be proved by the appellant? - Held that:- It appears that the assessee relied upon number of decisions of the jurisdictional High Court as well as the learned Tribunal. However, none of them have been dealt with and/or discussed and/or appreciated by the learned Tribunal, while passing the impugned order. In para-9, the learned Tribunal has observed that “due to these reasons, the case laws relied upon by the assessee do not come to its rescue”. Except the above, there is no appreciation and/or consideration by the learned Tribunal with respect to the decisions relied upon by the assessee. - Matter remanded back for fresh decision.

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• 2013 (12) TMI 839
  Reducing eligible business profit, while granting deduction under Section 80HHC, by gross interest income as against net interest - Held that:- for the purpose of deduction under Section 80HHC of the Income Tax Act net interest is to be excluded. In the present case, while passing the impugned judgment and order, the ITAT has held that for the purpose of claiming deduction under Section 80HHC of the Income Tax Act, the gross interest is to be excluded. The aforesaid cannot be sustained in view of the decision of the Hon’ble Supreme Court in the case of ACG Associated Capsules PVT. LTD (2012 (2) TMI 101 - SUPREME COURT OF INDIA) - Decided in favor of assessee.

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• 2013 (12) TMI 838
  Deduction u/s 80HHC - excise duty and sales-tax receipts - Held that:- Applying the ratio laid down by Hon’ble the Supreme Court in the case of Lakshmi Machine Works (2007 (4) TMI 202 - SUPREME Court), question no. (A) is answered against the revenue.

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• 2013 (12) TMI 837
  Deduction under Section 80HH and 80I - process of texturising of yarn - manufacturing activity or not - Held that:- applying the ratio/law laid down by Hon’ble the Supreme Court in the case of Yashasvi Yarn Ltd. (2012 (9) TMI 480 - SUPREME COURT) and in the case of Emptee Poly-Yarn P. Ltd. (2010 (1) TMI 18 - SUPREME COURT OF INDIA), the question formulated/raised in the present Tax Appeals is answered in favour of the assessee and consequently the impugned common order is hereby quashed and set aside and it is held that the assessee shall be entitled to the deduction under Section 80HH and 80I of the Income Tax Act by holding that the process of twisting and texturising of partially oriented yarn amounts to manufacture in terms of Section 80IA of the Income Tax Act. - Decided in favor of assessee.

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• 2013 (12) TMI 836
  Whether the appellant had incurred an additional expenditure for additional construction of one room and renovation - valuation report - Held that:- the assessing officer will have the other materials supplied by the assessee to know what exactly was the material used and what was the prevailing rate of such material apart from ascertaining the rates from PWD department which rate varies from time to time. Ultimately the assessing officer would take into consideration what was the prevailing rates of PWD in the State of Kerala adopted for the particular assessment year in order to arrive at the cost of renovation and construction claimed by the assessee for the assessment year 2006-07. The orders of the three authorities based on the Central PWD rates is set aside by remanding back the matter to the assessing officer who shall rely upon the report of the District Valuation Officer at Thiruvananthapuram so far as value of the renovation and cost of construction for the assessment year 2006-07 and then proceed in accordance with the procedure contemplated. - Decided partly in favor of assessee.

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• 2013 (12) TMI 835
  Transfer of case of a partnership firm - contravention, principles of natural justice and violation of Section 127 - Held that:- Rightly in this case, a show-cause notice was issued and the petitioner was provided an opportunity to make objections and after considering the objections, this impugned order of transfer was made. The question is as to whether the transfer order has been communicated and whether it is required to be communicated. Though Section 127(2) of the Act does not speak about the communication of the order, but any order affects the party is to be communicated. The impugned order is to be communicated and it should be a reasoned order and it should assign reasons as to why the case of the petitioner is not considered. The Commissioner Income Tax at Gulburga is directed to pass fresh order and the order should be a reasoned order and the reasons to be assigned as to the rejection of the objections. - Consequently, the assessment order issued by the office at Belgaum is quashed. - Decided in favor of assessee.

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• 2013 (12) TMI 834
  Addition u/s 68 - creditworthiness and the genuineness of the transactions - Held that:- it is the satisfaction of the Assessing Officer but not of the Commissioner of Income Tax (Appeals). - Admittedly, the so-called creditors were not before the Assessing Officer nor any affidavit or any document was collected from those persons. Therefore, the creditworthiness of those persons is not established. This condition is one of the element of proof and this proof has to be produced and established by the assessee at the first instance. - . By merely filing bank account details of the alleged creditors, it is not enough to hold that the assessee has satisfied the above ingredients of Section 68 of the Act. - Decided against the assessee.

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• 2013 (12) TMI 833
  Cancellation of registration under Section 12AA(3) on the ground that the activities of the appellant could not be said to be genuine after the amendment of the definition of 'charitable purpose'? - Cricket Association - Held that:- he trust falls under the head of "any other object of general public utility" and hence falls within the meaning of charitable purpose under Section 2(15) of the Act. The anxiety of the Parliament in introducing the proviso to Section 2(15) of the Act is only to check those institution, which attempt to gain exemption under the cloak of a trust. Revenue granted registration under Section 12AA of the Act satisfying itself as to the objects of the association befitting the status as charitable purpose as defined under Section 2(15), as it stood in 2003 and after granting the registration, if the registration is to be cancelled, it must be only on the grounds stated under Section 12AA(3) of the Act with reference to the objects accepted and registered under Section 12AA, as per the law then stood under the definition of Section 2(15) of the Income Tax Act. The Income Tax Appellate Tribunal's view that it is an entertainment and hence offended Section 2(15) of the Act does not appear to be correct and the same is based on its own impression on free ticket, payment of entertainment tax and presence of cheer group and given the irrelevant consideration. These considerations are not germane in considering the question as to whether the activities are genuine or carried on in accordance with the objects of the Association. We can only say that the Income Tax Appellate Tribunal rested its decision on consideration which are not relevant for considering the test specified under Section 12AA(3) to impose commercial character to the activity of the Association. In the circumstances, we agree with the assessee that the Revenue has not made out any ground to cancel the registration under Section 12AA(3) of the Act. - Decided in favor of assessee.

