Income Tax
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Stricture against department - In the process, a person who is eligible to a tax holiday has not only been denied the benefit, but made him to contest the proceedings in three forums - The only way to bring reason to the department is by imposing costs, so that appropriate action may be taken against the person who has taken a decision to prefer an appeal and recover the same after inquiry- HC
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Penal Charges paid to Sister Concern towards cost of storage - deduction disallowed - AT
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Revision u/s 263 - In view of 80IA(7) read with rule 18BBB, unless audit report of p/y is furnished no deduction is available. - CIT was justified in holding the order of the AO as erroneous in so far as it was prejudicial to the interests of Revenue. - AT
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The manufacture of identity cards cannot be described as photography apparatus and goods. In fact, the assessee is taking the aid of photographic apparatus and goods for manufacturing or producing identity cards. - Deduction u/s 80IA allowed - HC
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Depreciation on hotel building given on lease – Licence fee receivable taxable as business income - depreciation allowed - HC
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Block Assessment - Set off or carry forward of loss for p/y years from the undisclosed income determined during Search - It is clear that in computing the total income or loss of the Block period, the income or loss of each of the previous year has to be taken into consideration and computed in accordance with the provisions of the Act except set off or brought forward of loss under Section 32(2) of Act. - HC
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Income-tax (Appellate Tribunal) Rules, 1963 - Amendment in rules 2, 4A, 9, 26 & 34A; deletion of proviso to rule 35A and substitution of words 'Income Tax Officer' and “Appellate Assistant Commissioner“ - Ntf. No. F. 71-Ad(AT)/2012, Dated: February 7, 2012
Customs
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Amends notification no. 09/2012- Custom (NT) - Rate of exchange of conversion of each of the foreign currency with effect from 1st February, 2012. - Ntf. No. 14/2012-CUSTOMS (N.T.) Dated: February 27, 2012
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Foreign currency - illegal import - a compulsory requirement of making a Custom Declaration Form (CDF) is the legal requirement specifically when the impugned foreign currency involved is more then US $ 5000 ( or equivalent). - CGOVT
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Amends Notification No. 12/97 – Customs(N.T.) dated the 2nd April, 1997 - Ntf. No. 12/2012 - Customs (N.T.) Dated: February 27, 2012
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Appointment of Common Adjudicating Authority - Ntf. No. 13/2012-Customs (N.T.) Dated: February 27, 2012
DGFT
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Duty exemption on re-import of Cut & Polished Diamonds sent abroad for Certification/ Grading - Ntf. No. 100 (RE-2010) /2009-2014 Dated: February 28, 2012
Corporate Law
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Daily fine - Period of limitation - Default on submission of annual returns - default in filing the balance-sheet of the profit and loss of the Companies within the prescribed statutory period was a continuing offence. - HC
Service Tax
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Cenvat credit - assessee availed input service tax credit among other things for the function arranged for Kannada Rajyostava Day and colour photography expenses in respect of the inaugural function of Kengeri Police Station - Credit allowed - HC
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Commercial concern versus non profit concern - As per definition of security agency under Section 65(94) service provider should be engaged in the business rendering specified service. There is no warrant for reading therein requirement of profit motive. - HC
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Notification No. 41/2007-ST dated 06.10.2007 - Refund - Regarding refund of service tax paid on CHA service and technical testing service - there cannot be two different yard sticks for charging the service tax and allowing the benefits. - AT
Central Excise
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Processing of Wet cotton fabric - mercerizing and bleaching - Processed goods being in wet condition was not marketable. - To make the said fabric marketable further process of squeezing and stentering has to be done invariably. - AT
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Cenvat Credit on Inputs - Served from India Scheme (SFIS) - debits made in SFIS would not amount to exemption from payment of duty. - Provisions of Rule 6 are not attracted - AT
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Cenvat credit wrongly claimed - supplier committed fraud - cenvat credit can not be recovered from the purchaser since he was not part of fraud - HC
VAT
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Dena Bank Authorized for e-payment - Ntf. No. No. F.7(239)/P-I/05/VAT/2009/1275-1287 Dated: February 21, 2012
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Income Tax
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2012 (2) TMI 407
Validity of Assessment under 147 after Intimation under 143(1) But no notice under 143(2) - Held That:- It is open to Revenue to issue notice u/s 147/148 even if notice u/s 143(2) was never issued or for that matter even if assessment u/s 143(3) had taken place. Income Escaping assessment 147 - Change of opinion - two business - Seprate books of account maintained - common expense pertaining to all unit claimed for deduction under 80IA - Held That:- whether appellant was entitled to deductions or not, already stood examined, considered and adjudicated by the Assessing officer in the previous years.Its not the case that assessee suppressed information or relevant facts were not disclosed neither it was based on report of audit party. Re-asseement is invalid
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2012 (2) TMI 406
TDS - Assessee develops and markets 3D Solutions - sale of shrink wrap software - Royalty - NO Permanent Establishment(PE) - Held That:- In view of DIT Vs. Ericsson AB, (2011 - TMI - 207919 - Delhi High Court) consideration received by the Assessee for software was not royalty. The receipts would constitute business receipts in the hands of the Assessee. Admittedly the Assessee who is a non resident does not have a permanent establishment and therefore business income of the Assessee cannot be taxed in India in the absence of a permanent establishment. Decided in favour of revenue.
