TMI Tax Updates - e-Newsletter
February 23, 2013

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Law of Competition Service Tax Central Excise CST, VAT & Sales Tax Wealth tax

Articles

1. Learning from recent case of Deloitte Consulting India Pvt. Ltd. - we must be very careful while making claims in returns and also while withdrawing claims by filing revised return.

   By: DEVKUMAR KOTHARI

News

1. Restructure of Corporate Loans

2. Biometric Money Dispensing Machines

3. 373 Crore Farmers benefitted to the Extent of Rs. 52,259.86 Crore under Awards

4. Functioning of NABARD

5. Loan Recovery Agents

6. Differential interest Rates on Home Loans

7. Implementation of Central Projects

8. FM to Dedicate Centralized Processing Cell for Tax Deducted at Source, CPC (TDS) Tomorrow

9. Directorate General of Central Excise Intelligence Detects Cases of Tax Evasion of Over Rs. 25 Crore by Misusing Cenvat Credit Facilities

10. Exchange Rate of Foreign Currency Relating to Imported and Export Goods Notified

11. RBI Guidelines on Saving Fund Account Holder; Banks to Ensure that Adequate Stocks of Cheque Books of 20 / 25 Leaves are Maintained With All the Branches to Meet the Requirements of their Customers

12. Penetration of Insurance Policies; IRDA to Come-Out With a New Policy Giving Automatic Clearance to Standard Life Insurance Products and Relax Investment Guidelines to Encourage Flow of Funds into Infrastructure Sector

13. Banking Licence not Required by Cooperative Credit Societies

14. Concept of Financial Super Market Started by A PSB

15. NTPC ties up USD 250 million term loan facility

16. Payment of statutory dues, salary and wages in sick/loss making CPSEs under the Department of Heavy Industry

17. Rationalisation of pay and allowance to licensed category of employees of Air India in line with Industry practice and standard over and above the DPE guidelines

Notifications

Central Excise

1. 04/2013 - dated 20-2-2013 - CE

Amends Notification No. 64/95-Central Excise dated 16 March 1995-Seeks to extend exemption to project LR-SAM of Ministry of Defence

Companies Law

2. GSR 87(E) - dated 15-2-2013 - Co. Law

NIDHIS & Mutual Benefit Societies - notified NIDHIS Companies - Amendment in Notification No. Gsr 978, Dated 28-5-1963

Customs

3. 23/2013 - dated 21-2-2013 - Cus (NT)

Rate of exchange of conversion of each of the foreign currency with effect from 22nd February, 2013

Income Tax

4. 13/2013 - dated 20-2-2013 - IT

SCIENTIFIC RESEARCH EXPENDITURE - APPROVED SCIENTIFIC RESEARCH ASSOCIATIONS/INSTITUTIONS - FOUNDATION FOR REVITALIZATION OF LOCAL HEALTH TRADITIONS, BANGALORE

5. 12/2013 - dated 20-2-2013 - IT

SCIENTIFIC RESEARCH EXPENDITURE - APPROVED SCIENTIFIC RESEARCH ASSOCIATIONS/INSTITUTIONS - INTERNATIONAL INSTITUTE OF INFORMATION TECHNOLOGY BANGALORE, BANGALORE

SEZ

6. S.O. 363(E) - dated 13-2-2013 - SEZ

Under Section 4 of the Special Economic Zones ACT, 2005 - Electronics Technology Parks-Kerala

Circulars / Instructions / Orders

VAT - Delhi

1. F.No.1(1)/T&T/collection/e-pay/2012-13/1602 - dated 13-2-2013

All the registered dealers and contractees (TAN holders) will make payment of their tax, interest and penalty or any other payment due under the DVAT Act 2004 and CST Act compulsorily through Electronic Mode of payment from e-payment portals of the notified banks.

Highlights / Catch Notes

Income Tax

• Assessee Can Claim Depreciation on Machinery During Trial Run and Non-Owned Cable Network Parts.

  Case-Laws - AT : Depreciation - on trial run of machinery assessee is entitled to depreciation - assessee is eligible to claim depreciation on the cable network even though the entire network is not owned by it. - AT
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• Assessee Can Hold Land as Capital Assets and Claim Section 54F Benefits on Plot Sales.

  Case-Laws - AT : Exemption u/s 54F - assessee engaged in purchase and sale of plots/lands - it did not mean that assessee was debarred from holding some plots/land as capital asset and claim benefit u/s 54F - AT
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• Volcker Report: No TDS Liability on Unethical Iraq Commission Payments u/s 40(a)(i) of Income Tax Act.

  Case-Laws - AT : Commission to foreign agent - Volcker Committee report - unethical payment of commission to agent in Iraq - Section 40(a)(i) shall not be applicable in the given case since there is no liability on the appellant to deduct TDS - AT
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• Assessee allowed section 80-IA deduction despite restrictions on selling windmill power directly to customers at lower rates.

  Case-Laws - AT : Deduction 80-IA – windmill - Had the assessee not been saddled with the restrictions of supplying surplus power to the SEB, it would have supplied the power to ultimate customers at lower price - Deduction allowed - AT
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• Receipt Vouchers Alone Don't Justify Ad Hoc Discount Disallowance in Income Tax Assessments: Key Principle Highlighted.

