TMI Tax Updates - e-Newsletter
March 3, 2012

Case Laws in this Newsletter:

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

Articles

1. CAN BOTH PENALTIES U/S 76 AND 78 IN SERVICE TAX BE LEVIED EVEN BEFORE MAY 2008?

   By: Dr. Sanjiv Agarwal

2. Taxability of Business Exhibition Services

   By: Dr. Sanjiv Agarwal

News

1. Valid bids worth Rs. 12,766.75 crore received through disinvestment of 42,04,16,170 shares of ONGC; Volume weighted average price was Rs. 303.67 per share against floor price of Rs.290

2. Anand Sharma Meets High Power Delegation from Japan & Us

3. Change in Tariff Value of Brass Scrap (All Grades), Poppy Seeds, Gold and Silver Notified .

4. Import of sensitive items during April-December 2011.

5. Harmonized list of Infrastructure sub-sectors.

6. India’s Foreign Trade: January, 2012.

Notifications

Customs

1. 14/2012 - dated 29-2-2012 - ADD

Rescinds Notification No. 30/2008-Customs, dated the 3rd March, 2008.

2. F.No. 437/06/2012-Cus. IV - dated 1-3-2012 - Cus (NT)

Appointment of Common Adjudicating Authority.

3. 17/2012 - dated 29-2-2012 - Cus (NT)

Amends Notification No. 63/1994-Customs (N. T.) - Land Customs Stations and Routes for import and export of goods by land or inland water ways.

4. 16/2012 - dated 29-2-2012 - Cus (NT)

Amends Notification No. 63/1994-Customs (N. T.) - ustoms ports — Appointment for specified purposes.

5. 15/2012 - dated 29-2-2012 - Cus (NT)

Amends Notification No. 36/2001-Customs(N.T) - Palm oil, Palmolein, Soyabean Oil (Crude) and Brass Scrap (all grades) - Traiff Values.

Income Tax

6. 12/2012 - dated 28-2-2012 - IT

Section 10(46) of the Income-tax Act, 1961 - Exemptions - Statutory Body/Authority/Board/Commission - Notified body or authority - Competition Commission of India.

7. 11/2012 - dated 28-2-2012 - IT

Section 10(46) of the Income-tax Act, 1961 - Exemptions - Statutory Body/Authority/Board/Commission - Notified body or authority - National Skill Development Corporation.

Circulars / Instructions / Orders

FEMA

1. 88 - dated 1-3-2012

Clarification - Establishment of Branch Offices (BO) / Liaison Offices (LO) in India by Foreign Entities – Delegation of Powers.

2. 89 - dated 1-3-2012

Foreign Institutional Investor (FII) investment in ‘to be listed’ debt securities

3. 84 - dated 29-2-2012

Compilation of R-Returns: Reporting under FETERS.

4. 85 - dated 29-2-2012

External Commercial Borrowings (ECB) for Infrastructure facilities within National Manufacturing Investment Zone (NMIZ).

5. 86 - dated 29-2-2012

KYC Norms/AML Standards/Combating Financing of Terrorism/Obligation of Authorised Persons under (PMLA), 2002 - Assessment and Monitoring of Risk – Money Changing Activities.

6. 87 - dated 29-2-2012

KYC Norms /AML Standards/Combating Financing of Terrorism/Obligation of Authorised Persons under (PMLA, 2002 - Assessment and Monitoring of Risk - Cross Border Inward Remittance under MTSS.

DGFT

7. 55 (RE-2010)/2009-14 - dated 29-2-2012

Conditionality for Import of Erythromycin Thiocyanate under Advance Authorization Scheme: Applicability of Policy Circular No.9 dated 30.6.2003 and PC 15 dated 17.9.2003.

8. 56 (RE-2010)/2009-14 - dated 29-2-2012

‘On-line’ filing of PRC.

9. 101(RE-2010)/2009-14 - dated 29-2-2012

Earlier the expression “Handmade” did not include “Braided” in the ‘Note:’ at Sr. No.11 in Table-2 of Appendix 37D. This has now been included.

Companies Law

10. 2/2012 - dated 1-3-2012

Registration of Companies or LLPs which have one of their objects is to carry on the profession of Chartered Accountant, Cost Accountant, Architect, Company Secretary etc.

