TMI Tax Updates - e-Newsletter
December 6, 2012

Case Laws in this Newsletter:

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

TMI SMS

• Valuation of taxable services - reimbursement of expenses can not be included in the value of taxable services - Rule 5(1) is ultra virus to section 67 - HC

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• Method of accounting - Chit Fund Company allowed to follow completed contract method when dividend to the foreman has to come only from out of the discount - HC

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• Dishonor due to change in authorized signatories - authorised signatory liable to be prosecuted along with the company even after resignation. - SC

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• Cost Accounting Records - Various Rules Amended - Form for filing XBRL document in respect of compliance report and other documents with the Central Government

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Articles

1. Composition Scheme for on-going works contract prior and post 1st July, 2012

   By: Bimal jain

2. Ex-Senior officers appearing as Consultants before Lower authorities

   By: vasudevan unnikrishnan

News

1. Regulation on Pesky Calls

2. Effect of Cashew Import on Domestic Industry

3. Export of Sugar

4. Increase in Trade Deficit

5. Targets Set for Exports

6. Effect of MAT on SEZ on Investors

7. Policy Regarding Export of Food Products

8. Trade Deficit with China

9. Effect of Ban on Export of Poultry Products From India

10. Increase in Almond Imports

11. The Standards of Quality of Service for Wireless Data Services Regulations, 2012

12. FDI Proposal Worth Rs. 27 Crore Cleared

13. Shri Sachin Pilot Chairs Meeting on Corporate Social Responsibility Urges Corporates to Support Visible Social Interventions

14. Policy Document on Corporate Governance

15. Independent Regulator for Auditors

16. FDI Policy for Mining Sector

17. Revision of Income Criteria for Eligibility Under Various Housing Schemes for the Economically Weaker Sections (EWS) and the Lower Income Group (LIG)

18. Inter-Ministerial Task Force on Coal

19. Crop Insurance Schemes for Compensation of Loss to Farmers

20. Kisan Credit Cards for Flow of Credit to Farmers and Increasing Financial Inclusion

21. Providing Financial Assistance to Farmers Through Subsidy Schemes

22. Enhancing Cold Storage Capacity in the Country through Various Schemes

23. Steps for Regulating the Working of Contract Farming

24. Signing of the Bilateral Swap Arrangement between Japan and India

Notifications

Companies Law

1. G.S.R. 868(E) - dated 30-11-2012 - Co. Law

Cost Accounting Records (Telecommunication Industry) Amendment Rules, 2012 - Amendment In Rule 2 And Forrm - A

2. G.S.R. 867(E) - dated 30-11-2012 - Co. Law

Cost Accounting Records (Petroleum Industry) Amendment Rules, 2012 - Amendment in rule 2 and Form A

3. G.S.R. 866(E) - dated 30-11-2012 - Co. Law

Cost Accounting Records (Electricity Industry) Amendment Rules, 2012 - Amendment In Rule 2 And Form - A

4. G.S.R. 865(E) - dated 30-11-2012 - Co. Law

Cost Accounting Records (Sugar Industry) Amendment Rules, 2012 - Amendment In Rule 2 And Form - A

5. G.S.R. 864(E) - dated 30-11-2012 - Co. Law

Cost Accounting Records (Fertilizer Industry) Amendment Rules, 2012 - Amendment In Rule 2 And Form - A

6. G.S.R. 863(E) - dated 30-11-2012 - Co. Law

Cost Accounting Records (Pharmaceutical Industry) Amendment Rules, 2012 - Amendment in rule 2 and form - A

7. G.S.R. 862(E - dated 30-11-2012 - Co. Law

Companies (Cost Accounting Records) Amendment Rules, 2012 - Amendment in rule 2 and form - A

8. G.S.R. 861(E) - dated 30-11-2012 - Co. Law

Amendment in rule 2 and substitution of form-I - Companies (Cost Audit Report) Amendment Rules, 2012

Customs

9. 51/2012 - dated 3-12-2012 - ADD

Regarding imposition of definitive anti-dumping duty on imports of digital offset printing plates

10. 107/2012 - dated 4-12-2012 - Cus (NT)

Amends Notification No.12/97-Customs (N.T.) dated 2nd April, 1997 - Inland Container Depots for loading and unloading of goods

Highlights / Catch Notes

Income Tax

• Chit Fund Company Allowed to Use Completed Contract Method for Accounting When Foreman's Dividend Comes from Discount.

  Case-Laws - HC : Method of accounting – Chit Fund Company allowed to follow completed contract method when dividend to the foreman has to come only from out of the discount - HC
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• Assessing Officer Must Consider Taxpayer's Historical Data in Best Judgment Assessment to Ensure Fair Evaluation.

  Case-Laws - AT : Best Judgement assessment - The AO while making the best judgment is not entitled to ignore the assessee’s own history as what better comparison then ones own past. - AT
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• Understanding "Lack of Inquiry" vs. "Inadequate Inquiry" in Section 263 Revisions: Key Differences for Commissioners.

  Case-Laws - HC : Revision u/s 263 - One has to keep in mind the distinction between “lack of inquiry” and inadequate inquiry”. - If there was any inquiry, even inadequate that would not by itself give occasion to the Commissioner to pass orders under Section 263 - HC
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• Section 143(2) Notice Invalid: Failed to Comply with CBDT Instructions, Raising Legitimacy Concerns in Tax Scrutiny.

  Case-Laws - AT : Validity of Notice issued u/s 143(2) - selection of cases of corporate assesses for scrutiny - notice issued u/s 143(2) of the Act for assumption of jurisdiction was not in terms of the instructions of the CBDT - AT
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• Mobilization Money Not Automatically Income: Tax Deduction by Builder Doesn't Classify as Assessee Income for the Year.

  Case-Laws - AT : Merely because tax at source has been deducted by the builder, the receipt of mobilization money cannot be deemed as income of the assessee for the year under consideration - AT
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Customs

• Anti-Dumping Duty Imposed on Digital Offset Printing Plates to Protect Domestic Industries from Unfair Competition.

  Notifications : Regarding imposition of definitive anti-dumping duty on imports of digital offset printing plates - Notification
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Corporate Law

• Supreme Court: Resigned Signatory Still Liable for Dishonored Cheque u/s 138, Despite Change in Authorization.

  Case-Laws - SC : Dishonor of Cheque u/s 138 - dishonor due to change in authorized signatories - authorised signatory liable to be prosecuted along with the company even after resignation. - SC
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Service Tax

• Court Declares Rule 5(1) Invalid: Reimbursements Excluded from Taxable Services' Gross Value for Tax Calculations.

  Case-Laws - HC : Valuation of taxable services - reimbursement of expenses can not be included in the value of taxable services as not forming part of gross value - Rule 5(1) of valuation rules is constitutionally invalid - HC
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Central Excise

• Tribunal's Legal Error: 'Soft Serve' Misclassified Under Tariff; Should Be 'Ice Cream' Per Common Parlance Test, Section 2105.00.

  Case-Laws - SC : Classification of ‘soft serve' - Common Parlance Test - Tribunal erred in law in classifying ‘soft-serve’ under tariff sub-heading 2108.91 - to be classified under tariff sub-heading 2105.00 as “ice-cream” - SC
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Case Laws:

• Income Tax

• 2012 (12) TMI 136
  Exemption u/s 11 - charitable activities - profit motive - Applicability of section 13(1)(bb) - whether the predominant object of the activity involved in carrying out the object of general public utility is to subserve the charitable purpose or to earn profit. - held that:- the primary purpose of the Trust was to afford relief of poor, education and medical relief, the means employed by exploiting its assets to earn income to achieve the objects, cannot, in any manner, be applied to defeat the claim of the assessee under Section 11. Decision in the case of Additional CIT Vs. Surat Art Silk Cloth Manufacturers Association [1979 (11) TMI 1 - SUPREME COURT] followed.

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• 2012 (12) TMI 135
  Manufacture and sale of paper caps and rental income u/s 11 - educational and charitable purposes - held that:- With the finding of fact arrived at by the Officer that the primary purpose of the Trust was charitable in nature, in the face of Section 2(15) and Section 11(4A) read with Section 13(1)(bb) of the Income Tax Act, we have no hesitation in confirming the order of the Tribunal. Even though the Tribunal had not considered the issue as a final fact finding authority, with no disputes raised by the Revenue on the facts and on the facts admitted by the Assessing Officer, decided in favor of assessee.

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• 2012 (12) TMI 134
  Method of accounting Chit Fund Company - completed contract method - Commission income - discount and dividend Held that:- Looked at from the angle of the subscriber, while there may be a certainty as to the dividend received every month for considering the same for assessment on accrual basis, as far as a company running the chit business is concerned, the dividend and the discount can properly be ascertained only at the completion of the transaction and not in the midway. Given the significant nature of the service yet to be performed in relation to the chit series, till the series come to an end, it is difficult to assess with any certainty, the amount that would be properly called as income for the purpose of assessment. Discount as defined under Section 2(g) of the Chit Funds Act, means the money set apart under the chit agreement to meet the expenses of running the chit or for distribution among the subscribers or for both. Dividend is the share of the subscriber in the amount of discount available for reasonable distribution among the subscribers at each instalment of the chit. Given the rights of the subscriber, when Section 21 provides for 5% chit amount to be given to the foreman, the same is stated therein as commission, remuneration or for meeting the expenses of running the chits. Thus, going by these provisions, when dividend to the foreman has to come only from out of the discount, we do not find any justifiable ground to agree with the Revenue that the assessee cannot claim completed contract method for income recognition. As far as the expenditure of the company is concerned, it is seen that the same related both to the administrative costs as well as to the advertisement costs. Taking note of the business of the assessee, we agree with the assessee s contention that the expenses cannot be viewed as relatable to the particular series alone, but as relating to the running of the business. Thus it has to be revenue expenditure to be considered in the year in which the same is incurred. Assessee is justified in following the mercantile system of accounting and adopting the completed contract method, to arrive at the real income. - Decided in favour of assessee

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• 2012 (12) TMI 133
  Deemed income u/s 41(1) - transfer of Rs. 1,32,88,530/- from the share application account to the capital reserve account - Assessee is an investment company mainly into the business of purchase and sale of shares. It is also engaged into taking business loans and further financing done to the parties. - held that:- The share application amount was treated as a capital receipt; and likewise the amount of Rs. 45,41,542/- was shown as liability towards purchase of capital assets. Having regard to the law declared in HHEC, consequently it never changed its character when it was eventually transferred to the capital reserve in 2006-07 when the conversion took place 6-7 years later. The period of time when the amounts were held by the assessee in its books also factually eliminated the suspicion that the amounts were given as grants or aid. Whether the assessee claimed any depreciation in respect of the second amount i.e. Rs. 45,41,542/-. There is no observation or finding on the part of the assessing officer. If such is actually the position those amounts allowed as depreciation are liable to be added back. For these reasons the matter is remanded, restricted to the second question, for determination as to whether any amount was allowed as depreciation by the assessee towards goods it imported from its holding company - appeal is partly allowed in the above terms in terms.