  Case-Laws - AT : Discount to customers - Merely because the receipt vouchers were made by the assessee cannot be a ground to make ad hoc disallowance out of the claim of discount - AT
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• Mutuality Principle: Members, Guests, and Affiliates Exempt from Taxation u/s 115JB.

  Case-Laws - AT : Principles of mutuality – “member” includes guests and relatives of the members and members of the affiliated clubs - Once the income is found to be covered by principle of mutuality, the same cannot be brought to tax even under the provisions of s. 115JB - AT
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• Advances for Share Allotment Not Classified as Loans; No Penalties u/ss 271D and 271E of IT Act.

  Case-Laws - AT : Sec. 269SS and 269T - there is bonafide belief to the effect that the receipt of advances against allotment of shares and repayment of share money would not be termed as loans or deposits - no penalty u/s 271D and 271E- AT
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Customs

• Timber Import Rules: Logs Must Be Cut to 40 Feet Before Transport; Exemption Available Under Notification No.102/2007.

  Case-Laws - HC : Notification No.102/2007 – import- Before transportation of timber, they were required to reduce its size since the RTO rules did not permit transportation of logs longer that 40feet – Exemption would be available - HC
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Indian Laws

• Energy Company Secures $250 Million Loan to Enhance Operations and Expand Infrastructure Under Section 123.

  News : NTPC ties up USD 250 million term loan facility
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• Dominance Determination Key in Competition Act's Section 4 Breach Cases: No Dominance, No Violation Inquiry Needed.

  Case-Laws - AT : Breach of provisions under Section 4 of Competition Act, 2002 - Once the AAI held not to be in a dominant position, there would be no question of going further into the breach or otherwise of Section 4 of the Act. - AT
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Wealth-tax

• Wealth tax not assumed on assets from income tax additions after 8 years.

  Case-Laws - HC : Wealth Tax consequent to addition in Income Tax - assets - presumption - cannot be held to be the assets in the hands of the assessee after the period of more than eight years on the basis of addition in Income Tax - HC
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Service Tax

• Rent-a-Cab Services: Entire Gross Amount Considered for Tax Liability When No Separate Tax is Collected.

  Case-Laws - AT : Rent-a-cab Services - when no tax is collected separately, the gross amount has to be adopted to quantify the tax liability treating it as value of taxable service plus service tax payable - AT
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• Central Railway Faces Service Tax Demand for Pre-Exemption Maintenance on Private Sidings; Appellant Must Deposit 20% of Amount.

  Case-Laws - HC : Maintenance and repairs of railway sidings owned by private parties carried out by Central Railway - The demand which relates period is prior to the exemption notification - appeleant direct to deposit an amount equivalent to 20% - HC
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Central Excise

• Exemption Denied: Notification No. 74/93-CE due to Board being the user, not a State Government Department.

  Case-Laws - AT : Exemption - Ntf. No. 74/93-CE – the intended or actual user of the poles also being the Board itself, and not any Department of the State Government, the other condition are is not fulfilled. - Exemption denied - AT
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Case Laws:

• Income Tax

• 2013 (2) TMI 506
  Provision of salaries - deduction claimed u/s 37 (1) disallowed - assessee submitted that it is a Public Sector Undertaking (PSU) & the revision of salary depend upon the decision of the Government - Held that:- As decided in Bharat Earth Movers vs. CIT [2000 (8) TMI 4 - SUPREME COURT] if a business liability has definite origin in the accounting year, the deduction should be allowed although the liability may have to be quantified and discharged at a future date. What should be certain is the incurring of the liability. It should also be estimated with reasonable certainty though the actual quantification may not be possible. If these requirements are satisfied, the liability is not a contingent one. The liability is in praesenti though it will be discharged at a future date, it does not make any difference if the future date on which the liability shall have to be discharged is not certain. Thus following the above case AO is directed to allow the claim of deduction of provision for salary of Rs.40.71 lakhs as the services rendered are in presentee - in favour of assessee. Disallowance of deduction of provision of OFC charges considering as prior period expenses - assessee's submission that it is the demand note received from the Department of Telecommunication (DOT) - Held that:- As decided in Sourashtra Cement and Chemical Industries Ltd. vs. CIT [1994 (10) TMI 30 - GUJARAT HIGH COURT] that merely because expenses relate to a transaction of an earlier year, it does not become a liability payable in the earlier year unless it can be said that the liability was determined and crystallized in the year in question on the basis of maintaining accounts on mercantile basis. As the facts of the present case are identical with the ratio laid down by the Gujarat High Court, no hesitation in following the findings. Also see Satna Stone & Lime Company vs. CIT [1989 (9) TMI 11 - CALCUTTA HIGH COURT] - in favour of assessee. Depreciation on new earth stations at Ernakulam and Jalandhar on Trial run - Direction of the CIT(A) to allow depreciation disallowed by AO as the same have not been put to use for business purpose - Held that:- The claim of the assessee is based on the trial run of the equipments before putting them for commercial use. And as find that the documents which were submitted before the lower authorities clearly show that the assets were put to test run before the close of the financial year under consideration. Thus as decided in ACIT vs. Ashima Syntex Ltd. (2000 (8) TMI 22 - GUJARAT HIGH COURT) that on trial run of machinery assessee is entitled to depreciation - it is not in dispute that the assets had been acquired by the assessee during the previous year and is put to use for the purposes of business or profession and as the assets have been put to use for less than 180 days, the assessee has rightly claimed depreciation @ 50% of the allowable rate of depreciation - in favour of assessee. Depreciation on the ownership of Flag Project - Direction of the CIT(A) to allow depreciation disallowed by AO as assessee is not a complete owner of the asset which is in the form of cable network and owned by a consortium of number of operators - Held that:- The words “wholly” or “partly” have been inserted in Section 32 with effect from 14.4.1997 and as such, the assessee is eligible to claim depreciation on the cable network even though the entire network is not owned by it. The CIT(A) concluded that the assessee is clearly entitled to claim the depreciation and directed the Assessing Officer to allow depreciation accordingly - in favour of assessee.