Central Excise

11. F.No.354/38/2011 -TRU - dated 2-3-2012

Clarification regarding levy of Excise duty on branded precious metal jewellery

Highlights / Catch Notes

Income Tax

• Closure Costs Don't Equal Total Shutdown if Trading Continues in Manufacturing Business.

  Case-Laws - HC : Expenditure incurred on closure of business of manufacturing activity - since the assessee had been doing other business activity also, namely, 'trading' it could not be said that the assessee had closed its business. - HC
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• Court Rules Issuance of Notice u/s 201 Must Be Within Reasonable Time, Even Without Specific Limitation.

  Case-Laws - HC : Assessee in default - Time limitation - issuance of notice u/s 201 after a period of 4 years - though there is no period of limitation prescribed for exercise of that power, still such a power must be exercised within reasonable time - HC
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• Competition Commission of India granted income tax exemption u/s 10(46) of the Income-tax Act, 1961.

  Notifications : Section 10(46) of the Income-tax Act, 1961 - Exemptions - Statutory Body/Authority/Board/Commission - Notified body or authority - Competition Commission of India. - Ntf. No. 12/2012 Dated: February 28, 2012
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• National Skill Development Corporation Gains Tax Exemption u/s 10(46) of Income-tax Act, 1961 for Skill Initiatives.

  Notifications : Section 10(46) of the Income-tax Act, 1961 - Exemptions - Statutory Body/Authority/Board/Commission - Notified body or authority - National Skill Development Corporation. - Ntf. No. 11/2012 Dated: February 28, 2012
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Customs

• Common Adjudicating Authority Appointed to Streamline Customs Adjudication Process Under Notification F.No. 437/06/2012-Cus. IV.

  Notifications : Appointment of Common Adjudicating Authority. - Ntf. No. F.No. 437/06/2012-Cus. IV Dated: March 1, 2012
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• Amendment to Notification No. 63/1994-Customs Updates Land Customs Stations and Routes for Cross-Border Trade.

  Notifications : Amends Notification No. 63/1994-Customs (N. T.) - Land Customs Stations and Routes for import and export of goods by land or inland water ways. - Ntf. No. 17/2012 - Customs (N. T.) Dated: February 29, 2012
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• Amendment to Notification No. 63/1994-Customs (N.T.) Updates Customs Port Regulations for Improved Efficiency and Compliance.

  Notifications : Amends Notification No. 63/1994-Customs (N. T.) - ustoms ports - Appointment for specified purposes. - Ntf. No. 16/2012 - Customs (N. T.) Dated: February 29, 2012
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• Amendment to Notification No. 36/2001-Customs(N.T.) updates tariff values for palm oils, crude soybean oil, and brass scrap.

  Notifications : Amends Notification No. 36/2001-Customs(N.T) - Palm oil, Palmolein, Soyabean Oil (Crude) and Brass Scrap (all grades) - Traiff Values. - Ntf. No. 15/2012 - Customs (N. T.) Dated: February 29, 2012
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DGFT

• "Handmade" Now Includes "Braided" in Note at Sr. No.11, Table-2, Appendix 37D.

  Circulars : Earlier the expression “Handmade” did not include “Braided” in the ‘Note:’ at Sr. No.11 in Table-2 of Appendix 37D. This has now been included.
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• Guidelines for Importing Erythromycin Thiocyanate under Advance Authorization Scheme Referencing Circular No. 55 (RE-2010)/2009-14.

  Circulars : Conditionality for Import of Erythromycin Thiocyanate under Advance Authorization Scheme: Applicability of Policy Circular No.9 dated 30.6.2003 and PC 15 dated 17.9.2003. - Cir. No. 55 (RE-2010)/2009-14 Dated: February 29, 2012
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• DGFT Launches Online System for Pre-Requisite Certificate to Boost Efficiency in Trade Applications.

  Circulars : ‘On-line’ filing of PRC. - Cir. No. 56 (RE-2010)/2009-14 Dated: February 29, 2012
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FEMA

• Circular on FII Investments in Unlisted Debt Securities Under FEMA Guidelines: Compliance and Regulatory Framework Explained.