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• 2012 (12) TMI 132
  Claim of Depreciation on goodwill - Scheme of Amalgamation - Held that:- Explanation 3 states that the expression `asset' shall mean an intangible asset, being know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature. A reading the words `any other business or commercial rights of similar nature' in clause (b) of Explanation 3 indicates that goodwill would fall under the expression `any other business or commercial right of a similar nature' as per decision of court in Commissioner of Income Tax, Kolkata Versus Smifs Securities Ltd. [2012 (8) TMI 713 - SUPREME COURT] Disallowance of prior period expenses - held that:- An estimated income or liability, which is yet to be crystallized, can only be adjusted as a contingency item but not as an accrued income or liability of that year - restore the issue to CIT(A) for further adjudication.decision in Saurashtra Cement & Chemical Industries Ltd. vs. CIT, [1994 (10) TMI 30 - GUJARAT HIGH COURT] is followed. Disallowance u/s 14A - held that:- following the decision of court in case of Maxopp Investment Ltd. & Others Versus Commissioner of Income Tax [2011 (11) TMI 267 - DELHI HIGH COURT] it is fair and appropriate to set aside the order of CIT(A) and restore the matter to his file for deciding the issue, afresh in accordance with law in the light of aforesaid judicial pronouncements, after allowing sufficient opportunity to both the parties - In result, appeal for the AY 2004-05 is allowed but appeal for the AY 2005-06 is allowed partly for statistical purposes.

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• 2012 (12) TMI 131
  Disallowance u/s 14A - Held that:- sec 14A and Rule 8D would operate prospectively (and, not retrospectively) does not mean that the assessing officer is not to satisfy himself with the correctness of the claim of the assessee with regard to such expenditure. Even where the assessee claims that no expenditure has been incurred in relation to income which does not form part of total income, AO is required to verify the correctness of such claim. In case, the AO is not, on the basis of objective criteria and after giving the assessee a reasonable opportunity, satisfied with the correctness of the claim of the assessee, he shall have to reject the claim and state the reasons for doing so. There is nothing in the assessment order or impugned order as to whether the assessee placed the relevant details & accounts before AO nor CIT(A) seems to have undertaken any exercise to ascertain the details of expenditure objectively in managing and supervising the aforesaid huge investments - it is fair and appropriate to set aside the order of CIT(A) and restore the matter to the file of AO for deciding the issue, afresh in accordance with law , after allowing sufficient opportunity to the assessee - Matter remanded back - Decided in favor of revenue. Decision in Maxopp Investment Ltd. & Others Versus Commissioner of Income Tax [2011 (11) TMI 267 - DELHI HIGH COURT] followed.

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• 2012 (12) TMI 130
  Disallowance on account of expenses other than interest u/s 14A in relation to exempt income i.e. dividends - Held that:- Assessing Officer must in the first instance determine whether the claim of the assessee is correct and determination must be made having regard to the accounts of the assessee. The legislature directs him to follow rule 8D only where the Assessing Officer is not satisfied with the claim of assessee - Assessing Officer has not fulfilled his onus of recording his findings - disallowance under section 14A of the Act requires a clear finding of incurring of expenditure and that no disallowance can be made on the basis of presumptions – disallowance deleted – in favor of assessee.

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• 2012 (12) TMI 129
  Disallowance of deduction under section 80IB(10) – on the ground that housing project should commence on or after 1/10/1998, whereas the assessee's project named "Gold Coast" started much earlier and built up area of some residential units exceed 1500 sft – Held that:- Explanation brought in statute, the same was not applicable to the projects approved prior to 01-04- 05 - plans which are approved on which the basis for construction of the present building was approved in 2002 and accordingly they are within the provisions of Section 80-IB(10) - As seen from the nature of expenditure, they cannot be considered as evidencing that the project has commenced before 1st October 1998 as only cost of land, construction of compound wall and Municipal taxes and various expenditures for plan approvals were incurred. There is no expenditure on construction activity on the project - assessee has sold adjoining flats of more than 1500 sft, the measurements were taken again and post survey even Departmental Valuation Officer has certified that even the combined flat was less than 1500 sft - Revenue appeals are dismissed

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• 2012 (12) TMI 128
  Re-opening of Assessment - application of his mind by the AO before issuance of notice u/s 148 - Held that:- a precise and definite information was received by the AO regarding receipt of accommodation entries in respect of capital from various persons aggregating to Rs. 14.45 lakh. He compared the information with the information available in the return of the assessee. As the information could not be matched, he recorded definite reasons in clear terms that income escaped assessment. - AO rightly reopened the assessment by adhering to the relevant provision and following the right procedure provided under the rule. - Decided against the assessee. Defect in issuance of notice u/s 143(2) for the purpose of reassessment - held that:- The only missing words are "any evidence on which the assessee may rely in support of the return". Absence of these words may lead to prima facie view that the notice does not conform to the statutory language. However, section 292B provides that no notice etc. issued or purported to have been issued in pursuance of any of the provisions of the Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in the notice provided that such notice is in substance and effect in conformity with or according to the intent and purpose of this Act. - Decided against the assessee. Addition u/s 68 - accommodation entries - held that:- latest decision [COMMISSIONER OF INCOME TAX VERSUS NOVA PROMOTERS & FINLEASE (P) LTD (2012 (2) TMI 194 - DELHI HIGH COURT)] covers plethora of cases on the subject. It does appear to us that this case makes a distinction between credits simplicitor and credits received through hawala operators, the bank accounts of which are spurious in the sense that most of the entries are in respect of debits and credits of the same amount with very little balance staying in the account at any other point of time. - Decided against the assessee.

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• 2012 (12) TMI 127
  Deduction u/s. 10A – Receipt of foreign exchange - Held that:- Section 10A(3) of the Act provides that the sale proceeds in convertible foreign exchange has to be brought into India within the period of six months from the end of the previous year or within the such further period as the competent authority may allow for availing the deduction under section 10A of the Act - Explanation 1 provides that the competent authority means the RBI - assessee has produced a Circular from the RBI allowing extension of time for bringing the sale proceeds in convertible foreign exchange - assessing officer directed to verify the FIRCs and recompute the deduction u/s. 10A after considering the amounts realised within 12 month from the date of respective exports – In favor of assessee

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• 2012 (12) TMI 126
  Income accrues/arises or is deemed to accrue/arise in India – assessee-company is receiving the remittances of tickets sold by the Indian company outside India – Held that:- Assessee was not having any ‘business connection’ in India within the meaning of section 9(1)(i) of the Act, and hence, no income has been accrued to the assessee in India in respect of booking or sale of tickets for ‘tour packages’ of the cruises in India. No income accrues or arises to the assessee in India on the sale of tickets/booking of ‘Cruise tour packages’ which was done through Star Cruises (India) Travel Services Pvt. Ltd. (SCITC) - In favor of assessee

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• 2012 (12) TMI 125
  Addition under Section 68 - additional evidence – alleged that addition made under Section 68 without affording an opportunity to the assessing officer of being heard as envisaged in sub-Rule (3) of Rule 46A – Held that:- CIT (A) forwarded the additional evidences to the Assessing Officer for calling the remand report. In the remand report, the Assessing Officer objected for admission of additional evidences and CIT (A) admitted these evidences and granted the relief to the assessee without giving an opportunity to the Assessing Officer regarding the merits of the additional evidences. - matter restored to the file of AO for fresh decision.

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• 2012 (12) TMI 124
  Addition made under sec. 14A of the Act - chain of Chinese food restaurants - assessee received dividend - it was submitted by the assessee that dividend income has been earned by it from mutual funds the investment – Held that:- Disallowance under sec. 14A can be made if the expenditure incurred has nexus with the exempt income. Since the Assessing Officer had not examined the issue relating to nexus between the expenditure incurred and exempt income earned, we set aside the matter to the file of the Assessing Officer with the directions to examine whether any administrative expenditure was incurred for earning the exempt income - Assessing Officer will provide opportunity of being heard to the assessee. Disallowance on ad hoc basis - AO during the course of assessment proceedings asked the details of packing material – Held that:- Complete details of expenditure were furnished before the AO and no defect has been pointed out by the Assessing Officer. No specific query regarding packing material expenses or other expenses has been raised by the AO. It is a settled law that ad hoc disallowance without pointing out any mistake is not justified – addition deleted - appeals filed by the assessee is partly allowed and by the Revenue is allowed for statistical purposes.

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• 2012 (12) TMI 123
  Penalty u/s 271D of Income-tax Act – deposit or loan - adjustments through book entries - alleged that loan is not taken/accepted by the assessee through account payee cheques or account payee bank draft, in violation of the provisions of section 269SS of Income-tax Act - Held that:- Assessee executed a development agreement with M/s Duce for development of a residential township - In terms of the agreement, M/s Duce agreed to provide finance for purchase of land by the assessee company - M/S Duce made payments to vendors(land owners) on behalf of the assessee by account payee cheques towards purchase of land - penalty could not be levied in bonafide transactions - when by making the book entries the assessee has made the adjustment bona fide without having the knowledge that such book entries may render the assessee liable to penalty under section 271D of the Act on account of violation of the provisions of section 269SS of the Act - Bona fide belief coupled with the genuineness of the transactions will constitute reasonable cause for not invoking the provisions of section 271D of the Act – In favor of assessee

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• 2012 (12) TMI 122
  Accrual of interest on FDR - Revocation of bank Guarantee - held that:- The argument that FDRs were under lien against the Bank Guarantee does not help the assessee, the assessee could offer it for lien only because the assessee’s ownership was unfettered.- Assets whose ownership is questionable cannot be offered as lien. Even after offering them as lien the ownership is not transferred and assessee’s ownership continues to be undisturbed till the occurring of the event by virtue of which the ownership passes to the party who has a lien in its favour which event has occurred on 16.12.2000 when the bank guarantee was invoked. The arguments that assessee was under a bonafide belief that maintaining FDRs from these funds and holding them as lien for the State of Bihar in terms of the requirements of the Agreement does not impact the taxability of the amount; Ignorance of law in tax matters cannot be accepted. Application of income - condonation of delay - appellant’s plea for deemed application of funds u/s 11(2) for accumulation of Rs. 3.60 crores - held that:- delay is condonable in certain circumstances - However on facts it is seen that no such application has been filed by the assessee for condoning the delay before the Commissioner. As such the occasion to consider and thereafter accept/reject the same did not arise. Decided against the assessee.

