Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 10, 2012
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Deduction u/s 54EC – LTCG - Proviso to Section 54EC restricts investment of more than Rs 50 lacs in a F.Y.. However, if assessee transfers his capital asset after 30th September of the F.Y. he gets an opportunity to make an investment of Rs. 50 lakhs each in two different F.Ys. - AT
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Hiring of vehicles to be used for loading & unloading and transportation of products – Merely because the words "loading & unloading" are used in the contract, no one can presume that the contractee has to do any work on behalf of the assessee. The assessee has to make use of the equipment/vehicle made available on payment of hire for his use. Therefore, it is hire of equipment/vehicle simplicitor and Section 194I would be applicable - AT
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Nature of 'Usance Interest' – The nexus of interest was only with the period from which the purchase price of the raw material became due viz., the date of bill of lading. Therefore, usance interest, is interest within the meaning of sec. 2(28A) and same would be deemed to have accrued and arisen in India in view of the provisions of sec. 9(1)(v)(b) of the Act. - AT
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Method of accounting or royalty and assessment of reimbursement of expenses by the AO - Singapore based company - royalty and FTS are taxable on payment basis and not on accrual basis. - AT
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Capitalization of regularization fee paid - Construction of hospital building - The assessee has rightly booked the payment under the cost of construction of the hospital building - AT
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Payments made by the assessee-company for subcontracting its works contract - payment of hire charges/charter fees to EMPL - the contract given to EMPL was in the nature of sub-contract to undertake on behalf of the assessee's dredging work with the equipment and manpower of EMPL - It is only hiring of the equipment and the assessee did not use the dredger or any part thereof on its own neither it was given any right to use - AT
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Succession of the proprietorship business in to a corporate entity - conditions prescribed in section 47 (xiv) - in the present case, it cannot be held that he has received consideration or benefit indirectly other than by way of allotment of shares, only because higher number of shares have been allotted due to revaluation - AT
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Taxability of project - relevant assessment year - held that:- Once the income from the project is taxed, the Assessee will have no occasion to claim expenses relating to that project in a later assessment year. - AT
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Power u/s 131 - Extension of period of retaining Books of account - Assessing Officer can retain the books of account only for 15 days. - learned single judge was justified in entertaining the writ petition, issuing a direction to return the books of account,- HC
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Mentioning of a footnote below the return - a footnote cannot guide or control a return which is filed by an assessee. A footnote if at all can be for the purpose of amplification or for further reference or any such thing, but not to indicate a stand contrary to the main thing - HC
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Exemption u/s 54F - land purchased for construction of house but stayed by the court - the entire amount spent by the assessee in purchasing the land should be construed as amount invested in purchase/construction of residential house - AT
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Assessee had transferred as per the agreement goodwill to client which AO contested that it cannot be treated as a capital receipt and be treated as a revenue receipt and brought to tax under the head "Profit and Gains of Business' - consideration paid is not for the goodwill but it is for the assets, properties and rights of the transferor hence treated as capital receipt - HC
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Allow ability of discount charges in respect of debentures issued by the assessee while computing income from house property - the difference between the issue price and maturity value has to be spread over the debenture holding period and only proportionate amount can be allowed as deduction in a particular year. - AT
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Exemption u/s 10A(2) - Deduction u/s 80HHE - Tribunal in the present case has come to the conclusion that where a running business is transferred lock, stock and barrel by one assessee to another assessee the principle of reconstruction, splitting up and transfer of plant and machinery cannot be applied - Reconstruction is of a business already in existence and there must be a continuation of the activities and business of the same industrial undertaking - HC
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Depreciation on intangible assets being “business and commercial rights” - pecified intangible assets acquired under slump sale agreement were in the nature of “business or commercial rights of similar nature” specified in Section 32(1)(ii) and were accordingly eligible for depreciation. - HC
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Charitable Institution - when no approval was granted u/s 10(23C), CIT was not justified in holding that assessee is a charitable institution and eligible for exemption u/s 10(23C)(iiiad) - AT
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ITAT deleted the addition of Rs. 1.50 crore made by AO invoking the provisons of Section 40(a)(ia) read with section 194C - Tribunal while deleting the addition made under Section 40(a)(ia) of the Act has made out altogether a new case and accepted the stand of the assessee that they had not paid Rs. 1.50 crores and the said work was not sub-contracted by them to Rishikesh Properties Pvt. Ltd - Decided in favor of revenue. - HC
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Set off of business loss ignoring the provisions of section 90(2) - From the prescription of section 71, it is palpable that there is no bar in allowing set off of loss under the head "Profits and gains of business or profession" against income under the head "Income from other sources".