  Circulars : Foreign Institutional Investor (FII) investment in ‘to be listed’ debt securities - Cir. No. 89 Dated: March 1, 2012
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• Guidance for Foreign Entities on Setting Up Branch or Liaison Offices in India under FEMA Circular, March 1, 2012.

  Circulars : Clarification - Establishment of Branch Offices (BO) / Liaison Offices (LO) in India by Foreign Entities – Delegation of Powers. - Cir. No. 88 Dated: March 1, 2012
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• Guidelines for Compiling R-Returns under FETERS per Circular No. 84 for Compliance with FEMA Reporting Standards.

  Circulars : Compilation of R-Returns: Reporting under FETERS. - Cir. No. 84 Dated: February 29, 2012
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• External Commercial Borrowings allowed for infrastructure in National Manufacturing Investment Zones under Circular No. 85, boosting economic growth.

  Circulars : External Commercial Borrowings (ECB) for Infrastructure facilities within National Manufacturing Investment Zone (NMIZ). - Cir. No. 85 Dated: February 29, 2012
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• Authorized under PMLA 2002 must follow KYC and AML standards to prevent money laundering and terrorism financing.

  Circulars : KYC Norms/AML Standards/Combating Financing of Terrorism/Obligation of Authorised Persons under (PMLA), 2002 - Assessment and Monitoring of Risk – Money Changing Activities. - Cir. No. 86 Dated: February 29, 2012
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• Authorized Persons Must Follow PMLA 2002: KYC, AML Standards, and Monitor Cross-Border Remittances for Risk Compliance.

  Circulars : KYC Norms /AML Standards/Combating Financing of Terrorism/Obligation of Authorised Persons under (PMLA, 2002 - Assessment and Monitoring of Risk - Cross Border Inward Remittance under MTSS. - Cir. No. 87 Dated: February 29, 2012
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Corporate Law

• New Circular Outlines Registration Rules for Professional Firms: Chartered Accountants, Architects, and More.

  Circulars : Registration of Companies or LLPs which have one of their objects is to carry on the profession of Chartered Accountant, Cost Accountant, Architect, Company Secretary etc. - Cir. No. 2/2012 Dated: March 1, 2012
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Central Excise

• Excise Duty Guidelines Issued for Branded Precious Metal Jewelry to Ensure Compliance with Central Excise Laws.

  Circulars : Clarification regarding levy of Excise duty on branded precious metal jewellery - Cir. No. F.No.354/38/2011 -TRU Dated: March 2, 2012
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• No Interest on Reversed Cenvat Credit Error if Duty Not Paid, Court Rules.

  Case-Laws - HC : Interest for taking the Cenvat credit wrongly - assessee had availed wrongly the Cenvat credit on capital goods - Before the credit was taken or utilized, the mistake was brought to its notice. The assessee accepted the mistake and immediately reversed the entry - Without the liability to pay duty, the liability to pay interest would not arise. - HC
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Case Laws:

• Income Tax

• 2012 (3) TMI 47
  Surrender of leasehold rights – invocation of Section 50C - CIT(A) deleted addition made on account of LTCG on the ground that Section 50C has no application on transfer of leasehold right in building – Held that:- Provisions of Section 50 C will apply on receipt of consideration on transfer of a property, being land or building or both, and not in case of transfer or surrender of tenancy rights. Lessee's rights cannot be treated as ownership rights. There is nothing on the record to suggest that the assessee was owner of the property in question. Further, cost of acquisition of the tenancy rights, in view of the specific provisions of Section 55(2)(a), should have been taken as ‘nil’. This aspect is however tax neutral since qualifying investment u/s 54F is more than the consideration for surrender of these tenancy rights – Decided against the Revenue.

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• 2012 (3) TMI 46
  DTAA between India and Sweden – applicant availed loan facility from AB SVENSK Export Kredit (SEK), a company incorporated in Sweden – facility being guaranteed by the Swedish Export Credits Guarantee Board (EKN) – whether payment of interest (through the Facility Agent NORDEA Bank AB(‘PUBL’)) is exempt in India – withholding of tax - Held that:- Payment of interest to SEK through NORDEA Bank AB is not taxable in India under Article 11.3 of the India-Sweden Double Taxation Avoidance Convention in view of and only in view of the Most Favoured Nation Clause in the India-Sweden Protocol which has to be taken as part of the Convention. Since it is claimed that SEK has no Permanent Establishment in India, there will be no obligation on the applicant to withhold taxes u/s 195 of the Income-tax Act, on the interest payable on the transaction.

