Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 25, 2012
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
Indian Laws
Articles
News
Notifications
Highlights / Catch Notes
Customs
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Appointment of Common Adjudicating Authority. - Ntf. No. 36 / 2012 - Customs (N.T.) Dated: April 23, 2012
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Seeks to amend Notification No.12/97-Customs (N.T.) - Inland Container Depots for loading and unloading of goods . - Ntf. No. 35 / 2012 - Customs (N.T.) Dated: April 23, 2012
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Seeks to amend Notification No.12/97-Customs (N.T.) - Inland Container Depots for loading and unloading of goods . - Ntf. No. 34/2012 - Customs (N.T.) Dated: April 20, 2012
Case Laws:
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Income Tax
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2012 (4) TMI 423
Understatement of the sale of bullion (gold and silver) made by the assessee – Addition made by AO as there are cash sales which are not verifiable and the rates whereof is below the average rate of Delhi Bullion Association - ITAT deleted the addition made by the AO - Held that:- It is not the case of the AO that he has come across any material showing that the assessee is receiving something over and above that entered into the books of accounts maintained - all the requisite books and records are maintained duly audited and no specific defect in the same has been pointed out - the lower rates of the Delhi Bullion Association were also comparable with that shown by the assessee even though the rates of the Delhi Bullion Association were in respect of the retail trade and not in respect of the wholesale trade in which the assessee was involved– against revenue. Addition on account of stock of silver bars written off - assessee contended that during weighing and re-weighing of the silver bars on a repeated basis a weight loss due to breakage of corners of the silver bricks occurs - The CIT (A) confirmed the addition as silver was not a perishable commodity – Held that:- AO while rejecting the explanation given by the assessee did not make any verification as to whether in the type of trade i.e., wholesale trade in silver a negligible amount of breakage occurs or not - AO without any evidence to this effect could not conclude that the sales had been made outside the books of accounts - on this basis the Tribunal on facts reversed the finding of the CIT (A) as also the Assessing Officer - the Tribunal arrived at this conclusion and the same is a pure finding of fact.
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2012 (4) TMI 422
Saga of errors from both the assessee and the revenue - Society carrying on charitable activities formed in the year 1979 - no income tax return filed till 2003 - AO did not issue any notice U/S. 147/148 to the respondent-assessee calling upon them to file a return for the period prior to 1.4.2003 - school in Alwar treating itself as an assessee filing returns with the AO at Alwar – society filed an application in Form 10A for registration under Section 12A - Order passed by Tribunal that the respondent-society shall be treated as registered under Section 12A w.e.f. 1.4.1997; the notices issued under Section 147/148 of the Act to the school will be treated as having been validly issued to the respondent-society and therefore, the Assessing Officer will assess the income of the respondent-society for the assessment year 1998-99 onwards for all the assessment years – Revenue appeal to dis allow the registration on retrospective effect and there was delay of 3 years & 4 months in preferring an appeal against the order - Held that:- if the order of the Tribunal is set aside it will be against and contrary to the interest of the Revenue as they would not be able to now assess required tax in respect of income right from 1998-99 onwards - as noticed lapses on both the sides and interfering with the impugned order will lead to difficulties and not in the interest of the Revenue when the respondent-assessee has not been issued notice under Section 147/148 for any of the assessment years - appeal is dismissed.
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2012 (4) TMI 421
Rejection for registration under sec. 12A – Held that:- It is not ascertainable as to how the activities of the assessee are not genuine - the only reason that marginal surplus at 21.4% over the gross receipts in A/Y 2008-09 would not establish as to how the activities of the assessee could not be put to a test of genuineness and not to be a consideration for rejecting the application for grant of registration - allow the appeal of assessee and direct the Learned CIT to issue registration certificate in accordance with law - in favour of assessee.
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2012 (4) TMI 420
Addition made on loan amount disclosed in the cash flow statement - Tribunal reversing the order of the first appellate authority and confirming that of the Assessing Officer – Held that:- The mere production of confirmation letters does not discharge the liability of the assessee to offer satisfactory explanation for the loan receipts - the production of such material cannot lead either to a conclusion that the Assessing Officer has to discredit the same or call for further details in the event of non-satisfaction –assessee contented with the production of confirmation letters without any further material regarding the identity, status or capacity of the creditors or even the dates on which the said loans were said to be made - against assessee.