Corporate Law
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Annual general meeting - the 7th to 12th annual general meetings of the company could not be held. On 28th May, 2008 the company issued notices for holding these annual general meetings on 27th and 28th June, 2008 at diverse timings specified in the notices - The Company Law Board (CLB) fell into great error in altogether preventing holding meetings as mentioned in the above notices. It ought to have permitted them to be held - HC
Indian Laws
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Theft from cash chest by an employee - Once the employer has lost the confidence in the employee and the bona fide loss of confidence is affirmed, the order of punishment must be considered to be immune from challenge, for the reason that discharging the office of trust and confidence requires absolute integrity, and in a case of loss of confidence, reinstatement cannot be directed. - SC
Wealth-tax
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Wealth tax - the commercial asset used by the assessee substantially and partly given on lease are not business assets and thus includible into the 'net wealth' u/s 2(ea) - Since the assessee in the instant case has let out a part of its business premises and since the assessee is not in the business of letting out properties, therefore, the said property, in our opinion, is not exempt either u/s. 2(ea)(i)(3) or 2(ea)(i)(5) of the Wealth Tax Act - - AT
Service Tax
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Refund of service tax on taxable services used for export of goods – assessee claimed refund of service tax on taxable services used for export of MT of Chrome Concentrate as per Notification 17/2009-ST dated 7.7.2009 – export made through MMTC - claim denied on ground that the appellant are not the exporter of the goods but the exporter of the said goods was M/s MMTC Ltd., BBSR - Matter remanded back - AT
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Intellectual Property Services - Trade marks and brand name - The appearance of the trade mark "Hero Honda" and "Hero Honda 4T plus" on the oil company's products definitely indicates a connection between the said companies and the appellants product. - AT
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Cenvat credit while availing benefit of abatement - Commercial and Industrial Construction - notification no. 1/2006 - there is no stipulation in the notification that the option to avail/non-avail CENVAT credit has to be exercised uniformly in respect of all the contracts executed by the assessee. It is for the assessee to choose which formulation he wants to follow in a given contract.
- AT
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Maintainability of application filed u/s 96(C) of the Finance Act, 1994 – subsidiary of a subsidiary of a Government company - If ruling is given in this case, it will bind only the applicants, this would mean CESTAT is free to render a ruling ignoring what is being ruled by this Authority. Such a situation should be avoided. - AAR
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Business auxiliary service - the entries for “Business Auxiliary Service” and “Business Support Service” have different objects. After the introduction of the new entry, there can be argument as to which entry covers the activity more appropriately - in such situations the extended period of time cannot be invoked for raising demand - AT
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Claim for exemption under Notification 12/2003-ST which was not claimed in adjudication proceedings - When the contract is read as a whole it is indeed a contract for transfer of the right to use the Trademark for limited purposes but on a permanent basis - the impugned contract, in its pith and substance is not a "transfer of right to use" and is more in the nature of permission to use the trademark which continues to be the property of the licensor - Demand of service tax confirmed. - AT
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Cenvat credit - Input service distributor (ISD) - The term 'commencing of business' in Rule 3 therefore, cannot be understood in the manner whereby it will apply only to the cases where the actual manufacturing process would start. It would commence from the time the preparation commences for the establishment of manufacturing unit as the party is entitled to avail credit even prior to actual commencement of production. - Benefit of cenvat credit denied - decided against the assessee. - AT
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Storage and warehousing - the various old records such as discharged cheques, vouchers, books of accounts in respect of which the service was rendered by the appellant to his clients such as banks and corporate houses for management of the records, cannot be considered as storage and warehousing of "goods" as defined in the Finance Act, 1994 read with section 2(7) of the Sale of Goods Act, 1930 - not liable to pay service tax - AT
Central Excise
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Refund of the excess excise duty paid - Tribunal has travelled beyond the show cause notice and has given a reasoning in paragraph 5 of the order passed by the Tribunal that the appellant has not established whether incidence of excess paid duty was not passed to the customer in the form of availment of MODVAT/CENVAT credit. - HC