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• 2012 (3) TMI 45
  India-Japan DTAC – Japanese company, subsidiary of USA company – product sold are copyrighted material in software form - right to use the application is given to customers by way of vendor licence key and through an independent reseller in India - license is provided on a non-exclusive and non-transferable basis – taxability of payments received for sale of product – whether royalty or business income – withholding of tax – Held that:- As held in Citrix Systems Asia Pacific Pty. Ltd. (2012 - TMI - 210758 - Authority For Advance Rulings) that there cannot be a user of software over which exists a copyright without a use of the copyright therein. The payment for such use can only be royalty. Therefore, in present case, what is paid by the reseller to the applicant and what is paid for updates and maintenance are royalty as defined in Article 12 of the India-Japan DTAC and not business income covered by Article 7 of the India-Japan DTAC. Further, tax needs to be deducted by the customers while making the remittances to the applicant as consideration for the software supplied to them.

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• 2012 (3) TMI 44
  Interest free advances - Additions made by AO applying 12% rate of interest - Held That:- the assessee was having sufficient interest free fund in the form of capital and reserves Rs. 5.48 crores against interest-free advances of Rs. 1.30 crores. Since the assessee has having sufficient interest-free funds to interest free advances, we therefore, delete the addition of Rs. 15,66,180/- Reliance placed on Torrent Financiers v. Asstt. CIT (2001 - TMI - 55358 - ITAT AHMEDABAD-A).

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• 2012 (3) TMI 43
  Assessee importing & trading timber - Requisition under 133(6) - Books of Account Rejected - On comparable GP calculated at 3% - CIT(A) reduced the rate to 2.5% - Revenue aggrieved by action of CIT is in appeal - Held That:- CIT was correct in rejecting books of account. After considering the nature of business, loss declared and after considering the decision cited by ld. A.R. including the decision of ITAT, Rajkot Bench, we find that it will be fair and just to both sides if GP is estimate at the rate of 2% as against 3% applied by the AO and 2.5% applied by the CIT(A). Interest free Advances - Additions made by applying 18% rate of interest - Held That:- In view of Torrent Financiers v. Asstt. CIT (2001 - TMI - 55358 - ITAT AHMEDABAD-A),disallowance deleted.

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• 2012 (3) TMI 33
  Unexplained Capital Introduced - partner personal cash book or passbook were not furnished - CIT(A): non-production of the partners could not be taken as ground to treat the capital introduced as unexplained, source of capital were explained no additions made in the hands of the assessee firm - Held That:- Assessee had discharged the primary onus which was on it by offering explanation, which has not been found to be incorrect or false in any manner.Decided in favour of assessee. Unsecured loans - break up of the loans, copies of acknowledgements of returns filed, confirmation letters from some of the creditors/depositors were produced - CIT gave relief of 15,05,000 and withheld additions of 3,00,000 - Revenue and Assessee both are in appeal - Held That:- loan of Rs.1,50,000/- in respect of Shri Mathew is hereby confirmed and addition in respect of Rs.50,000/- from M/s Parth Computerized Weigh Bridge and Rs.1,00,000/- from Shri S. K. Gupta are restored back to the file of AO for verification and fresh adjucation. Assessee’s second ground is partly allowed for statistical purposes. Unexplained Credits - 21 days time given to furnish evidence - CIT(A) deleted additions of Rs.10,41,850 and confirmed Rs.50,91,930 - Held That:- Assessee submitted that complete names and addresses were given during assessment. No enquiry was made by the AO or evidence of remission of liability brought on record by the AO no adequate opportunity was granted to furnish confirmations. We remand the matter to AO for fresh adjudication after verifying the evidences produced by the assessee before the ld. CIT(A) in support of his claim by the assessee. Bank Interest Claimed - No interest charged to advances given to o Gitaben Kalathia of Rs.3,40,303 - Held That:- Assessee has tried to make out a case that assessee had substantial interest-free funds for giving interest free advances in respect of which he has filed the details. But these details require verification at the end of the AO, the matter is, therefore, restored back to the file of AO for fresh decision. This ground is allowed for statistical purposes.