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2012 (4) TMI 419
Reopening - Validity of notice - proposal to withdraw the benefit of deduction u/s 80IA - held that:- only on scrutiny assessment the total income of the petitioner was determined after allowing deductions under section 80-IA(4)(iii) and section 80-IA(10) - the notice for reopening within the period of four years from the end of the relevant assessment year is not found sustainable. It is also required to be noted that while disposing of the objections, it was harped upon the Assessing Officer that the mandated condition for availing of the benefit under section 80-IA(4)(iii) was to have an industrial park notified by the Central Board of Direct Taxes and the factum of not possessing the Central Board of Direct Taxes notification was not brought on the record by the assessee. This failure also attributed to the assessee-company for not disclosing fully and truly. This very basis ; as mentioned hereinabove, is not sustainable in wake of clear direction by this Bench to the Union of India for issuance of such notification and this very edifice on which this re-opening is based has been demolished. Notice for reopening; even though issued within four years from the end of the relevant assessment year and in spite of the Assessing Officer having wide powers under section 147 of the Act (in the post-amendment period - with effect from 1st April, 1989) overwhelmingly, the factual matrix and the decision of this court would not permit such a notice to continue, and resultantly, the impugned notice dated October 1, 2009, issued under section 148 of the Income-tax Act, 1961, and all consequential proceedings are hereby set-aside and are quashed.
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2012 (4) TMI 418
Block assessment - Penalty u/s 158BFA - whether mandatory or discretionary - power of AO - held that:- It is true that Section 273B of the Act which provides that penalty shall not be imposed in certain cases on the assessee proving that there was reasonable cause for failure to pay tax refers to several provisions such as Section 271, 271A, etc., makes no mention of Section 158BFA(2). This still does not mean that penalty under Section 158BFA (2) is mandatory. - penalty under Section 158BFA (2) is not mandatory. Power of the Tribunal to delete the penalty - Tribunal interfered with the penalty on the ground which was not permissible. Additions made on the basis of estimation may be one of the grounds on which discretion not to impose penalty may be exercised. However, in absence of any requirement to prove concealment or furnishing of inaccurate particulars found in Section 271 [1](c) of the Act cannot form the sole basis to delete penalty imposed by the Assessing Officer and confirmed by Commissioner [Appeals] - Held that: Tribunal committed a grave error in interfering with the penalties imposed by the Assessing Officer and confirmed by the CIT [A] on the grounds mentioned in the order. - Decided in favor of the revenue
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2012 (4) TMI 417
Deduction u/s 54 and 54-F - Reopening - assessment u/s 147 - held that:- the reopening was definitely valid since the No Objection Certificate from Appropriate Authority issued on 21.02.2000 was never brought to the notice of Assessing Officer by the assessee during the course of original assessment proceedings. Regarding eligibility of exemption u/s 54 and 54F - held that:- The original agreement of sale of the Chennai property was made on 28-6-1996. Based on that agreement, NOC from the Appropriate Authority was obtained on 8-10-1996. Thereafter a supplementary agreement was executed on 6-2-1998 in order to accommodate the actual extent of the landed property arrived at on re-measurement. When the sequences of events are considered in a wholesome manner, it is evident that the possession of the property was handed over to the buyers and the consideration was paid by the buyers on 28-11-1999 itself. This giving away of the possession of the properties to the buyers against receipt of the consideration of the transaction, has satisfied the requirements of "transfer" within the meaning of section 2(47) of the Income-tax Act, 1961 and within the meaning of section 53A of the Transfer of Property Act. It is to be seen that the NOC issued on 21-2-2000 relates back to 8-10-1996 and as such reinforces the fact of transfer of the property on 28-11-1999, when the possession was handed over to the buyers. In these circumstances, as far as this case is concerned, therefore, there is complete compatibility between the application of section 2(47) of the Income-tax Act, 1961 with section 53A of the Transfer of Property Act and Chapter XX-C of the Income-tax Act, 1961. Investment made by the assessee on 9.12.1998 in the residential property was well within the time period mentioned for availing deduction under Section 54 / 54F of the Act. - Decided in favor of assessee.