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• 2012 (12) TMI 121
  Rebate under sec. 88E(1) of the Income tax Act, 1961 – alleged that the assessee earned income on scrips which were not listed on the stock exchange or traded in securities before those were listed thereby implying that no STT was paid on such transactions - contention of the assessee is that the assessee has not claimed the rebate in respect of transactions which have not been made through Stock Exchange – Held that:- According to the AO, the assessee had earned income on scrips which were not listed on Stock Exchange or traded in securities before those were listed. Therefore, the contention of the assessee has to be verified whether the assessee has claimed the rebate in respect of any transaction on which no STT was paid. Subject to verification, the AO is directed to allow rebate in respect of Income-tax payable on the income from taxable securities transactions reckoned at average rate of tax payable or securities transaction tax, whichever is lower Disallowance made under sec. 14A of the Act – Held that:- AO can make disallowance under sec. 14A if there is a direct nexus between the expenditure incurred and the exempt income - AO has made disallowance under Rule 8D which is not applicable for the year under consideration - AO was not justified in invoking the provisions of Rule 8D of the Income-tax Rules. As regards estimation of disallowance @ 10% of exempt income, learned CIT(A) has estimated disallowance on ad hoc basis without establishing any nexus between the expenditure incurred and the exempt income - neither the AO nor the ld. CIT(A) has examined any nexus between the exempt income and expenditure incurred – matter remanded to AO

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• 2012 (12) TMI 120
  Best Judgement assessment - comparison - held that:- if comparisons are to be made then the best comparison is of the assessee’s performance itself as stated is universally accepted and in the eventuality comparisons are to be made with outsiders then the parties with whom comparison are being made the relevant facts applicable to them have to be disclosed to the assessee so as to enable the assessee to give an effective representation. To make a comparison with a business concern whose particulars are not known to the assesee cannot be upheld as merely confronting the names cannot be said to be affording a genuine and effective opportunity of being heard as relevant facts have not been disclosed. The AO must take into consideration the local practices and also refer to previous record of the assessee and consider comparables after confronting these facts of the assessee so as to arrive at a fair and proper estimate if best judgment has to be resorted to. The AO while making the best judgment is not entitled to ignore the assessee’s own history as what better comparison then ones own past. Thus, the assessee’s own case can be considered and if still need be felt judicially to make comparisons with comparables, then it can be done only after confronting their facts to the assessee. Rejection of books of accounts – Held that:- Contended that in the timber business it is not possible to maintain item wise details as after sawing in different sizes it is recognized as timber like wise as in the trade of marble purchased and sold it is described as marble the day to day stock register is maintained - failure on the part of the assessee in not maintaining stock register it was stated can be a ground for suspicion however, if explanation of the assessee that it is not practical or feasible in the line of business is to be considered - issue is restored back to the file of the AO

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• 2012 (12) TMI 119
  Reopening of assessment and issuance of notice after the expiry of period of four years from the end of the relevant assessment year - Held that:- There is no failure on the part of the assessee to make a return u/s 139 or to disclose fully and truly all material facts necessary for assessment - assessment was completed u/s 143(3) of the Act and as per sub-section (iii) of section 148 there was no failure on the part of the assessee in computing the book profit for the purposes of section 115JB of the Income-tax Act, 1961 - there is no whisper that there was failure on the part of the assessee to disclose fully and truly all material facts for the calculation of book profit u/s 115JB. In view of these facts, reopening of assessment after the expiry of four years is not justified as notice u/s 148 was issued on 9.4.2007, consequently, the assumption of jurisdiction u/s 147/148 is also unjustified – In favor of assessee

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• 2012 (12) TMI 118
  Validity of reassessment proceeding on the basis of change of opinion - Held that:- If the entire material had been placed by the assessee before the AO at the time when the original assessment was made and the AO applied his mind to that material and accepted the view canvassed by the assessee, then merely because he did not express this in the assessment order, that by itself would not give him a ground to conclude that income has escaped assessment and, therefore, the assessment needed to be reopened - facts were before the AO at the time of framing the original assessment, and later a different view was taken by him or his successor on the same facts, it clearly amounts to a change of opinion. This cannot form the basis for permitting the AO or his successor to reopen the assessment of the assessee - initiation of reassessment proceeding is based merely on “change of opinion” - initiation of reassessment proceeding was bad also on account of applicability of proviso to sec. 147 – in favor of assessee

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• 2012 (12) TMI 117
  Penalty u/s 271(1)(c ) – alleged that assessee was indulging in suppressing the information from theme wedding parties which includes design and layout for the functions, implementation and coordination of weddings etc. - alleged that for various events the assessee as per the diary has shown that certain amounts were received which are not correctly reflected in the books of accounts the issue qua the non-reliability and non-reconciliation of the figures is already concluded in the quantum proceedings – Held that:- Consistently the assessee has not been able offer any explanation as to how the amounts can be reconciled and has merely chosen to take a general argument that the entries as per the books are higher than as per the diary whereas consistently the A.O.’s finding has been upheld that the assessee has been in the habit of suppressing the receipts - appeals of the assessee are dismissed

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• 2012 (12) TMI 116
  Foreign exchange fluctuation loss - restatement of debtors and a further loss on account of revaluation of foreign currency – Held that:- Assessee company by revaluing the foreign currency assets at the closing rate and by recognizing the exchange difference arising as expenses ensured adherence to the mandatory requirement laid under accounting standard AS11 of the ICAI. It has further been claimed that the assessee maintained its accounts as per the accrual system of accounting and has been following this accounting and the same is also in line with the Standard Accounting policies and practices being followed by the industry at large - loss suffered by the assessee on account of foreign exchange difference as on the date of balance sheet is an item of expenditure u/s. 37(1) - in favour of the assessee Addition - expenses incurred on birthday and anniversary gifts given to Directors and other managerial persons – alleged that these expenses were of personal nature – Held that:- Expenses were incurred by the assessee on birthday and anniversary gift given to the Director and other managerial persons. These expenditure can certainly be categorized as expenditure for the purpose of business as the same amount was to boost the moral of the employees - expenditure in this regard is duly allowable - in favour of the assessee. Addition on account of commission paid to Directors – alleged that in this regard the two employee director also happen to be share holder of the company holding 19.80% and 12.40% of shares of the company – Held that:- Compensation for both the directors were structured in such a way that apart from getting a fixed remuneration for their services rendered, they would also be entitled to receive commission based on the profitability of the company - assessee has paid taxes at maximum marginal rate. Both the Directors have admitted the payment of commission received and offered the same in their income tax returns and had paid at a maximum marginal rate. This clearly establishes the fact that there has been no tax avoidance motive behind the payment of commission to the directors by the assessee company - payment of commission was justified and not disallowable u/s 36(1)(ii) of the IT Act - in favour of assessee.

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• 2012 (12) TMI 95
  Addition as income from other sources for the credits appearing in the bank account – alleged that bank account not belong to the assessee – Held that:- during the course of assessment proceedings, certain information was gathered u/s 133(6)/131 which is available in the assessment record. - However, in the assessment order, we do not find any whisper about such information. - If the information is against the assessee, he should have been confronted with this information and if the information was in favour of the assessee, then to that extent, addition should not have been made. AO made the addition of entire receipt credited in the assessee’s bank account. The assessee has claimed that most of the receipt is either the loan taken by the assessee or repayment of the loan which was given by the assessee. He also stated that the parties from whom loan was taken or who refunded the loan to the assessee have affirmed those facts to the AO in writing. If it is so, then the addition in respect of that credit should not have been made - matter is restored back to AO for making assessment afresh

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• 2012 (12) TMI 94
  Validity of Re-assessment Proceedings – Unexplained Addition u/s 68 – bogus credit - accommodation entries - credit worthiness and genuineness of transaction - Following the decision of court in case of [Commissioner of Income-tax Versus Vishal Holding & Capital (P.) Ltd. 2010 (8) TMI 634 - DELHI HIGH COURT ] Held that:- Assessee had produced copies of accounts, bills and contract notes issued by M/s. MKM Finsec Pvt. Ltd., and had been maintaining books of account as per Companies Act - Assessing Officer has simply acted on the information received from the Investigation Wing without verifying the details furnished by the assessee. The assessee has also produced best possible evidence to support its claim - AO has not verified details in respect of the material, which has been relied upon by him, he has not provided any findings of the investigation to the assessee. Therefore, in these circumstances, the addition made by the Assessing Officer cannot be said to be on the basis of some evidence that was put to the assessee in the course of assessment proceedings. CIT(A) has correctly deleted the addition - order of CIT(A) on the issue in question is upheld - In the result, revenue ‘s appeal is dismissed.

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• 2012 (12) TMI 93
  Determination of arm's length price - rule of consistency – Held that:- External comparable prices for the impugned assessment year 2006-07 supplied by the assessee, when accepted by the Assessing Officer for the assessment year 2007- 08, must be accepted for that year in view of the absence of material facts and also in view of the rule of consistency - rule of consistency is relevant to Income-tax matters and Assessing Officer cannot be ignore the same - appeal filed by the assessee is allowed for statistical purposes

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• 2012 (12) TMI 92
  Deduction u/s 80I - disregarding the fact that the report of chartered engineer upon which the Ld. CIT(A) relied does not state categorically that none of the machineries were transferred to new unit - alleged that almost whole work was got done from out side on job work basis and assessee simply assembled the machinery and is therefore not eligible for deduction u/s 801 - Hold that:- Deduction u/s 80I cannot be denied if an assessee get the machinery manufactured or fabricated from outsiders and thereafter assembling the machine itself - claim u/s 80I to the assesses Co. is eligible heaving reference to the manufacturing activity carried out by the assessee during the relevant years, for which supporting purchase of raw materials and manufacturing have been adduced before me which are reflected in the relevant P & L accounts - final product have been manufactured by the assessee Co. Similar factual position is verified with other assessment years - AO is accordingly directed to allow the claim u/s 80I

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• 2012 (12) TMI 91
  Addition on account of bogus expenses – Held that:- Nature of business of the assessee clearly proves that component of labourers is necessary for doing the business of the assessee. The assessee maintained complete records of the payments for labour charges and the outstanding payments have been cleared - With regard to Shyam Steels Pvt. Ltd. the assessee purchased old and used D. G. Sets from them and the assessee submitted before the authorities below that it is a registered dealer under Sales Tax and regularly assessed to income tax and payment is made through account payee cheques. Similarly, commission payments have been made through account payee cheques - addition deleted – in favor of assessee Addition on account of bogus purchases – Held that:- Sale value of oil coolers was disclosed in the books of accounts which the AO himself admitted - On verification of the books of accounts, bills and vouchers found the contention of the assessee to be correct. The assessee filed ledger account, copy of the draft and bills of M/s. Akil Corporation at pages 71, 72 and 73 of the paper book to show that purchase of Rs.1,18,000/- have been made which are recorded in the books and payments are made through banking channel - addition deleted – in favor of assessee Addition on account of excess payment to persons specified u/s 40A (2) (b) of the IT Act – alleged that major purchases were made from the sister concern which is more than 42% of the total purchases and 65% of the D. G. Sets were also purchased from them - AO was of the view that the assessee could have purchased the same directly instead of purchasing it through sister concern – Held that:- AO has not compared the prices paid by the assessee to the sister concerns with the market price for proving that these concerns were made excessive or unreasonable payments - AO has not brought any evidence or material on record to prove as to how the payments made to the sister concerns were excessive or unreasonable as compared to fair market value of these services or facilities – addition deleted – in favor of assessee