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Remission of duty - remission of duty is being claimed on the ground that the goods in respect of which the remission of duty has been claimed were a lost/destroyed due to an unavoidable accident - appellant have not been able to explain as to how the bottom of the tank got burst. - AT
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Cenvat credit - separate account and inventory of the inputs - requirement of Rule 6(2) - this requirement cannot fulfilled in respect of inevitable waste or by product - AT
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Valuation u/s 4A based on MRP or u/s 4 based on truncation value - Classification of bath fittings etc. - AT
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Exemption under Notification No.8/97-CE, dated 1.3.1997 - finished goods manufactured by the 100% EOU out of the raw material supplied by another 100% EOU - Clearance to DTA - The notification requires to be interpreted in the light of the words employed by it and not on any other basis. There cannot be any addition or subtraction from the notification for the reason the exemption notification requires to be strictly construed by the Courts. - SC
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Cenvat credit - though the document is titled as "Debit Note" the said document contains all relevant details as specified in Rule 9(2) of the Cenvat Credit Rules, 2004 and therefore there is no reason to deny the credit - AT
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Cenvat Credit denied on the ground that invoices did not contain necessary details as required under Rule 11 of Central Excise Rules, 2002 - The fact that Rule 9(2) is an exception to the provisions of Rule 11 of Central Excise Rules, has not been taken note of by both the lower authoritiest - AT
VAT
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Supply of goods from SEZ to DTA - Levy of CST - territory outside the territory of India u/s 53 (1) of SEZ Act, - The deeming provision also cannot be inferred from the analogy drawn from different Acts - Decided against the assessee. - HC
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Classification - voltage stabilizers were electronic goods falling within entry No. 74(f) of Notification No. 1223 dated March 31, 1992, passed under the U. P. Trade Act, 1948, and were liable to sales tax under the U.P. Trade Tax Act, 1948, at the rate of four per cent. - SC
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AO issued annexure A notice under section 22(3) of the KVAT Act, on the basis that the aforesaid products of the assessee were laundry brighteners and proposing to classify the products under entry 27 of S. R O. No. 82/2006 tax and levy tax at 12.5 per cent - Decided in favor of revenue. - HC
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Benefit of the sales tax deferral scheme - it is not the case of the Revenue that circular dated May 1, 2000 is in conflict with either any statutory provision or the deferral schemes announced under the aforementioned Government orders. We, therefore, hold that the said circular is binding in law on the adjudicating authority under the TNGST Act. - SC
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Clarifications/circulars issued by the Central Government and of the State Government are concerned they represent merely their understanding of the statutory provisions. They are not binding upon the court. - SC
Case Laws:
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Income Tax
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2012 (4) TMI 195
Deduction u/s 54EC – LTCG - sale of residential property on 22.10.2007 - deduction u/s 54EC allowed in respect of investment of ₹ 50 lacs made in REC bonds on 31.12.2007 - denial of deduction in respect of investment of ₹ 50 lacs in NHAI bonds made on 26.05.2008 on ground of it being made beyond the prescribed time of 6 months – assessee contended that subscription to the eligible investment was closed during the period 01-04-2008 to 26-05-2008 - investment of more than ₹ 50 lacs cannot be made in one F.Y. – Held that:- Proviso to Section 54EC restricts investment of more than ₹ 50 lacs in a F.Y.. However, if assessee transfers his capital asset after 30th September of the F.Y. he gets an opportunity to make an investment of ₹ 50 lakhs each in two different F.Ys. In present case, assessee could have invested in eligible investment within six months (on or before 21-04-2008) involving two financial years. Therefore, assessee is entitled to get exemption upto ₹ 1 Crore if investment is made upto 21.04.2008. Further investment of ₹ 50 lacs is made by assessee on 26.05.2008. It is undisputed that subscription to the eligible investment was closed during the period 01-04-2008 to 26-05-2008 thus assessee was prevented by sufficient cause which was beyond his control in making investment in these Bonds within the time prescribed. Therefore, investments made by the assessee on 26-05-2008 even though beyond six months is eligible for exemption – Decided in favor of assessee.
