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TMI Tax Updates - e-Newsletter
March 12, 2012
Case Laws in this Newsletter:
Income Tax
Customs
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Recovery of Tax - notice u/s 226(3) - An error in the figure, in a notice of demand does not vitiate the demand. - HC
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Consolidated appeal before tribunal against common order - One appeal, according to us, is maintainable against a common judgment, but, how-ever, the appellant would be required to pay court fees as is payable in accordance with the provisions of the applicable Court Fees Act in respect of each appeal, which stands consolidated by the common judgment against which an appeal has been preferred - HC
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Applicability of 40A(3)(cash payment exceeding of 20,000) - It acts as a commission agent facilitating payment to the truck owners, who are its members. Therefore, the payments were not business expenses of the assessee, therefore no disallowances. - AT
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There is no restriction on account of allowability of depreciation on the assets purchased out of withdrawal from NABARD. - AT
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Exemption u/s 11 -if the assessee is not entitled to exemption u/s 10(23C)(iiiae) then it will not be a bar in not claiming benefit u/s 11 to 13 of I.T. Act - AT
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Section 10(15), item (h) of sub-clause (iv) of the Income-tax Act, 1961 - Exemptions - Interest on bonds/debentures - Notified bonds/debentures of Public Sector Companies - Ntf. No. 13/2012 Dated: March 6, 2012
Customs
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Proof of realization of export proceeds - duty drawback - once the RBI after examining the matter issued the letter dated 25-5-2004 indicating in clear words that the shipment bills of the petitioner were written off without surrender of duty drawback, the proper course available to the Customs Department was to drop the recovery proceedings. - HC
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Import of goods under DEEC scheme - demand of on unutilized items - notification no. 30/97-Cus., dated 1-4-1997 - assessee has fulfilled the export obligation completely - The excess material in fact had not been utilized completely because of efficient utilization of the raw material. - Demand of duty is not justified - HC
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Clarification on imposition of Ban on export of Cotton with immediate effect by DGFT - Cir. No. 07/2012 Dated: March 9, 2012
DGFT
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Notification No.102, dated 05.03.2012 not applicable for cotton consignment for which Let Export Order(LEO) has been issued up to 2400 hrs. on 04.03.2012. - Cir. No. 58 (RE-2010)/2009-14 Dated: March 9, 2012
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DFIA: applicability of provisions contained in paragraph 4.32.2 of HBP v1 regarding declaration of technical characteristics, quality and specifications at the time of exports. - Cir. No. 57 /2009-14 (RE 2011) Dated: March 6, 2012
SEZ
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U/S. 4 of the SEZ Act, 2005 - Set up a sector specific Special Economic Zone for Gems and Jewellery at Village Bhamboriya, Tehsil Sanganer, District Jaipur in the State of Rajasthan; - Mahindra World City (Jaipur) Ltd. - Ntf. No. S.O.354(E), Dated: February 29, 2012
Corporate Law
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Allotment of Director’s Identification Number (DIN) under Companies Act, 1956 - Cir. No. 4/2012 Dated: March 9, 2012
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Role-check for the Digital Signatures (DSCs) belonging to authorized signatories of Banks/FIs - Cir. No. HQ/104/2007 Dated: February 17, 2012
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Constitution of a Committee to formulate a Policy Document on Corporate Governance. - Cir. No. 3/2012 Dated: March 7, 2012
Indian Laws
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Income Tax : Highlights of Report of Standing Committee on Finance on Direct Taxes Code Bill, 2010 presented to Speaker on 9-3-2012
Service Tax
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Import of servcies - Rule 3(iii) - The said services were received by a recipient located in India for use in relation to business or commerce and thus satisfy criteria of Rule 3(iii) - prima facie the duty demanded from the applicant is payable. - AT
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Building Development agreement - In the absence of there being any service provider and service recipient in relation to the transaction in question, the Tribunal was justified in holding that the transaction in this case cannot be considered as taxable - HC