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• 2012 (3) TMI 32
  Survey - Difference on valuation of Inventory - Unrecorded Sales - Books of Account Rejected - CIT(A) scaling down the addition from Rs.937123/- to Rs.298812, Held That:- CIT(A) has given the above findings after properly analyzing the facts of this case and has passed a well reasoned speaking order. Nothing substantial was argued by either party to deviate us from the view taken by the learned CIT(A). Allegation of bogus purchase - non production of documents - held that:- it is an undisputed fact that the lift was installed and put to use with the approval of Chief Inspector of Lifts and Elevators through license dated 15.2.2006. For allowability of any expenditure in a particular year of assessment bill of purchase is an important piece of evidence which could not be produced by the assessee. - since the assessee’s income has been arrived at by applying the net profit rate on sales, no separate addition was called for.

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• 2012 (3) TMI 31
  Weighted Deduction - Automobile Industry notified 21.09.04 - Held That:- In view of CIT v. Claris Life Science (2008 - TMI - 201802 - Gujarat High Court), dis allowance confirmed. Subscription Charge not treated as Business Expenditure - Held That:- In view of Sundaram Industries(1999 -TMI - 15776 - MADRAS High Court), disallowance deleted. TDS - Machining Charges - Re-imbursement of actual expense - Payment for job work and no fee for technical service - Held That:- Expenditure is nothing but repairs and rework of the defective brake linings exported by the assessee. Payment does not fall within the category of ‘fee for technical services’ nor does it fall with the term ‘royalty. In view of Transmission Corporation (1999 - TMI - 5757 - SUPREME Court), no liability to deduct TDS. Additional depreciation - machinery installed in immediately p/y used more than 180 days - only 50% additional depreciation claimed - Held That:- The provisions of section 32 of the Act do not provide for carry forward of the residual additional depreciation, if any. order of CIT(A) confirmed. UPS depreciation under "Plant & Machinery OR Computer" - Held That:- Surface Finishing and Equipment (2003 - TMI - 68566 - ITAT JODHPUR), classified as Computer, eligible for higher rate of depreciation.

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• 2012 (3) TMI 30
  Depreciation on UPS under Computer@60 percent or plant & Machinery @25 per cent - Held That:- In view of CIT vs BSES Rajdhani Powers Limited (2010 - TMI - 78240 - DELHI HIGH COURT), UPS classified as Computer eligible for depreciation under 60%. Depreciation on Work Station and Server Back - Held That:- Definition of these items may be available in public domain but same were not provided to the CIT (A) nor such claim was made before her. Case referred back to decide afresh.

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• 2012 (3) TMI 29
  Expenditure in respect of Exempt Income - AO made additions upto Rs 43,93,130 on account of administrative expense - Held That:- Tribunal in assessee own case in preceding years has restricted the disallowances to Rs 1,00,000 therefore on identical footing we restrict the disallowance under section 14A of the Act to Rs 1,00,000. Book Profit under 115JB - Adjustments of provision un-ascertained leave encashments - Held That:-Leave encashment does not fall in the category of an unascertained liability and, therefore, the Commissioner of Income-tax (Appeals) made no mistake in deciding the issue in favour of the assessee

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• 2012 (3) TMI 28
  Validity of reference to Valuation Officer under section 142A - No incriminating material found in Search - No material on record that value of the property was under-stated OR investment exceeded the amount recorded in the registered sale deed - Held That:- Assessing Officer cannot make a reference u/s 142A for making roving and fishing enquires. Reference to DVO can only be made after rejecting books of account when books are not rejected Assessing Officer has no power to straightaway jump to the next step of making an estimate. Relaince placed on CIT vs Mahesh Kumar (2010 - TMI - 78245 - DELHI HIGH COURT), CIT vs Ramesh Kakkar (2010 - TMI - 79050 - DELHI HIGH COURT), CIT vs Manoj Jain (2005 - TMI - 9979 - DELHI High Court).