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• 2013 (12) TMI 832
  Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the expenses and depreciation on guest House was allowable and the provisions of Section 37 (4) of the Act, were not attracted? - Held that:- this issue is covered by judgment of the Supreme Court in Britannia Industries Ltd Vs. Commissioner of Income-Tax and another [2005 (10) TMI 30 - SUPREME Court], in which it was held that maintenance expenses not allowable in respect of Guest House. Whether on the facts and in the circumstances of the case, the Tribunal was right in law holding that deduction u/s 80-I was allowable on gross total income without reducing the deduction u/s 80-HH of the Act? - Held that:- Decided against the revenue.

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• 2013 (12) TMI 831
  Disallowance u/s 40(a)(ia) for non deduction of TDS - payments have been artificially broken up to avoid the TDS provisions - composite contract - Held that:- it is not clear that which portion of the payment was made for infrastructural facilities. But, whatever may be the position, the payment has been made and the tax could have been deducted at source. In view of the fact finding of the learned Tribunal, we are unable to admit the appeal, as the learned Tribunal has correctly held that the assessee has not deducted the tax at source from the payment made to M/s. Ushakiran Movies Limited and therefore, the disallowance made under Section 40(a)(ia) was justified. - Decided against the assessee.

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• 2013 (12) TMI 830
  Deduction u/s 80IC - prohibited category of business - principle of res-judicata - Held that:- This is the ninth year of relief being claimed by the assessee. In all the earlier eight years, relief has been allowed on identical facts and the same has not been disturbed. In view of the above, respectfully following the above decision of Hon'ble Jurisdictional High Court [2013 (6) TMI 70 - DELHI HIGH COURT] as well as Hon'ble Supreme Court [2013 (10) TMI 324 - SUPREME COURT], we are of the opinion that on the principle of consistency, learned CIT(A) was justified in directing the Assessing Officer to allow deduction under Section 80IC of the Act

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• 2013 (12) TMI 829
  Validity of Assessment u/s 153C - assessment u/s 153C passed in the individual name of the appellant - warrant of authorization to search was issued in the joint names of several persons. - Held that:- CIT(A) was not justified in confirming the action of the Assessing Officer, who treated the agricultural income shown by the assessee in the original return of income filed u/s 139(1) of the Act prior to the search conducted u/s 132 of the Act particularly when neither any document or incriminating evidence was found during the course of search to substantiate that the assessee earned any income from other sources. Therefore, the income already accepted as an agricultural income in the original return of income furnished u/s 139(1) of the Act, cannot be disturbed in the assessment framed u/s 153C read with Section 153A/143(3) of the Act. - Decided in favor of assessee.

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• 2013 (12) TMI 828
  Disallowances of the rent of guest house - CIT(A) deleted 50% of the disallowance and 50% confirmed on the ground that guest house was located inside a farm house, its use by the Directors for personal purpose cannot be denied.- Held that:- if the CIT(A) was of the opinion that matter needed proper enquiry or even a survey he should have got the same done. Without getting the same done, Ld. CIT(A) has deleted the part of the disallowance. Assessing Officer has also not examined the watchman who was produced by the assessee for examination. In our considered opinion, the matter has not been properly enquired into. - matter remanded back. Deemed dividend - Held that:- it is undisputed that assessee was not a share holder in the payor company and M/s Sonia & Co. and hence no addition can be made in the hands of the assessee u/s. 2(22)(e) of the Act. It has been expounded that addition u/s.2(22)(e) can be made only if the assessee is a registered shareholder of the payor company - Decided in favor of assessee.

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• 2013 (12) TMI 827
  Undisclosed income - Held that:- The assessee is maintaining its books of accounts on cash system of accounting - The entire fees are shown as income as and when they are received - The assessee might have claimed the credit of TDS without taking income into consideration for want of receipts of the income - The assessee is directed to once again file reconciliation statement showing unreconciled receipts as income of the subsequent years, in which the payment has been received by the assessee - The assessee is also directed to show that the TDS amount claimed by the assessee has been shown as its income during the year under consideration - The issue is restored for fresh adjudication. Credit of TDS - Held that:- The assessee has not received the TDS certificate in physical form - He has claimed the credit only on the basis of Form 26AS - The issue is restored for fresh adjudication. Interest income understated - Held that:- The addition has been made on the basis of AIR information disregarding the facts of interest shown in the books of account - The issue is restored for fresh adjudication. Remuneration to partners - Held that:- The capital gains has not been considered for the purpose of computing the remuneration to partners in the computation of income - Interest on FDR, the assessee has been showing interest on fixed deposits as its business income since past years and no disturbance has been made by the AO - The same treatment has been followed - The AO is directed to verify whether the assessee has excluded the capital gains while computing the remuneration paid to the partners or not - The issue is restored for fresh adjudication.

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• 2013 (12) TMI 826
  Purchase of agricultural land - Held that:- It was an established fact that the situation of the land was more than 08 kms. away from the municipal limits of Jodhpur - As per the provisions contained in section 2(14)(iii)(a) of the Act, the present land being agricultural land situated beyond 08 kms. of the municipal limits was not a capital asset - The profit earned by the assessee on the sale of the said land was not a capital gain - The assessee' intention was to keep the land available for cultivation - Decided against Revenue. Interest income - Held that:- The assessee purchased FDR amounting for 12 months - The period of 12 months from the date of purchase of the FDR was going to be expired on 31/10/2009 - Maturity date was not falling within the period relevant to the assessment year under consideration - The Assessing Officer was not justified in making the addition on the basis of notional income accrued to the assessee - Decided against Revenue.