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• 2012 (12) TMI 90
  Addition on account of right to receive royalty fees – Held that:- Asseasee company entered into agreement with Dr. Syed Mohd. won Syed Hussein and Dr. Lourdenedin of Kaulalumpur on 28.8.7S. The company agreed to provide technical knowhow - assessee company has received total consideration of Rs.4.75,000/- for both the agreements which has been added to the value of the goodwill. This part of consideration is liable to be taxed as amount received in lieu of income - assessee did not produce any further evidence or material justifying their case for non-taxability of the amount in question – addition upheld

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• 2012 (12) TMI 89
  Disallowance of Sales promotion expenditure - rewards point can be redeemed by the customers by way of rebate from the sale price while making additional purchases at the assessee’s stores – disallowance of claim on the ground that the expenditure is an unascertained expenditure – Held that:- As and when the customer of the assessee makes a particular purchase, the customer is given a monetary right, in the form of rebate in the cost of goods that he may purchase at a future date. Thus, as and when a right is given, the assessee incurs a liability which it has claimed as marketing expenditures. The assessee, based a historical data, in a scientific manner, has estimated that only 50% of the reward points given are likely to be encashed by the customers. Out of this, 50% gross profit margin is reduced and the balance is only claimed as expenditure - assessee has also proved that this is a consistent accounting policy being followed year after year – Disallowance deleted – In favor of assessee

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• 2012 (12) TMI 88
  Deduction u/s 35D in respect of amortization of expenditure incurred on initial public offer of Equity shares – alleged that the appellant is not an industrial undertaking – Held that:- Assessee company is carrying on banking business in India - Section 35D allows authorization of certain preliminary expenses only to an ‘industrial undertaking’ incurred before commencement of business, or after the commencement of his business, in connection with the extension of his ‘industrial undertaking’ or in connection with his setting up of a new ‘industrial unit’ and financial institutions are not eligible for the same” - assessee is a bank and not an ‘industrial undertaking’ for the purpose of section 35D – against assessee. Revision u/s 263 - possible view - held that:- the AO has not examined issue and simply without applying the mind allowed the claim of the assessee, therefore, the order of the AO becomes erroneous and prejudicial to the interests of the Revenue. - the order passed by the CIT u/s 263 o upheld.

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• 2012 (12) TMI 87
  Penalty under section 271(1)(c) of the Income Tax Act - alleged that under Rule 5(2) of the IT Rules furnishing of a certificate from the competent authority in respect of pant & machinery, (in this case moulds) to qualify for depreciation @ 40% was necessary and since the assessee was unable to furnish & comply with the said requirement ,the depreciation on such assets is restricted to 25% only – Held that:- Assessee cannot be charged with having concealed particulars of income - requirement of Rule 5(2) have been duly complied with, as the assessee was using technology developed in an institution recognized in this behalf by the Secretary, Department of Scientific and Industrial Research, Government of India - technology used by the assessee is the same as was used by him in the past for manufacture of sleepers - though the addition is justified in the quantum proceedings, imposition of penalty on such addition is not warranted – In favor of assessee

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• 2012 (12) TMI 86
  Disallowance made on account of payment made by the assessee to the spouse of its diseased partner – Held that:- Deed of partnership referred to in the supplementary partnership deed, the main logo and mark “GAGRATS” were assigned along with goodwill and all tangible and intangible rights to Mr. J.R. Gagrat and Mr. R.J. Gagrat jointly as their absolute and exclusive property - when the name, logo and mark belonged to Mr. J.R. Gagrat and Mr. R.J. Gagrat, there was no question of payment for their use to the wife of Mr. J.R. Gagrat especially in the event of his retirement - payment of Rs. 12 lakhs made to Mrs. M.J. Gagrat, therefore, was not a case of diversion of income by overriding title and it was only case of giving benefit to one individual who was neither a partner of the firm nor in any way related to the professional work of the firm - it was clearly a gratuitous payment made by the assessee firm which was not an allowable business expenditure u/s 37(1) – In favor of revenue

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• 2012 (12) TMI 85
  Minimum Alternate Tax (MAT) - Book adjustment - Deduction under section 80HHC – Held that:- Deduction allowable under section 80HHC has been done away with in a phased manner and since assessment year 2005-06, no deduction is allowable. The clause (iv) of Explanation 1 to section 115JB(2) has also been omitted by the Finance Act 2011 w.e.f. 1.4.2005 and, therefore, from assessment year 2005-06, book profit is not required to be reduced by the amount of profit eligible for deduction under section 80HHC as deduction under section 80HHC is no longer available from assessment year 2005-06 - assessee is not entitled for any deduction under section 115JB(2) - assessee will not be entitled for any reduction of book profit on account of section 80HHC deduction or profit eligible for deduction under section 80HHC – In favor of revenue

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• 2012 (12) TMI 84
  Deduction u/s 80IB - Ownership vs Builder - held that:- Fact that Assessee was not the owner would not disentitle assessee from claiming relief u/s 80IB(10) of the Income Tax Act. As decided in Commissioner of Income-Tax V. Radhe Developers [2011 (12) TMI 248 - GUJARAT HIGH COURT], Gujarat High Court considered the question on ownership as a condition for grant of deduction under Section 80IB(10) in depth and accepted the case of an assessee similarly placed. It held that the provisions nowhere require that developers who are the owner of the land alone would be entitled for grant of deduction under Section 80IB(10). Therefore, assessees were entitled to the benefit u/s 80IB(10) even where the title of the lands had not passed on to the assessees and in some cases, the development permissions may also have been obtained in the name of the original land owners – Decided against the Revenue. Whether Tribunal was right in holding that the provisions of Sec 80IB(10) provide for partial deduction to housing project with respect to residential flats with built up area of less than 1500 sq.ft. where the same project contains flats with built up area exceeding 1500 sq.ft - held that:- Assessee was not entitled to relief in respect of those flats, which exceeded 1500 sq.ft. it is evident that what the assessee had undertaken is not a mere construction, but developing and constructing of a project, which qualifies for deduction u/s 80IB of the Income Tax Act. Deduction contemplated therein is oriented towards the project and not with reference to an assessee. It is no doubt true that the project has to be done by the assessee, but then, when the deduction is specific enough as regards the particular activity, administrative process, is purely at the hands of the Statutory Authority concerned, over which, the assessee could not have any control, the Explanation cannot, in any manner, have a negative effect on a factual aspect of the matter, namely, completion of the construction. Thus, in a case like this, where, the local authority, being the Corporation, had already certified about the completion of the project as per the approved plan, the fact that one of the Authorities, namely, Chennai Metropolitan Development Authority had issued a letter only on 13.6.2008, per se, cannot negative the assessee's claim for deduction. In the light of the above-said facts, Revenue's appeal is rejected. Though the assessee had complied with the extent of built-up area as per clause (c) and the assessee is entitled to have the benefit of deduction under Section 80IB of the Income Tax Act, since the Tribunal had remanded the portion of the built-up area for verification before the Assessing Officer and a factual enquiry has to be made thereon as to whether the built-up area is in fact 1500 sq.ft. or more than that In the circumstances, we confirm the order of the Tribunal on the remand portion. when the local authority, being part of Chennai Metropolitan Development Authority and also the approving authority, thus having certified about the completion, we do not find any justifiable ground to invoke Explanation (2) to sub-section (10) of Section 80IB of the Income Tax Act for the purpose of negativing the claim. In any event, going by the fact that the Explanation cannot have a control on the substantive provision, as a matter of construction, we agree with the assessee's contention and we have no hesitation in confirming the order of the Tribunal.

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• 2012 (12) TMI 83
  Enhancement of Assessment - power of CIT(A) to enhancement - held that:- When, in the course of considering the assessee's appeal on a different issue, the CIT (A) thought it fit to exercise his enhancement powers with reference to one aspect of assessment, which was not the subject matter of the appeal, it is no doubt true that Sec 251 of the Income Tax Act provides for such authority and jurisdiction to enhance the assessment.- But, then, Sub Section (2) of Section 251 of the Act, stated that such authority could be exercised only subject to the assessee being given a reasonable opportunity to show cause against such enhancement - order of tribunal set aside - matter remanded back to CIT(A) Spreading over of interest - assessment of income - held that:- In contrast to the decided case relating to claim of deduction as expenditure, the case on hand is related to the assessment of income. Even though the parameter for considering the expenditure and income is not the same, yet, the principle to be followed is that when the instrument concerned is certain as to its period of life and specifically points out to a particular interest amount to be paid on the maturity date, the question of assessing the entire interest in the first year itself, does not arise. - the question of assessing the entire interest income of Rs.3,10,43,664/- in the assessment year 1997-98 does not arise and that the Revenue would be entitled to assess a sum of Rs.3,37,431/- alone for the assessment year 1997-98 and the balance amount of Rs.3,07,06,233/- has to be assessed for the assessment year 1998-99.

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• 2012 (12) TMI 82
  Broken period interest - classification of the securities as permanent or current - allowability of interest of securities held as investments and stock in trade - held that:- in view of decision in T.C.(A).No. 455 of 2008 dated 30.10.2012, decided against the assessee. Set off of carried forward losses of earlier years - held that:- there is no consideration of the said question by the Tribunal - matter remanded back to AO. Valuation of securities in respect of stock-in-trade - matter remand to the Assessing Officer for his consideration on the issue in terms of the decision of the Apex Court in the case of UCO Bank Vs. CIT [1999 (9) TMI 4 - SUPREME COURT] Disallowance of Interest - Assessee submitted that when the consistent case of the assessee is that they had not expended anything in making investment for the tax free securities, the Tribunal committed serious error in upholding the order of the authorities below restricting 2% of the income earned towards the estimated expenditure. Learned counsel for the assessee pointed out that when the assessee had not expended anything on the investment in securities, there is no question of proving any such expenditure in earning income from tax free securities. It is seen from the order of the assessment that the assessee earned income from investment on tax free securities as specified in Section 10(15) of the Income Tax Act. When the assessee was specifically asked as to the expenditure incurred thereon, the assessee submitted that there was no expenditure incurred or expended for earning such interest income. The Officer held that in the absence of any evidence, the claim could not be considered. We agree with the assessee's contention that there could be no evidence that could be let in, to prove the non-existent expenditure; the assessee could nevertheless have substantiated the nature of the securities in which it had invested and the source from which it had invested. Since no details are available on this - restore the assessment back to the Assessing Officer for the purpose of enabling the assessee to let in evidence, particularly, as to the source to which it made investments. Depending on the materials available, it is open to the Officer to pass orders thereon - Tax Case (Appeal) is dismissed. No costs.