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CENVAT credit on courier services - courier service is received after the clearance of goods from the factory gate therefore, the service relates to post clearance of the samples and nothing to do with the manufacture of samples - AT
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Demand - Management Consultancy Service - the services rendered by ESI, PF, and other industrial law practitioners - do not get covered by scope of the term ‘Management Consultant’ - AT
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Cargo Handling Service versus Airport Services - classification - If there is holding of cargo for a few hours or a few days for proper handling of cargo and loading on to proper aircraft, the activity cannot be considered as storage and warehousing service notwithstanding the fact that they charge to the clients in the name of “storage charges” - AT
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Penalty - courier service -The contention that once there is a default, the payment of penalty is automatically unsustainable in view of the language employed in Section 80 of the Act - HC
Central Excise
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Interest 11AB - even where the duty is short paid by an assessee, is available as credit to the recipient unit of the same assessee, interest in terms of provisions of Section 11AB is required to be confirmed and interest is leviable. - AT
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Affixing of bar code and MRP or imported goods - deemed manufacture - held that:- the provisions of Section 2(f)(iii) of the Central Excise Act are attracted. - AT
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Revision application - rebate sanctioning authority - rebate claims under the provisions of Rule 18 of the Central Excise Rules, 2002 - Deputy Commissioner/Assistant Commissioner of Central Excise having jurisdiction over factory of production of export goods or the warehouse, or the Maritime Commissioner is empowered to sanction the rebate claim - CGOVT
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Refund - the duty paid under protest falls under section 11B of the Act and as such, would attract the principles of unjust enrichment. - HC
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Valuation of goods under central excise - deduction from price - No justification for the Commissioner to decide the claim regarding six deductions by answering the same in favour of the assessee. - AT
Case Laws:
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Income Tax
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2012 (3) TMI 144
Shoguns received on marriage taxable as gift - Marriage of assessee's daughter - Held That:- Shoguns were given to assesse and not too daughter, logically cheque should be in bride name - No details provided which showed that amount has been transferred to bride's account. Decided against assesee. Foreign Travel Expenditure disallowed on account of personal element - Held That:- Revenue could not bring any material on record to show that such expenditure are personal. Decided in favour of assessee.
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2012 (3) TMI 143
Rectification of mistake - Time Period - order not passed within the period of three month from the date of hearing - Held That:- when the assessee has not brought on record anything to establish prima facie that any material fact or contention was left without considering by the Tribunal while passing the impugned order. Accordingly, we do not agree with the contentions of the learned counsel for the assessee on this point. Order Signed by different member and Pronounced by different member - Held That:- the order was signed by both the Members who have heard the appeal in question. Since one of the Members was already transferred was not available at Mumbai, therefore, another Accountant Member Shri R.S.Syal was nominated to substitute D.K.Shrivastava, AM who was transferred, therefore, there is no illegality or defect in the process of pronouncement of the impugned order. Rectification of order of Tribunal - granted tenancy to the clients even though the same is termed as ‘cabin space’ - Held That:- Tribunal has duly considered al l the contentions and the decision relied upon by the ld. Sr.Counsel for the assessee. Therefore, once the findings given on merits, after considering the relevant records as well as facts then even if the said findings of this Tribunal is not sustainable would not bring the case under the scope of section 254(2) of the Income Tax Act, 1961.