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• 2013 (12) TMI 825
  Rejection of appeals - Held that:- The ld. CIT(A) has committed an error in dismissing the appeals filed by assessee for more than one reasons - He did not provide reasonable opportunity to the Assessee of being heard - The order passed u/s. 263 cannot come into the way of ld. CIT(A) to dispose the appeal filed by assessee against impugned assessment orders as these proceedings are independent proceedings - If proceedings u/s. 263 are held to be invalid then the impugned assessment orders will stand and matter would be required to be adjudicated on merits - The ground on which ld. CIT has invoked section 263 is entirely different from the grounds raised in the impugned appeals - The ground on which section 263 is invoked is relating to non-initiation of concealment penalty which is not subject matter of appeal before the ld. CIT(A) - The issue was restored for fresh adjudication.

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• 2013 (12) TMI 824
  Deduction u/s 10A - Held that:- In earlier years - The assessee had not opted to claim the deduction because of loss - AO found that it had adjusted the loss derived from the 10A unit against the other income - Following The Commissioner of Income Tax10 Versus M/s. Galaxy Surfactants Ltd. [2012 (3) TMI 101 - BOMBAY HIGH COURT] - There is no provision in Section 10B by which a prohibition has been introduced by the Legislature in setting off of a loss which is sustained from one source falling under the head of profits and gains of business against income from any other source under the same head - AO/FAA did not have the benefit of the judgment of the Hon'ble jurisdictional High Court - The issue is restored for fresh adjudication.

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• Customs

• 2013 (12) TMI 823
  Maintainability of Petition – Factual disputes – Held that:- Many of the grounds are raised on factual aspects of the case with regard to the utilisation of the duty free indigenous capital goods - the petitioner also relies upon various documents in support of the plea that they are not liable to pay the duty demanded – the Court is not inclined to go into various factual aspects of the case as several grounds are on disputed questions of facts - there is an effective alternative remedy under the provisions of the Customs Act, 1962, the writ petitions by-passing the alternative remedy are misconceived – Decided against Petitioner.

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• 2013 (12) TMI 822
  Restoration of appeal - Appeal dismissed for want of clearance from the empowered Committee of Secretaries - Held that:- appellant was given reasonable opportunity to produce clearance from the Committee on Disputes in terms of the Hon’ble Supreme Court’s judgment in ONGC case [1991 (10) TMI 58 - SUPREME COURT OF INDIA]. Ultimately, their appeal came to be dismissed along with a few other appeals on the ground of non-production of clearance from the Committee. This dismissal order was passed on 30-4-2008 and the same also indicated the aforesaid judgments of the Hon’ble Supreme Court in ONGC case - Committee had granted clearance to HPCL in [2009 (5) TMI 683 - CESTAT, NEW DELHI] to pursue their appeal before the CESTAT and they, after obtaining such clearance on 14-2-2008 from the Committee, filed an application for restoration of the appeal on 6-2-2009 after nearly one year and this delay in the filing of the restoration application was not satisfactorily explained by the appellant to the Tribunal. We have not found in the Hon’ble Supreme Court’s judgment in Electronics Corporation of India Ltd. case any purport to invalidate the scores of the orders passed by the Tribunal or by various High Courts on the question of maintainability of appeals for want of clearance from the Committee on Disputes. If such interpretation as being given by the learned counsel is given to the Hon’ble Supreme Court’s judgment in the case of Electronics Corporation of India Ltd., it will have the effect of opening a Pandora’s box which in our view, is not intended in the judgment passed by the Hon’ble Supreme Court in the case of Electronics Corporation Ltd. In our view, the recall of the 1992 and 1994 judgments in ONGC case has only prospective effect from 17-2-2011. Right from December 2007 till 17-2-2011 (over three years), the appellant apparently had been pursuing their application before the Committee on Disputes but unsuccessfully. In this scenario, our Final Order dated 30-4-2008 insofar as it pertains to the present application must be intact - Restoration of appeal denied.

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• 2013 (12) TMI 821
  Imports of Zinc dross - Levy of CVD - Amendment in Section 2 of the Central Excise Act, 1944 - Revenue contends that zinc dross is covered under the definition of excisable goods, which fall under sub-heading 7092 00 10 of the Central Excise Tariff, zinc dross was leviable to countervailing duty - Held that:- with the change in definition of excisable goods with effect from 10-5-2008; zinc dross would get covered as an excisable item falling under Chapter 79, attracting duty of excise and import of the same would call for confirmation of CVD. Further, the appellants plea that the said zinc dross was to be used in their factory located at J & K, where the same stand exempted does not appeal to the Bench at this stage, inasmuch as the levy of CVD cannot be dependent upon the area based exemption - Partial stay granted.

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• 2013 (12) TMI 820
  Admissibility of appeal - Bar of limitation - Held that:- Office of Commissioner (Appeals), Mumbai instead of returning the appeal papers to the appellant should have transferred the same to the Office of Commissioner (Appeals), New Delhi for disposal of the same. As such, the first appeal having been filed in time, though before wrong office inadvertently, the appeal should not have been dismissed on limitation - Matter remanded back - Decided in favour of assessee.

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• 2013 (12) TMI 819
  Validity of show case notice - Bar of limitation - Whether the Show Cause Notice issued within 6 months from the date of seizure is in accordance with the provisions of Section 110(2) of the Act - Held that:- if the Show Cause Notice is not issued within 6 months from the date of seizure, only consequence would be that the person from whom the goods were seized, would become entitled to their return - The period laid down under Section 110(2) is of seizure of goods and not the validity of the notice. As such, by applying the ratio of law as declared by Hon’ble Supreme Court, even if it is considered that the notice does not stand issued within 6 months from the date of seizure as envisaged by Section 110(2) of Customs Act, 1962, the effect of the same would be that the appellant would become entitled to return of the goods. However, it is seen that the goods were already carted by the appellant in CFS and continued to lie there even during the period of detention and after the seizure was formally made. They never applied for return of the rice. As such, it has to be held that the seizure continued till the Show Cause Notice was issued. The same cannot be held to be barred by limitation - Following decision of Chaganlal Gainmull v. CCE [1989 (11) TMI 59 - SUPREME COURT OF INDIA] - Decided against assessee.