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• 2012 (12) TMI 81
  Setting off of Unabsorbed Depreciation and Losses - held that:- A reading of Section 32(2) thus makes it clear that if the unabsorbed depreciation allowance could not be wholly set off under clause (i) and clause (ii)a, the amount of depreciation not so set off can be set off from income from other head, if any, available for that assessment year. The language of Section 32(2) is very clear and there is hardly anything contained in Section 72(2) to prevent such set off of carried forward depreciation being given to the assessee under the head of income from business or income from other sources. The Revenue does not deny the fact that as far as the income from other sources are concerned, there could be no set off of business loss or carried forward loss. Section 72(2) is as regards set off of business loss as against the income from profits and gains of business or profession and if there is loss as well as unabsorbed depreciation, the set off shall be first on the business loss as against the business income and then on unabsorbed depreciation. What is spoken to under Section 32(2) is as regards set off of unabsorbed depreciation as per clause (ii) of sub section (1) and when the unabsorbed depreciation could not be set off as against the income from business or profession by reason of there being no income available under the said heads and where there is income from other sources, effect must be given to Section 32(2) of the Act for that assessment year - rejecting the Revenue's plea, there by confirming the order of Tribunal. The above Tax Case (Appeal) is dismissed. No costs.

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• 2012 (12) TMI 80
  Excess claim of Deduction u/s 80HHC - Reopening of Assessment - held that:- if the Assessing Officer has reason to believe that income has escaped assessment it confers jurisdiction on the Assessing Officer to reopen the assessment. Thus, the case herein is covered by the main provision and not the proviso. - So long as the ingredients of Sec 147 are fulfilled, the Assessing Officer is free to initiate proceeding u/s 147 and failure to take steps under Section 143(3) will not render the Assessing Officer powerless to initiate reassessment proceedings even when intimation u/s 143(1) had been issued - it is seen that prima facie adjustments were made under Section 143(1-A) of the Act on a debatable issue, which was subsequently set aside by the Commissioner and thereafter there being no regular assessment rightly, the Officer assumed jurisdiction under Section 147 of the Act as a case of an escaped assessment for making the original assessment under Section 147 of the Act - Decided in favor of revenue. Decision in Assistant Commissioner of Income-Tax Versus Rajesh Jhaveri Stock Brokers P. Limited [2007 (5) TMI 197 - SUPREME COURT]followed.

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• 2012 (12) TMI 79
  Expenditure on Iron rolls - Capital vs Revenue Expense - assessee does not claim its expenditure as replacement of whole machinery or repairing of machinery as such = Held that:- Whether expenditure is "revenue" or "capital in nature" would depend upon several factors, namely, nature of the expenditure, nature of business activity etc. - In the case of Commissioner of Income Tax Vs. Ramaraju Surgical Cotton Mills (2007 (8) TMI 39 - SUPREME COURT OF INDIA), the Supreme Court considered the decision in the case of CIT Vs. Saravana Spinning Mills P.Ltd reported in (2007 (8) TMI 16 - SUPREME COURT OF INDIA) and in the case of CIT Vs. Janakiram Mills Ltd [2005 (4) TMI 39 - MADRAS HIGH COURT] and pointed out that in considering whether the expenditure is revenue or capital in nature, the proven tests have been evolved that if the expenditure is of the nature not leading to the increased production capacity and the same remaining as constant, even after replacement, then, the expenditure would be revenue in nature. Given the technicalities on the "revenue" and "capital expenditure", "current repairs" and its application to a finding based on facts, Assessing Officer should have adverted to the various facts involved in the use of steel rolls to arrive at the decision as to whether the assessee is entitled to deduction under Section 37 of the Act or not. When the authorities below had not adverted to any of these, proper course herein would be to set aside the order of the Income Tax Appellate Tribunal. Accordingly, the order of the Income Tax Appellate Tribunal is set aside and the matter is restored to the files of the Assessing Officer to consider the claim of the assessee in the background of the nature of the expenditure incurred by the assessee and to the decisions of the Apex Court as referred to above and thereafter arrive at a finding - In the result, the Tax Case Appeal stands disposed of with the above observation. No costs.

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• 2012 (12) TMI 78
  Agent of the non-resident u/s 163 – Representative assessee - Assessee enter into an agreement with foreign company for purchase of certain machineries – Assessee had to pay only contract price for supply, installment and erection of the machinery - Foreign company deputed one its employees for supervising the work in India – Salary payment was made by the foreign company – According to AO such employee was employed in India, on such receipts, he was liable for taxation therefore assessee should be treated as the agent u/s 163 of such employee – Held that:- When the impugned notice was issued, assessee was described as an agent of the foreign company. This, in our view, is a vital defect in the notice itself. Foreign company & its employee were two different entities. It can, however, not be denied that the foreign company and its employee were legally completely in different position vis-a-vis the petitioner-company. Therefore the notice was wholly defective. In favour of assessee Validity of notice u/s 148 – AO issued notice u/s 148 came to be issued treating the assessee as an agent of the foreign company – Held that:- Mere passing reference or remark in the reasons recorded which ordinarily unless the assessee demands, are not supplied to the assessee, cannot be seen as a formal order against which the assessee could exercise his right of appeal. Following the decision in case of Kanhaya Lal Gurmtjkh Singh (1970 (12) TMI 33 - PUNJAB AND HARYANA HIGH COURT) that before issuing notice u/s 148, the AO must pass an order u/s 163(2) treating the assessee as an agent. In favour of assessee

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• 2012 (12) TMI 77
  Deduction under section 10A of the Income Tax Act - 100% Export oriented unit for Software – Held that:- There was a change of name, which is also duly approved by the ROC - Copy of declaration of Software export through data communication link with the company in SOFTEX from the Software Technology Park of India along with purchase orders made by the customers, confirmation of the same, invoice raised to clients and foreign inward remittance certificates from banks confirming receipt of money in the form of foreign exchange were furnished. Certificate regarding qualification of both the Directors was also furnished. The assessee company has made genuine exports, earned foreign exchange, which is not doubted by any other authorities except the A.O - exemption under section 10A of the Income Tax Act allowed – In favor of assessee

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• 2012 (12) TMI 76
  Addition on account of unaccounted income – alleged that addition was on presumption basis - appellant feeling that the Tribunal did not consider number of contentions raised and voluminous evidence produced while disposing of the appeal, filed an application for rectification under Section 254 of the Act – Held that:- There was no error in the decision of the Assessing Officer - reasons recorded by the Tribunal in the original order were rather brief. However, in the subsequent order which is impugned before us, such reasons have been indicated, evidence is evaluated and the findings of the Revenue authorities is confirmed – appeal dismissed - In favor of revenue

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• 2012 (12) TMI 75
  Rectification of mistake - Investment allowance - Section 32A – alleged that the assessee had not used the plant and machinery for its business and the same was given on lease rent from 1991- 92 - Held that:- Plant and machinery was hired out for a temporary period, which does not amount to transfer. Further the machinery was given on lease basis - On this ground the Assessing Officer in the original order had accepted the assessee's claim for investment allowance under Section 32A of the Act - such issue being debatable, the order could not have been varied in exercise of powers under Section 154 of the Act read with Section 155(4A) of the Act – in favor of assessee

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• Customs

• 2012 (12) TMI 153
  Re-quantification of short levy of customs duty - appeal against the order of tribunal remanding back the order for re-quantification - held that:- The grievance of the appellants is the Adjudicating Authority is required to re-quantify the short levy of customs duty on the basis of prices quoted by M/s Export Management Service Group ( EMSG ) to M/s Kemtech , but, at no point of time, the appellants were confronted with the said information. The appellants prays that the Adjudicating Authority may be directed to supply copies of all the documents which are likely to be relied upon for the purpose of fresh adjudication in terms of the impugned order, to enable to the appellants to meet revenue's case. The prayer made is reasonable - Adjudicating Authority shall supply all the documents, on which it proposes to place reliance, to the appellants.

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• 2012 (12) TMI 152
  Conversion of free Shipping Bill into DEPB Shipping Bill - appellants exported Losartan Potassium Tablets under free Shipping Bill – Held that:- Circulars issued by the Board do not permit conversion of free Shipping Bill into any export promotion Shipping Bill like DFIA, DEPB etc. Para (iv) of the circular dated 23-9-2010 states that free Shipping Bills are subject to nil examination norms. Conversion of free Shipping Bill into export promotion scheme Shipping Bill should not be allowed - circular does put conditions and limitations in regard to substitution of Shipping Bills and the same can be construed as limiting exercise of the powers of the proper officer under Section 149 - order passed by the adjudicating Commissioner following those circulars cannot be faulted with - appeal is dismissed.

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• 2012 (12) TMI 151
  Classification – appellants imported 594 MT of Bakery Shortening and classified the goods under Chapter heading 1516209, claiming exemption from additional duty of excise under Notification No. 4/2005 - department reclassified the goods under CTH 15.17 and also denied the benefit of exemption – Held that:- Classifying the goods under Chapter heading 1517, it would be necessary to show that the same had been further prepared by a processes like emulsification, churning, texturation etc., to change the basic character of the same from being a product classifiable under Chapter heading 1516 to that of Chapter heading 1517 - when the goods were removed no samples were taken nor any tests were conducted to ascertain the chemical nature or character of the goods imported - Revenue could not produce any such evidence in support of their case - classifying the goods under Chapter Heading 15162091, allowing exemptions from additional duty of excise under Notification No. 4/2005 - Appeal is allowed

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• 2012 (12) TMI 111
  Determination of Nature of Impugned Goods - alloy steels vs non alloy steel - held that:- A reading of the order of the Tribunal clearly pointed out that when the chemical test of the impugned goods pointed out the nature of goods sought to be exported and that with an uncertainty to the extent of 200% error margin writ large on the results, the test done by the Revenue is uncertain to support its claim on misdeclaration. Revenue does not deny the fact that National Metallurgical Laboratory is not a laboratory of the respondent's choice, but an authoritative institution to speak on materials like the impugned consignments. The remand order at the first instance itself was on account of the Revenue pointing out to the discrepancy between the respondent's test and the Revenue's report. As agreed to between the parties, the matter was once again referred to National Metallurgical Laboratory. When confronted with the error margin, the further plea for once again calling for further report from the Scientist, appears as a cry in vain. Thus, when a reading of the order of the Tribunal does not disclose any perversion in the finding, in the nature of absence of material on the factual finding, we do not find any question of law arising out of the order of the Tribunal for admitting this case by this Court. Hence, we have no hesitation in rejecting this appeal at the admission stage itself - In the circumstances, the above Civil Miscellaneous Appeals are dismissed at the admission stage itself. Consequently, connected MPs are closed. No costs.

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• 2012 (12) TMI 110
  Import - Polybutylene Teraphthalate (BPT) - prayer is that BPT Polyester itself is entitled to exemption granted by Notification No. 28/2006 - Revenue submits that PET and BPT are two different goods. HSN classification brings out PET itself is different good, although belongs to saturated Polyester category. When the legislature did not intend to grant exemption to BPT, they have not used that term in the earlier Notification No. 28/2006-Cus., dated 20-3-2006 – Held that:- BPT is a member of the Polyester family as per HSN Explanatory Notes - This view is also fortified when Polyester chips is also referring to its member goods in Notification No. 89/89-C.E., dated 1-3-89 as well as Notification No. 40/90-C.E.(N.T.), dated 8-11-90. Notification No. 28/2006-Cus., dated 20-3-2006 exempts polyester chips without specifying other sub-species - it cannot be said that BPT does not belong to the Polyester family - no reason to deny the benefit of exemption to the appellant foe the reasons stated above - appeal is allowed.