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2012 (3) TMI 142
Whether surrender made on account of discrepancies found in the books/cash and also considering that entire sales/purchases be treated as income under 69A - Held That:- In view of Fakir Mohamed Haji Hasan (2000 - TMI - 14629 - GUJARAT High Court), additional income offered is deemed income assessable u/s 69A of the Act and no deduction is allowable against such deemed income assessed u/s 69A of the Act in the hands of the assessee. Set of Business loss against undisclosed Income - Held That:- In view of Fakir Mohamed Haji Hasan (2000 - TMI - 14629 - GUJARAT High Court), appeal dismissed. Additions on account of difference in Stock - Held That:- Addition of Rs.53,379/- on account of unexplained investment in the stock is fully covered by the amount surrendered by the assessee as unexplained investments. The impugned addition is, therefore, deleted. Rejection of books of account - Held That:- Assessee has surrendered a sum of Rs.25 lakhs on account of unexplained transactions also shows that the books of account maintained by the assessee are neither complete nor correct nor reliable. In this view of the matter, the order passed by the CIT(A) rejecting the books of account is confirmed. Additions on account of low GP rate - AO has applied the previous year GP as declared by the appellant which is held to be just and fair. The addition of Rs. 3,26,556/- made by the AO is upheld.
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2012 (3) TMI 141
Penalty Proceedings - Assessee marketing machine tools - AO: calculation of income @5% of turnover under 44AF is erroneous - Held That:- In assessee own case it has been decided that invoking of provision of 44AF are bonafide - For adjusting Commission and brokerage receipts: merely non furnishing of certain paper which are not in assessee possession will not attract penalty proceedings. When claim disallowed on adhocc basis and no valid information in possession of revenue. Penalty un-justified.
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2012 (3) TMI 140
Rejection of Books of Account on low GP ratio, payment to sister concerns section 40A(2), un-justified job work expenses - Held That:- Assessee furnished detailed explanation. Assessee had explained the decrease in sale price as also its reasons. AO admitted purchase price of the raw materials have risen during the year under consideration. Similarly non reporting of transaction can be best attributed to auditor and cannot be ground to reject books. Job work - previously was carried from outside and now from sister concern at same amount with no un-reasonable expenditure. - Decided in favour of assessee.
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2012 (3) TMI 139
Calculation of Profit - 4.5% of Net Profit - Assesee contended net profit in transportation business ranges 2 to 3 percent even as per 44AE maximum income per truck is 3500 per month - Held That:- The above NP ratio were applied by assessee in earlier two years thus AO is directed to compute the income of the assessee at NP rate of 4.25%. Calculation of Profit - Asseesee argued Net profit @1.75% not justified - Business doubled - Held That:- Having regard to the entirety of the facts and circumstances of the case and submissions made by the ld. ‘AR’ regarding the hike in expenditure and turnover of molasses, as also to meet the ends of natural justice, the AO is directed to apply net profit rate at 1.50% . Thus, the assessee gets partial relief.
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2012 (3) TMI 138
Waiver of interest under 234A,B,C and interest under 220(2) - Held That:- Default has occurred for reasons due to unavoidable circumstances, no details thereof have been furnished and this factual issue was not established before, denial of the request for waiver of interest cannot be said to be against the provisions of the notification. For waiver under 220 - apart from pleading that nonpayment of tax was due to reasons beyond the control of the assessee, the assessee has not established this factual question. Reliance placed on GTN Textile Ltd (1993 -TMI - 18908 - KERALA High Court). - Decided against the assessee.
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2012 (3) TMI 137
Re-opening of assessment under 147 - reason supplied after the expiry of six years from the end of relevant A/Y - Held That:- since the reasons for the reopening of the completed assessment were supplied to him beyond the period of six years from the end of the assessment year under consideration, the reopening is invalid - In view of Haryana Acrylic Manufacturing Co. vs. CIT (2008 - TMI - 31355 - DELHI HIGH COURT), assessment declared void ab initio.
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2012 (3) TMI 133
Genuineness of Gifts - Grandfather owner of 34 bighas of land cultivating wheat, paddy - Cash gifts on account of Natural love - Held That:- No evidence to show agriculture land is well irrigated. There is an element of overstating 34 bighas of land. Other relatives of assessee also at village, entire saving from agriculture without produce at no doubt. AO should have summoned the above facts from donour, no such effort made, it would bu suffice to sustain addition of Rs 307562 after giving relief of Rs 4,00,000. Cash Credit - Confirmation letters of creditor were filed - AO: identity not sufficient creditworthiness to be proved - Held That:- creditors are relatives of the assessee and have mentioned their relationship with the assessee in the confirmation letters filed before the AO, the absence of any material to doubt the genuineness of the transaction assessee has discharged its initial onus. Addition of Rs.77,800/- is deleted.
