TMI Tax Updates - e-Newsletter
April 14, 2012

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws FEMA Service Tax Central Excise

News

1. Government of India and World Bank Sign US$ 352 Million Agreement for National Dairy Support Project - 1.7 Million Rural Milk Producing Households to Benefit Directly.

2. Government of India and World Bank Sign Agreement for US$ 50 Million Additional Credit for Increasing Agricultural Production and Market Access in Assam.

3. Government of India and World Bank Sign US$ 109 Million Agreement for Rajasthan Agricultural Competitiveness Project – 155,000 Smallholder Farmers to Benefit Directly.

4. Permission for Export of about 19 Lakh Bales of Cotton.

5. Anand Sharma Inaugurates Lifestyle Pakistan 2012 Integrated Check Post at Wagha to be opened tomorrow.

6. Undisclosed income exceeding Rs. 9,200 crore detected by CBDT during the search operations in the financial year 2011-12.

7. The Public Procurement Bill, 2012.

8. Extension of Swavalamban Scheme for the workers in the unorganised sector.

9. Special Floating Rate Bond for Rs 7,000 Crore (Nominal) Issued Press Communique.

Notifications

Companies Law

1. S.O. 733(E) - dated 4-4-2012 - Co. Law

Companies (Central Governments's) General Rules & Forms,1956, Assistant Commissioner of Income Tax, Guwahati appointed as prescribed authority for the purposes of Section 108(1A) (a) of the Comapnies Act,1956.

Customs

2. 21/2012 - dated 12-4-2012 - ADD

seeks to extend the validity of notification No. 112/2007-Customs, dated 30th October, 2007 by one more year.

3. Corrigendum - dated 12-4-2012 - Cus

Corrigendum of Notification no. 12/2012- Custom.

4. Corrigendum - dated 11-4-2012 - Cus (NT)

Corrigendum to notification 118/2009 – Customs(N.T.).

Circulars / Instructions / Orders

Income Tax

1. 03/2012 - dated 11-4-2012

Guidelines for engagement of Standing Counsels to represent the Income-tax Department before High Courts and other judicial forums.

2. 04/FT&TR/2012 - dated 10-4-2012

Section 144C of the Income-tax Act, 1961 - Dispute resolution panel - Reference to - Constitution of DRP at specified places - modification of order no. 1/ft&tr/2012 and no. 2/ft&tr 2012.

FEMA

3. 106 - dated 12-4-2012

Exim Bank's Line of Credit of USD 150 million to the Ecowas Bank for Investment and Development (EBID).

Customs

4. F.No. 437/12/2012-Cus. IV - dated 12-4-2012

Appointment of Common Adjudicating Authority.

Highlights / Catch Notes

Income Tax

• New Guidelines for Appointing Standing Counsels to Represent Income-Tax Department in High Courts Explained.

  Circulars : Guidelines for engagement of Standing Counsels to represent the Income-tax Department before High Courts and other judicial forums. - Cir. No. 03/2012 Dated: April 11, 2012
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• Court Rules Hospital's Tax Exemption Denied Due to Misinterpretation of Primary Purpose u/s 10(23C)(via.

  Case-Laws - HC : Charitable Trust – Hospital – exemption u/s 10(23C)(via) - Chief CIT has clearly misapplied himself in law by having regard to a clearly ancillary or incidental activity and elevating it to the status of the dominant purpose for which the hospital has been established - HC
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• Assessing Officers Must Act as Quasi-Judicial Authorities on Stay Applications, Ensuring Fairness Over Revenue Focus.

  Case-Laws - HC : Assessing Officers and Appellate Authorities, should act as quasi judicial authorities while disposing stay applications and not merely as tax gatherers of the Revenue. - HC
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• Fifteen Co-Owners in TDS Dispute Over Rental Income; Section 26 Ensures Individual Tax Assessment, Not as a Group.

  Case-Laws - HC : TDS on rental -fifteen co-owners - each of the co-owners has a definite share in the building - Section 26 of the Act provides that where property consisting of buildings or buildings and lands appurtenant thereto is owned by two or more persons and their respective shares are definite and ascertainable, such persons shall not in respect of such property be assessed as an association of persons - HC
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• Taxpayer's Admission and Seized Title Deeds Support Tax Department's Additions Without Further Proof Required.

  Case-Laws - HC : The admission made by the assessee before the assessing officer corroborated by the title deeds seized in search absolves the department from discharging any burden regarding the additions made - HC
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• Penalty Waived Despite Incorrect PAN Quoted by Assessee u/s 139A of Income Tax Provisions.

  Case-Laws - AT : Default for the failure on the part of the assessee to quote correct PAN in terms of provisions of section 139A - penalty waived - AT
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• Tribunal Misses Clear Mistake of Fact, Qualifies for Correction u/s 254(2) as Apparent Mistake of Law.

  Case-Laws - HC : Tribunal apparently fell into an error in not rectifying the said mistake apparent on the face of record, which is nothing more than a mistake of fact and even if it is construed to be a mistake of law, it is apparent mistake of law, which would also fall within the scope of rectifiable mistake under s. 254(2) - HC
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• Understanding "Education" for Tax Exemptions u/s 10(22) of the Income-tax Act, 1961: Key Interpretations and Case Laws.

  Case-Laws - HC : Exemption under section 10(22) of the Income-tax Act, 1961 - Scope of the word "education" used in Clause 15 of section 2 of the Act of 1961 - HC
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Customs

• Appointment of Common Adjudicating Authority Announced to Streamline Customs Disputes and Ensure Consistent Decision-Making.

  Circulars : Appointment of Common Adjudicating Authority. - Cir. No. F.No. 437/12/2012-Cus. IV Dated: April 12, 2012
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• Validity of Customs Notification No. 112/2007 Extended for One Year via Notification No. 21/2012-Customs (ADD.

  Notifications : seeks to extend the validity of notification No. 112/2007-Customs, dated 30th October, 2007 by one more year. - Ntf. No. 21/2012-Customs (ADD) Dated: April 12, 2012
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• Corrigendum Issued for Notification No. 12/2012-Customs; Important Corrections to Ensure Accurate Implementation of Customs Policies.

  Notifications : Corrigendum of Notification no. 12/2012- Custom. - Ntf. No. Corrigendum Dated: April 12, 2012
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• Corrigendum Amends Notification 118/2009 for Accurate Customs Compliance and Clarity in Procedures.

  Notifications : Corrigendum to notification 118/2009 – Customs(N.T.). - Ntf. No. Corrigendum Dated: April 11, 2012
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FEMA

• Exim Bank Grants $150M Credit Line to Ecowas Bank for Development Projects in Region, Circular No. 106 Issued April 2012.