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• 2012 (12) TMI 109
  Refund claim – excess payment of duty because of arithmetic mistake - prayer was made to amend the quantity mentioned in the shipping bill in terms of Section 154 of the Customs Act - Held that:- Refund claim was time-barred as the provisions of Section 154 was not applicable to a refund claim - Section 154 of the Customs Act which is an enabling power not containing any time limit cannot be used to defeat the specific time limit for claiming the refund of any alleged excess duty paid – refund claim rejected

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• 2012 (12) TMI 108
  Transaction value – alleged that value of the goods was significantly lower than the contemporaneous values, the adjudicating authority doubted the genuineness of the declared value and asked the appellant to provide further information – Held that:- To avoid delay, the importer can declare the higher value or can accept the enhanced value and in such cases, such value even if it is not a transaction value it will prevail - once the value enhanced is accepted, there is no need for any further action. Similarly, if the importer declares the higher value and if that is accepted by the customs authorities, naturally no case would be initiated or investigated - reliance of the adjudicating authority on contemporaneous price to reject the transaction value and to ignore the transaction value without considering the submission at all was not in order – in favor of appellants Detention charges – Held that:- Goods were neither seized nor detained is correct and therefore not giving any direction to the adjudicating authority for wavier of detention charges, is also correct

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• Corporate Laws

• 2012 (12) TMI 155
  Scheme of Amalgamation – Dispensation of requirement of Meetings - Publication in newspaper is sufficient - held that:- In view of the approval accorded by the Shareholders and Creditors of the petitioner Companies, representations/ reports filed by the Regional Director, Northern Region and the official liquidator, attached with this court to the proposed scheme of Amalgamation, there appears to be no impediment to the grant of sanction to the Scheme of Amalgamation and is hereby sanctioned. The petitioner companies will comply with the statutory requirements in accordance with law. Certified copy of the order be filed with the Registrar of Companies within 30 days from receipt of the same. In terms of the provisions of Section 391 and 394 of the Companies Act, 1956 and in terms of the Scheme, the whole or part of the undertaking, the property, rights and powers of the Transferor Company be transferred to and vest in the Transferee Company without any further act or deed. Similarly, in terms of the Scheme, all the liabilities and duties of the Transferor Company be transferred to the Transferee Company without any further act or deed. Upon the Scheme coming into effect, the Transferor Company shall stand dissolved without winding up. It is, however, clarified that this order will not be construed as an order granting exemption from payment of stamp duty or taxes or any other charges, if payable in accordance with any law; or permission/ compliance with any other requirement which may be specifically required under any law - petitioner Companies would voluntarily deposit a sum of Rs. 1,00,000/- in the Common Pool Fund of the Official Liquidator within three weeks from today. The statement is accepted.

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• 2012 (12) TMI 154
  Complaint u/s 138 of Negotiable Instruments Act, 1881 - complaint without signature when subsequently verified by the complainant - maintainability - period of limitation - held that:- Writing as defined by General Clauses Act requires that the same is representation or reproduction of “words” in a visible form and does not require signature. - “Signature” within the meaning of “writing” would be adding words to the section which the legislature did not contemplate. Requirements of Section 142(a) of the Act is that the complaint must necessarily be in writing and the complaint can be presented by the payee or holder in due course of the cheque and it need not be signed by the complainant. correct interpretation would be that the complaint under Section 142(a) of the Act requires to be in writing as at the time of taking cognizance, the Magistrate will examine the complainant on oath and the verification statement will be signed by the complainant. In Japani Sahoo vs. Chandra Sekhar Mohanty,[2007 (7) TMI 572 - SUPREME COURT] held that “so far as the complainant is concerned, as soon as he files a complaint in a competent court of law, he has done everything which is required to be done by him at that stage. Thereafter, it is for the Magistrate to consider the matter to apply his mind and to take an appropriate decision of taking cognizance, issuing process or any other action which the law contemplates”. This Court further held that “the complainant has no control over those proceedings”. Taking note of Sections 468 and 473 of the Code, in para 52, this Court held that “for the purpose of computing the period of limitation, the relevant date must be considered as the date of filing of the complaint or initiating criminal proceedings and not the date of taking cognizance by a Magistrate or issuance of process by a Court”. Period of Limitation - held that:- Crucial date for computing the period of limitation is the date of filing of the complaint or initiating criminal proceedings and not the date of taking cognizance by the Magistrate. In the present case complaint was filed on June 3, 1998 which is well within the time and on the direction of the Magistrate, verification was recorded by solemn affirmation by authorized representatives of the complainant and after recording the statement and securing his signature, the learned Magistrate passed an order issuing summons against the accused u/s 138/142 of the Act. Complaint u/s 138 of the Act without signature is maintainable when such complaint is verified by the complainant and the process is issued by the Magistrate after due verification. The prosecution of such complaint is maintainable and we agree with the conclusion arrived at by the Division Bench of the High Court. Consequently, both the appeals fail and are dismissed.

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• 2012 (12) TMI 107
  Claim of liquidated damages - Consequences for breach of the contract - winding up petition filed on account of alleged dues - can an amount of unexpired lock-in period be treated as debt ? - Held that:- The petitioner is claiming payment on the basis of lock-in period mentioned in the Master Service Agreement (MSA) with respect to the sites procured by the respondent from the petitioner. Winding up petition is filed on that basis. The defence of the respondent is that it does not own any definite or certain amount to the petitioner and there is no admitted debt and also mentioned that he has already tendered an amount of Rs.1.13 Crores to the petitioner and, therefore, the petition has become infructuous. It is clear that no doubt the respondent had, to some extent, accepted its fault and also stated in reply dated 9.2.2010 that delay for completion of the project was result of lack of inflow of funds. However, on reading of reply dated 9.2.2010, one cannot say that the respondent had accepted its fault in entirety. Loans from banks/financial institutions could not be raised due to non-availability of title deeds of the project land which was to be deposited with the bank for creating equitable mortgage etc. Moreover, even if breach is accepted and the clause relating to liquidated damages gets triggered, still the obligation of the petitioners to prove that because of non-completion of the project in time, it has suffered some loss though proof of actual loss may not be required. In the communication dated 9.2.2010 itself, the respondent highlighted that there were no willing buyers in the market. Therefore, it cannot be said that even if this area in constructing form was made available to the petitioner, it could have been able to sell the same. Therefore, of the opinion that at present, having regard to the legal position explained above, 'debt' has not got crystallized and the matter needs evidence. Thus dismiss this petition. Where the premises were given by the petitioner to the respondent on license basis vide lease and license agreement dated 18.2.2008. Lock-in period of 33 months was prescribed and the entire amount is claimed on account of premature termination of agreement by the respondent. The petitioner is claiming total amount of the lock-in period. It is nowhere stated as to how it has suffered any loss on this account and whether the liquidated damages stipulated in the agreement are genuine pre-estimate damages,the consequence of that would be to dismiss this petition as well.

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• 2012 (12) TMI 106
  Dishonour of Cheque u/s 138 - dishonor due to change in authorized signatories - Stop Payment instructions and post-dated cheque - held that:- There is in our view no qualitative difference between a situation where the dishonour takes place on account of the substitution by a new set of authorised signatories resulting in the dishonour of the cheques already issued and another situation in which the drawer of the cheque changes his own signatures or closes the account or issues instructions to the bank not to make the payment. So long as the change is brought about with a view to preventing the cheque being honoured the dishonour would become an offence under Section 138 subject to other conditions prescribed being satisfied. Stoppage of cheque after notice to the drawer - held that:- dishonour on the ground that the payment has been stopped, regardless whether such stoppage is with or without notice to the drawer, and regardless whether the stoppage of payment is on the ground that the amount lying in the account was not sufficient to meet the requirement of the cheque, would attract the provisions of Section 138. Regarding offer to settlement after dishonor - held that:- The offer made by the respondent-company was in any case conditional and subject to the settlement of accounts. So also whether the cheques were issued fraudulently by the authorised signatory for amounts in excess of what was actually payable to the appellant is a matter for examination at the trial. That the cheques were issued under the signature of the persons who were authorised to do so on behalf of the respondent-company being admitted would give rise to a presumption that they were meant to discharge a lawful debt or liability. Allegations of fraud and the like are matters that cannot be investigated by a Court under Section 482 Cr.P.C. and shall have to be left to be determined at the trial after the evidence is adduced by the parties. Dishonor of cheque after resignation by the signatories after issuance of cheque - held that:- Just because the authorised signatories of the cheques have taken a different line of defence than the one taken by by the company does not in our view justify quashing of the proceedings against them. - authorised signatory liable to be prosecuted along with the company even after resignation. Rebuttable presumption - held that:- The instant matter however do not relate to a case of ‘stop payment’ instruction to the bank as the cheque in question had been returned due to mismatching of the signatures but more than that the petitioner having neither raised nor proved to the contrary as envisaged under Section 139 of the NI Act that the cheques were not for the discharge of a lawful debt nor making the payment within fifteen days of the notice assigning any reason as to why the cheques had at all been issued if the amount had not been settled, obviously the plea of rebuttal envisaged under Section 139 does not come to his rescue so as to hold that the same would fall within the realm of rebuttable presumption envisaged under Section 139 of the Act.

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• Service Tax

• 2012 (12) TMI 150
  Service Tax (Determination of Value) Rules, 2006 - Constitutional validity of Rule 5 Re-imbursement of expenses in the value of taxable services for the purposes of levy of service tax - Company providing consulting engineering services - Petitioner receives payments not only for its service but is also reimbursed expenses incurred by it such as air travel, hotel stay, etc - It was not paying any service tax in respect of the expenses incurred by it, which was reimbursed by the clients Section 67 states that ‘Service tax was to be charged on the gross value including reimbursable and out of pocket expenses’ – Charging Section 66 states that ‘the charge of service tax is on the value of taxable services’ - Section 67 (1) makes the provisions of the section subject to the provisions of Chapter V, which includes Section 66 - This is a clear mandate that the value of taxable services for charging service tax has to be in consonance with Section 66 which levies a tax only on the taxable service and nothing else - Rule 5 (1) which provides for inclusion of the expenditure or costs incurred by the service provider in the course of providing the taxable service in the value for the purpose of charging service tax is ultra vires Section 66 and 67 Rule 5 may also result in double taxation - If the expenses on air travel tickets are already subject to service tax and is included in the bill, to charge service tax again on the expense would certainly amount to double taxation. It is true that there can be double taxation, but it is equally true that it should be clearly provided for and intended; at any rate, double taxation cannot be enforced by implication Even if the rule has been made under Section 94 of the Act which provides for delegated legislation and authorises the Central Government to make rules by notification in the official gazette, such rules can only be made “for carrying out the provisions of this Chapter” i.e. Chapter V of the Act which provides for the levy, quantification and collection of the service tax. The power to make rules can never exceed or go beyond the section which provides for the charge or collection of the service tax. “The Rules were meant only for the purpose of carrying out the provisions of the Act and they could not take away what was conferred by the Act or whittle down its effect.” as decided in case of Taj Mahal Hotel (1971 (8) TMI 2 - SUPREME COURT) Rule 5 (1) of the Rules runs counter and is repugnant to Sections 66 and 67 of the Act and to that extent it is ultra vires. It purports to tax not what is due from the service provider under the charging Section, but it seeks to extract something more from him by including in the valuation of the taxable service the other expenditure and costs which are incurred by the service provider “in the course of providing taxable service”. What is brought to charge under the relevant Sections is only the consideration for the taxable service. By including the expenditure and costs, Rule 5(1) goes far beyond the charging provisions and cannot be upheld. Sub-ordinate legislation - The fact that the rules framed under the Act have to be laid before each House of Parliament would not confer validity on a rule if it is made not in conformity with Section 40 of the Act. Quash the show-cause notice and allow the writ petition in favour of assessee.