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• Corporate Laws

• 2013 (12) TMI 818
  Penalty u/s 15A(a) of SEBI Act,1992 - Violation of sections 11C(2) and 11C(3) of the SEBI Act – Failure to furnish records while investigation - Dissolution without winding up of "SFPL" ordered – Held that:- There was no lacuna in upholding the investigation and the adjudication proceedings by the Respondent - The summons issued by the competent authority of the Respondent have to be complied with otherwise the system will suffer - In order to conduct a thorough investigation and in order to ascertain the exact role played by the various entities including the ten dummy companies and their shareholders, vide summons, detailed information was sought from "SFPL" by the investigating authority. Despite duly receiving summons "SFPL" failed to submit complete detailed information as required vide summons, thereby violating the aforesaid charges - oral and written submissions made by the Appellant, the Adjudicating Officer came to the conclusion that the Appellant was guilty of violating the provisions of Sections 11C(2) and 11C(3) of the SEBI Act - Penalty for partial non-compliance issued by the Investigating Officer is on a higher side – Thus, Penalty reduced it to Rupees Two Lakh – Decided partly in favour of Appellant.

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• Service Tax

• 2013 (12) TMI 867
  Service Tax demand - CD Roms sold which contained a kind of “live virtual class” - Equivalent penalty under Section 78 - Commercial Training or Coaching Services - Held that:- unlike in a regular coaching, there is no institute, there is no contact whatsoever alleged between the students and the teacher. Prima facie, we are of the view that these activities may not fall under the category of ‘Commercial Training and Coaching’ and therefore, we deem it appropriate to waive the pre-deposit of dues as per the impugned order and stay recovery thereof till disposal of the appeal - Stay granted.

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• 2013 (12) TMI 863
  Demand of service tax - Onus of Assessment - who is to identify whether the income received is because of rendering a taxable service or as a receiver of taxable service and pay the tax on it - Held that:- in the present system of levy of central excise and service tax, the assessment and payment of tax are entirely left to the assessee and it is the responsibility of the assessee to pay the tax correctly - if some income cannot be explained, it means self-assessment is incomplete - appellant was not able to produce a Chartered Accountant certificate. If the same was produced, Commissioner was inclined to consider the same - There are procedures in accounting where it will be possible to conduct audit on the basis of samples chosen on scientific basis to work out the liability across the whole organization based on such samples. We consider that it would be appropriate to direct the appellant to get such audit done and based on that if any liability arises, the same can be worked out across the organization and total liability arrived at - Decided against assessee.

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• 2013 (12) TMI 862
  Refund Claim of Service Tax paid on services consumed within the SEZ and services which were used in the authorized operations of the SEZ units - partial denial on ground of absence of nexus and non-application of Notification No. 09/2009-ST - Held that:- Approval Committee, examined this issue and had issued a specific certificate indicating the various services received by the appellant and justification for use of such services in relation to authorized operations. Once the Approval Committee has given the nexus and the justification, rejection by the lower authorities of the refund claims of the service tax paid on various services on this ground is bad in law and is accordingly set aside. In the case of services which are wholly consumed within the SEZ, there is no necessity to discharge the service tax liability ab initio. That does not mean that in a case where service tax liability has been discharged, the appellant is not eligible or not entitled for refund of the service tax paid under the provisions of Section 11B of the Central Excise Act, 1944 r.w.s. 83 of the Finance Act, 1994. If the appellant is eligible for refund u/s 11B, then the same cannot be denied on the ground that the claim was made under Notification No. 09/2009-ST - Following decision of TATA CONSULTANCY SERVICES LTD Versus COMMISSIONER OF CENTRAL EXCISE & ST (LTU), MUMBAI [2012 (8) TMI 500 - CESTAT, MUMBAI] - Matter remanded back - Decided in favor of assessee.

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• 2013 (12) TMI 861
  Demand of service tax - Appellant entered into license agreement with GAIL - GAIL contends that liability to service tax if any lies with the appellants with whom license agreement dated 10.9.2001 was entered - Classification of appropriate category of Service Tax - Held that:- As regard the classification of appropriate category of Service Tax for services provided by the Appellants in view of clauses of agreement, bill for first installment raised by the Appellants, definitions contained in Act and clarification issued by CBEC, New Delhi vide its Circular No. B/43/5/97-TRU dated 2.7.1997. I find that the learned adjudicating authority has appropriately classified the services under the category of Consulting Engineering Services in view of findings which have been discussed in detailed in impugned order. during the audit of the GAIL it was noticed that GAIL has incurred expenditure in foreign currency during the year 2000-2001 and 2001-2002. In the balance sheet the expenditure is shown under head Technical Consultancy and Engineering. We note that balance sheet is a document prepared under provisions of Companies Act. GAIL has received the service of Technical Consultancy and Engineering as per Balance Sheet, which means that appellants have provided the service of Technical Consultancy & Engineering. However as per definition of Consulting Engineer under Section 65(13) of the Act, these services when provided by an engineering firm or professional engineer only become taxable. We find that Commissioner (Appeals) has not given any finding on the fact that appellants are an engineering firm and he has just upheld the finding of original authority without analysing the definition under the Act. Period of dispute in the present appeal is 2000-2001 and 2001-2002 and IPR service was not in existence at that time. Moreover there is no provision in Finance Act, 1994 stating that when a new service is created, the same was not covered under other taxable service prior to creation of new entry. On the other hand we note that a service may fall under two taxable services and to classify it more appropriately Section 65A of the Finance Act is required to be invoked. In view of the fact that during the disputed period IPR service was not in existence - we remand the matter back to Commissioner (Appeals) - Decided in favour of assessee by way of remand.