  Circulars : Exim Bank's Line of Credit of USD 150 million to the Ecowas Bank for Investment and Development (EBID). - Cir. No. 106 Dated: April 12, 2012
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Corporate Law

• Assistant Commissioner of Income Tax in Guwahati appointed as prescribed authority under Companies Act, 1956, Section 108(1A)(a).

  Notifications : Companies (Central Governments's) General Rules & Forms,1956, Assistant Commissioner of Income Tax, Guwahati appointed as prescribed authority for the purposes of Section 108(1A) (a) of the Comapnies Act,1956. - Ntf. No. S.O. 733(E) Dated: April 4, 2012
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Indian Laws

• ICAI Disciplinary Enquiry Highlights Auditors' Role in Satyam Scandal, Stresses Ethical Compliance and Accountability.

  Case-Laws - HC : Disciplinary enquiry by ICAI - statutory auditors of Satyam Computers Services Limited - Principles of natural justice - HC
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Service Tax

• Voluntary Service Tax Payment Justifies Penalty Waiver u/s 80: Case Highlights Sufficient Cause for Leniency.

  Case-Laws - AT : Waiver of penalty - since Service tax liability was discharged voluntarily it is a fit case as sufficient cause has been shown by the appellant for invoking Section 80 - AT
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• Refund Allowed from July 7, 2009, as Notification No. 41/2007 Doesn't Require Exclusive Export Use for Storage Facilities.

  Case-Laws - AT : Refund - Notification No. 41/2007 - refund allowed for the period from 7-7-2009 onwards as the relevant notification does not prescribe any condition that the storage and warehouse should be exclusively used only for the purpose of export goods - AT
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Central Excise

• CENVAT Claim Denied: Revenue Alleges Fraudulent Invoices, No Copper Ingots Received, Based Solely on Statements.

  Case-Laws - AT : Revenue rejected the claim of CENVAT stating that assessee was not supplied copper ingots and cenvat credit has been obtained by the appellant on the basis of fake invoices - allegation merely on the basis of statement.. - AT
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Case Laws:

• Income Tax

• 2012 (4) TMI 273
  Validity of re-opening of assessment beyond a period of four year from the end of relevant AY – Trust – AY 2004-05 - assessment reopened on ground of information received by A.O. of alleged misappropriation of funds – assessment of AY 2005-05 pending when FIR of misappropriation of funds was lodged – Held that:- A.O. formed belief on the basis of the material revealed in the investigation which was carried out by CID, Mumbai. The chargesheet which has been filed by the EOW would in our view constitute tangible material on the basis of which the A.O. could have reopened the assessment. Conclusion drawn by A.O. that there was a failure on the part of the assessee to fully and truly disclose material facts necessary for the assessment for the Assessment Year 2004-2005 is upheld – Decided against the petitioner.

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• 2012 (4) TMI 272
  Unexplained cash credits – CIT(A) deleted major additions made by A.O. - addition related to amount advanced by non-resident retained in absence of evidences - Held that:- Order of CIT(A) is upheld since assessee discharged his onus by establishing the identity, credit worthiness of parties and genuineness of the transactions and onus shifts to revenue, which is not discharged by it. AO cannot brush aside the evidences submitted during assessment proceedings and make additions. Further, CIT(A) have rightly excluded opening balance pertaining to the earlier years from the total addition - Decided against the Revenue With respect to amount advanced by non-resident – Assessee submitted that since creditor is not assessed to tax in India, details of the tax returned could not be filed – held that:- Since there is no finding in the assessment order about the claim made by the assessee, so it will be proper to remit the matter back to the AO for making verification in this regard and pass a speaking order – Decided in favor of assessee for statistical purposes.

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• 2012 (4) TMI 271
  Receipts in the nature of reinsurance brokerage/commission of the appellant treated by AO as fees for technical services as per Article 13 of the UK DTAA - Tribunal's order in assessee's own case for AY 2006-07 in his favour - DR relied on a recent ruling of AAR in the case of Verizon Data Services India limited (2011 - TMI - 205159 - AAR - Income Tax) after elaborately interpreting the provisions of Article 12 of the Indo-US DTAA and guiding protocol to the Treaty has concluded that it is not necessary to make available consultancy know how to the recipient in order to hold the same taxable under FIS Ld - Held that:- decision of AAR on the issue of applicability of Art. 12(4)(b) of the Indo-US DTAA has been set aside by the Hon'ble Madras High Court vide their order dated 9th August, 2011 in WP 14921 of 2011, we set aside the order of the ARA and remit the matter back giving an opportunity to the assessee to state its case as to the nature of services given by the seconded employees - the services do not fit into either of the categories defined in Article 13, since the services rendered by the assessee do not involved technical expertise, nor did the assessee made available any technical knowhow, experience, skill etc. - assessee was basically acting as an intermediary in the process of finalization of reinsurer suggesting various options to the Indian Insurance Co. for their consideration and acceptance - cannot be qualified to be in the nature of fees for technical services as contemplated under Article 13(4)(c) of the DTAA between India & UK - in favour of assessee.

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• 2012 (4) TMI 270
  Determination of the appropriate head of income for taxing the surplus realized on sale of shares - business income or capital gain – Held that:- AY 2006-07 - an investor would not enter into purchase and sale transactions of shares of 52 companies and units of 10 mutual funds in a single year. The transactions are numerous and period of holding is small - undertakes such large number of transactions keeping the market conditions in view would obviously assume the character of a dealer and not investor - surplus arising from the transactions fall in head “profits and gains of business” - against assessee. AY 2007-08 and 2008-09– Assessee stated that the LTCG was claimed to be not includible in the total income by dint of provision contained in section 10(36), lower rate of tax was claimed to be applicable in respect of STCG - assessee has also shown STCG in respect of 74,000 bonus and the assessee also sold sub-divided shares and earned profit on it – Held that:- bonus shares would normally be deemed to be distributed by the company as capital and the shareholders receive the shares as capital - profit on sale of bonus shares would be in the nature of capital gain to profit which has to be classified as STCG - bonus shares of Kotak Bank Ltd. and Unitech Ltd. are held to be on capital account and all other transactions are held to be on business account.