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• 2012 (12) TMI 139
  Refund claim - Documentation charges - Held that:- Service tax liability having been discharged on the documentation charges under the category of Clearing and Forwarding Agency as shown in Suppliers invoice submitted by the appellant. - Following the decision in case of [Sarvesh Refractories (P) Ltd vs.CCE, 2007 (11) TMI 23 - SUPREME COURT OF INDIA] decided in favour of assessee Denial of refund claim of the service tax paid on account of documentation charges to the appellant is not sustainable in law - appeal allowed with consequential relief.

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• 2012 (12) TMI 138
  Demand of service tax from the main service provider and subcontractor - double taxation on same service - Held that:- Same service for which the contractor has procured an order, does not stand actually provided by him but is passed on to sub-contractor, who provided the actual service, it cannot be said that the contractor is liable to pay duty on the same. Service definitely stands provided only once. As such by no stretch of imagination service tax in respect of the same service can be paid for the second time. It Is not a case where the service provided by sub-contractor is further used by him for providing services to his buyers. As such, the example of inputs being used in the final product and both leviable to excise duty is not apt - issue remanded back to the adjudicating authority in respect of the contract which has been awarded by M/s. Reliance Industries to M/s. Viral Builders - appeal has to be allowed by way of remand to the adjudicating authority to reconsider the issue afresh along with the issue of M/s. Viral Builders to reconsider the issue after following the principles of natural justice - appeal is allowed by way of remand.

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• 2012 (12) TMI 137
  Business auxiliary services - Held that:- goodwill for transfer of fly ash business has been fixed at Rs. 4,21,34,400/- and the consideration is paid to SSE therefore,no merit in the Revenue's appeal - Accordingly, the appeal is dismissed as devoid of merits - cross objection is also disposed of.

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• 2012 (12) TMI 114
  Display of the latters logo/marks/sign on the uniform of the cricketers - Player of cricket received fees from M/s. Royal Challengers Sports Pvt. Ltd. for playing IPL (Indian Premier League) tournaments - Royal Challengers were the franchisee of the Board of Control for Cricket in India (BCCI). - Held that:- It is evident from the records of this case that the contentions raised by the assessee in his replies to the show-cause notices were not heeded by the adjudicating authority which chose to rely on Wikipedia and other materials without referring to the contentions of the assessee. It appears, to Wikipedia was elaborately referred to in the impugned order without putting the assessee on notice, which by all means amounts to violation of natural justice. Further, the case of department considered by the learned Commissioner mainly based on the MoUs executed by Royal Challengers with the owners of logo/mark/sign which were displayed by the cricketer on his uniform during the course of the tournaments, but no copy of any such MoU was supplied to the assessee, nor even mentioned in the list of relied upon documents attached to the show-cause notices. This is yet another instance of denial of natural justice to the appellant. Matter remanded back for de novo adjudication in accordance with law.

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• 2012 (12) TMI 113
  Condonation of delay of 383 days in filing Appeal – rebate claim for service tax paid on input services used for rendering exported services. - Following the judgement of court in case of [RAM NATH SAO @ RAM NATH SAHU AND OTHERS Versus GOBARDHAN SAO AND OTHERS 2002 (2) TMI 1280 - SUPREME COURT] held that:- each case has to be examined with reference to the facts of the case. The question whether there is a negligence on the part of the appellant is a very relevant question. Further the standards to be adopted while dealing with different types of litigation also has to be different. The standards applicable for a case involving suspension of CHA licence or in the matter of taking steps for substitution of heirs to a property cannot be applied to a matter involving refund of taxes paid. The appellants have been negligent in pursuing the remedies available to them. The power granted to the Tribunal under Section 86(5) is to be exercised only if there has been sufficient cause for the delay. We are not satisfied that the reasons explained are reasonable and sufficient to justify the delay of 383 days. - Decided against the assessee.

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• 2012 (12) TMI 112
  Cenvat Credit - Removal of inputs and capital goods for providing output servcies - Rule 3(5) - Held that:- If any Inputs or Capital goods are removed outside the premises of the provider of output service for providing such service, there is no requirement for any demand of duty or reversal of credit. Hence, the impugned order is set aside and the appeals are allowed.

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• Central Excise

• 2012 (12) TMI 149
  Classification of ‘soft serve' - Common Parlance Test - Whether classifiable under heading 21.05 (as claimed by the revenue) or under heading 04.04 or 2108.91 (as claimed by the assessee) of the Central Excise and Tariff Act, 1985 - held that:- in the absence of a statutory definition in precise terms; words, entries and items in taxing statutes must be construed in terms of their commercial or trade understanding, or according to their popular meaning. In other words they have to be constructed in the sense that the people conversant with the subject-matter of the statute, would attribute to it. Resort to rigid interpretation in terms of scientific and technical meanings should be avoided in such circumstances. This, however, is by no means an absolute rule. When the legislature has expressed a contrary intention, such as by providing a statutory definition of the particular entry, word or item in specific, scientific or technical terms, then, interpretation ought to be in accordance with the scientific and technical meaning and not according to common parlance understanding. Tribunal erred in law in classifying ‘soft-serve’ under tariff sub-heading 2108.91, as “Edible preparations not elsewhere specified or included”, “not bearing a brand name”. We hold that ‘soft serve’ marketed by the assessee, during the relevant period, is to be classified under tariff sub-heading 2105.00 as “ice-cream”. Regarding alternate plea - assessee contended that in the event ‘soft serve’ was classifiable under heading 21.05, the assessee was entitled to the benefit under Notification No. 16/2003-CE (NT) dated 12th March 2003. - held that:- We are afraid we are unable to take this argument into account since such a plea was not urged before the Tribunal in the first place. Given that this is a statutory appeal under Section 35L of the Act, it is not open to either party, at this stage of the appeal, to raise a new ground which was never argued before the Tribunal. Even if we assume that this ground had been urged before the Tribunal, in our view, learned counsel’s reliance on this notification is misplaced. Upon a reading of the notification it is clear that the exemption in the notification is granted for the whole of excise duty which was payable on such softy ice cream and non alcoholic beverages dispensed through vending machines, but was not being levied during the relevant period, which is not the case here. In the present case, as aforenoted, three show cause notices had been issued to the assessee alleging that ‘soft serve’ was classifiable under heading 21.05 and attracted duty @ 16%. The show cause notices issued by the revenue also indicated that the assessee was liable to pay additional duty under Section 11A of the Act. - This clearly shows that the excise duty was payable by the assessee and was being levied by the revenue. - Decided against the assessee.

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• 2012 (12) TMI 148
  Cenvat credit - waiver of pre deposit - duty paid inputs like steel plates for fabrication of various machinery, tanks etc. - held that:- there is no dispute as regards the receipt of the plates and consumption thereof for fabrication of the storage tanks in the refinery. It is also seen that the said show cause notice is only on the ground that the appellant could not have availed the cenvat credit of the inputs which were received prior to 10.09.04. This adjudication order has attained the finality as department has not filed any appeal. Extending the same logic, prima-facie we find that there cannot be any dispute regarding the availment of cenvat credit by the appellant in this case as we have already recorded that there is no dispute as to receipt of the plates and the duty paid nature of the same and consumption thereof for the fabrication of storage tanks in the appellant's factory premises. - prima facie case in favor of assessee - stay granted.

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• 2012 (12) TMI 147
  Cenvat credit - Import of capital goods availing the benefit of Notification No. 25/2002-Cus., by paying concessional rate of duty – importer has two units – capital goods transferred from DTA unit to 100% EOU as such – Held that:- DTA unit having taken the credit on the capital goods, are required to reverse the credit in terms of Rule 3 (5) of CENVAT Credit Rules - E.O. unit though belonging to the same legal entity operates under different provisions on tenability and benefits. Whether the credit taken by them on capital goods could be utilised by them depends upon whether there are any domestic clearances by them are payment of duty. Therefore, the plea of revenue neutrality cannot be accepted unconditionally - DTA unit directed to reverse the CENVAT credit taken by them on the capital goods removed as such or to pay equivalent amount in cash

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• 2012 (12) TMI 146
  Exemption to pipes needed for delivery of water from its sources to the plant and from there to the storage facility. – PSCC Pipes manufactured by the appellant were laid to make pipeline from Junia to Bhinay to carry untreated water. - Notification No. 6/2002-C.E., dated 1-3-02 as amended vide Notification No. 47/2002-C.E., dated 6-9-2003 - Held that:- the Notification has to be interpreted to cover the pipes which were needed to deliver water not only up to the first storage point but also to the second and subsequent storage points such as elevated storage reservoir where water was further treated for chlorinisation. If the intention of the Govt. was to restrict the exemption for pipes upto first storage point, the Notification should have been accordingly worded from the beginning. Assessee can avail the benefit of Notification as the notification is not worded about the various storage points properly - in favour of assessee.

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• 2012 (12) TMI 145
  CENVAT Credit - Service Tax paid by him as a recipient of services from foreign national for the purpose of obtaining the orders from the foreign countries – denial on the ground that the appellant is not eligible for availing credit under the provision of Rule 2(l) of CENVAT Credit Rules, 2004 - period involved in this case is prior to 31.03.2008, on which day the definition under Rule 2(l) of CENVAT Credit Rules, 2004 has undergone change - commission paid by the appellant is for procuring the orders for goods manufactured by him - Service Tax liability on the appellants made under Section 66A, is a liability which should have been discharged by commission receiver, in which case, the appellant would have been eligible to avail CENVAT Credit of Service Tax so paid - activity of payment of commission during the relevant period is in respect of the business activity of appellant – cenvat credit allowed – in favor of assessee

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• 2012 (12) TMI 144
  Adjustment of excess payment of duty against short-payment of duty upon finalisation of provisional assessments - Held that:- Adjustment of the excess payment of duty against the short-payment of duty for the period covered by the same return is what is impliedly permitted - Such claim shall be considered on monthly basis. In other words, the amount of duty paid in excess for a month covered by a return may be adjusted against the amount of duty short-paid (if any) for the same month. For such adjustment of duty burden of duty has to be borne by the assessee as per Doctrine Of Unjust Enrichment and not the Consumer. - Matter remanded back for fresh decision.