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2012 (4) TMI 416
Depreciation on intangible assets - AO disallowed the depreciation - various assets including integrated software - During the survey, it was found by the survey team that these assets were not there in the premises and if the appellant had any objection regarding the list of the assets in the survey report, the same has to be objected there itself and ought to have corrected - AO denied claim of the assessee because no fixed assets register was maintained by the assessee but same was produced before the AO subsequently - held that:- Merely because the parties who had supplied assets to the assessee have not responded to the notice of the AO may not be a ground for denying claim of the assessee on tangible assets - the material supplied by the assessee is not examined in detail and complete details of the assets are recorded in the report of valuation prepared prior to the survey at the instance of IDBI, therefore, we are of the view the matter as regards depreciation on tangible assets requires reconsideration at the level of the AO Regarding deduction u/s 80HHC and 80 IA - Held that: assessee made a claim of deduction under these provisions when income is computed at profit. The learned CIT(A), therefore, rightly directed the AO to consider this issue particularly when the assessee fulfilled conditions under these provisions. The learned CIT(A) merely directed the AO to allow the claim of the assessee as per law Regarding bad debts u/s 36 (1) (vii) - Held that: debts having been written off in the books of accounts in the year under consideration, the claim of bad debts is allowable to the assessee - Appeal is allowed Disallowance of insurance expense - AO rejected the claim of the assessee because the insurance cover was taken for loss of production and expected profit whereas insurance expenses were debited on estimate basis relating to destruction of machinery, building, raw material and finished goods. - held that:- Once assessee has shown income on account of insurance receipts out of the same incident and claimed expenses out of the same incident relating thereto, the claim of the assessee should have been appreciated and considered for both i.e. income and the expenditure on account of insurance. Similarly, assessee shall have to satisfy the AO as to how expenses have been claimed and should have filed the supporting evidences. - matter remanded back. Regarding disallowance to the extent of 25% on disallowance of Rs.3,08,17,231/- made by the AO on account of nongenuine purchases - arned Counsel for the assessee reiterated the submissions made before the authorities below and submitted that search was carried out by central excise department on 15-02-2002 which is prior to the start of the financial year relevant to the assessment year under appeal 2003-04 - It is not in dispute that search was carried out by central excise department prior to start of the financial year in appeal. The financial year starts from 01-04-2002 and would end on 31-03-2003 for assessment year 2003-04 under appeal - In the absence of any material on record against the assessee, we do not find any justification to sustain even part addition against the assessee - Decided in favor of the assessee Disallowance of various expenses - assessee Company filed return of income in response to notice u/s 148 of the IT Act and has made additional claims on these expenses. Such claims were not made in the original return of income. - held that:- the proceedings u/s 147 are meant for the benefit of revenue and not for assessee, the assessee cannot be permitted to convert the re-assessment proceedings into an appeal or revision in disguise and sick leave in respect of items earlier rejected or claim relief in respect of items not claimed in the original assessment proceedings, unless relatable to escaped income. Regarding addition of Rs.10,55,53,967/- u/s 36(1) (iii) - It was submitted before the learned CIT(A) that the AO did not issue any show cause notice on this issue and that all the advances were made for business purposes either for purchase of materials or plant and machinery - The learned Counsel for the assessee submitted that the entire disallowance has been made by the AO purely on estimate basis without establishing any nexus between the funds borrowed and advances granted - It was submitted that recently the Hon’ble Supreme Court has held that in case of loans to associate concerns and/or outside parties, commercial expediency from the businessman’s point of view has to be taken into consideration and while doing so, revenue cannot sit in the arm-chair of the assessee - Held that: the assessee is having sufficient own funds, therefore, there is no question of diversion of interest-bearing funds for giving loans and advances - Decided in favor of the assessee Regarding addition on account of loss on sale of raw materials of Rs.2,69,86,470 - After verification of the evidences produced by the assessee the AO had come to the conclusion that the loss claimed in respect of such sales of raw material is fictitious and therefore, the same has been disallowed and as per the clear finding in the assessment order, the AO stated that the addition made be confirmed - learned Counsel for the assessee also submitted that huge volumes of additional evidences are in order and the AO did not find any mistake in the same and hence, he has not commented on any of them - Held that: CIT(A) considering the details furnished found that the assessee has suffered loss and such findings of the learned CIT(A) have not been rebutted through any evidence or material on record - Appeal is dismissed