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• 2013 (2) TMI 505
  Benefit of deduction under section 54F denied - Jurisdiction u/s 263 by Commissioner stating that assessee was engaged in business of sale and purchase of properties thus he could not claim benefit of deduction under section 54F - The assessee was deriving income from 'dealing in property transactions' - as per CIT(A) claim qua sale of some plots/land could not have been treated by the AO as 'capital gain' - Held that:- AO had himself treated the main income of the assessee from purchase and sale of plots/land. The assessee himself has disclosed this fact over the years. The Assessing Officer has made proper inquiries in this regard & the Commissioner (Appeals) has proceeded on a notion that an assessee, whose main business was purchase and sale of plots/lands, could not claim LTCG on the sale of some plot/land even if these were held for quite some time and the sale consideration even from those plots to be treated as assessee's business income. There is no dispute regarding the source of income of the assessee which was mainly from the business of purchase and sale of plots/lands. Yet, it did not mean that assessee was debarred from purchasing and holding some plots/land as capital asset and claim benefit under section 54F. The entire facts regarding this aspect go to prove that the assessee had kept the impugned asset and has earned LTCG, which has been invested in terms of provisions of section 54F. The AO' action did not call for any enquiry in this regard as he had taken one of the possible view keeping in view the entire facts. The Commissioner can have his own view and that may be other possible view. But in such situations, the order cannot be treated as erroneous.The Commissioner cannot revise the order on this aspect. AO has also made requisite enquiries regarding other aspects of investments made and liabilities shown by the assessee and other expenses, which is clearly explained by the assessee - the order of the Commissioner is set aside and that of the Assessing Officer is restored - in favour of assessee.

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• 2013 (2) TMI 504
  Addition on account of Value of Closing Stock – AO added an amount under the head under valuation of closing stock – weight of closing stock in the valuation report of valuer and closing stock on the date of survey differ – Held that:- Assessee is a registered dealer of gold ornaments having TIN and duly filed the quarterly returns of VAT - VAT audit report was also obtained from the Chartered Accountant certifying the total turnover and stock, reflecting the gross weight of ornaments and net weight contents of gold in the ornaments as also the method of stock valuation – VAT audit report was duly submitted with the sales tax authorities and no objection and/or adverse inference was drawn by Department. Further excess closing stock was incorrectly ascertained on the basis of figures as per the stock records in GS- 1 I and GS-12 which were not up to date in respect of all the entries as on the date of survey – There was difference of 91.365 gms. in gross weight, this difference is considered to be quiet negligible - Addition made by the A.O. on account of excess stock deserves to be deleted because there was no excess stock and that the approved valuer has not correctly ascertained the net weight of gold ornaments valued by him – Case of Prakash Motwani Vs. ITO [2009 (6) TMI 650 - ITAT AGRA] is relevant here – Against the revenue.

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• 2013 (2) TMI 503
  Commission to foreign agent - Assessee paid commission to foreign agent - Assessee’s name was appearing in the report of Volcker Committee, wherein it was mentioned that commission paid to parties outside India in respect of sale of goods to Iraq is unethical - On this basis AO disallowed the commission payments as it is illegal payment – Held that:- Mere appearance of the name of the appellant-company in the Volcker Committee’s Report could not lead to an adverse inference against the appellant because the appellant itself has admitted to have made export gainst sale contracts procured from the Govt. of Iraq and payment of commission therefor - Payment of commission by the appellant for the services rendered in procuring the sale contracts and for facilitating smooth execution of the sale contracts. The appellant has produced ample material in support of the reasonableness and legality of the payment of commission - commission was paid through the normal Banking channel - payment of commission was made for the purpose of business on grounds of business expediency and there was no element of illegality in making the payment – Against the revenue. Further, Section 40(a)(i) shall not be applicable in the given case since there is no liability on the appellant to deduct taxes at the time of payment of the commission to an agent outside India and deposit the same with the tax authorities – No violation of Section 195 - Against the revenue.