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2012 (4) TMI 194
Hiring of vehicles to be used for loading & unloading and transportation of products – assessee contended it to be composite contract and applicability of Section 194C to it – alternative contention of the assessee that section 40(a)(ia) is applicable only in case of non deduction of tax and not for short deduction of tax - Held that:- Agreement clearly shows that the assessee is taking vehicles on hire for use of the same for particular hours in his business activity. The agreement does not require the contractee to do any work at all. Merely because the words "loading & unloading" are used in the contract, no one can presume that the contractee has to do any work on behalf of the assessee. The assessee has to make use of the equipment/vehicle made available on payment of hire for his use. Therefore, it is hire of equipment/vehicle simplicitor and Section 194I would be applicable – Decided against the assessee. Applicability of Section 40(a)(ia) on short deduction of tax – Held that:- Since this issue was not considered by the lower authorities. Hence, matter is remitted back to the file of the A.O. for the limited pupose of determining whether short deduction of tax would attract the provisions of section 40(a)(ia)
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2012 (4) TMI 193
Taxability in India of income earned in a foreign countries covered under DTAA, by the assessee who is a resident of India - assessee engaged in providing full range of consultancy, design and engineering services in all fields of telecommunication in India as well as abroad – Held that:- If, in the DTAA, an item of income is "may be taxed" in state of source and nothing is mentioned about taxing right of state of residence in convention itself, then state of residence is not precluded from taxing such income and can tax such income using inherent right of state of residence to tax such global income of its resident. Only in the case of phrase "shall be taxed only" used, then only the state of residence is precluded from taxing it. In such cases, where the phrase "may be taxed" used, the state of residence has been given its inherent right to tax. Also, in case of CIT vs PVAL Kulandagan Chettiar (2007 - TMI - 40400 - Supreme Court) it was held that state of residence has right to tax global income of its resident. Since, Residence based taxation is followed in India rendering residents to be taxed on their global income, and non-residents to be taxed only on income sourced inside the country. Therefore, assessee is liable to be taxed on its global income – Decided against the assessee. Validity of reopening of assessment beyond 4 years from the end of relevant A.Y – excessive deduction u/s 80HHC & 80HHB – assessee contending change of opinion – Held that:- As per Explanation (2)(c)(iv) to section 147, if excessive loss, depreciation allowance or any other allowance under the act has been computed, it shall be deemed to be an escapement of income. In present case, indirect expenses attributable to the exported trading goods were understated. There was no discussion about deduction u/s 80HHC & 80HHB in assessment order and even there was no working of attributable indirect expenses in Form No. 10CCAC which was vital element for computation of deduction available to the assessee which has not been furnished by the assessee. Therefore, there was a reasonable belief that income has escaped assessment. Further, existence of belief can be challenged by assessee but not the sufficiency of the reasons to belief – Decided against the assessee. Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under subsection (2) of section 148. Deduction u/s 80HHB - dis-allowance of Rs 8 lacs - Claim of Rs 32.08 crores made and reserves made upto Rs 32 crores only – Held that:- Since there is shortfall in reserves , hence conditions laid down in Section 80HHB(3)(ii) are not fulfilled. Thus, dis-allowance is upheld – Decided against the assessee. Dis-allowance u/s 80HHC - assessee contending that it is maintaining separate books of account for export business, therefore, indirect expenses relatable to the export goods need not to be worked out as per provisions of section 80HHC(3) – Held that:- Administrative expenses will have to be apportioned in the ratio of export turnover to total turnover which have relations with the export business – Decided against the assessee.
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2012 (4) TMI 192
Validity of order of Tribunal setting aside the entire dis-allowance of Rs 28.69 lacs in respect of Bad debts to the file of A.O. to decide fresh when assessee had withdrawn its appeal before the Tribunal against the order of CIT upholding disallowance of Rs 14.96 lacs only – appeal before Tribunal barred by limitation - assessee withdrew its appeal during the hearing and sought to press in aid the provisions of Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963 – Held that:- Under Rule 27 the Respondent is permitted to support the order appealed against, though he may not have appealed against the order, on any of the grounds decided against him which renders that Assessee would be entitled to urge that the deletion of the disallowance of Rs.13.73 lacs by the CIT(A) was correct and proper. Assessee, however, would not be entitled to avail of the benefit of the provisions of Rule 27 in regard disallowance of Rs.14.96 lacs confirmed by CIT(A). Therefore, Tribunal erred in setting aside the order of the CIT(A) in its entirety. Order of the Tribunal would have to be confirmed only to the extent to which it restores the proceedings to the Assessing Officer as regards the amount of Rs.13.73 lacs – Decided in favor of Revenue.