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2012 (4) TMI 415
Denial of waiver of interest, levied under Section 234A, B and C of the Income Tax Act – Held that:- there is no provision in the Act, providing for waiver of such interest – notification dated 23.05.1996 provides the circumstances in which such waiver is permissible which says that where the return of income could not be filed by the assessee due to unavoidable circumstances and it was later filed voluntarily without detection by the Assessing Officer - no details thereof have been furnished by assessee and this factual issue was not established before the 1st respondent - denial of the request for waiver of interest cannot be said to be against the provisions of the notification – against assessee. Request for waiver of interest levied under Section 220(2) – Held that:- Apart from the pleading that the non-payment of tax was due to reasons beyond the control of the assessee, the assessee has not established this factual question - the ingredients of the other conditions specified in Section 220(2)(a) also are not established – against assessee.
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2012 (4) TMI 403
Revenue expenditure u/s 37(1) - Deletion of the addition made by the AO on account of commission claimed on payment to various agents in respect of sale of machinery – Revenue contested that seven buyers had stated categorically in their written responses that in the transactions of purchase made by them of the web offset printing machines from the assessee, no commission agent was involved – Held that:- For AY 2005-06 any amount paid by way of commission to persons in respect of these seven buyers cannot be regarded as business expenditure and the same would not be allowable as Revenue expenditure under Section 37(1) but as far as the other payments by way of commission are concerned, there is no evidence which has been produced by the Revenue – partly allowed in favour of revenue. Assessment Year 2006-07 – Held that:- No evidence from any of the buyers indicating that there was no commission agent between them and the assessee company - there is no material on record nor is there any other evidence which the Revenue could produce to indicate that the commission paid to the commission agent was not genuine – against revenue.
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2012 (4) TMI 402
Invoking the provisions of section 50B to sale of assets of the M Seal Division of the Appellant - assessee contented that it was an itemized sale - Slump sale – Held that:- A close analysis of the agreement and the deeds entered into by the appellant with PIL confirms that the business as a whole was sold and not an itemized sale of assets - Directors' report and Auditors' report also talk about 'sale of business' - the business of Sealants and Adhesives of assessee includes all the processes from manufacturing to marketing and as per the ‘Agreement to Grant’ Appellant had agreed to sell/transfer and assign all rights, benefits, titles, interests of any nature in relation thereto 'business of Sealants and Adhesives', thus leading to sale of entire business – as a result of the nine agreements/ deeds entered with PIL business of Sealants and Adhesives carried out by the Appellant had gone to PIL irrevocably - agreements/deeds entered in to by both the parties prove that they are part of the one transaction only and to considered as ‘ slump sale' – against assessee.
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2012 (4) TMI 401
Rejection of claim of exemption under section 54– assessee submitted that non compliance with the provisions of section 54 within the time prescribed was for reasons beyond her control as the money which was blocked by her by paying advances to procure the property was not realized within the time - Held that: - Payment of advance and return of the same are all matters of normal commercial agreements and cannot act as supervening impossibilities - two out of the three persons to whom advances were made are assessee’s own sons to whom she handed over the money who enjoyed it for long time - these events do not lead to supervening impossibilities to constructed the residential property beyond three years of the prescribed time limit – against assessee.