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• 2012 (12) TMI 143
  Waiver of pre-deposit – cenvat credit - revenue submitted that credit of Education Cess is permissible only for two times whereas the applicants in the present case have availed the benefit of credit at third time. - Held that:- Applicability of Rule 3(7) of the Cenvat Credit Rules and in the present case major portion of the dispute is after the amendment of Cenvat Credit Rules i.e. 7-9-2009 - Education Cess and Secondary Education Cess as referred to in Part B of the proviso to the Cenvat Credit Rules, prima facie, credit is available to the applicants - Stay petition is allowed.

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• 2012 (12) TMI 142
  CENVAT credit - Denial of credit in respect of the capital goods - Depreciation claimed under the Income Tax Act - Held That:- As Documents were not available to the original authority and that authority was therefore handicapped in taking a decision on the dispute. Appellate Authority did not properly examine the documents produced by the assessee - The matter was remanded back to the original authority.

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• 2012 (12) TMI 141
  Cenvat credit - CENVAT credit in respect of Service Tax paid on services namely clearing charges, commission on export sales, material handling charges, terminal handling charges, Bank Commission charges and Aviation charges have been availed by the appellant as input service – CENVAT credit has been denied to the appellant on the ground that the above stated services do not qualify within the definition of input services as per Rule 2(I) of CENVAT Credit Rules, 2004 - Held that:- Assessee is entitled to avail input service credit on the services availed by them in the course of their business of manufacturing - appellant has availed all the above services in the course of business of manufacturing - appellant is entitled to avail input service credit on the services

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• 2012 (12) TMI 140
  Waiver of pre-deposit - 100% Export Oriented Unit - demand of SAD on DTA clearances – manufacturers of fatty acids, alcohol and soap noodles - stock transfer to their Sion unit – Held that:- There is merely stock transfer to their Sion unit which finally has paid ST/VAT on their clearance - applicant has paid VAT/ST on the clearance made to other than their Sion unit. Therefore, the applicant has correctly availed the exemption under Notification 23/03 which provides exemption to DTA clearance on the goods produced by EOU and as per condition on the goods which are cleared in DTA are not exempt by state government from payment of ST/VAT - pre-deposit waived

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• 2012 (12) TMI 105
  Cenvat Credit on GTA Services - Whether factory gate at the port of export would be the place of removal when the goods are cleared for export with bond – held that:- Respondent would be eligible for cenvat credit of service tax paid on GTA services availed for transportation of the goods from the factory to the port from where the goods were placed on board the vessel for export to their overseas buyer - issue stands decided in favour of the respondent as per judgment of Tribunal, that the respondent’s contract with the overseas buyers was on C that in view of this, the place of removal would be the port from where the goods were exported – no merit in the revenue’s appeal - same is dismissed.

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• 2012 (12) TMI 104
  Excisable Goods - reversal of cenvat credit – held that:- Appellant is engaged in manufacture of sugar and molasses in which process the waste product i.e. Bagasse and press mud are generated, it cannot be said that the appellant possibly could have maintained separate account for inputs for production of excisable items sugar and molasses and exempted items i.e. Bagasse and press mud. - Bagasse generated in the course of crushing of sugarcane is not an excisable item notwithstanding the amendment of Section 2(d) of the Central Excise Act, 1944 vide Finance Act, 2008 which became operative w.e.f. 13.05.2008 - Bagasse and press mud being waste product those cannot be termed as excisable goods so as to attract the provision of Rule 6(2) and Rule 6(3) of the Cenvat Credit Rules, 2004 - impugned order is, therefore, not sustainable and is set aside - appeal as well as stay petition is allowed.

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• 2012 (12) TMI 103
  Denial of exemption at Sr. No. 91 of Notification No. 6/2006-C.E., - exemption was available to all goods supplied against International Competitive Bidding subject to condition that the goods in question should have been eligible for exemption from duties of Customs when imported into India – Held that:- Deemed export benefits dealt within para 8.6.1 and 8.6.2 deal with incentive granted by DGFT and not exemption granted by Ministry of Finance and there is no reason to refer to those conditions so long as they are not referred to in the notification claimed - relief from excise duty is not granted through the mechanism of deemed export but administered through exemption notification issued - Revenue has not made any case that any of the conditions specified in the exemption notification is not fulfilled - exemption cannot be denied for the reason that sub-contractor did not take part in International Competitive Bidding - waiver of pre-deposit allowed

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• 2012 (12) TMI 102
  CENVAT credit on outdoor catering service – Held that:- When the assessee provides outdoor canteen facilities because of a statutory obligation imposed on him under Section 46 of the Factories Act, it becomes a condition of service as far as the employees are concerned. He has paid the service tax on outdoor canteen services - cost incurred in rendering such service will be included in the cost of production - credit of service tax would be allowable to a manufacturer even in cases where the cost of the food is borne by the worker – matter remanded to original authority in de novo proceedings to ascertain whether respondent employed more than 250 workers during the material period - it is found that the relevant conditions have been satisfied by the respondent, they would be entitled to the CENVAT credit in

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• 2012 (12) TMI 101
  Demand - fraud - attachment of the property - department's request for continuance of attachment and directed the appellant to deposit an amount of Rs.6 crores - appellant's submission that the attachment of the property by the Revenue should be ordered to be released so as to enable him to dispose the same and deposit Rs.6 crores as directed by the Tribunal – Held that:- Difference of opinion between members regarding following issues - Whether it is justified to revoke the notice of attachment in respect of all the four items of properties at this stage when the stay order has not taken effect at all - Whether in the facts and circumstances of the case it will be better to order release of properties only to the extent necessary to raise Rs. Six crores at this stage - Whether it will be appropriate to allow the Revenue to take action to realize Rs. 6 crores by completing the process of attachment and sale of such property - matter referred to larger bench.

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• 2012 (12) TMI 100
  SSI Exemption - value of clearance – appellant were also manufacturing medicines under the brand-name of others for which they were paying duty without availing benefit under the above notification – alleged that exemption could not be availed on any clearance beyond the value limit of Rs. One crore, even if the first clearances included duty paid clearance – Held that:- with the reference of case of K.N. Chari Rubber Plastics (2001 (4) TMI 157 - CEGAT, CHENNAI ) - exemption for small scale units allowed – in favor of assessee

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• 2012 (12) TMI 99
  Whether goods procured duty free from DTA by a DTA unit for manufacture of finished goods when cleared to a unit in SEZ shall amount to export – Held that:- Clarification issued by Board vide Circular No. 29/2006-Cus., dated 27-12-2006 clarifying that section 2(m) of SEZ Act, 2005 envisages that supply of goods or providing services, from DTA to a SEZ unit or SEZ developer shall constitute export - supply of goods to buyers who had further supplied the same to SEZ have to be held as eligible exempted clearances in terms of Rule 19(2) read with Notification No. 43/2001-C.E. (N.T.) – in favor of assessee

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• 2012 (12) TMI 98
  Denial of exemption under Notification No. 5/99-C.E. - alleged that required certificate was not produced at the time of clearance the appellants were not eligible for the exemption - manufacture of Cotton and Synthetic yarn - sale to National Handloom Development Corporation Lucknow – Held that:- Condition involved in this case is of a type where compliance after clearance of goods cannot be fatal to the claim - whether the certificates produced cover the quantities issued, whether it is issued by the proper authority etc. have not been verified by the lower authorities - matter remanded to the lower authority

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• 2012 (12) TMI 97
  Refund – export - adjudicating authority after going through refund claims and all the relevant documents has sanctioned the refund claims to the appellants holding that the assessee is eligible for refund to the extent of ratio of export turnover to the total turnover - appeals filed by the Revenue were decided by the Commissioner (Appeals) vide impugned Order-in-Appeal holding that the excess refund sanctioned to the assessee are liable to be rejected and recovered from them – Held that:- Commissioner (Appeals) has given finding only in those cases where excess refund was granted to the assessee on the basis of proportionate credit and he has not considered the cases where less refund were sanctioned to the assessee, though the appeals were filed by the Revenue in respect of all 16 Orders-in-Original - matter remanded back to the original adjudicating authority to examine and decide the refund claims on the basis of actual use of inputs gone into the manufacture of final product exported under bond or under letter of undertaking month-wise

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• 2012 (12) TMI 96
  Communication of orders to parties – Held that:- Communication of the order to authorised agent of a person is sufficient communication. Thus when the order was passed by the Tribunal on 22nd July, 2010 in presence of counsel of the appellant, the order shall also be deemed to be communicated on the same date and the submission of the appellant that unless the order is received by the appellant in person, the order shall not be treated to be communicated to the appellant, cannot be accepted - appeal is dismissed

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• CST, VAT & Sales Tax

• 2012 (12) TMI 156
  Classification of steel tubes - exemption from CST - inter-state sales - constitutional validity of the notification No.F 10/11/2005/CT/V (20) - steel strips are manufactured in the integrated plant same is used for manufacture of steel tubes – Held that:- Classification as allegedly introduced by notification No. F 10/16/2002/CT/V (17) dated 12-2-2002 has been rescinded by the impugned notification No. F 10/11/2005/CT/V (20) - Notification No. F 10/16/2002/CT/V (17) dated 12-2-2002 deals with tax payable under sub section (1) of section 8, if the same is rescinded by the impugned notification, the steel tubes may come under section 8(2) of the CST and the rate has been reduced from 2% to 1% by notification No. F- 10/11/2005/CT/V (31) dated 31-5-2005. Thus, the facts which are necessary for adjudication is that whether the petitioner is liable to be taxed under section 8(2) or section 8(1) that cannot be ascertained without proper assessment by the Assessing Authority on the basis of return submitted by the dealer - petition cannot be entertained at this stage on the ground that the entire facts are not available, as the petitioner ought to have filed the return before the Assessing Authority, and thereafter the decision taken thereon would be appellable before the appellate authority - writ petition dismissed

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• 2012 (12) TMI 115
  Punjab Value Added Tax - Detention of goods – alleged that attempt to evade/avoid tax was made by the petitioner by not reporting the paddy/rice at the barrier - goods were meant for trade and not covered by proper/genuine documents – Held that:- Vehicle has to be released in accordance with provisions of Section 51(6)(a) of the Act. In respect of the goods, the explanation under Section 51(7) of the Act must be interpreted in the light of the provisions of sub Section (5) of Section 62 of the Act. Accordingly, the principles of harmonious construction would lead us to a conclusion that 30% of the penal amount be deposited by the petitioner - writ petition stands disposed of

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