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• 2012 (3) TMI 27
  Depended agent or independent agent - Money Transfer Business - Stand alone Machines - liaison office versus Permanent Establishment - held that:- Non-banking financial companies deal with money belonging to others and the activity of paying out monies on behalf of the Western Union Financial Services Inc., must be viewed as part of their business activity. In the case of tour operators, acting as agents of an established firm engaged in the international money transfer business may be conducive to their business. A broad view of the matter has to be taken in these matters. - held as independent agent. Whether the activities of the agent are wholly or almost wholly devoted to the assessee. - held that:- just because they are not acting as agents for any other company carrying on money transfer business it cannot be said that their activities are wholly or almost wholly devoted to the assessee. Whether the transactions between the agents and the assessee are under arm's length. - Held that:- There is no material to show that the rates of compensation are higher in other cases so as to indicate that the agents were discriminated against. The higher rate of compensation in the case of the Department of Posts is probably because its reach is much wider compared to the commercial banks, NBFCs or tour operators. The terms of appointment of sub-agents are uniform in all cases. Thus there seems to be no basis for the charge that the compensation paid is not adequate for the services rendered by the agents. - there is no merit in the claim that the transactions between the assessee and the agents are not under arm's length. Existence of PE in India - held that:- the fact that the agents in India payout the money to the beneficiaries or claimants, which they are bound to under the agreement with the assessee for which they are remunerated does not appear to us to be a case of exercise of any authority. Thus, the agents do not habitually exercise the authority to conclude the contracts on behalf of the assessee. - there is no agency PE of the assessee in India. In the absence of any PE in India, it follows that the profits, if any, attributable to the Indian operations cannot be assessed as business profits under article 7 of the treaty.

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• 2012 (3) TMI 26
  Condonation - Delay of 788 days - Sufficient and reasonable cause - hearing held just once - Held That:- In view of Collector, Land Acquisition vs. Mst. Katiji & Ors.(Supreme Court), pragmatic and liberal approach while considering the petition for condonation of delay. Closing Stock in books at Rs 1,44,77,950 carried forward at Rs 1,15,20,868 - Assessment under 143 - CIT invoked 263 - Held That:- C.I.T. assumed that the opening stock of the subsequent assessment year was correct, which led him to assume that closing stock of the assessment year under consideration was shown at lesser value, which was based on unfounded premises without considering the audited books of accounts of the assessee. 263 of the Act is not one which depends on contingency or guess work, but it should be actually an error either of fact or of law.CIT vs. Trustees of Anupam Charitable Trust (1986 - TMI - 25628 - RAJASTHAN High Court), Jai Kumar Kankaria vs. CIT (2000 -TMI - 14058 - CALCUTTA High Court)

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• Customs

• 2012 (3) TMI 42
  Contravention of import policy in respect of rough diamond – absolute confiscation of goods held – failure of assessee to furnish Kimberly Process certificate in respect of import of said goods - seeking permission for re-export of goods and waiver of penalty – Held that:- No evidence of wilful attempt by the assessee to contravene the rules is found, therefore there is no reason to impose any penalty. Hence, order of the Commissioner (Appeals) of setting aside the penalty is upheld. Further, Respondent is not making a clear submission as to why he wants the goods to be re-exported. He has not made any payment towards the goods. Thus, permission for re-export of goods is denied and order of the original adjudicating authority for absolute confiscation of the goods is restored – Decided partly in favor of assessee.

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• Corporate Laws

• 2012 (3) TMI 41
  Reduction of Share Capital - Recessionary Conditions - no explanatory statement along with notice of AGM - Held That:- As there were no creditors on the date of passing special resolution, no objection from any other party. Company may be permitted to reduce the share capital from Rs. 12,64,10,930/- divided into 1,26,41,093/-equity shares of Rs. 10/- each to Rs. 9,14,10,930/-. equity shares of Rs. 10/- each.

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• Service Tax

• 2012 (3) TMI 36
  Stay petition – dispute regarding quantum of commission income - non co-operation at the adjudication stage – Held that:- Dispensing with the requirement of pre-deposit, we remand the matter back to the Commissioner to consider the details appearing in the balance sheet since figures therefrom were adopted and agreement order.