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2012 (4) TMI 400
Assessee in default - TDS u/s 194J - Trust directly makes payments to various hospitals as per the MOUs it entered with such hospitals. - Held that: A close reading of the above provisions of S.194J and S.2(31) of the Act, makes it clear that the assessee, which is claimed to be having no source of income and constituted without any profit motive, as well as the hospitals to which payments have been made clearly constitute 'person' as defined in S.2(31) of the Act, and the services rendered by the hospitals, being in the nature of medical services, also comes within the scope of 'professional services' as defined in Explanation to S.194J, thereby, making the payments made by the assessee towards such services fall within the ambit of professional services. - Decided against the assessee. Regarding bifurcation of payment made to hospital - learned counsel for the assessee, submitted that elements of payment towards bed charges, medicines, follow up services, outpatient services, transportation charges, implants, expenditure incurred for conducting camps at village levels, do not strictly fall within the scope of 'fee for professional services' which alone can be considered as falling within the scope of the provisions of S.194J - Decided in favor of the assessee by way of direction to AO to bifurcate the payments made by the assessee trust to the hospitals into various element, and confine the demand raised in terms of S.201(1) of the Act, only to the payments which assume the nature of fee for professional services, as noted above
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2012 (4) TMI 399
Claim of exemption u/s 54B and expenditure incurred towards improvement of land - Sale of 1.81 acre of land by Assessee and his co-owners – assessee out of his 1/3rd share in the sale consideration purchased another piece of agricultural land - claim disallowed - Held that:- It is essential that for claiming the benefit of exemption of section 54B, capital asset sold should have been used either by the assessee or his parents for agricultural purposes in the two years immediately preceding the date on which the transfer took place - detailed enquiry ascertain by AO and the land revenue authorities categorically statement that as per revenue records no crop was cultivated/agricultural activity undertaken on the land owned by the assessee - no concrete evidence has been brought on record by the assessee to controvert the finding of facts recorded by the lower authorities - production of statements of neighbours of the assessee are vague and sketchy - the assessee has miserably failed to prove that the land in question was agricultural land and he had cultivated crops in the land – against assessee.
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2012 (4) TMI 398
Deduction u/s 80IB - Date of commencement of manufacturing activity - factory license was issued by the Chief Inspector of Factory only on 3.5.2005 - assessee had in fact began such manufacturing prior to 31.3.2004. - AO disallowed deduction - held that:-Primarily we are of the opinion that while holding that assessees are not entitled to deduction under section 80IB(4) of the Act, we are not reading into it any other requirements contained in any other Act but are reading the requirements contained in the proviso to Sub-section(4)of Section 80IB of the Act so as to require that commencement of the industrial activity must be lawful and any manufacturing activity which is fundamentally unlawful or prohibited by law and against public policy, would not be covered by said provision. in cases where the application for license was already made before 31.3.2004, but obtained shortly thereafter, we are of the opinion that such lapse must be viewed as one which is purely technical even without accepting the contention of the counsel for the assessee that grant of license subsequently would relate back to the original date of application. - Decided in favor of the assessee
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2012 (4) TMI 397
Deduction u/s 80-I - denial of deduction u/s 80-I(9) - Close relations between the assessee - company and the foreign buyer - burden of proof - held that:- there being no material to indicate that the course of business had been so arranged as to inflate profits, i.e. to show a. higher profit margin to the two export units of the assessee, we are unable to answer the question in favour of the Revenue, but the only answer can be that the Tribunal was justified in taking this view and therefore, the first question is answered in the affirmative and in favour of the assessee and against the Revenue. Deduction u/s 10A read with section 80-I(9) - maintenance of separate books - held that:- the question basically arise because the Assessing Authority rejected the method of accounting followed by the assessee