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2012 (2) TMI 405
Deduction under 35(2AA) - Approval pending - Donation claimed in return at 100% and will increase to 125% after approval - Additional ground regarding deduction u/s 35(1)(ii) - Held That:- 35(1)(i) and section 35(2AA) operate entirely in different fields and are mutually exclusive. For claiming deduction under 35(2AA) amount should be paid to National Laboratory, University, and under a programme approved in this behalf by the prescribed authority. In the instant case the amount simply was lying with the IIT but it could not be used for scientific research. However for deduction under 35(1)(i) its not necessary that research to be carried in house. For additional ground we remand case back to CIT if CIT(A) allows claim under 35(1)(ii), AO to give effect and if does not allow the assessee’s claim entire deduction of 143 Laks to be withdrawn.
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2012 (2) TMI 404
Penal Charges paid to Sister Concern towards cost of storage - AO: penal charges not a liability related to business of assessee - Held That:- If expenditure relates to commercial expediency its allowable. As far as penal rent is concerned it should be governed by the agreement entered between two parties. In the instant case, it was not shown by the assessee that the impugned liability was fastened upon it. Decided against assessee.
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2012 (2) TMI 403
Revision under 263 - lack of enquiry - Held That:- There is nothing on record which could show that Assessing Officer had inquired into financial charges paid on the borrowed fund for purchase of property which is forming part of closing stock. Assessing Officer has also not inquired into the method of valuation of stock. Assessing Officer has passed a summary order without looking into the issue of genuineness of transactions relating to sale and purchase of shares of G.R. Industries. - Revision justified.
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2012 (2) TMI 402
Penalty Proceedings - Survey - Incriminating documents found - Surrender of 22,32,000 in statement u/s 132(4) - Tax and Interest not paid while filing return but paid before completion of assessment - Held That:- Penalty cannot be imposed u/s 271(1)(c) of the Act as the assessee has paid tax alongwith interest before imposition of penalty. Reliance placed on CIT Vs. Mahendra C Shah and CIT (2008 - TMI - 3705 - GUJARAT HIGH COURT) Vs. Radha Kishan Goel (2005 - TMI - 10686 - ALLAHABAD High Court)
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2012 (2) TMI 401
Revision u/s 263 by commissioner - Deduction under 80IB - Failure to file audit report - Held That:- In view of 80IA(7) read with rule 18BBB, unless audit report of p/y is furnished no deduction is available. Therefore We have no hesitation in holding that the learned CIT was justified in holding the order of the AO as erroneous in so far as it was prejudicial to the interests of Revenue. Decide against assesee.
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2012 (2) TMI 389
Writ petition filed aginst order of Administrative Tribunal allowing stepping up of pay of employee to that of an admitted junior at each post and cannot be treated as once in a service time – employee have exercised this option twice at different posts - Held that:- No jurisdictional error or legal infirmity in is found in the order. Obviously, such stepping up can be done only in terms of the other conditions being satisfied in accordance with the rules.
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2012 (2) TMI 388
Validity of reassessment order – original order framed u/s 143(3) - assessee filed objections and contended change of opinion of A.O. – objections disposed by way of non-speaking order on 02.11.2010 – writ petition against the said order filed on 24.11.10 - reassessment order passed in meantime dated 19.11.2010 - Held that:-Once we have quashed the order dated 2.11.2010 on the ground of it being non-reasoned and does not meeting the basic requirements of the principles of natural justice, the petitioner should not be denied relief on the ground that the Revenue had proceeded in great haste and hurry to pass the reassessment order. In the present case, therefore, quashing of order dated 2nd November, 2010 would necessarily entail and as a sequitor mandate quashing of the reassessment order dated 19th November, 2010. A.O. is directed to pass a fresh order on the objections raised by the petitioner in terms of direction issued in case of GKN Driveshafts (India) Ltd (2002 - TMI - 6100 - Supreme Court) – Decided in favor of assessee.
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2012 (2) TMI 387
Recovery apprehended during the pendency of the appeals – writ petition filed - Held that:- In such case petitioner is directed to file stay petitions and recovery proceedings for realising the tax due from the petitioner will be kept in abeyance until orders are passed.
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2012 (2) TMI 386
Depreciation on hotel building given on lease – non-disclosure of licence fees as income after A.Y. 1995-96 by assessee on ground of dispute between assessee and ITC Ltd – settlement agreement executed - A.O. made addition on accrual basis and allowed depreciation – search conducted in 2007 – A.O. disallowed depreciation on ground that hotel building was not being used for business – Held that:- CIT(A) deleted dis-allowance of depreciation on ground that for claiming the depreciation it is not necessary to use the asset by the assessee directly. The appellant's ownership over the asset on which depreciation is claimed is not under dispute and user of these assets in business is also not under dispute. Tribunal has also recorded that licence fee receivable should be included as "business income" and accordingly, depreciation on hotel building is to be allowed. Aforesaid is upheld – Decided against the Revenue.