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• 2013 (2) TMI 502
  Claim for deduction under Section 80-IA – Assessee is in the business of manufacturing of yarn - Also installed three windmills - Electricity Board purchased power from assessee at the rate of Rs. 2.70 p.u. and sold to assessee’s textile units at 3.50 p.u. – For deduction u/s 80-IA in respect of the power produced by the windmills, assessee adopted the rate at which the power was sold by Electricity Board to it, after making adjustments for the units generated by the assessee – Held that:- It is not that the same power that was produced by the assessee was supplied by the Electricity Board to its yarn manufacturing unit. The adjustment in the bills as a barter arrangement was, therefore, only for the convenience of the Electricity Board. Section 80-IA provides that where an assessee, which is eligible for 80-IA benefits, transferred its goods or service to its business other than the eligible business, the consideration if any recorded for such transfer in the accounts of the eligible business, should correspond to the market value of such goods or services - Determining of tariff between assessee and Electricity Board cannot be considered as an exercise undertaken in a competitive environment and under market conditions – Further Had the assessee not been saddled with the restrictions of supplying surplus power to the State Electricity Board, it would have supplied the power to ultimate customers at a price not less than Rs. 3.50 per unit, being the rate charged by the Board from its industrial consumers. Thus consideration recorded by the assessee for transfer of power for captive consumption, at Rs. 3.50 per unit, corresponds to the market value of such power – In favour of assessee.

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• 2013 (2) TMI 501
  Addition u/s 68 – Advance from customers – Assessee is a dealer of tractors and spare parts manufactured by Mahindra Tractors – There was unsecured loan in the books – It was received through demand draft - six parties had advanced against purchase of tractors to be billed in the subsequent year - AO taxed the same u/s.68 – Held that:- Assessee had discharged the onus which lay upon him and it was not the case for the AO to make pertinent note of the disclosure in the balance sheet that the trade creditors were to be separately indicated other than sundry creditors and unsecured loans – Assessee was not to be burdened under the provisions of Section 68 in respect of the six parties who have been adjusted from their advance in the subsequent sales – Further two persons who could not appear before the AO, had adequately established their identity, genuineness and creditworthiness as per the notings of the authorities below. Further a customer of the assessee cannot be summoned to justify the amount paid by him for the purchase of tractor as after having purchased the goods he had no relation whatsoever with the assessee. The AO therefore was only to consider the identity, genuineness and creditworthiness of the purported loan creditors on the basis of confirmations and income tax documents filed before him which were self sufficient – No addition should be made u/s 68 – In fafour of assessee. Discount to customers - Merely because the receipt vouchers were made by the assessee cannot be a ground to make ad hoc disallowance out of the claim of discount – such ad hoc disallowance cannot be sustained for legal scrutiny, without identifying a particular customer who could not be said to have availed such discount – In any case, the discount for disallowance has to be identified on specific finding which is lacking in the instant case – In favour of assessee. Donations made to “pooja” committees – In this respect impugned orders of the authorities was upheld – Against the assessee.

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• 2013 (2) TMI 500
  Principles of mutuality – Whether member will include guests and relatives of the members and members of the affiliated clubs - Held that:- Principles of mutuality are available to the assessee on the aspect of treating the income derived by the assessee as exempt from tax. For the purpose that the term “member” includes guests and relatives of the members and members of the affiliated clubs etc – As decided in Bhubaneswar Club Limited [2006 (8) TMI 237 - ITAT CUTTACK ] concept of “member” is spacious enough to include guests and relatives of the members and members of affiliated clubs and if it is so, then in the case of the assessee the income derived by letting out its premises or by allowing the guests and relatives of the members and members of affiliated clubs will not be subjected to tax – The services offered to the guests, relatives and affiliated clubs cannot be treated as trading activity and cannot be tainted with commerciality – Against the revenue. Interest on deposits and investments - Whether interest on deposits and investments will form part of the taxable income - Held that:- Interest earned by the assessee out of the bank deposits and investments made by the assessee out of out of surplus contributions made by its members, is also covered under the principles of mutuality and as such - Mutuality offers a tax exemption as long as its mutual association is retained and its income is not tainted by commerciality - As held in Chelmsford Club vs. CIT [2000 (3) TMI 4 - SUPREME COURT] principles of mutuality applies to interest income derived by the assessee-co-operative society from the deposits made by it out of the contributions made by the members of society – Therefore, Once the income is found to be covered by principle of mutuality, the same cannot be brought to tax even under the provisions of s. 115JB – In favour of assessee.