for the purpose of computing its profits in terms of the profit and loss account and the Appellate Commissioner as well as the Tribunal have found that there was no reason or justification for the Assessing Officer to have rejected the books of account as maintained by the assessee which was according to standard accounting practices. Assessing Officer is of the view that the assessee was not entitled for the deduction in terms of Section 43B of the Act as the actual payments had not been made good by placing before the Assessing Officer the commensurate material for the accounting period of excise duty and customs. - The second question posed for our answer is answered in the negative and against the assessee but after setting aside the orders of the Tribunal and the Appellate Commissioner on this aspect the matter is remanded to the Assessing Officer on this aspect i.e., regarding the claim of the assessee for reducing the claim of the MODVAT credit available to it at the end of the accounting period from the date of the closing stock and for such purpose, the Assessing Officer shall give an opportunity to the assessee to place material and pass orders afresh on this aspect of the matter. – Appeals are allowed in part
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2012 (4) TMI 396
Disallowance u/s 40(a)(ia) - Sub contractor - Non deduction of TDS under Section 194C - hiring charges - tippers and excavators. - transport charges by utilising the trucks of other owners - The assessee being a transport contractor having executed whole of the contract for transportation by hiring lorries from other lorry owners who simply placed the vehicles at the disposal of the assessee without involving themselves for carrying any part of the work undertaken by the assessee could not be said to have made the payments for his business involving deduction of tax at source to another contractor. The work contract as defined exclude payments for hiring out lorries therefore could not be subjected to consider the issue of claiming of higher depreciation also. The assessee owns those assets which are leased out for the purpose of hiring out and the nature of business clearly entitles the assessee to claim higher depreciation when the assessee for the volume of work hires other trucks from other truck owners for executing its contract. - No TDS - Dis-allowance deleted - Decided in favor of assessee. Higher rate of depreciation - lease out of trucks - held that:- as the assessee has clearly hired them out by way of a sub-contract its machinery and equipments which income has been returned by the assessee therefore could not be said to have been reduced from the expenditures incurred for hiring out the vehicles of the other truck owners. - The word "hired" used by the law was to only indicate that some income should be rendered to taxation by utilization of those assets and not that assets which can only be hired out can be used for claiming higher depreciation. The fact that the assessee chose to lease out the trucks does not on that score disentitle higher rate of depreciation. - - Decided in favor of the assessee
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2012 (4) TMI 395
MAT - Addition made by the AO u/s. 115JB - capital gain have not been routed through profit & loss account - held that:- the Act has recognised that there may be cases where F.Y of the company may be different from the previous year and if the financial accounts are adopted in the previous year then such accounts must have similar Accounting Policies and Accounting Standard etc. - Now, who is going to check this aspect? Obviously, the Registrar of Companies is not concerned with these aspects whether accounts adopted for the previous year are same or not because the Registrar of Companies at best is concerned whether the accounts adopted and laid before the annual general meeting are in accordance with the requirements of Part II and Part III of Schedule VI of the Companies Act, 1956. Therefore, in view of these enlarged requirements, we are of the view that AO has powers to go behind the accounts and see whether same have been prepared in accordance with the requirements of Part II and Part III of Schedule VI of the Companies Act, 1956. Atleast u/s.115JB AO has power to go behind the accounts. - it is clear that book profits have to include the profits earned from capital gains. - assessee had earned certain profit on sale of shares and some industrial units which admittedly have not been credited to the profit & loss account which is contrary to the significant accounting policy of the assessee itself as well as against the requirements of Accounting Standard AS-13 and requirements of Part II and Part III of Schedule VI of the Companies Act, 1956. Therefore, in our opinion, AO has rightly brought these items to taxation under the MAT provisions of sec. 115JB. - Decided against the assessee.