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2012 (4) TMI 191
Exception granted in proviso of Section 220(1) – period of less than 30 days granted for deposit of demand of Rs 36.56 crores – assessee contended no detriment to the interests of the Revenue since ACIT has already levied a provisional attachment u/s 281B on assesse’s investment in mutual funds of Rs 36.54 crores – Held that:- Proviso to Section 220(1) which empowers the AO to demand payment within a period lesser than 30 days with the prior approval of the JCIT cannot be exercised casually and without due application of mind. In present case, since Revenue is adequately protected by the attachment levied u/s 281B, there would have been no basis for forming a reason to believe that if the period of 30 days was to be observed u/s 220(1), that would be detrimental to the Revenue. The detriment to the Revenue must be akin to a situation where the demand of the Revenue is liable to be defeated by an abuse of process by the Assessee. Therefore, order of A.O. was not justified and was contrary to law. Petition is disposed off by directing continuation of provisional attachment u/s 281 B until disposal of appeal before CIT(Appeals). No coercive steps will be taken for recovery of demand pending the appeal – Decided in favor of assessee
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2012 (4) TMI 190
Nature of 'Usance Interest' – assessee engaged in business of manufacturing of cables of different types – imports raw material from parties who are non-residents – finance charges/usance charges paid for availing credit under LC - whether usance interest comes within meaning of Section 2(28) – assessee contending it to be partaking character of purchase price - taxability in view of DTAA between India and countries where-from raw material is imported – dis-allowance u/s 40(a)(ia) for non-deduction of tax at source – AY 02-03 - Held that:- There was no nexus between the interest amount and fixation of the price of the raw materials purchased. Price of the material supplied was reflected in a separate invoice and interest paid for availing credit facility of 180 days from the date of bill of lading was reflected in separate invoice. The nexus of interest was only with the period from which the purchase price of the raw material became due viz., the date of bill of lading. Therefore, usance interest, is interest within the meaning of sec. 2(28A) and same would be deemed to have accrued and arisen in India in view of the provisions of sec. 9(1)(v)(b) of the Act. Taxability in view of DTAA between India and the respective countries – Held that:- Neither the AO nor the CIT(A) had discussed the issue in the light of the relevant DTAA. Therefore, we remand the issue to the AO for fresh consideration. Applicability of Section 40(a)(ia) – In present case, payment is made to to non-residents and in the event of doubt the Assessee ought to have approached the AO for appropriate certificate u/s.195. He cannot plead bonafide belief to stand out of the said provisions. Addition of unutilized Modvat credit to the value of Closing stock – Held that:- Addition made by the AO as modified by the CIT(A) i.e. to allow it under u/s 43B if it is paid before filing of returns, has to be sustained but the AO should be directed to allow corresponding adjustment to the opening stock in respect of unutilized Modvat credit. - Decided partly in favor of assessee. Prior period expenses – mercantile system of accounting – AY 2001-02 - Held that:- No infirmity is found in the order of CIT(A) allowing the claim of the assessee if these expenses are related to that year after verification. The same is therefore upheld – Appeal of Revenue dismissed. Waiver of penalty for concealment – dis-allowances in respect of write off of leasehold premium, prior period expenses, payment of gratuity, unexplained expenses – AY 99-2000 – Held that:- It is seen that few dis-allowances have been deleted by Tribunal and dis-allowance in respect of write off of leasehold premium was then a matter of debate hence in view of Reliance Petroproducts (P) Ltd.(2010 (3) TMI 80 - SUPREME COURT) mere rejection of a claim for deduction made by the assessee will not give rise to imposition of penalty for concealment – Decided against the Revenue.