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• 2013 (2) TMI 499
  Addition u/s 68 – Assessee received share application money from M/s. Deevee Commercial Ltd – AO treated the amount received as unaccounted money – Search his creditworthiness and genuineness of the transaction – As decided in Nemichand Kothari vs. CIT [2003 (9) TMI 62 - GAUHATI HIGH COURT ] where an assessee receives any money by account payee cheque from another person, then u/s. 106 of the Evidence Act the assessee can be said to have established the genuineness and creditworthiness of the payer. In CIT vs. Value Capital Services Pvt. Ltd. [2008 (4) TMI 263 - DELHI HIGH COURT] it was held that there was additional burden on the department to show that even if the share-applicants did not have means to make investments, the investments made by them actually emanated from the coffers of the assessee – In this case no such evidence was brought to prove that the assessee’s unaccounted money routed through M/s. Deevee Commercial Ltd. or any cash was deposited in the share applicant’s bank account prior to issuance of cheque for share application. Transaction was by account payee cheque. PAN details of the share applicant were provided ,therefore, the onus cast on the assessee u/s. 68 of the Act, was duly discharged – when all the ingredients contained in Sec. 68 of the Act are fulfilled, there is hardly any scope to invoke that section alleging introduction of unexplained fund by way of share application – As decided in CIT vs. M/s. Lovely Exports (P) Ltd[2008 (1) TMI 575 - SUPREME COURT OF INDIA] no addition on account of unexplained cash credit is warranted in the case of the assessee on the given facts and circumstances. Further assessee filed a copy of Memorandum and Articles of Association of the assessee-company along with details of Demat Account - assessee purchased shares of M/s. Himadri Chemicals and M/s. Indo Tech Ltd. out of the share application money received from M/s. Deevee Commercial Ltd – In past the assessee has not been indulging in share trading business – AO was directed to treat the surplus as short-term capital gain instead of business income – Against the revenue.

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• 2013 (2) TMI 498
  Addition u/s 68 – Assessee received share application money from M/s. Deevee Commercial Ltd – AO treated the amount received as unaccounted money – Search his creditworthiness and genuineness of the transaction – As decided in Nemichand Kothari vs. CIT [2003 (9) TMI 62 - GAUHATI HIGH COURT ] where an assessee receives any money by account payee cheque from another person, then u/s. 106 of the Evidence Act the assessee can be said to have established the genuineness and creditworthiness of the payer. In CIT vs. Value Capital Services Pvt. Ltd. [2008 (4) TMI 263 - DELHI HIGH COURT] it was held that there was additional burden on the department to show that even if the share-applicants did not have means to make investments, the investments made by them actually emanated from the coffers of the assessee – In this case no such evidence was brought to prove that the assessee’s unaccounted money routed through M/s. Deevee Commercial Ltd. or any cash was deposited in the share applicant’s bank account prior to issuance of cheque for share application. Transaction was by account payee cheque. PAN details of the share applicant were provided ,therefore, the onus cast on the assessee u/s. 68 of the Act, was duly discharged – when all the ingredients contained in Sec. 68 of the Act are fulfilled, there is hardly any scope to invoke that section alleging introduction of unexplained fund by way of share application – As decided in CIT vs. M/s. Lovely Exports (P) Ltd[2008 (1) TMI 575 - SUPREME COURT OF INDIA] no addition on account of unexplained cash credit is warranted in the case of the assessee on the given facts and circumstances. Further assessee filed a copy of Memorandum and Articles of Association of the assessee-company along with details of Demat Account - assessee purchased shares of M/s. Himadri Chemicals and M/s. Indo Tech Ltd. out of the share application money received from M/s. Deevee Commercial Ltd – In past the assessee has not been indulging in share trading business – AO was directed to treat the surplus as short-term capital gain instead of business income – Against the revenue.

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• 2013 (2) TMI 497
  Penalty u/s 271D and 271E – Whether receipt of share application money and repayment thereof will violate the provisions of section 269SS and 269T – Assessee has accepted monies on account of shares/ debentures of Rs.20,000/- or more and also repaid monies otherwise than by account payee cheques or account payee Bank Drafts – Held that:- As decided in the case of Rugmini Ram Ragav Spinners Pvt. Ltd.[ 2007 (7) TMI 237 - MADRAS HIGH COURT] provisions of section 269SS and 269T have application only in a limited way in respect of deposits or loans. When it is neither deposit nor loan the provisions of sections 269SS and 269T have no application at all. The Court further held that even if there is repayment by cash, it could not be said to attract the levy of penalty automatically under section 271E of the Act. The advances of share application money or repayments of such advances have not flowed from any undisclosed income of the assessee or the concerned persons. In the present case also, the assessee was searched and these share application monies were never the subject matter of addition in the case of the assessee and accordingly the share application money and repayment of the same have not flowed from any undisclosed income of the assessee. Further even the penalty under section 271D and 271E is not automatic there is bonafide belief to the effect that the receipt of advances against allotment of shares and repayment of share money would not be termed as loans or deposits, which would be sufficient to drop the penalty levied in the present case – In favour of assessee.

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• Customs

• 2013 (2) TMI 496
  Notification No.102/2007Cus – Transformation of the imported round logs into sawn timber by the importer before subsequent sale to domestic market – Whether it would vitiate the condition of subsequent sale prescribed in exemption notification No.102/2007Cus – Held that:- Importer were, under the law, obliged to reduce the length of the timber before its transport - Importer imported the goods after paying SCVD - At the time of its sale in the local market, they also paid local taxes - Before transportation of timber, they were required to reduce its size since the RTO rules did not permit transportation of logs longer that 40feet – Exemption would be available – Against the revenue.