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• 2012 (3) TMI 35
  Cenvat credit on service tax paid on outward transportation of the goods from the place of removal – Held that:- In view of the decision in case of CST, Bangalore Vs. ABB Ltd. (2011 - TMI - 203985 - Karnataka High Court) this issue stands decided in favour of the assessee. Whether credit can be taken on basis of TR-6 challan - period prior to 16.6.2005 - document under Rule 9(1)(e) of Cenvat Credit Rules – Held that:- In view of the decision in case of Gaurav Krishna Ispat (I) Pvt. Ltd. Vs. CCE (2008 - TMI - 31348 - CESTAT New Delhi) this issue stands decided in favour of the assessee.

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• 2012 (3) TMI 34
  Refund of credit of service tax paid on various input services - Rule 5 of the Cenvat Credit Rules 2004 – 100% EOU - services - transportation of goods from the factory to the port, services of the CHA and terminal handling charges and similar other charges incurred within the port area – Held that:- Issue is already settled in the case of services of outward transportation and custom house agent in favor of assessee. See CST Vs. ABB Limited (2011 - TMI - 203985 - Karnataka High Court), CCE Vs. Rolex Rings P. Ltd. (2008 - TMI - 30898 - CESTAT, Ahmedabad ). The other services are essentially of the same nature as that of custom house agent in the matter of eligibility for taking Cenvat credit – Decided in favor of assessee.

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• Central Excise

• 2012 (3) TMI 40
  Classification of `Povidone Iodine Cleansing Solution USP' and 'Wokadine Surgical Scrub' - assessee contending it to be medicaments classifiable under Chapter sub-heading 3003 whereas Revenue contends it to be detergents classifiable under chapter sub-heading 3402.90 on ground of presence of the surface active agent and other substances in it – Held that:- Combined factor that requires to be taken note of for the purpose of the classification of the goods are the composition, the product literature, the label, the character of the product and the user to which the product is put. However, the miniscule quantity of the prophylactic ingredient is not a relevant factor. In the instant case, it is not in dispute that this is used by the surgeons for the purpose of cleaning or degerming their hands and scrubbing the surface of the skin of the patient before that portion is operated upon. The purpose is to prevent the infection or disease. Therefore, the product in question can be safely classified as a "medicament" which would fall under chapter sub-heading 3003 which is a specific entry and not under chapter sub-heading 3402.90 which is a residuary entry – Decided in favor of assessee.

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• 2012 (3) TMI 39
  Plea for waiver of pre-deposit – manufacture of Asbestos Cement Sheets – denial of exemption under Notification No.6/2002 – Revenue denied the plea on ground that no prima facie case has been made out by the petitioner and no supporting documents had been furnished to substantiate existence of 'financial hardship' – Held that:- While dealing with the application twin requirements of considerations i.e., consideration of undue hardship aspect and imposition of conditions to safeguard the interest of Revenue have to be kept in view. In present case, it could be inferred that the petitioner has a strong prima facie case in the said appeal. Tribunal ought to have waived condition of pre-deposit, even if financial hardship had not been shown to exist or proved by acceptable evidence, as held by the Supreme court, in RAVI GUPTA Vs. COMMISSIONER OF SALES TAX, DELHI. However, in order to safeguard interests of the revenue, petitioner is directed to furnish a bank guarantee for a sum of 4.50 crores for hearing of the appeal by Tribunal.

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• 2012 (3) TMI 38
  Jurisdiction defect – penalty imposed under Rule 26 of the Central Excise Rules, 2002 for alleged wrong availment of credit on capital goods – Revenue's case is that there were no goods cleared at all from supplier of capital goods located at Indore – appellant factory situated at Nasik - Held that:- The order is not specific as to how there is jurisdiction vested with CCE, Indore for imposing penalty for taking wrong Cenvat credit in Nasik or how the provisions of Rule 209A or Rule 26 is applicable to the situation. Thus no merit is found in the argument for imposing penalty under aforesaid Rules and vesting of jurisdiction with CCE, Indore for credit taken in Nasik factory – penalty order set aside - Decided in favor of assessee.

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• 2012 (3) TMI 37
  Maintainability of the reference application filed u/s 35H by Revenue - whether substantial question of law arises - Tribunal allowed refund claimed on duty paid under protest on input manufactured by the assessee and captively consumed in the manufacture of final product - Held that:- In this case, final product is sold at market price which is same for all products manufactured and sold by every manufacturer. It is the duty of the assessee to prove that market price at which they sold the product does not include duty on input paid under protest. Therefore, substantial question of law arises that whether Tribunal was justified in holding that there is no unjust enrichment thereby entitling the assessee for refund of the duty paid under protest on input.Tribunal is directed to draw up a Statement of the case and refer the above question for decision by this Court.