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2012 (4) TMI 189
Method of accounting or royalty and assessment of reimbursement of expenses by the AO - Singapore based company - licensing of software to one of the customers which is its hundred per cent subsidiary - Held that:- even if there is force in the argument that the interpretation may lead to delay in payment of tax, it will be useful only in such cases where the AO makes out a case that the delay was with a view to defer the payment of tax. In absence of such a finding by the AO, it is held that the argument is not applicable to the facts of this case. Accordingly, it is held that royalty and FTS are taxable on payment basis and not on accrual basis. Taxability of reimbursement of expenses - held that:- royalties and FTS are taxable on payment basis, and reimbursement of traveling expenses will have to be included in the gross receipts for the purpose of taxation. Whether, the assessee is liable to pay surcharge?- held that:- circular no. 734 does not mention anything about surcharge for the purpose of deduction of tax at source from payments by way of dividends, interest and royalties. What is good for the TDS is also good for the taxation. Therefore, it is held that the assessee is not liable to pay surcharge.
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2012 (4) TMI 187
Capitalization of regularization fee paid - Construction of hospital building - Held that:- The regularization fee paid by the assessee has a direct nexus to the construction of the hospital building as it is paid only for the purpose of regularizing the violations committed in the course of constructing the building - State Government Ordinance has been held to be unconstitutional but even then, the Hon'ble High Court has not directed to repay the amount to the defaulters - It cannot be held that the payment could not be booked anywhere in the business accounts of the assessee - The assessee has rightly booked the payment under the cost of construction of the hospital building - appeals are to be allowed
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2012 (4) TMI 186
Payments made by the assessee-company for subcontracting its works contract - payment of hire charges/charter fees to EMPL - royalty u/s 9(1) and article 12 of the DTAA between India and Singapore - Held that:- the contract given to EMPL was in the nature of sub-contract to undertake on behalf of the assessee's dredging work with the equipment and manpower of EMPL - It is only hiring of the equipment and the assessee did not use the dredger or any part thereof on its own neither it was given any right to use - in order to assess the payment as business receipt of the EMPL it has to be established that there is a permanent establishment of EMPL in India which is not possible since the dredger Ketam has been operated in India for less than 183 days - the liability u/s 195 to deduct TDS depends upon changeability of tax in the hands of recipient and the assessee did not use the dredger or any part thereof on its own, nor had apparent acquired any right to use it
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Customs
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2012 (4) TMI 185
Jurisdiction of High Court to entertain appeal against order of Appellate Tribunal – gist of the decision pronounced without detailed order by CESTAT in open court – direction issued to Member(Technical) to draft detailed order who posted the matter for re-hearing – on writ petition filed by assessee, Court directed Tribunal to pass detailed order in line with pronouncement made in the open Court and gist of the decision recorded and signed on 04.6.2009 - Held that:- High Court has no power to entertain an appeal filed against the order of the Tribunal and if the parties are aggrieved, they should have approached the Supreme Court by way of appeal u/s 130-E of the Customs Act instead of resorting to invoke Article 226 of the Constitution of India when the jurisdiction of this Court has been ousted by Act 49 of 2005 from 28.12.2005. Therefore, earlier writ petition allowed is dismissed as not maintainable and the Writ Appeal stands allowed.
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2012 (4) TMI 184
Writ Petition - the Deputy Joint Director of Foreign Trade ,the respondent no. 4, after issuing show-cause notice to which the petitioner had replied and was not found to be satisfactory, and after giving an opportunity of personal hearing, to which the petitioner did not respond, had passed an order under section 9 (4) and section 11 (2) of the Act and under Rule 10(b) of the FTRR, cancelling the license of the petitioner and directing payment of customs duty and interest and imposing fiscal penalty - the respondent no.4, passed the order directing imposition of penalty and the Joint Director of Foreign Trade, the respondent no.3, under section 11(4) had passed the order of suspension of Code of the petitioner for non-payment of penalty - Held that:- Respondent No. 3 not being “the Adjudication Authority” had no power and authority or jurisdiction to pass the impugned suspending the Code - as before passing the order of suspension of Code the petitioners were not given an opportunity of hearing - as before the suspension of Code the “consent” of the Board was not obtained - the said order is without jurisdiction and illegal and cannot be sustained – Writ Petition allowed
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Corporate Laws
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2012 (4) TMI 183
Winding up application - failure to make payment of dues - held that:- From the facts of this case it can safely by concluded that there is no bona fide dispute about the amount receivable by the petitioning creditor. That the purported defense as taken in the Affidavit in Opposition is totally misconceived, sham and illusory and also not bona fide. It prima face appears that a sum of Rs. 3,57,73,135/- remained due and payable by the Company to the petitioner as on 15th March, 2010. The Company is indebted to pay the sum claimed by the petitioner and, therefore, I prima face hold that the petitioner is entitled to get a sum of Rs. 3,57,73,135/- as detailed hereinbefore and interest at the rate of 15 per cent plus 2 per cent penal interest from the date of default until payment as well as overdue service charges at the rate of 1 per cent per month. The interest which is charged by the banker that is 15 per cent plus 2 per cent penal interest is fixed by this Court. Therefore, this winding up application is admitted. However, the Company is granted an opportunity to pay the dues as aforesaid by five monthly equal installments.