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• Corporate Laws

• 2013 (2) TMI 495
  Modification of the scheme of amalgamation - scheme was sanctioned by this court under sections 391 and 394 of the Companies Act for amalgamation of ICCL into IMFA – After sanction of the scheme ICCL was dissolved without being wound up - petition under section 392 was filed to modify the scheme of arrangement and amalgamation - by confirming the reduction of share capital of IMFA, by cancellation of 3,49,466 equity shares of Rs. 10 each presently held by the erstwhile ICCL Shareholders Trust – Held that:- Modification is sought for cancellation of 3,49,466 equity shares of IMFA which have not been accepted by the small shareholders of erstwhile ICCL offered to them at a discount of 50 per cent. - This situation was not conceived at the time of framing the said scheme and, therefore, this situation has arisen during the working of the scheme. No objection has been received from any person to the modification sought in this petition. The shareholders to whom the said shares were to be offered under the scheme have not accepted the same despite reminders as aforesaid. Further, since the consequent reduction of capital does not involve either the diminution of liability in respect of unpaid share capital or the payment to any shareholder of any paid-up share capital, the interest of creditors of IMFA are not affected. The modification sought in this petition is merely a small portion of the scheme and does not involve any substantial modification of the scheme – This does not affect the interest of any shareholder of either the erstwhile shareholder of ICCL or IMFA or creditor of IMFA adversely and there cannot be any possible objection to the same. As decided in S. K. Gupta's case [1979(1)TMI 195 – SC], the company court has been conferred power of widest amplitude under section 392 not only to give direction but to make such modifications in the scheme as the court may consider necessary and the only limit on the power of the court being that such directions can be given and modifications can be made for the proper working of the scheme - petition is allowed and the scheme sanctioned modified to the extent that 3,45,466 equity shares -consequent reduction of share capital of IMFA to the above extent is confirmed – In favour of petitioner.

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• Service Tax

• 2013 (2) TMI 511
  Eligibility to utilize cenvat credit availed for discharge of service tax paid on GTA services - period from October 2006 to March 2008 - Held that:- As decided in ABB Ltd. [2011 (3) TMI 248 - KARNATAKA HIGH COURT] prior to 01.03.08 credit of service tax would be available for discharge of service tax on the services rendered or received for GTA services. Since the entire service tax liability in this case falls within the period from October 2006 to February 2008 the judgment of the Hon ble High Court of Karnataka will squarely cover the issue in favour of the assessee.

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• 2013 (2) TMI 510
  Refund claim rejected - for the period from July to December, 2009 on the ground that the Appellant failed to produce requisite documents for verification - Held that:- Appellant are in possession of the said documents, as the same are produced before this Tribunal and verified by the ld. A.R. Therefore, these claims need to be remanded to the lower Adjudicating Authority for verification of these documents which were held to be not produced before the Commissioner (Appeals). Refund claim for the period from April to June, 2009 rejected on the ground of time-bar as the refund claim was filed after a period of six months, as prescribed under Notification No.41/2007 dated 06.07.2007 - Held that:- There is some force in the argument of the assessee that the Notification No.17/2009-ST dated 07.07.2009 was in force at the time of filing of the refund claim. Therefore the refund claim for the period from April to June, 2009 is also remanded to the lower adjudicating authority to examine the same afresh, in the light of the judgment of this Tribunal in the case of East India Minerals Ltd. (cited supra). Also, while deciding the refund claims, the adjudicating authority should keep in mind the decisions of this Tribunal in Trident s case and Durhan Spintex & Holding s case (2012 (8) TMI 22 - CESTAT, KOLKATA) - appeal in favour of assessee by way of remand.

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• 2013 (2) TMI 509
  Rent-a-cab Services - non obtaining of service tax registration up to January 2008 and without paying service tax on the amount received by them for providing taxable service - whether the appellant herein is eligible to claim the benefit of cum-tax value on the bills which has been raised by him as service provider - Held that:- As decided in Advantage Media Consultant (2008 (3) TMI 59 - CESTAT KOLKATA) also confirmed in [2008 (10) TMI 570 - SUPREME COURT] Service tax is an indirect tax. As per this system of taxation, tax borne by the consumer of goods/services is collected by the assessee (manufacturer/service provider) and remitted to the Government. When the amount is collected for the provision of services, the total compensation received should be treated as inclusive of service tax due to be paid by the ultimate customer of the services unless service tax is also paid by the customer separately. So considered, when no tax is collected separately, the gross amount has to be adopted to quantify the tax liability treating it as value of taxable service plus service tax payable also this principle has been legislated with effect from 18-4-2006 in Section 67(2) of the Finance Act, 1994 that where the gross amount charged by a service provider, for the service provided or to be provided is inclusive of service tax payable, the value of such taxable service shall be such amount as with the addition of tax payable, is equal to the gross amount charged - the appellant is eligible to cum-tax benefit of the amounts received from the service recipient and the same being differential amount, which has been confirmed by the lower authorities the impugned orders to the extent they confirm the differential service tax liability of Rs. 33,929/- along with interest are set-aside and also the consequent penalties - in favour of assessee.

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• 2013 (2) TMI 508
  Maintenance and repairs of railway sidings owned by private parties carried out by Central Railway - seeking waiver of pre-deposit of 50% of the service tax as by a Notification dated 21 December 2010 an exemption was provided in respect of management, maintenance or repair of railways - Held that:- As it appears that from 21 December 2010 Notification the service provided for the management, maintenance or repair of railways stands exempted.Hence, insofar as the demand covered by the second show cause notice dated 3 May 2011 for 2010-11 is concerned (Rs.74.22 lakhs), a complete waiver of deposit was warranted. For the balance of the demand of Rs. 2.51 crores which relates to the period 2005-06 to 2007-08 this period is prior to the exemption notification thus appeleant direct to deposit an amount equivalent to 20% of the demand within a period of eight weeks from today.