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• 2012 (4) TMI 269
  Disallowance u/s. 40(a)(ia) - TDS u/s 194C or u/s 194J deleted by CIT(A)– production of cinematographic films - held that:- Fundamentally, there is no difference between production of film for broadcasting and telecasting except that cinemotograph films are exhibited in theatres for viewing by the public. - The payment made by the assessee would fall for consideration only under the provisions of Sec. 194-C of the Act. Since the provisions of Sec.194-C of the Act were not applicable to individuals prior to 1.4.2007, the assessee was under no obligation to deduct tax at source for the period under consideration and therefore no disallowance could be made u/s. 40(a)(ia) of the Act. Addition u/s 41(1) - remission of liability - held that:- there is no material on record to show that there was cessation of liability or remission of liabilities and that the assessee derived benefit by such remission or cessation of liabilities. In fact, the facts and record go to show that the liabilities were only one year old. In these circumstances, we are of the view that the addition sustained by the CIT(A) deserves to be deleted. Additional grounds - new claim - CIT(A) rejected the Additional Ground raised by the Appellant - held that:- he Hon'ble Delhi High court in the case of Jai Parabolic Springs Ltd. (2008 (4) TMI 3 - DELHI HIGH COURT) has taken the view that there is no prohibition on the powers of the Tribunal to entertain any additional ground for a just decision of the case. The Hon'ble Delhi High Court distinguished the decision of the Supreme Court in the case of Goetz (India) Ltd. (5171). We, therefore, hold that the CIT(A) ought to have admitted the additional ground for adjudication. Expenditure on production of feature films - Rule 9A - held that:- the claim made by the assessee was rightly accepted by the CIT(A). Even if Rule 9A is applied, the assessee was entitled to claim the un-recouped cost of production in terms of Rule 9A(3) of the Rules. This un-recouped cost has been determined at a sum of Rs. 2,93,73,793/- by the AO in the assessment of the firm for asst. year 2004-05 and the same has become final. It is not open to the AO of the assessee to re-determine the cost of production in the assessment of the assessee.

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• 2012 (4) TMI 268
  Application of stay of demand - Asst. Commissioner passed an Order stating that merely filing an appeal against the assessment order before the appellate authority is not sufficient reason to stay the recovery of demand – Assessee file a Writ stating that Commissioner while passing the order has not taken into consideration the law laid down by the Hon'ble Supreme Court, this Court and also the mandatory circulars issued by the department of Income Tax itself - the view of the assessee is supported by the judgment of the hon’able Delhi High Court in the case of Soul v. Deputy Commissioner of Income - 2008 - TMI - 76546 - DELHI HIGH COURT - Income Tax – Held that:- when the assessed income is more then double of the returned income then the demand should be stayed till the decision of appeal - it is apparent that while deciding the stay application, the Assistant Collector has not taken into consideration the judgment and circulars cited by the petitioner - quash the order remanding to the Assistant Collector of Income Tax to consider the stay application afresh by providing an opportunity of hearing to the petitioner and also by taking into consideration judgments and circulars cited by the petitioner – in favour of assessee.

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• 2012 (4) TMI 267
  Return of income claiming deduction u/s 80I, 80IA and 80HH – AO accepted the claim with little variation - CIT issued a notice under Section 263 mentioning that research expenditure incurred by the assessee is inextricably linked with the business of the assessee and business in those products which are manufactured in the units entitled to a deduction under Sections 80I, 80IA and 80HH - Tribunal set aside the order passed by the CIT holding that the jurisdiction under Section 263 has not been invoked properly - Held that:- As a result of an erroneous order passed by an Assessing Officer, where the Revenue is losing tax lawfully payable by an assessee, the order is prejudicial to the interests of the Revenue -there was a complete failure on the part of the AO to apply his mind to the issue of whether the expenditure which was claimed should be allocated as between the units in respect of which the deduction had been claimed and on whether there was a direct or proximate nexus - jurisdiction under Section 263 was in order and that the Tribunal was not justified in interfering with the order passed by the Commissioner. Tribunal is right in holding that the entire cess can be claimed against taxable income? - the composite income derived from sale of tea grown and manufactured by the assessee cess payable on green tea leaves is allowable as a business expenditure in computing the composite income under Rule 8 of the Income Tax Rules,1962.

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• 2012 (4) TMI 266
  Profit from purchase and sale of shares - Capital gain or business income - Held that:- assessee did not place any material, other than Board resolution, while the auditor reports and facts for the years under consideration, reflecting intention of the assessee, lead to the conclusion that the assessee is continuing its activities as in earlier years of a trader in shares - the voluminous share transactions were in the ordinary line of the assessee's business; purchase of shares by them was not for the purpose of earning dividend, but with the dominant intention of resale in order to earn profits - the repetition and continuity of the transactions, give them a flavour of "trade" - ld. CIT(A) was not justified in accepting the claim of the assessee as investor in shares - restore the order of the AO.

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• 2012 (4) TMI 265
  Addition of income for suppression of the cable connections - the AO rejected the books of accounts silently and resort of estimations adopting basis of 40% of the electricity connections of an area in making the best judgment assessments u/s 144 - Held that:- In the absence of any material pointing towards falsehood of the books of accounts and no particular defect, or discrepancy being pointed in the books of accounts, resort could not be made to rejecting the books of accounts by invoking Sec.145(3) - AO shall not reject the books unless the accounts of the assessee suffer from either of the twin reasons specified in the Act ie correctness or completeness - Shri Ezaz Inamdar, Director’s response is picked in isolation. A reading of the question and answer makes it clear that a part of the sentence is extracted to mislead. The full sentence is "Further for planning purpose, we take 40% as the possible connectivity - the said allegation of Service Tax Department and informed that the said allegation were finally dropped by the said Department as they could not support the allegation - the AO never could enlist or provide single conclusive instance of either incompleteness or inaccuracy in the accounts – in favour of assessee.

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• 2012 (4) TMI 264
  Disallowance of claim u/s 80IC - assessee filed return of income after due date claiming deduction u/s 80-IC - AO disallowed the claim as per Section 80AC stating unless the return is filed within the prescribed date, the claim u/s 80IC shall not be allowed - Held that:- The assessee in the present case, had filed all the necessary documents which were supporting the claim of the assessee for deductions u/s 80IC before due date of filing the return. The default of the assessee for not filing the return was only a technical default as the return was not filed, but supporting documents were filed - claim of the assessee should be considered on merits and it should not be rejected - AO has not examined the claim of the assessee on merits that whether or not the assessee is fulfilling the conditions laid down in Section 80IC, we restore the matter back to the file of AO to examine that whether these conditions are satisfied by the assessee - Appeal in favour of assessee in the mentioned manner.