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2012 (3) TMI 132
Transfer Price - International transaction - Additional Evidences - Documents could not be produced before lower authorities - Held That:- In view of Anaikar Trade and Estates (1990 - TMI - 23190 - MADRAS High Court), tribunal can consider additional evidences. Once additional evidence are taken up they have to be considered to decide the matter therefore we remand case back to AO for fresh adjudication in accordance with law, after providing due and reasonable opportunity of being heard to the assessee.
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2012 (3) TMI 131
Validity of Re-assessments Proceedings - Computation of MAT u/s 115JB - Book profit wrongly set-off against brought forward loss - Held That:- AO: himself prepared computation it cannot be said there was no application of mind. In view of Kelvinator of India (2010 - TMI - 35201 - SUPREME COURT OF INDIA), CIT(Appeals) was correct in holding that reopening done was invalid.
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2012 (3) TMI 130
Sale/Purchase of Shares - "Capital Gain" OR "Business Income" - Held That:- When purchases were from assessee own fund merly because it has entered into huge investments in limited number of shares of Indian Companies, does not merit the stand of the authorities in treating the same as income from business. Decided in favour of assessee.
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2012 (3) TMI 129
Registration as Trust - Land leased from Trustee CIT rejected registration - Held That:- Assessee running school with 900 student no finding could be brought to show leased land is for benefit of Trustee. Order of CIT quashed and assessee eligible for registration.
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2012 (3) TMI 128
Maintainability of Appeals - Taxes due on returned income were not paid - Held That:- Taxes due were actually paid by the assessee before the hearing of the appeals by the Commissioner of Income-tax (Appeals) and that, therefore, the same be considered as sufficient compliance with the provisions of section 249(4) of the Act.
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2012 (3) TMI 127
Conditions for Invoking order by Commissioner under Sec 263 - AO enquired for allowability of deduction u/s 80HHF in respect of interest income treated as business income and non-exclusion of expenses incurred in foreign currency under Explanation (c) and (j) below to Section 80HHF - Assessee gave detailed Explanation by writing letter - Held That:- AO on being satisfied allowed claim of assesee. The order of the AO could not be considered to be “erroneous” simply because two views are possible and the AO has taken as one view with which the ld. CIT does not agree, which cannot be treated as erroneous and prejudicial to the interests of the Revenue unless the view taken by the AO is found to be unsustainable in law.
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2012 (3) TMI 126
Review of Order passed by Tribunal - Application for rectification - Period of limitation - The appeals of the assessee were dismissed by the Tribunal vide impugned order as barred by limitation because the Tribunal was of the view that the assessee has failed to explain the reasonable cause for filing the appeals late by 670 days and thereby did not inclined to condone the delay. - Held That:- Order under 254(2) can be rectified only in case of mistake apparent from record,Tribunal has no power to review its order passed on merit which amounts to reversal of the order passed after discussing all the facts and statutory provisions in detail. - Miscellaneous Application filed by the assessee dismissed.
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Customs
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2012 (3) TMI 125
Contract of Construction of Roads in India- Notification 21/2002-Cus dated 01.03.2002- availing the exemption the importer should have a contract awarded or as a sub contractor for the construction of roads in India either by the Central Government or the State Government or other agencies mentioned in the notification - Appellant had such a contract at the time of importation- the usage of the equipment in the performance of the contract is mandatory - held that:- Exemption cannot be granted as the Appellant has utilized the equipment for construction of roads elsewhere not as a contractor but as a sub-contractor. But even in those cases, they were not named as a sub-contractor - appellant to make a pre-deposit of 50% of the customs duty within eight weeks
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