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• 2013 (12) TMI 860
  Demand of service tax - Business Auxiliary Service - carriage fee - Lease Circuit Service - whether charging carrier fees from different channels is covered under Business Auxiliary Service - Held that:- Appellants are undertaking the placement of channels of different broadcasters at desired frequency and carry the channel to the viewers through own cable network and by doing so, appellants facilitate better quality view of the channel. Better quality of channel enhances viewer ship of channel which amounts to promotion of broadcasting channel making the activity classifiable under Business Auxiliary Service (BAS) - BSS came into existence with effect from 01.05.2006 but period of dispute in the present appeal being the levy of service tax on carriage fee is for the period 2003-2004 and 2004-2005 that is prior to 01.05.2006 - activity of appellant in respect of carriage fees is liable to service tax under Business Auxiliary Service - Decided against assessee. Whether income received on account of Lease Rental on fiber optic cable network will be covered under Lease Circuit Service - Held that:- Commissioner (Appeal) in the impugned order has confirmed demand for entire period under the category of Telecommunication service. Since the Show Cause Notice was issued to the appellants under category of lease circuit service, lower authorities have gone beyond Show Cause Notice and matter needs to be remanded to original authority on this ground - We remand the matter back to original authority to decide the demand in respect of Leased Circuit afresh after giving an opportunity heaving to appellants - Decided in favour of assessee.

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• 2013 (12) TMI 858
  Stay application - Reverse charge - Section 66A - Bar by limitation - Held that:- prima facie, the demand of tax under second show-cause notice is within the period of limitation - there is change of legislation from time to time - Prima facie case not in favour of assessee - Stay granted partly.

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• 2013 (12) TMI 857
  Admissibility of abatement of 75% from the gross taxable value of the GTA services received - Notification No.32/2004 dated 03.12.2004 - Held that:- principle of law on the eligibility of benefit of Notification NO.32/2004-ST, dated 03.12.2004 has been settled by this Tribunal in Eastern Coalfields Ltd. (2012 (10) TMI 492 - CESTAT KOLKATA ) and Indian Oil Corpn. Ltd.'s cases (2013 (6) TMI 201 - CESTAT KOLKATA). However, the verification of the documents produced by the Appellant needs to be done by the lower authorities. In these circumstances, we remit the case to the original adjudicating authority to take into consideration the declarations filed by the applicant and decide the issue afresh in the light of the principle of law laid down by this Tribunal in Eastern Coalfields Ltd. and Indian Oil Corpn. Ltd.'s cases - Decided in favour of assessee by way of remand to the original adjudicating authority.

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• 2013 (12) TMI 856
  Denial of Input service credit - Outdoor catering service for Failure to produce evidence – Garden maintenance service for not qualifying under Rule 2(1) of CENVAT Credit Rules, 2004 – Waiver of Pre-deposit – Held that:- Following CCE, Nagpur Versus Ultratech Cement Ltd. [ 2010 (10) TMI 13 - BOMBAY HIGH COURT ] - any service which has nexus with the business activity of the appellant, whether it is manufacturing or rendering service, has to be treated as "input service" coming within the purview of Rule 2(1) of the CENVAT Credit Rules, 2004 - The applicant has been able to produce the evidence with regard to the information given to the Office of the Director of Industrial Health and Safety about the number of employees working in the applicant's Company during the relevant time – Stay granted.

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• 2013 (12) TMI 855
  Waiver of pre deposit - Demand of service tax - Business Auxiliary Services - Held that:- after perusal of the assignment agreement and agreement for appointing the applicant as "Collection Agent" the services rendered by the applicant to the buyers of their assets like ICICI Bank in their capacity as collection agent is a service classifiable under "Business Auxiliary Service" But the applicant has not paid any service tax for such activity. Regarding the value of the service we see some force in the argument of Revenue that the value of such service can appear in expenditure side if the amount inclusive of this amount is appearing on receipt side of the balance sheet in some other entry. So the case cannot decided solely for the reason that figures are taken from the expenditure side of the balance sheet - agreement is for a period subsequent to the period of dispute - Assessee directed to make a pre deposit - Conditional stay granted.

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• 2013 (12) TMI 854
  Demand of service tax - Renting of immovable property - Receipt of reimbursement of electricity charges from the tenants - Adjudicating authority confirmed the demand by adding the amounts which are as reimbursement of electricity charges from the tenants in the assessable value for the purpose of service tax as provider of renting of immovable property - Held that:- As per the terms and conditions of the Lease Agreements, the tenants have to pay electricity charges directly to the MSEB and the appellants are also providing electricity through generator set in case there is a power failure and the appellants are charging for the same. Electricity is goods chargeable to duty under Central Excise Tariff as well as under the Maharashtra Value Added Tax Act, 2002. Therefore, the supply of electricity to tenant amounts to sale of goods and not supply of service. Further the Notification No.12/03 ST dated 20/6/2003 exempt from service tax, any value of goods supplied by service provider to service recipient. Further we find that the Commissioner of Central Excise Pune.III vide Order-in-Original dated 28.11.2011 relied upon by the appellants dropped the proceedings which were initiated on the same ground in the case of M/s. Panchshil Tech Park Ltd. The Commissioner of Central Excise in the adjudication order held that electricity is goods and chargeable to Nil excise duty - Electricity charges collected from the tenants cannot be formed part of the assessable value for the purpose of service tax as provider of renting of immovable properties - Decided in favour of assessee.

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• 2013 (12) TMI 853
  Availment of CENVAT Credit - Penalty imposed u/s 11AC - Held that:- appellant is a manufacturer of P or P medicaments and discharging appropriate duty on the final products so manufactured. It is also undisputed that in order to diversify, they had proposed to enter into manufacturing of herbal products, for which they had engaged services of consultant for ascertaining the market requirement, research requirement, standardization of materials and preclinical studies; on receipt of such report from the consultant, they were deliberating on the question of expansion/diversification. During the interregnum, period till the decision was taken, appellant availed Cenvat credit of the service tax paid by such consultant as service provider. Having abandoned the plan of diversification in the manufacturing herbal products, the services rendered by the consultant on this specific products, credit of said service tax, would not be available to the appellant - appellant has no case of availing Cenvat credit of the service tax paid by the service provider. Penalty seems to be unwarranted as the appellant had an idea of diversification into manufacturing activity of herbal products. When they availed cenvat credit of the service tax paid on the services of the consultant, who was engaged for considering such an activity, they had an intention to start the activity of herbal products. They could have had a bona fide belief in availing the Cenvat credit on such a service tax. In view of this, I hold that the penalty imposed by the adjudicating authority under Rule 15 of the Cenvat Credit Rules, 2004 seems to be inconsistent as the said rules envisages imposition of penalty on the intention to avail wrong cenvat credit - Decided partly in favour of assessee.