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• 2012 (4) TMI 263
  Determining the average profit margin under the TNMM method - comparable - assessee stated that the companies which are showing loss are to be considered as comparable for determining ALP - CIT(A) observed that the financial results of the company used for comparable by TPO are shown for 15 months period and direct report of this company clearly stated that due to abnormal circumstances during the year, profits were adversely affected - due to the extra expenses, the probability of the company has been adversely affected - CIT(A excluded the results of loss making companies for the purpose of determining profit margin - Held that:- The determination of the ALP is depended upon the facts of a particular case - selection of comparables should be based on functional, asset and risk analysis of both the parties and the transactions - The underlying principle being that only likes can be compared with the like -the result of mentioned companies is not considered as comparables with the assessee's company transactions on the reason that the datas of these companies are not comparable with the assessee's company - If a reasonable accurate adjustment for the difference to eliminate material effect of the differences cannot possibly be made, then such comparables (uncontrolled) are to be rejected

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• 2012 (4) TMI 262
  Profit on 'sale of ships' - CIT(A) stated profit from sale not attributable to the core activities defined for a tonnage tax company and as such is not to be include in the "Book Profit" of a tonnage tax company u/s 115 V-0 which is to be excluded in determining the Book Profits u/s 115JB of Income Tax Act - Assessee contented that it is carrying on only one activity of operation of ships and the entire income relating to ships as recorded in the profit & loss account was to be taken as profit derived from the activities of tonnage tax company and the same was to be reduced from the book profit for the purpose of sec.115JB – Held that:- As per the provisions section 115VI(i)(2), core activities of a tonnage tax company mean, inter alia, its activities from operating qualifying ships - the activity of sale of old ships cannot be regarded as an activity from operating qualifying ships – favour of revenue. Income from sale of ship - Held that:- this issue is squarely covered against the assessee by the decision of Special Bench of ITAT at Hyderabad in the case of Rain Commodities Ltd. (2010 - TMI - 203366 - ITAT HYDERABAD) - provisions of section 115JB have an overriding effect upon other provisions of the Act and, therefore, the method of computation of book profit provided in the Explanation to section 115JB should be followed while computing the book profit and the normal provisions of computation of profit under any head of the Act shall not be applicable – in favour of revenue.

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• 2012 (4) TMI 261
  Penalty u/s 271(1)(c) - compensation received from the landlord on failure to provide an alternate accommodation on vacating one of its premises - AO considered it as income received on termination of warehousing agreement - Held that:- the assessee claimed the amount as not chargeable to tax which view as not accepted by the taxation authorities. Obviously it cannot be a case of concealment of income. - section 271(1)(c) reveals that the concealment of particulars of income or furnishing of inaccurate particulars of such income by the assessee is sine qua non for the imposition of penalty under this section - the assessee succeeds in proving that none of these conditions are satisfied in his case, then obviously the addition made by the Assessing Officer shall not constitute income in respect of which particulars have been concealed for the purposes of section 271(1)(c) - all the material facts relating to the case were disclosed by him the penalty would not be attracted - appeal in favour of assessee

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• 2012 (4) TMI 260
  Deletion of addition made by the A.O. on account of adjustments made to the ALP u/s 92CA(3) in respect of international transactions entered into with AE by Ld. CIT(A) - determination of comparable - Held that:- geographical difference is not material so far as it applies to the logistics industry - there is splitting of gross profit equally at 50:50 even in Pakistan, Bangladesh and Sri Lanka which fall under the same geographical region. - the detailed reasoning given by the ld. CIT(A) we do not find any infirmity in the CUP method (50:50 module) adopted by the assessee - the order of the ld. CIT(A) is upheld and the ground raised by the Revenue is dismissed. Petty cash expenses - A.O. noted that many of the petty cash expenses were not supported by invoices/bills – assessee submitted that the above amount is merely 1.82% of the income from operations -CIT(A) deleted the addition as on observation that the assessee has duly produced the vouchers for A.O's verification but A.O. has not given any cogent reasons for making an adhoc disallowance – Held that:- claiming any expenditure as genuine business expenditure the onus is always on the assessee to satisfy the A.O. with evidence to his satisfaction to substantiate that the expenditure has been incurred wholly and exclusively for the purpose of business – disallowance of Rs. 20 lacs appears to be on higher side adhoc disallowance of an amount of Rs. 10 lacs will allowed appeal by the Revenue is partly allowed. Employees' contribution to PF – Held that:- the contributions have been paid before the grace period, therefore, in view of the consistent decisions of the co-ordinate Benches of the Tribunal that amounts paid within the grace period has to be allowed as deduction, the amount cannot be disallowed

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• 2012 (4) TMI 259
  Disputed the validity of order of DRP – as constitution of DRP is contrary to principle of natural justice as one of the member of DRP is the Jurisdictional Commissioner of assessee and assessee filed objections before DRP on Transfer Pricing Officer's order suggesting Arm Length Price (ALP) adjustment but DRP disposed off the objections stating that AO is to follow adjustment proposed by TPO and did not go into the merits of objections filed by assessee – Held that:- considering the fact that CBDT issued notification which is subsequent to the order passed by Hon'ble High Court of Uttarkhand in the case of Hundai Heavy Industries Ltd. v. Union of India (2011 -TMI - 210159 - UTTARAKHAND HIGH COURT) observing that CBDT to ensure that Jurisdictional Commissioner is not nominated as a member of DRP – considering Sec. 144C that DRP before giving any direction to AO under sub-section (5) to enable him to complete assessment, will give opportunity of being heard to parties on such directions which are prejudicial to the interest of assessee or the interest of Revenue - DRP has not given any reason and/or commented upon the objections of assessee in the said order while agreeing with the adjustments proposed by TPO - order passed by DRP u/s. 144C of the Act is not a speaking order and held to be set aside – AO to pass fresh assessment order - in favour of assessee.

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• 2012 (4) TMI 250
  Search & seizure – partnership firm – engaged in providing security services – dissolution of firm - legality of warrant of authorization issued in name of dissolved firm – legality of search conducted at place of erstwhile partners – sufficiency of reasons to issue summon by DIT - time limit for release of documents seized - Held that:- It is found that profits were deflated and money siphoned off were invested in fixed deposits taken in name of individual names of the partners and were never disclosed to the Department. Therefore, satisfaction has been arrived at by DIT (Investigation) on the basis of relevant and material circumstances which are recorded and DIT had reason to believe within meaning of Section 132. The sufficiency of these reasons cannot be questioned by this Court in exercise of the writ jurisdiction under Article 226 of the Constitution.See ITO, Special Investigation Circle "B" Meerut Versus Seth Brothers and Ors (1969 (7) TMI 1 - SUPREME Court), Pooran Mal Versus Director of Inspection (1973 (12) TMI 2 - SUPREME Court - Income Tax) Section 189 states that notwithstanding the discontinuance of firm or its business, assessment has to be made of the total income of the firm as if no such discontinuance or dissolution has taken place and every person who was at the time of such discontinuance or dissolution a partner of the firm, shall be jointly and severally liable. Also, warrants of authorization were not merely issued in the names of the firms, but also separately issued in the name of the petitioner and his spouse. Further, documents have been retained having regard to the pendency of the appeal proceedings. Thus no illegality is found. For the aforesaid reasons, no meit is found in the petition – Petition dismissed.