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2012 (4) TMI 394
Disallowance of long term capital loss, arising on conversion of US 64 units into 6.75% tax free bonds, after indexation of cost, as claimed by the Appellant - Exemption u/s 10(33) - held that:- The provisions are not meant to enable an Assessee to claim loss by indexation for set off against other capital gain chargeable to tax. The intention of the legislature was only to restore status quo ante and not to confer any benefit of carry forward of capital loss for set off against capital gain chargeable to tax in the subsequent Assessment years. The economic reasons for insertion of Sec. 10(33) of the Act clearly shows that the source viz., transfer of capital asset being units of US 64 itself that has been excluded by the will of the Legislature and not the capital gain alone. - Decided against the assessee. Regarding deduction u/s 80HHC - The assessee had claimed a sum of ₹ 1,14,844/- as deduction u/s. 80HHC of the Act, however the AO allowed deduction of only ₹ 1,00,600/- because this was the sum specified in the report in Form 10CCAC which has to be filed by the Assessee in terms of Sec. 80HHC(4) - It is not in dispute that in Form No. 10CCAC while calculating the deduction u/s. 80HHC of the Act Excise Duty had been included as part of the total turnover - the tax liability has to be determined in accordance with law and the mistake made in the certificate of the Chartered Accountant in Form 10CCAC should not have been relied upon by the revenue for reducing a legitimate claim for deduction u/s. 80HHC of the Act made by the Assessee - Held that: the claim made by the assessee for deduction u/s. 80HHC at a sum of ₹ 1,14,844/- has to be accepted - Decided in favor of the assessee
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2012 (4) TMI 393
Search and seizure - Claim of interest under section 132B(4) - The petitioner claims that an amount of Rs. 1,60,000 seized from him was neither appropriated nor treated as advance tax - Section 244A deals with interest on refunds. - It states that whether the refund of any amount becomes due to the assessee under the Income-tax Act, he is entitled to receive the said amount with simple interest upon it calculated at 1 per cent. for every month or part of months comprised in the period or periods from the date of payment of tax or penalties to the date on which refund is granted - Held that:- respondents are, therefore, liable to pay interest on the above amount of Rs. 1,60,000 from July 5, 1996, till December 2, 1996, as calculated under section 244A(1)(b). - Decided in favor of the assessee
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2012 (4) TMI 392
Addition on account of foreign education expenditure of the son of the Director of the assessee company - Held that: The education of the children is sole and exclusive responsibility of the parent and cannot be mixed up with the business of the family owned company - Expenditure on higher education of the son of the director, in the facts and circumstances of the case cannot be said to be wholly and exclusively for the purpose of the business of the assessee and without any extra commercial circumstance – Decided against the assessee. Regarding depreciation of BSE card and FEDAI membership - It is clear from the developments of BSE as well as from the amended provisions of the Act that after corporatisation of BSE and corresponding amendment in the relevant provisions of the Income Tax Act, the Membership Card of the erstwhile BSE ceased to exist and the cost of shares of the recognized Stock Exchange allotted in lieu of the card under the scheme of demutualization shall be the cost of acquisition of original membership of the Stock Exchange; whereas the cost of the capital asset being trading or clearing rights of recognized Stock Exchange acquired under the said scheme shall be deemed to be nil. As regards the membership of FEDAI is concerned, despite specific query from the Bench about the status of the membership card of FEDAI; whether the same development/charges as taken place as in the case of membership card of BSE, the ld AR has expressed his inability to say anything and requested that the matter may be remanded to the record of the CIT(A) for consideration of all the relevant facts and decide the same – Decided in favor of the assessee by way of remand to AO Deduction for payment of penalty on violation of bye-laws of Stock Exchange - held that:- penalty for short payment of margin money was a compensatory payment under rule of stock exchange which is allowable as revenue expenditure. Membership fee paid to Dubai Gold and Commodity exchange. - Held that:- the membership expenditure is undoubtedly a capital in nature. The membership of DGCX was once for all and the expenditure would have an enduring benefit. Therefore, in case the assessee would have taken membership, the entire membership fee was to be treated as a capital expenditure.