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• 2013 (12) TMI 852
  Condonation of delay - Order not received in time - Held that:- Commissioner (Appeals) in his order has observed that on a verification made with the Assistant Commissioner, Hyderabad-II Division it had been reported that the order-in-original was sent by registered post acknowledgment due and the learned Commissioner took the view that once the order has been sent by registered post acknowledgment due, the order is deemed to have been communicated and therefore the appeal has to be considered as having been filed with considerable amount of delay which cannot be condoned. When the matter had come up before the Tribunal on 9-12-2011, the authorized representative of the department was directed to produce evidence regarding dispatch of order-in-original to the appellant - However once it is clear that the order-in-original was sent by speed post, the responsibility to show that it was received by the appellant is on the department - Under these circumstances, the claim made by the appellant that they had not received the order-in-original and they had collected it on 22-3-2011 has to be accepted. Accordingly the impugned order is set aside and the appeal is remanded for reconsideration of the Commissioner (Appeals) for fresh decision in accordance with law - Delay condoned.

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• 2013 (12) TMI 851
  Waiver of pre-deposit of demand - Payment of education cess - Notification 41/2007 - Board Circular No. 134/3/2011-S.T., dated 8-4-2011 - Held that:- applicants have made out a case for 100% waiver of pre-deposit. Accordingly, we waive the requirement of pre-deposit of education cess demanded as per the impugned order and stay recovery thereof during the pendency of the appeal - Stay granted.

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• 2013 (12) TMI 850
  Demand of service tax - Commission received by them on the activities of harvesting and transportation of sugar cane upto the sugar cane factory - Busines Auxiliary Services - Notification No. 14/2004-S.T., dated 10-9-2004 - Held that:- demand has been confirmed on the basis of the commission received for the services of harvesting and transportation of sugar cane to the sugar cane factory for the manufacture of sugar which is a manufacturing activity. Therefore, the applicants are not entitled for the benefit of exemption under Notification No. 14/2004-S.T. Further, from the facts of the case we find that the extended period has been rightly invoked - Stay granted.

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• 2013 (12) TMI 849
  Waiver of pre-deposit of service tax, interest and penalty - Business auxiliary service - Applicant is selling rechargeable coupons, SIM Card of BSNL - Held that:- applicants are purchasing and selling rechargeable coupons, SIM card of BSNL, therefore, we find that prima facie, the applicants have made out a strong case for waiver of pre-deposit of the dues. Therefore, the pre-deposit of the dues is waived and recovery of the same is stayed during pendency of the appeal - Stay granted.

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• Central Excise

• 2013 (12) TMI 859
  Cenvat Credit - emergence of non-dutiable goods - The Iron Ore Fines emerge at the stage of crushing of Iron Ore and thereafter Iron Ore fines are taken out from the raw material handling plant - Classification under sub-heading 26011120 of the Tariff or 26011110 - Held that:- Neither the show cause notice nor the order passed by the original adjudicating authority mention as to which cenvat credit availed inputs and/or input services have been used upto this stage. When the show cause notice and the order-in-original do not even mention as to which common cenvat credit availed inputs/input services have been used upto the stage of crushing of Iron Ore at which stage Iron Ore Fines emerge, on this very ground itself, the demand under Rule 6(3) would be liable to be set aside. Moreover in this case, even if, there are some common inputs/input services and the assessee wants to comply with the provisions of sub-rule (2) of Rule 6 by maintaining separate account and inventory of input and input services meant for dutiable and excisable product, it is not possible as the Iron Ore Fines emerge as an unavoidable and inevitable byproduct. The provisions of Rule 6(2) read with Rule 6(3) cannot be interpreted to cast an obligation on an assessee which is impossible and thereafter penalize him for failure to discharge an impossible obligation - Decided against Revenue.

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• 2013 (12) TMI 817
  Intention to evade payment of duty – Held that:- The appellant adopted a notional price in respect of consignment sales and they had admitted that there was some delay in receipt of sale patties from the consignment agents and the Director of the Company admitted the liability and accepted to pay the differential duty - as declared in the invoices that the removals specified in the notice are towards consignment agents, the responsibility of paying differential duty lies with the noticee - the appellant was conscious of the notional value for sale towards consignment agent, the responsibility of paying differential duty is rest on the appellant - appellant intentionally withheld payment of differential duty for the subsequent period which clearly established that there was willful intention to evade payment of duty. Leviability of penalty and interest – Held that:- Following Union of India vs. Rajasthan Spinning & Weaving Mills [2009 (5) TMI 15 - SUPREME COURT OF INDIA] - Payment of differential duty, whether before or after the show cause notice is issued, cannot alter the liability for penalty and the condition for which are clearly spelt out in Section 11AC of the Central Excise Act – Decided against Appellant.

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• 2013 (12) TMI 816
  Admissibility of Cenvat credit – Credit taken on Xerox copy of triplicate Bill of Entry - Certificate issued by Bank - Original Bill of Entry not available – Held that:- The Facility Notice No. 49/2010 issued by the Chief Commissioner of Customs, Mumbai Zone-II, dated 26.4.2010, in which a procedure is prescribed for taking Cenvat credit in case the EDI Bill of Entry is lost / misplaced / destroyed / mutilated - an importer can approach the authorised Bank with a request to obtain attested/certified copy of the Bill of Entry under which the duty was paid - the appellant has followed the procedure and produced the relevant certificate - Relying upon C.C.E., VAPI vs. MEHTA HWA FUH PLASTICS PVT. LTD. [2013 (1) TMI 527 - CESTAT, AHMEDABAD] - when the receipt of inputs and its final use in the manufacturing activity is not disputed, then the importer cannot be denied the Cenvat credit – the Cenvat credit was correctly availed by the appellant – Decided in favour of Assessee.