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• 2012 (4) TMI 249
  Deemed Dividend – interest free loan and advances made to sole proprietorship of assessee (shareholder) having 20.6% shareholding the company – assessee contended that advance or loan are provided in normal course of business – Held that:- It is observed that interest free loans are provided which cannot be said to be made in ordinary course of money lending business. Further, documents show that company was doing the business of import and export and it was a recognized export house. Order of Tribunal is upheld in attracting provisions of clause (ii) of section 2(22)(e) – Decided against the assessee.

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• 2012 (4) TMI 248
  Validity of reopening of assessment framed after scrutiny beyond a period of four years from the end of the relevant A.Y. - A.O. purported to reopen assessment on ground that melting loss of 7.75% claimed by assessee is higher than what is found in a similar line of business - A.Y. 2005-06 – Held that:- No allegation has been made that that there was any failure on part of assessee to fully and truly disclose material facts necessary for assessment for that A.Y. This ex facie would amount merely to a change of opinion. Therefore, notice issued u/s 148 and impugned order of assessment is set aside. See Shriram Foundry Ltd. vs. DCIT, Circle 2 & Ors.(2012 (3) TMI 334 - BOMBAY HIGH COURT) – Decided in favor of assessee.

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• 2012 (4) TMI 247
  Dis-allowance of expenditure u/s 14A – Rule 8D of Income Tax rules – A.Y. 2006-07 - Tribunal remanded back file to A.O. holding that Rule 8D is perspective and hence will apply w.e.f. A.Y. 2008-09 – Held that:- In all cases where the Tribunal has remanded this aspect to the A.O. either before or after the decision in Maxopp Investment Ltd. (2011 -TMI - 208569 - Delhi High Court ) for a fresh consideration, the Assessing Officer is bound to comply with the direction and ratio expounded in Maxopp Investment Ltd.

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• 2012 (4) TMI 246
  Denying exemption u/s 10B to the appellant and restricting benefit of deduction u/s 80HHE it to the extent of 10% of receipts from CIC Inc. USA, (excluding reimbursements for traveling) – assessee is a company and registered with the ministry of Industry as 100% Export Oriented Unit - AO stated that assessee has not developed any software programme but main activity of the assessee is to train engineers and other professionals in administration of computer software, especially SAP and export them out of India as per the requirements of CIC – assessee contested that the training of the personals is part and parcel of the whole process of job of customization of software through a pre-defined training curriculum – assessee further contended that once the claim of deduction u/s 80HHE has been allowed by the CIT(A), then the claim of exemption u/s 10B should also have been allowed - Held that:- the software developed was uploaded into the server of CIC through e-mail- no compact disctape, perforated media or other information storage device was ever exported physically out of India, had any meaningful software ever been produced, it could definitely have been exported via the medium of a compact disc or a computer cartridge. It is pertinent to note that the provisions of sec. 10B required the transmission of customized data of computer programme through electronic media and email is no doubt an electronic media and therefore, the objection raised by the Assessing Officer is unfounded - raising of bill on the basis of man-hour further supports the case of the assessee that the assessee is carryout the customization work of software and development of programme as per the specific requirement of CIC clients - direct the Assessing Officer to allow deduction u/s 10B of the Act. The relief under section 80HHE, in the facts and circumstances of the ease, as an alternative prayer, becomes academic - in favour of assesee.

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• 2012 (4) TMI 245
  Levy of Penalty - Search and seizure operation u/s. 132 - consequent to the search, the assessee filed returns of income – AO assessed that assessee not disclosed the income from bill discounting correctly for A.Ys. 2002-03 and 2003-04, thus made addition to income and levied penalty u/s. 271(1) (c) – Held that: - the penalty has been levied only on the basis of estimated income - there is no conclusive material to show that there is actual concealment of income - the assessee has accepted the addition only with the sole intention to avoid litigation and because the assessee has not gone in appeal against the quantum addition, it does not automatically qualify for levy of penalty and it does not entail the Department to levy penalty - when the Assessing Officer and the CIT(A) adopted figures of income on estimate basis and it is a case of difference of opinion between the assessee as well as the Department and that reason cannot be a basis for levy of penalty – in the favour of assessee.

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• 2012 (4) TMI 244
  Modernization and replacement expenses - assessee claimed deduction under section 37(1) for expenditure incurred on replacement of machineries – AO treated it as a capital expenditure – assessee stated that replacement of ring frames and balancing machines was not done with a view to bring into existence a new asset and had been made only to restore the machinery to its original state of efficiency – Held that:- the issue stands fully covered by the judgment of the Hon'ble Supreme Court in the case of CIT v. Sri Mangayarkarasi Mills (P) Ltd. - 2009 - TMI - 34189 - SUPREME COURT - the expenditure of the assessee in this case is capital in nature as it amounts to an enduring advantage for the business - replacement, in this case, amounts to bringing into existence a new asset and also an enduring benefit for the assessee – against assessee. Additional Ground raised challenging the chargeability of interest under section 234B and 234C of the Act – Held that:- Since the ground was not before the lower authorities it is fit and proper to restore this issue back to the file of the Assessing Officer, who shall pass a speaking order with regard to chargeability of interest.

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• 2012 (4) TMI 243
  Whether I.T.A.T was justified in upholding CIT (A)'s order deleting the additions made u/s. 68 by AO, when the creditors have no creditworthiness to advance the loans - The CIT (A) observed that all the creditors appeared before the AO and their statements were recorded on oath and all of them have affirmed the fact of giving the said loans to the assessee.They had also indicated their source and financial capacity for making the impugned deposits with the assessee explaining the details of repayment of the deposits or interest to them by the assessee - CIT further held that the A.O. disbelieved the depositions made by the creditors and substituted his own personal presumptions to conclude that the creditors did not have adequate sources to make the said deposits - Held that:- AO without conducting local enquiries or collecting material evidence on record proved the statements of the creditors as false - thus, the finding of the CIT(A) that the observation of the A.O. with regard to dissatisfaction was on the basis of surmises and conjectures, is just and proper - the findings recorded by the CIT(A) and affirmed by the I.T.A.T. are based on proper appreciation of facts and are not perverse, being correlated with each and every transaction. Thus, the issue is purely question of facts – appeal dismissed.