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• 2013 (2) TMI 491
  Duty paying document - Stay of recovery - Denial of CENVAT credit in absence of documentary evidence - Of 'business support service' received from Input Service Distributor - Disallowance has been made in the absence of documentary evidence - Rule 9(g) of CCE 2004 - read with Rule 4A(2) of STR, 1994 - Rule 14 of Cenvat Credit Rules, 2004 - read with proviso to Section 11A of the Central Excise Act, 1944 - Held that:- Assessee have produced copies of these documents with a miscellaneous application. These documents include the ST-3 returns of the ISD, relevant challans and other documents related to distribution of services to the assessee by the ISD. Taking into all the said documents on record and, for the ends of justice, direct the adjudicating authority to reconsider the appellant's claim for CENVAT credit. Remand back to Commissioner

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• Central Excise

• 2013 (2) TMI 494
  Denial of Cenvat Credit - On dismantling of existing structure in the factory - Input service given under rule 2(l) of the CCR, 2004 - Held that:- Renovation involves dismantling of the existing structure on which a new structure can be erected - Cenvat Credit allowed in respect of dismantling of existing structure in factory - In favour of assessee

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• 2013 (2) TMI 493
  Benefit of Notification No. 74/93-CE – Whether State Electricity Board is a Department of the State Government to avail benefit of exemption notification - Held that:- No, Following the decision in case of ASSTT. ENGINEER (CIVIL) (2008 (9) TMI 105 - CESTAT NEW DELHI) that notification lays down twin conditions, and unless both the conditions are satisfied exemption cannot be claimed. Admittedly, State Electricity Board is not a Department of the Government. Merely because 100% capital is owned by State Government does not make it a body at par with the State Government. Hence the PCC poles manufactured in the factories which admittedly belong to the Electricity Board does not qualify for exemption. That apart, the intended or actual user of the poles also being the Board itself, and not any Department of the State Government, the other condition are is not fulfilled. Therefore, the appellants are not entitled for the benefit of Notification No. 74/93-CE – In favour of revenue Demand – Penalty u/s 11AC - Extended period of limitation – Suppression of facts – Intention to evade payment of duty – Held that:- Allegation of suppression with intent to evade payment of duty is not sustainable. Hence, demands invoking the extended period of limitation are not sustainable. The demands for the normal period of limitation as provided under Section 11A of the Central Excise Act are confirmed. Set aside the penalty – In favour of assessee

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• 2013 (2) TMI 492
  Demand proceeding - Matter under litigation - Premature demand - Compounded levy scheme - Annual Capacity of Production - Held that:- Where original order fixing the duty liability itself is challenged and remanded by the Hon'ble CESTAT for reconsideration, it is evident that as of today there is no valid legal order fixing the duty liability during the material period. When there is no such valid legal order, the demands raised based on the impugned order issued by the Commissioner cannot sustain. The demands are premature. Therefore, keeping in view of the Hon'ble CESTAT's order, the demands raised in the above three show cause notices are not sustainable and are to be dropped. In favour of assessee

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• 2013 (2) TMI 490
  Waiver of pre-deposit - Assessee is engaged in the manufacture of sugar and molasses - Bagasse, which is a residue, is cleared without payment of duty - Demand of duty in respect of the clearance of bagasse - Avail credit on common inputs and input service - Used in the manufacture of dutiable and exempted goods - Held that:- Following the decision in case of INDIAN POTASH LTD.(2012 (12) TMI 347 - CESTAT, NEW DELHI)that bagasse emerges in course of crushing of sugarcane. It may be noted that crushing of sugarcane is necessary to extract cane sugar juice which in turn is processed for production of sugar and molasses. Bagasse is the waste product left after the crushing of sugarcane. Therefore, by no stretch of imagination it can be held that the assessee possibly could have maintained separate account for the inputs for production of sugar and molasses (excisable item) and bagasse. Moreover, neither the show cause notice nor the impugned order in appeal mentions as to which common Cenvat credit availed inputs have been used in manufacture of sugar and molasses (dutiable final products) and bagasse (exempted final product). Since bagasse emerges at sugarcane crushing stage, there is no possibility of any input-chemicals etc. having been used at that stage. In favour of assessee

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• 2013 (2) TMI 489
  Waiver of pre-deposit - Assessee is engaged in the manufacture of sugar and molasses - Bagasse, which is a residue, is cleared without payment of duty - Demand of duty in respect of the clearance of bagasse - Avail credit on common inputs and input service - Used in the manufacture of dutiable and exempted goods - Held that:- Following the decision in case of INDIAN POTASH LTD. (2012 (12) TMI 347 - CESTAT, NEW DELHI) that bagasse emerges in course of crushing of sugarcane. It may be noted that crushing of sugarcane is necessary to extract cane sugar juice which in turn is processed for production of sugar and molasses. Bagasse is the waste product left after the crushing of sugarcane. Therefore, by no stretch of imagination it can be held that the assessee possibly could have maintained separate account for the inputs for production of sugar and molasses (excisable item) and bagasse. Moreover, neither the show cause notice nor the impugned order in appeal mentions as to which common Cenvat credit availed inputs have been used in manufacture of sugar and molasses (dutiable final products) and bagasse (exempted final product). Since bagasse emerges at sugarcane crushing stage, there is no possibility of any input-chemicals etc. having been used at that stage. In favour of assessee