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• 2012 (3) TMI 15
  Denial of Modvat Credit of duty paid on the angles, channels etc. on the ground of it being used as supporting structures – assessee contended that small portion of steel items were used as structures and the majority of the same were used for fabrication of capital goods - Chartered Engineer's certificate placed indicating quantum of steel items used for fabrication of capital goods - Held that:- We find that the observations made by the adjudicating authority are factually incorrect, and since issue revolves around the quantum of steel items used as either structural or capital goods, we find that the said certificate is required to be re-examined by the Commissioner. Hence, we remand the matter to Commissioner for de-novo adjudication. Further, we direct the Commissioner to re-decide the other issues relatable to availability of credit in respect of welding electrodes used for repair & maintenance of P&M or the availability of capital consumption notification to the angles, channels etc. being manufactured by the appellants.

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• 2012 (3) TMI 14
  Classification of the parts and accessories of optical fibre cables under heading 9033 – Revenue claiming it to be under heading 8544 – Held that:- In as much as the optical fibre cables fall under Chapter 90 as held in case of Optel Telecommunication Ltd (2005 - TMI - 53974 - CESTAT, Northern Bench, New Delhi), the parts would fall under Chapter 90.33 – Decided in favor of assessee.

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• 2012 (3) TMI 13
  Classification of add-on cards and motherboards and relevant rate of duty leviable – under heading 8473.00 or 8471.00 – Held that:- This Court, on number of occasions, has observed that Tribunal is the last fact finding authority on facts. See Standard Radiators Pvt. Ltd. v. CCE, (2002 - TMI - 46236 - Supreme Court Of India). In present acse, Tribunal merely proceeds to decide the issue on the ground that the assessee had earlier classified the goods in question under Sub-Heading No. 8473.00, and therefore, it was not open to him to claim classification under Sub-Heading No.8471.00. In a commodity classification, it is essential that the character and uses of the commodity and its parts are considered in detail and examined thoroughly. Therefore, we remand the matter to the Tribunal to decide the issue after considering the nature and the functions of add-on cards and motherboards in the functioning of Automatic Data Processing Machines.

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• CST, VAT & Sales Tax

• 2012 (3) TMI 51
  Delhi VAT, 2004 - interpretation of proviso to Section 2(1)(zd) - appellants are Government undertakings marketing petrol, diesel and petroleum products – increment of petrol prices by Government - relief in the price rise to the consumers provided by non-charging of VAT on incremental prices – prices subsequently rolled back - appellants contended entitlement of reduction in VAT on the VAT payable even on restoration of prices – Held that:- The proviso inserted to Section 2(1)(z) only protected and gave exemption in respect of enhanced ad valorem VAT payable on account of increase in prices of diesel and petrol from 6th June, 2006 and this increase was not to form part of the prices of petrol and diesel. The proviso did not say that VAT will not be payable and applicable on the pre 6th June, 2006 prices on petrol and diesel. Further, benefit under the proviso ceased to be applicable on roll back of prices w.e.f. 16.02.2007. Assessee contention of applicability of proviso even after the roll back of the prices does not find merit – Decided against the assessee.

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• Indian Laws

• 2012 (3) TMI 48
  Difference of opinion of members of Tribunal - Plea filed by applicant being Accountant Member of the ITAT, Chandigarh for invalidation of the transfer order by averring that it is punitive in character – alleged difference of opinion in a judicial matter with private Respondent No.4, who made complaint against him – Held that:- In present case, applicant retained draft judgement of private Respondent No.4 for more than one month, which does not appear to be appropriate and then returned it with contrary view. Applicant must have followed the procedure to be adopted by a Member who wishes to dissent from a draft judgment thus, applicant cannot himself be said to be free from blame. Further, we have not been persuaded to fault the wisdom exercised by the collegium in the matter of making a recommendation for transfer of the applicant from Chandigarh Bench of ITAT to the Rajkot Bench. Therefore, O.A. is held to be denuded of merit – appeal dismissed.

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