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• 2012 (4) TMI 242
  Expenses incurred for earning tax exempt dividend of – Rule 8D - Section 14A - Held that:- The elaborate formulae which has been adopted for making the disallowance is precisely what rule 8 D mandates- something directly contrary to the decision of Hon'ble Bombay High Court in Godrej & Boyce Mfg. Co. Ltd's case (2010 -TMI - 78448 - BOMBAY HIGH COURT) - The very approach adopted by the CIT(A) is unreasonable, contrary to legal position, and without regard to the specific facts of the case - there are no direct costs involved in funding the investments - The assessee has disallowance direct costs in earning the dividend, an as for indirect costs, the assessee has suo motu made a disallowance of by computing the at 0.5% of average investments - disalownace offered by the assessee is fair and reasonable and the CIT(A) ought to have accepted the same.

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• 2012 (4) TMI 241
  Assessment of the credits in respect of gifts claimed to be received by the assessees as undisclosed income for the block period - whether the credits could be considered as undisclosed income in terms of 158B(b)?; b) whether, even so, the assessee has to establish the genuineness of the gifts? - held that:- no material has been brought on record by the assessee and, in fact, before any authority, to exhibit the disclosure of the impugned credits. In fact, his argument that there is no requirement for furnishing either the capital account or the balance-sheet along with the return, i.e., as per law, with there being no specific column in the return for declaring the credits/gifts received, or that the credits stood reflected by way of capital balance of the assessee-partner per the return of income of the partnership firm/s (which is again, though not proved), is itself an admission of the non-disclosure of the gifts by the assessee. Legal requirement of disclosure of the gifts - held that:- sub clause (i) of clause (d) of Explanation to s. 139(9) clearly requires the assessee to furnish his financial statements, including balance-sheet, along with the return of income. The assessee/s, thus, ought to have filed the income and expenditure account as well as the balance-sheet, along with his returns of income, and which have admittedly not been, with the AO going on to state that the capital account or the copy of the bank account bearing the said credits - the gifts being claimed to have been banked - had not been filed along with the returns. As such, while the entries in the books of accounts or documents or transactions may be of relevance and consequence in assailing a search action u/s. 132, where that is the only information in possession of the Revenue, leading to a 'reason to believe' by it, the same would be adequate and/or sufficient to qualify it to be an undisclosed income u/s. 158B(b), where the same represents, wholly or partly, income for property. Genuineness of gift - held that:- Gifts are generally also exchanged between close friends and relatives on important occasions, as new borns in the family; landmark birth anniversaries; weddings; etc. It is noteworthy that no gifts have been given by both the assessees to any of their 'close friends and relatives', including those from whom gifts are being regularly received over the years. - there were materials and information found as a result of search to discredit the gifts under reference, i.e., as not genuine. - Decided against the assessee.

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• 2012 (4) TMI 240
  Provision gratuity u/s. 40A(9) - AO noticed that the assessee has made a provision for gratuity and debited the same to Income & Expenditure Fund – assessee stated that corporation contributes to the approved gratuity fund of RBI by way of contractual obligation for its employees all of whom are on deputation from RBI - gratuity liability for the staff deputed to the Corporation has to be reimbursed to the RBI - AO observed that reimbursement to RBI does not in any way change the character of provision for gratuity – Held that :- confirmed the deletion of disallowance on account of provision for gratuity. Non deduction of TDS - disallowance u/s. 40(a)(ia) - assessee contended that since the person to whom the payment was made has already offered the same for taxation, hence provisions of sec.40(a)(ia) cannot be invoked. - applicability of decisions in the case of Hindustan Coca Cola (2007 -TMI - 1676 - SUPREME COURT OF INDIA ) and Mahindra & Mahindra (2009 -TMI - 59571 - ITAT BOMBAY-H ) held that:- the principles laid down in these two decisions cannot be adopted for the purpose of interpreting sec.40[a][ia]. Further, we find that sec.201 deals with the mode of recovery of taxes and once tax due has already been paid then the same demand cannot be enforced again. However, sec.40[a][ia] deals with the disallowance of expenditure itself. Therefore, merely by invoking the Heydon’s principle the statutory provisions cannot be rendered redundant. Therefore, we are of the opinion that once tax has not been deducted and even if such tax has been paid by the deductee, disallowance u/s.40[a][ia] can still be made.

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• 2012 (4) TMI 239
  Striking down the reassessment proceedings initiated u/s 147/148 - change of opinion - respondent filed return of income including capital gain - the assessee has debited a sum of Rs. 2,86,74,323/- under the head of royalty and Rs. 10,73,766/- under the head technicians fee in the P & L a/c ending 31.3.2000 - As per revenue 25% of the royalty expenses should be considered as capital expenditure in view of the Supreme Court judgment in Southern Switchgear Ltd. [1997 (12) TMI 105 - SUPREME Court ]- The assessee is also entitled for royalty fee right and license to use the trademarks within the territory. The acquisition of such a right may be treated partly towards capital and partly towards the revenue thus failure on the part of the assessee to disclose truly and fully all mat erial facts - Held that :- Respondent assessee has filed the profit and loss account wherein royalty has been specifically shown in Schedule 13 in a separate heading, “manufacturing and other sale expenses”. This fact is also admitted in the reasons to believe itself - reading of the assessment order along with profit and loss account indicates that the expense/question of payment of royalty was examined before the assessment order u/s 143(3) was passed - there was no failure or omission on the part of the respondent assessee to disclose the head and the quantum thereof - Even TDS certificates and other details were filed -the Revenue has not been able to indicate and state, the specific failure or omission on the part of the respondent assessee to disclose fully and truly the material facts - that the present case falls in the category of change of opinion as at the time of original proceedings the AO examined and gone into the question of royalty - Appeal or revenue dismissed.

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• 2012 (4) TMI 238
  Motor accident claim - Taxability of interest - held that:- it has been clearly established and proved that the rate of interest awarded by the MACT is not final. The Insurance Company has filed appeal before Hon'ble Jurisdictional High Court and the appeal has been admitted and it may be possible that order of MACT may be approved or disapproved. But the order of MACT is not final. Therefore, in these circumstances and in view of various decisions, we are of the considered view that whether the interest awarded by MACT is revenue or compensation but it cannot be taxed in the year under consideration as the same has not reached its finality. Accordingly, we hold that the amount of interest awarded in the year under consideration or received by the legal heirs is not assessable in the year under consideration as the same will be considered in the year when the compensation plus interest awarded by MACT reached its finality.