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Service Tax
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2012 (4) TMI 199
Refund of service tax on taxable services used for export of goods – assessee claimed refund of service tax on taxable services used for export of MT of Chrome Concentrate as per Notification 17/2009-ST dated 7.7.2009 – export made through MMTC - claim denied on ground that the appellant are not the exporter of the goods but the exporter of the said goods was M/s MMTC Ltd., BBSR – Held that:- In EXIM Policy, 2004-2009, it has been clearly laid down that the appellants cannot export the said Chrome Concentrate directly, but required to export through M/s MMTC Ltd., the canalizing agency. However, agreement between appellant & MMTC, Arbitration Clause and other facts indicate that there is a link between the goods exported and the appellant through M/s MMTC and sellers are under obligation to accept the full liability , if any, without dispute. Therefore, in view of decision in case of State of Karnataka Vs. Azad Coach Builders Pvt. Ltd (2010 - TMI - 211475 - Supreme Court Of India), we remand the matter to the Commissioner (Appeals) for fresh decision.
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2012 (4) TMI 198
Intellectual Property Services - Trade marks and brand name - held that:- If the argument of the learned Advocate that 'Hero Honda' should be considered as trade mark of the oil companies is accepted, we really fail to understand as to whether there was any need for oil companies to enter into agreement with the appellant seeking their permission to allow use of their trade name. Admittedly, the goods manufactured by the oil companies are to be used in the vehicles manufactured by the appellant companies and have a strong connection with the same. The appearance of the trade mark "Hero Honda" and "Hero Honda 4T plus" on the oil company's products definitely indicates a connection between the said companies and the appellants product. If the oil companies would have used the said trade mark without entering into an agreement with the appellant, the same would have amounted to infringement of their right in terms of the sub-clause (4) of the Trade Mark Act. This explains the need to enter into an agreement with the appellant and for payment of royalty to them. As such, we do not agree with the learned advocate that their permission to use the said trade mark to the oil companies is not covered by the definition of Intellectual Property right and intellectual property services as appearing in the Finance Act. While deciding against the assessee, demand beyond normal period of limitation set aside.
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2012 (4) TMI 197
Cenvat credit while availing benefit of abatement - Commercial and Industrial Construction - held that:- , in respect of a contract where the assessee has not taken input credit prior to 01.03.2006 and input/input service tax credit on or after 01.03.2006, the assessee would be rightly entitled for the benefit under the notification no. 15/2004-ST as replaced by notification no. 1/2006 dated 01.03.2006. In a case where the assessee avails CENVAT credit, then in such cases the assessee is not entitled for abatement and the service tax liability will have to be discharged on the full value of the contract. There is nothing in these notifications which prevents an assessee from not availing CENVAT credit and paying service tax on 100% of the contract value in respect of one particular contract and availing abatement and not availing CENVAT credit in respect of another contract. In other words, there is no stipulation in the notification that the option to avail/non-avail CENVAT credit has to be exercised uniformly in respect of all the contracts executed by the assessee. It is for the assessee to choose which formulation he wants to follow in a given contract. Whether for the purpose of discharge of service tax liability, accumulated CENVAT credit arising from some other case/contract can be utilized or not. - held that:- there is no such bar or restriction/prescribed in the notification. The notification only stipulates that in respect of a case/contract, where abatement is availed, no CENVAT credit on inputs, capital goods or input services shall be taken. So long as this condition is satisfied, abatement is permissible.