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• 2013 (12) TMI 815
  Applicability of Rule 6 of the Cenvat Credit Rules - Eligibility to avail cenvat credit – Inputs consumed for the manufacture of exempted goods – Cenvat credit availed on service tax in respect of input services - Benefit of Notification No. 30/2004 – Held that:- Following Repro India Ltd. v. Union of India [2007 (12) TMI 209 - BOMBAY HIGH COURT] – the expression excisable goods is wider than the expression exempted goods, as it includes both dutiable as also exempted goods - an assessee, manufacturing goods chargeable to nil duty, is eligible to avail CENVAT credit paid on the inputs under the exception clause to Rule 6(1), as contained in Rule 6(5) of CENVAT Credit Rules, 2002 and Rule 6(6) of CENVAT Credit Rules, 2004, used in the manufacture of such goods, if the goods are exported - As per Rule 5 of CENVAT Credit Rules, 2004 a manufacturer, who exports the final products which are exempt from duty, can claim refund of CENVAT - The orders for rejection of the refund claims and also for the demand the Cenvat credit is ineligible. Rejection of refund claim - Services utilised for export of goods – Held that:- For export of goods, no tax is charged and there are also provisions of receiving inputs and services without payment of any duty or tax which are consumed in the manufacture of goods for export - refund claims and Cenvat credit cannot be denied by the departmental authorities – Following COMMISSIONER OF CENTRAL EXCISE Versus DRISH SHOES LTD. [2010 (5) TMI 334 - HIMACHAL PRADESH HIGH COURT] - Decided in favour of assessee.

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• 2013 (12) TMI 814
  Cash refund of cenvat credit on input service under Rule 5 of the CENVAT Credit Rules, 2004 read with Notification No.05/06-CE – Held that:- The documents on which CENVAT Credit was availed initially, on which cash refund had been claimed, were not in order- Both sides agreed that these documents require reconsideration; also on the admissibility of cash refund of CENVAT Credit on various input services, need to be examined afresh - in the Appellant’s own case for earlier period, the Tribunal had remanded the matter for re-verification of the documents and also on other issues - the Appeal needs to be also remanded to the Adjudicating Authority for verification of the relevant documents on which the Appellant had availed CENVAT Credit and later, claimed the cash refund under Rule 5 of CENVAT Credit Rules, 2004 – order set aside and the matter is remanded to the Adjudicating Authority for re-consideration of all the documents produced and the issues, afresh – Decided in favour of Assessee.

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• 2013 (12) TMI 813
  Payment of duty on waste and scrap of inputs and capital goods – Cenvat credit availed or not – Held that:- Relying upon Commissioner of Customs vs. Auto Ignition Ltd. [2008 (4) TMI 43 - SUPREME COURT ] - The onus to allege and prove that the waste and scrap has arisen from the Cenvat credit is upon the revenue - No presumption can be made - the Revenue has not referred to any evidence reflecting upon the fact of availment of credit - Neither the adjudication order nor the order in appeal refers to any evidence or entries in RG 23 A Part I or Part II indicating availment of credit - the Revenue has miserably failed to discharge the onus - Mere non-information to the Revenue, cannot be held to be a circumstances reflecting upon the malafide of the assessee - the view that demand is barred by limitation – Decided in favour of Assessee.

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• 2013 (12) TMI 812
  Length of Galleries to be taken into consideration or not while fining the annual capacity of stenter – Held that:- Following Mahalaxmi Dyeing & Ptg. Pvt. Ltd. Versus Union of India [2010 (9) TMI 859 - BOMBAY HIGH COURT ] – the length of galleries are not to be taken into consideration – Thus, the assessee can challenge the demand raised on these basis though he has not challenged the order fixing annual capacity by the Commissioner of Central Excise – order set aside – Decided in favour of Assessee.

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• 2013 (12) TMI 811
  Classification of Goods - Parts of television sets to be classifiable as parts of television sets falling under tariff heading 85.29 or they have to be treated as clearance of complete television sets falling under tariff heading 85.28 – Held that:- Following Salora International Ltd. vs. CCE New Delhi [2012 (9) TMI 276 - SUPREME COURT] - as various parts of television sets were being assembled as television in the assessee's factory and the same were thoroughly checked and it is only upon being satisfied that television receiver are complete in all respects, they were subsequently dis-assembled along with relevant material and individual serial numbers, the same were sent to various units. Entitlement for Benefit of Notification No. 6/82 - Different rates of duty depending upon the different categories of television sets – Imposition of Personal Penalty u/s 11AC – Held that:- Assessee contended that there was no malafide or mensrea attributable to the assessee so as to impose penalty under Section 11AC – the issues are required to be re-examined by the original adjudicating authority, the matter remanded back to the commissioner for assessing the duty liability – Decided partly in favour of Assessee.

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• 2013 (12) TMI 810
  Cenvat credit availed on capital goods – Also depreciation claimed for the same capital goods - Assessee contended that the depreciation claimed has been sought to be reversed by filing revised returns thus, cenvat credit was rightly taken – Held that:- The documents were not placed before the lower authorities - the case laws relied upon by the appellant was not brought to the notice of first appellate authority as some of them are published after the order in appeal dated 23.05.2007 passed by first appellate authority - appellant has not made evident that the revised income tax returns filed by them have been accepted by the Income Tax department for the relevant Assessment Year - As these facts and legal pronouncements were not considered by the original adjudicating authority, it will be in fitness of deliverance of justice that the case is remanded to the adjudicating authority - Appellant shall address all the evidences before the adjudicating authority in support their claim – order set aside – matter remanded back to the original adjudicatory authority for deciding the case afresh.