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• 2012 (4) TMI 237
  Capital versus Revenue expenditure - AO noticed that assessee had claimed depreciation on such amount by treating it as capital expenditure in the books and still claimed it has revenue expenditure in the return of the income - the assessee contended that such payments were made to company who was engaged to take up project of profit improvement programme which helped the company in increasing sales, cost reduction and eventually would increase the profit and therefore, the expenditure was claimed as revenue expenditure – AO treated it as capital expenditure as auditors of the company had treated it - Held that :- Tribunal committed no error as no technical know-how for any new project was provided and thus the expenditure resulted only in improving income and efficiency of the business and hence to be treated as revenue expenditure - mere entries in account books would not decide the nature of expenditure. MAT - book profit under Section 115JB of the Act - Revenue vehemently contended that in view of provisions contained in Section 115JB of the Act and considering sub-section (7) of Section 94 of the Act inserted with effect from 1.4.2002, Tribunal erred in deleting disallowance of loss of 47.23 crores (rounded off) for the purpose of computation of book profit under Section 115JB of the Act. Counsel pointed out that such loss was suffered by the assessee on account of dividend stripping. To control which activities sub-section (7) of Section 94 of the Act was added. - held that:- Such provision cannot be applied while computing book profit for the purpose of Section 115JB of the Act. Book profit under Section 115JB of the Act has to be worked out as per the provisions made in the section, giving effect to explanation contained therein. Appeal admitted.

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• 2012 (4) TMI 236
  Present petition challenging re-assessment proceedings u/s 147 and 148 of the Income Tax Act - “reasons to belief” recorded by the Assessing Officer that on perusal of P&L A/C payment towards software consultation was shown and was remitted to foreign company without deducting tax at source - such charges shall be disallowed and added back in the taxable income – assessee contented that payment made for Consultancy Services outside India are not chargeable under this Act as per Section 9(1)(vii) – Held that:- the AO during the course of the original assessment proceedings had gone into the question whether or not Section 9(1)(vii) of the Act was applicable to payment made by the petitioner and was satisfied with the reply furnished - the assessing officer has power to reopen, provided there is “tangible material” to come to the conclusion that there is escapement of income from assessment - the present case is of change of opinion as AO in the original assessment proceedings had gone into and examined the said question but accepted the stand of the petitioner- A wrong/incorrect opinion cannot be corrected in 147/148 proceedings but if the decision is erroneous and prejudicial to the interest of the Revenue, it can be corrected in proceedings under Section 263 of the Act - writ petition is allowed and the re-assessment notice is quashed.

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• Customs

• 2012 (4) TMI 257
  Release of goods – petition to direct respondents to accept the contracted price, declared in the relevant B/E, as the transaction value, as per Section 14(1) of the Customs Act, 1962, read with Rule 4 of the Customs Valuation Rules – differential duty payable is Rs. 8.81 lacs - Held that:- Court finds it appropriate to release the goods in question relating to relevant B/Es, subject to the petitioner executing a bond for a sum of Rs. 48,54,000/ and furnishing a bank guarantee for Rs. 5,00,000/-. It is open to the respondents to pass final orders, based on the investigation, and adjudication process.

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• 2012 (4) TMI 235
  Writ petition under Articles 226 and 227 of the Constitution of India - for direction to the respondents to deliver goods mentioned in the 3 bills of entry, without payment of detention and demurrage charges and award of exemplary costs – petitioner imported synthetic wastes soft quality but on tests done by CRCL on sample taken depicted to be staple fiber – petitioner highlighted delay commited by Department between the date of receipt of the test report and the date of issue of the show cause notice – petitioner seek direction against department to withdraw the show cause notice and further direction to clear the goods for home consumption - respondent contented that the method of taking sample was not correct - out of six reports three are in favour of petitioner one is favouring the respondent and two reports are unequivocal the goods were directed to be released forthwith on furnishing of provisional duty bond - petitioner claims that they had executed provisional duty bonds but the goods were not released for want of detention charges – Held that:- The petitioner submitted their reply to show cause notice dated 29th August, 1991, only on 5th March, 1992. Even if the petitioner was relying upon and wanted a copy of the test report by SASMIRA, the delay is not justified - The action of the customs authorities cannot be substantially faulted, once they had issued detention certificates in 1993, except to the extent of passing of the adverse assessment order - Contention of petitioner that none of the partners were willing to bear and pay the demurrage charges as there was no certainty when, how and who would be entitled to sell the goods and how the profits would be distributed cannot be accepted - If the petitioner had made payment of reduced demurrage charges on the basis of the detention certificates, the position may have been different - the petitioner had failed to take delivery of the consignment even after order dated 23rd April, 1993 and in such circumstances it is not viable for respondent- custom to pay the demurrage or container charges - writ petition dismissed

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• Corporate Laws

• 2012 (4) TMI 256
  Stamp Duty on scheme of Merger & Amalgamation - Continuing practice in this State for transfer of property pursuant to scheme of amalgamation or demerger without attracting stamp duty - The petitioners contented that an order sanctioning a scheme under the Companies Act would be exempted from stamp duty in this State - the other aspect of the matter relates to a notification of the year 1937 issued by the Governor General-in-Council providing, that stamp duty chargeable under Article 23 of Schedule I to the Indian Stamp Act, 1899 would stand remitted in the manner indicated in the notification – Held that:- Article 23 no longer forming a part of Schedule I to the Stamp Act as applicable in this State and being included in Schedule IA thereto, the benefit under the 1937 notification is no longer available as the State Legislature - An order sanctioning a scheme of amalgamation or demerger under Section 394 of the Companies Act, therefore, answers to the description of the words “instrument” and “conveyance” within the meaning of the Stamp Act applicable in this State and is, accordingly, exigible to stamp duty - no property transferred pursuant to any scheme of amalgamation of merger or demerger in this State would be effective unless appropriate stamp duty thereon has been paid.

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• 2012 (4) TMI 234
  Company Application for Confirmation/recognition of transfer to the applicant 3498 Equity Shares in the Respondent Company, made before order of winding up but after filing of petition for winding up of the Respondent Company - The appellant was appointed as Director of the company under liquidation at its EGM - the suit has been filed by Mr. A.V.K. Rao against the appellant and others in Ranga Reddy District Court Mr. A.V.K. Rao is the sole and absolute owner of 3498 equity shares of the company under liquidation and that the appellant is wrongfully in possession of the share certificates but the purported transfer shares is without consideration, and without execution of valid transfer deeds and without approval of transfer by Board of Directors and, therefore, invalid - The applicant seeks reliefs to commence the suit against the Liquidator and other parties before the Principal District Judge - Held that:- There is a civil suit pending with regard to the transfer of shares. It is in these circumstances the Applicant cannot be granted any relief in this Company Application - The appeal is accordingly dismissed but with liberty to the appellant to make a fresh application under section 536(2) of the Companies Act, 1956 if and only if Suit No. OS 244 of 2009 is dismissed by the District Court, Ranga Reddy, Hyderabad. If the suit is decreed, there can be no question of the appellant making any fresh application.