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2012 (4) TMI 196
Stay of Demand - Department is of the view that the service provided by the applicant to M/s. Tata Johnson Controls Automotive Ltd. are not received in convertible foreign exchange and therefore, are liable to service tax - It is contended on behalf of the applicant that the applicant are entitled for the benefit of circular no. 56/5/2003-ST dated 25.4.2003 - As per the said circular, service provided by the applicant to M/s. Tata Johnson Controls Automotive Ltd. get merged in the service provided by M/s. Tata Johnson Controls Automotive Ltd. in their service exported outside India - Pre-deposit waived.
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Central Excise
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2012 (4) TMI 182
Waiver of penalty imposed under Rule 173Q of the Central Excise Rules, 1944 – assessee opted not to avail the benefit of the notification No.9/99/C.Ex. Dated 29.09.99 in the middle of the year – Revenue contended violating conditions of said notification – Held that:- Tribunal was justified in deleting the penalty firstly, since assessee opted not to avail the benefit of the notification after obtaining permission from the excise authorities hence no violation of conditions. Secondly, there was no intention of evading tax, in fact assessee cleared the goods on full payment of duty. Thirdly, during the period from 3.3.2000 to 24.2.2001, though the assessee has cleared the goods by availing concessional duty under said notification, differential duty has not been demanded from the assessee – Decided against the Revenue.
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2012 (4) TMI 181
COD clearance pending –– Held that:- Both sides being Govt. Departments can take a cue from the order passed by CCE in case of two govt departments viz. CBEC, Railway Board and M/s. DLW highlighting efforts made to resolve the dispute by both govt departments by having a high level meeting of top officials. With those observations, after waiving the requirement of pre deposit, we remand the matter to CCE to decide the case afresh.
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2012 (4) TMI 180
Dismissal of appeal by Commissioner(Appeals) on ground of non-compliance of direction of pre-deposit - Section 35F of the Central Excise Act, 1944 – Held that:- Since, Commissioner (Appeals) has not decided the issue on merit. Therefore, the case is remanded to Commissioner (Appeals) for deciding afresh without insisting for any further pre-deposit.
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2012 (4) TMI 179
Delay of one day in filing the appeal before Commissioner(Appeals) – delay on medical grounds - Held that:- It is found that Commissioner (Appeals) has dismissed the appeal u/s 35 of Central Excise Act, 1944, for delay of one day in filing the appeal, without granting hearing to the applicant. Thus, after waiving the requirement of pre - deposit, delay of one day is condoned and matter is remanded back to Commissioner (Appeals) to decide the Stay Petition as well as Appeal on merit.
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2012 (4) TMI 178
Pre-deposit - assessee availed cenvat credit on duty paid sponge iron lumps and sponge iron fines – credit denied on ground that said goods are not their inputs and they did not have any Registration for trading such goods – appeal against the same denied by Commissioner (Appeals) for non-compliance of direction for pre-deposit – Held that:- Commissioner (Appeals) while dismissing appeal has not recorded any finding on merit of the case. Therefore, we remand the matter to Commissioner (Appeals) for passing an order afresh on merit without insisting any pre-deposit.
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CST, VAT & Sales Tax
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2012 (4) TMI 200
Petition filed to defer liability of assessee to pay taxes in compliance with terms & conditions of Purchase Agreement - assessee registered under MP VAT Act and CST Act, 1956 purchased tendu leaves in bid organized by MP State MFP Co-operative Federation Ltd - assessee contending it to be inter-state sale and not exigible for the levy of tax under the relevant VAT Act - Held that:- Applicants are expected to comply with the terms and conditions of the Purchaser's Agreement and accordingly deposit taxes to the Federation. We permit assessee to file appropriate appeals before the First Appellate Authority/revisions before the revisional authorities within a month's time from today and direct such authorities to dispose of the appeals/revisions on merits, without reference to the period of limitation, within four months from the filing of the appeals/revisions. Also, we direct the assessing authorities under the VAT Act to complete the assessments, within two months' from today.
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