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• 2013 (12) TMI 809
  Valuation of goods used in rebuilding/re-conditioning work of old/used/defective Grinding Rollers, Liners, etc - Determination of value under Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 read with Section 4(1)(d) of the Central Excise Act, 1944 – held that:- The expression used is ‘production or manufacture of other articles' - The rule nowhere Envisages that the production or manufacture should be of excisable goods - the appellant has utilised the goods in its factory in the repair of certain other articles – Thus, the question of invoking Rule 5 of the Valuation Rules would not arise at all - Even if for a moment it is assumed that Rule 8 will not apply and in the absence of any specific provision under any other rules, resort will have to be made to Rule 11 which provides for using reasonable means consistent with the principles and general provisions of the Rules and sub-section (1) of Section 4 of the Act - Even if the provisions of Rule 11 are applied, the most appropriate rule will be Rule 8 - even if it is held that Rule 8 will not apply, then even under Rule 11, the principles envisaged in Rule 8 should be followed – Decided against Revenue.

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• 2013 (12) TMI 808
  Activity manufacture or not - Refilling of gas from tankers to cylinders – Held that:- As per Note 10 of Chapter 28, two requirements were needed to be satisfied - One, there should labeling or re-labeling of the container and second repacking from bulk packs to retail packs - When both these conditions are satisfied, the activity would amount to ‘manufacture' - nowhere it is coming out that the appellant has done labeling and re-labeling on the gas cylinder - the gas has been supplied by the appellant in the buyer's cylinders – Thus, the question for re-packing from bulk pack to retail pack would not arise – Decided against Revenue.

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• 2013 (12) TMI 807
  Applicability of Rule 6 of CENVAT Credit Rules, 2004 - Common inputs used for dutiable as well as exempted final product – Waiver of Pre-deposit – Held that:- Even if, reversal as per Rule 6(3A) is done at a later point of time, that should prima facie be good discharge of the liability - As far as the quantum of reversal is concerned, the basis adopted by the appellant will result almost in the same amount that is to be reversed if formula prescribed under Rule 6(3A) is adopted – the deposit made is sufficient for the purpose of admission of appeal - the pre-deposit of balance waived till the disposal – stay granted.

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• 2013 (12) TMI 806
  Duty levied on Transaction value of coal – Royalty paid for extraction to be added or not – Waiver of Pre-deposit – Held that:- No transaction shall see the light of the day without royalty being added to the extracted value of coal as a direct cost incurred to make the coal to reach surface and marketable - sale consideration is fixed on the basis of cost incurred (both fixed cost and variable cost) to extract coal - it is inconceivable how transaction value shall not comprise element of royalty – the appellant is directed to deposit Rupees Seventy five lakhs as pre-deposit – upon such submission rest of the duty to be stayed till the disposal – Partial stay granted.

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• 2013 (12) TMI 805
  Denial of credit - Alert notice issued as no manufacturing activity undertook and only duty paying documents issued – Marking on capital goods – Held that:- The capital goods received in the factory in 2005 and assessee availed credit in respect of duty paid by the supplier only in the year 2008, same alert notice has been issued in respect of M/s. Ashok Electrical Stampings Pvt. Ltd – the capital goods on which the credit has been availed in the factory - the capital goods was in possession of the assessee even at the time of visit of the Revenue officer – Decided against Revenue.

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• 2013 (12) TMI 804
  Denial of 50% of the credit taken in subsequent financial year - Revenue was of the view that the Packing machine was exclusively used in the manufacture of exempted goods – Held that:- The packing machine was received when the goods manufactured using the packing machine are liable to Central Excise duty and appellant availed 50% of credit - Spenta International Ltd. v. CCE, Thane [2007 (8) TMI 25 - CESTAT, MUMBAI] - the relevant date for deciding the liability is the date of receipt of the capital goods in the factory. The appellant are entitled for credit when the packing machine was received in the factory, therefore, it cannot be said that appellant are not entitled for credit in subsequent financial year when the capital goods were in possession of the appellant - There is no condition provided under Rule 4(2)(b) of the Cenvat Credit Rules that the credit of remaining 50% of duty paid on capital goods is to be availed in case the capital goods have been used in the manufacture of dutiable product – Decided in favour of Assessee.

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• 2013 (12) TMI 803
  Conclusion of proceedings u/s 11A(2) of Central Excise Act – Held that:- Duty along with interest and 25% of penalty has been paid within the stipulated period under Section 11AC of the Act, 1944 – there was no merits in the contention of the Revenue that proceedings under Section 11A(2) of the Central Excise Act, 1944 are not concluded - the proceedings under Section 11A(2) are to be treated as closed. Entitlement for Cum-duty benefit – Held that:- Following C.C.E., Delhi v. Maruti Udyog Ltd. [2002 (2) TMI 101 - Supreme Court] - Asssessee is entitled to cum-duty benefit – Decided against Revenue.

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• CST, VAT & Sales Tax

• 2013 (12) TMI 864
  State Development Tax levied under Section 3-H of the U.P. Trade Tax Act, 1948 - Whether the assessee revisionist whose actual turnover for the period 1.4.07 to 31.12.07 of the assessment year 2007-08 had remained below 50 lacs rupees, is liable for payment of State Development Tax as in the remainder period of assessment U.P. Value Added Tax Act, 2008 - Held that:- assessee revisionist has not discontinued its business after 31.12.07 and as such Section 18 of the Act would have no application - assessee revisionist is clearly within the ambit of State Development Tax and is liable to pay the same accordingly. The authorities below accepted that the aggregate turnover of the assessee revisionist is more than 50 lacs rupees in the assessment year but have calculated it by adding the proportionate turnover for the three months in the actual turnover of the preceding 9 months which in effect is not the correct legal position - Since the assessee revisionist has continued with the business its actual turnover for the assessment year in question ought to have been taken into account. Notwithstanding enforcement of VAT Act w.e.f. 1.1.08 for the purposes of levy of State Development Tax under Section 3-H of the Act, the aggregate turnover for the assessment year would include the turnover for the period of the assessment year prior to the enforcement of the VAT Act as well as for the period after its enforcement - Decided in favour of assessee.

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