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• FEMA

• 2012 (4) TMI 258
  Under-invoicing and Hawala transactions – petition for stopping the investigation initiated by the Enforcement Directorate – petitioner alleges of documents being forged and fabricated - Held that:- Enforcement Directorate is fully entitled to investigate in such matters. Mere complaint of petitioner regarding alleged forgery and fabrication is no ground to stay the investigation by the Enforcement Directorate – petition dismissed.

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• Service Tax

• 2012 (4) TMI 276
  Sought registration and discharged entire tax liability with interest on being made aware by the department that its activities come under 'erection commissioning installation, repair and maintenance and commercial and industrial construction'- assesee claims a waiver of penalty as being an illiterate was not aware of the law - Held that :- So far as penalty under Sections 76 and 78 of Finance Act, 1994 are concerned, we are unable to find oblique motive of the appellant to cause evasion - All these mitigating factors call for waiver of penalty to the extent that was confirmed by first appellate order - penalty under Section 77 for no registration taken duly is confirmed - appeal partly allowed.

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• 2012 (4) TMI 275
  Whether the appellant was carrying out clearing and forwarding activities and such activity taxable - also the issue was whether reimbursement of expenses shall be forming part of assessable value - None present for the appellant - Held that:- examined the extent of test done by first Appellate order appears to have carefully examined the issue of taxability of the activity of clearing and forwarding - confirming the tax demand, we make a limited remand to first Appellate Authority to grant fresh hearing on penalty aspect as that was imposed by adjudication order.

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• 2012 (4) TMI 274
  Commercial training or coaching - Appellant taken service tax registration in the year 2003, they did not collect service tax from the students and remit the same to the Government till 2006 - SCN issued demand for Service Tax, confirmed along with interest and a penalty u/s 76 ,77 and 78 of the Act – Held that:- some leniency in the matter of penalty may be warranted in this case considering that tax and interest were paid before adjudication order and the fact the appellant are a small service provider operating in a remote locality - simultaneous penalties under Section 76 and Section 78 cannot be imposed – as per line with the case of K.P. Pouches (P.) Ltd. v. Union of India - 2008 - TMI - 30328 - HIGH COURT OF DELHI appellant given an opportunity to pay 25% of the tax demanded as penalty within 30 days of receipt of this order. If such payment is not made within the prescribed time limit, amount equal to the full tax amount confirmed will be payable - partly allowed.

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• 2012 (4) TMI 255
  Plea for waiver of pre-deposit of duty of Rs 58.55 lacs, interest and penalty – denial of credit of Service Tax paid on the taxable services of Manpower Recruitment or Supply Agency Service – Held that:- Taxable services availed of Yoga teacher, Poojari, Cook, Compounder, Nurse, helper etc. have no direct nexus with manufacture of final product. Credit rightly denied. Thus, assessee is directed to make pre-deposit of Rs 15 lacs within stipulated time subject to which pre-deposit of the balance amount of duty, interest and penalty shall stand waived and recovery thereof stayed during pendency of the appeal.

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• 2012 (4) TMI 253
  Learned Counsel says that reading of para 9 of the adjudication order demonstrates that the activity carried out by the appellant was within the mining area and the goods transported within mining area cannot be called as cargo handling - To call an activity to be cargo handling service there should be an activity of movement of cargo from one place to another place without any internal movement within the mining area - Held that: movement of the excavated iron within the mining area from one place to another that operation cannot be called as cargo handling service - Appeals are disposed of

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• 2012 (4) TMI 252
  Waiver of penalty - rent-a-cab service - short payment of Service Tax of Rs.20,500 - Proprietor, who could not explain the details since he happens to know only Gujarathi and no other language. Further, he was also found to be non-conversant with the provisions of law. - On going through the records, it was found that there was an order issued under Section 96(1) of Finance Act, 2008, under the Dispute Resolution Scheme, 2008 - Since the amount indicated in the Dispute Resolution Scheme as well as in Order-in-Original case exactly same, apparently neither the appellant nor the department had taken note of the fact that there was already an order under Dispute Resolution Scheme and therefore, the proceedings initiated in the Show-Cause Notice dt.11.09.07 - Held that: the appellant has been able to show reasonable cause under Section 80 of Finance Act - Decided in favor of the assessee

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• 2012 (4) TMI 251
  Demand - Condonation of delay - Show Cause Notice was issued in this case by comparing the income tax return with the ST-3 return and it was found that the income shown in the income tax return was much more than the ST-3 return - Even though, the appellant explained that receipts on bank statements includes receipt of various other amounts such as interest, loan etc and therefore without proper verification that cannot be taken as income for rendering services, the original adjudicating authority proceeded to confirm the demand on the basis of bank statement - Held that: the original adjudicating authority confirmed bigger amount than what was mentioned in the Show Cause Notice also, which was rightly set aside by the Commissioner (Appeals), hence is not the subject matter of the appeal - Appeals are decided by way of remand to original adjudicating authority

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• Central Excise

• 2012 (4) TMI 254
  Modvat Credit on Invoices other than duplicate copies – Revenue stated that respondent-assessee illegally and irregularly availed Modvat credit on Fabricated heaters/Fabricated tubes/Crab Assembly and Refractory materials - on the ground that the words 'duplicate invoice' was not mentioned on invoices and Refractory and Refractory materials not covered under the definition of 'capital goods' – Held that:- Tribunal held that after the amendment of Rule 57G of the Rules vide Notification No.7/99-CE(NT) dated 9th February, 1999 the amended Rules would apply in all pending cases and the credit cannot be denied on minor procedural lapses in case the inputs were duty paid - credit should not be denied only on the ground that the documents referred to in sub-rule (2) does not strictly comply with the said Rule but contains the details of payment dues, description of goods, assessable value, name and address of the factory or warehouse etc. - Modvat credit on Refractory and Refractory materials is allowed as these items are used for lining of the furnace used for producing the final products - This position has also been clarified by the Central Board of Excise and Customs by issuing a circular in exercise of its power under Section 37B of the Act and made it applicable to all pending cases – in favour of assessee.

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