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• CST, VAT & Sales Tax

• 2013 (2) TMI 513
  Recovery proceedings - defaulter of sales tax - Held that:- As for the year 2006-2007 penalty of Rs.12,000/- was levied on the petitioner for non-filing of the returns. Also during the year 2007-2008 penalty of Rs.1000/- was levied for non renewal of registration and penalty of Rs.2000/- was levied for non-filing of returns for April and May 2008. Thus total amount due from the petitioner is Rs.15,000/- and that the recovery proceedings in question have been initiated for realising the said dues. Thus the premise on which the writ petition is filed that the petitioner is not a defaulter is factually incorrect. No interference with the recovery proceedings required.

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• 2013 (2) TMI 512
  Review petition seeking review of the judgment - Tribunal is not taking up the appeal for hearing as per last sentence of judgment appeal shall be heard by the Tribunal within three months from the date of making payment of the last installment and assessee had paid one instalment, but could not pay the balance two instalments because of financial difficulties - Held that:- In the facts and circumstances of the case last sentence in the judgment is to be deleted but this will not in any way affect the right of the Revenue to recover the tax involved.

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• Wealth tax

• 2013 (2) TMI 514
  Addition of Rs.23,59,461 made up to the AY 1971-72 as extra income of the appellant available for purposes of taxation under the Wealth Tax Act? - contention of the petitioner that the assessment of income of the petitioner was based on the assessment made by the ITO in the income tax assessment proceeding and, therefore, the assessment and increase are only assessment therefore, intangible property - Held that:- It is true once a presumption is drawn, that can be rebutted by evidence by the person against such presumption goes and it is one of the well settled proposition of law, but there may be exception to it and one of that exception is that said presumption of existence of assets and it might have extinguished after passing of the long time, which is also sufficient rebuttal to the original presumption of existence of the assets in the hands of the assessee. Therefore, in view of the binding judgment of J.K.Cotton Manufacturers Ltd. [1994 (2) TMI 3 - SUPREME COURT] the considered opinion that the question is required to be answered in favour of the assessee and it is held that in these cases, the addition of Rs.23,59,461/made from assessment years 1963-64 to 1970-71 cannot be held to be the assets in the hands of the assessee after the period of more than eight years and, therefore, in these cases no tax can be imposed on the basis of such addition of Rs.23,59,461/treating it to be wealth for the purpose of wealth tax for the years 1985-86 to 1988-89 and onwards.

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• Law of Competition

• 2013 (2) TMI 507
  Breach of provisions under Section 4 of Competition Act, 2002 - abused of dominance position - Appellant-company was engaged in development of telecommunication networks, security systems, display systems and traffic management systems filed information against AAI complaining that it was abusing its dominant position by specifying a particular technology, i.e., hydraulic bollards, in its procurement tender invitation notice for bollards, and, therefore, creating technical entry barriers for other type of bollards like one which were being produced by appellant-company - Held that:- Tribunal cannot accede to any of the prayers in the information, as it is not for this Appellate Tribunal to re-write the tender conditions. It is also not for this Tribunal to frame the policies of the bodies like Airport Authority of India. Lastly, it is also not for this Tribunal to direct the CCI to address it to Vigilance Commission. The contention raised by informant cannot be accepted as that in requiring specific type of Bollards i.e. Hydraulic operated bollards the AAI has in any way breached any of the provision of section 4. The AAI was acting in its capacity as a consumer and as argued by the representative for the AAI it was equipped with technical committee to advise the AAI for a purchase of particular type of bollards. It cannot be imagined that a body like AAI was not equipped with the technical advice and would be acting without any such technical assistance. Therefore, if the AAI had a free choice to purchase a particular type of commodity, its hands could not be tied by taking the recourse to the competition act and the provisions there under. After all in the market the consumer would have to be given consumers dew i.e. basically his choice. The contention raised by appellant therefore, rejected. The argument of Appellant cannot be accepted that AAI was a dominant purchaser and had abused its dominance. In fact for the purposes of deciding the dominance, both the product market as well as geographical market are to be considered and insofar as the product market is concerned, it related to all the kinds of bollards whether hydraulic operated or otherwise. It is commonly known that bollards are used everywhere. The bollards are used even for the entry into the star hotels. They are used even for controlling the traffic. They are used everywhere where security and safety is required to be maintained. Therefore, there is nothing relevant about a particular type of bollards. They are required by not only AAI but by number of other institutions. Therefore, it cannot be said that the AAI would be a dominant player. Therefore the market to be only the five airports named in the notice inviting tender cannot br restricted. Once the AAI held not to be in a dominant position, there would be no question of going further into the breach or otherwise of Section 4 of the Act.

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