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2012 (2) TMI 385
Order issued by the CIT u/s 220(2A) waiving 50% of the interest due u/s 220(2) – appeal declined against such order – Held that:- CIT(A) order of granting partial relief is not interferred with however, having regard to the fact that the appellant is a widow and the financial constraints stated by her, we grant 12 equal monthly installments to clear the arrears.
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2012 (2) TMI 384
Expenditure in respect of exempt Income - Investment in shares - Tax free Income - Held That:- In view of Godrej & Boyce Manufacturing (2010 -TMI - 78448 - BOMBAY HIGH COURT) and Maxopp Investments Ltd (2011 - TMI - 208569 - Delhi High Court), we remand the matter back to AO to consider varios aspects.
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2012 (2) TMI 383
Deduction on payment basis - Employees Contribution towards P.F. and E.S.I - Held That:- In view of Vinay Cement (2007 -TMI - 102762 - Supreme Court of India), case remanded back to AO to find out whether the payments have been made before the due date of filing of return or not.
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Customs
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2012 (2) TMI 399
Petition filed for assessment of Bill of Entry by allowing exemption from Additional Duty of Customs (CVD), under Notification No.30/2004-CE, dated 09.07.2004, and to allow the clearance of the goods – Held that:- Prayer for assessing the Bill of Entry by allowing the exemption from Additional Duty of Customs (CVD), under Notification No.30/2004-CE, dated 9.7.2004, cannot be granted. However, respondents are directed to release the goods concerned, in respect of the above said Bill of Entry, subject to the condition that the petitioner furnishes a bank guarantee for the entire value of CVD. Release of the goods in question shall be subject to the orders to be passed by the Division Bench of this Court.
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2012 (2) TMI 377
Petition sought for directing the respondent to furnish backup copies of the data contained in a Laptop/hard discs seized during search conducted, enabling petitioner to file replies – Held that:- Since prayer of the petitioner is now agreed upon by the respondents. Therefore, this Writ Petition stands disposed of with a direction to the respondents to furnish the documents within stipulated time.
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Corporate Laws
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2012 (2) TMI 398
Companies Act 1956 - Petition filed u/s 433(e) & (f), 434 & 439 of Companies Act, 1956 seeking to wind up the Respondent-Company – non-payment of debt – Held that:- Petitioner has entered into transactions with the respondent Company and the respondent Company has been unable to pay its dues to the petitioner and therefore the respondent Company has made itself liable to be wound up – Decided in favor of petitioner.
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FEMA
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2012 (2) TMI 400
FERA Act, 1973 – violation of the provisions of Sections 8(3) and 8(4) of the Act by four companies - whether banks and their respective employees can be held guilty of abetting Companies for such violation – fresh LC opened even on failure to file BE for prior import - remittance of substantial amounts of foreign exchange against large number of confirmed L/Cs – failure to scrutinse defective import documents – Third bench of Tribunal held in negative – Held that:- The order passed by the Third Member, besides being cryptic, does not take note of all the materials which were on the record of the adjudication proceedings. Therefore, impugned order of the Tribunal based on the decision rendered by the third Member on the points of difference, should be set aside and the appeals be remanded back for hearing afresh – Decided in favor of assessee.
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Service Tax
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2012 (2) TMI 408
Stay petition - Since both sides agree for co-operation for verification of the document and resolving dispute of Cenvat credit, matter is remanded back to adjudicating authority and the matter shall be resolved by a reasoned and speaking order.
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2012 (2) TMI 392
Refund of service tax claimed on expenses incurred on road and rail and port handling and terminal charges for export of goods – denial of claim on ground of lack of evidences – stay petition - Held that:- Neither impugned order speak about non receipt of the goods at the port for export nor there is any evidence of not incurring handling and terminal charges when export remained undisputed. In the absence of contrary finding exporter should not be denied the benefit through rigidity of procedure – Decided in favor of assessee.
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Central Excise
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2012 (2) TMI 397
Maintainability of appeal - Revenue is in appeal against order of rejection of appeal by Tribunal – Tribunal confirmed the order of first appellate authority regarding classification of `Bitulux Insulation Board' under Chapter Sub-heading 4407.10 at nil rate of duty - Held that:- Since the revenue has not questioned the correctness or otherwise of the order passed by the first appellate authority dated 16.5.1997, setting aside the order of Asst Commissioner (Adjudicating Authority) it may not be open for the revenue to contend that the adjudicating authority was justified in issuing the impugned show cause notices and also the further confirmation of said notices vide orders passed by the adjudicating authority, the appellate authority and the Tribunal. Therefore, revenue would not be entitled for any relief – Appeal dismissed.
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2012 (2) TMI 396
Waiver of penalty – prompt reversal of Modvat Credit of duty paid on angles and bars, used in the construction activities on intimation by department – assessee contending it to be wrong Book Entry, corrected without utilizing the Cenvat credit - Held that:- We find no malafide reasons on the part of respondents to avail the Modvat credit with a fraudulent intention. We accordingly agree with the appellate authority that penalty imposed upon respondents is required to be set aside – Decided against the revenue.
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