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Customs
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2012 (4) TMI 414
Import of old, used and discarded rubber tyres – Department enhanced value of tyres, imposition of redemption fine in lieu of confiscation and penalty as the tyres imported were in sound condition, hence usable after working, proceedings initiated - Tribunal called for revision of classification as only a small quantity of 3,142 tyres was found to be in good condition and not on entire consignment – Held that:- Since a small quantity of less than 10% has been found to be usable, it cannot be said that the appellants have intentionally mis-declared the classification - what has been purchased apparently is a stocklot and in such purchase, some good quality tyres would always be found - redemption fine in lieu of confiscation on the ground of mis-declaration of classification also cannot be upheld and no penalty under Customs Act - remand the matter to the original adjudicating authority who shall decide the duty payable on 3142 tyres - once it has been held that the value arrived at on the basis of opinion of the re-traders, cannot be accepted and the valuation has not been done in accordance with the valuation rules, the Department cannot proceed to revise the value - Commissioner is directed to re-consider the issue
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2012 (4) TMI 391
Application for benefit of DEPB scheme rejected – Hon'ble High Court directed not to deny the benefit of conversion but the Commissioner passed order rejecting the request - Held that:- Policy Circular No.44(RE-2010)/2009/14, dt.1.11.2011 only directs the regional authorities to decide the admissibility of DEPB benefit in cases where the Commissioner of Customs has already allowed the conversion - in case of shipping bills filed prior to 22.4.97, DEPB benefits could not have been allowed at all since Porbandar was not a port specified for export under DEPB shipping bills - the appellant has failed to follow the requirements of Customs Public notice as none of the shipping bills were assessed by the Assistant Commissioner and the shipping bills were not filed 3 days in advance of shipment at the port of clearance – as per CBEC Circular No.10/1997-Cus, dt.17.4.97, the shipping bills for export made under DEPB scheme should bear Blue Colour Strip at the top and should indicate the serial number of the export product in the Public notice issued by DGFT specifying the rate of entitlement and the rate claimed - all substantive conditions for claiming benefit of DEPB scheme were not fulfilled conversion cannot be allowed – against assessee.
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2012 (4) TMI 390
Import of goods declared as M.S. Seamless pipes - Department found the goods were of used nature – confiscation of goods and imposed a redemption fine and penalty – Held that: - The inspection done in front of independent panchas witnesses, and 11 photographs of imported goods depicts the consignment of pipes of used nature - the appellant has not produced any evidence to come to a conclusion that the pipes imported by him are sold as capital goods – redemption fine imposed by adjudicating authority is reduced from Rs.1,20,000/- to Rs.75,000/- (Rupees Seventy Five Thousands only) and penalty is reduced from Rs.60,000/- to Rs.30,000/-against assessee.
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Corporate Laws
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2012 (4) TMI 413
Setting aside of the order contending that the complaint was filed on 7th May, 2002 whereas as per Section 468 Cr.P.C. cognizance on the complaint of the Respondent could have been taken latest by 10th April, 2000 as allegedly the wrong statement was signed on 11th April, 1997 – Held that:- The allegations in the complaint relate not only to the prospectus but also of filing balance-sheet as on 31st March, 2000 and 31st March, 2001 showing diversion of funds being advances recoverable without any explanation in the balance-sheet - the complaint clearly stated all the mis-statements made in each financial year - the date of knowledge is upto the financial year 31st March, 2000 and 31st March, 2001 regarding diversion of funds and the complaint was filed on 7th May, 2002 the complaint was not barred by limitation - the limitation arises from the date of knowledge of the offense committed - petition dismissed.
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2012 (4) TMI 389
Application under Section 446(2)(b) by Official Liquidator on behalf of the Company in liquidation – demand of a sum of Rs. 6,47,394/- with interest thereon from the respondent company - the receivable ledger for the period 1.6.2000 to 01.04.2004 reflects the said amount as against the name of the respondent with reference to the invoices under which the machines are supplied to the respondent – Held that:- the invoices claimed as dues in the statement maintained by the Company-in-liquidation are the very same invoices, the supplies made thereunder have been rejected - said invoice is found in Ex.P2 for the period commencing from 01.06.2000 and the rejection of the same is indicated in the statement maintained by the respondent at Ex.D2 for the period from 01.07.2000 to 31.07.2000 - claim as made in the application has not been proved.
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Service Tax
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2012 (4) TMI 427
Whether the respondents were doing any service for the prospective buyers or were doing the construction activity for themselves - Service tax liability confirmed against the Respondents but set aside by the Commissioner (Appeal) – Held that:- The period involved was prior to enactment of Finance Act, 2010 - the initial agreement between the promoters/builders/ developers and the ultimate owner is in the nature of 'agreement to sell' and the property remains under the ownership of the seller - any service provided by such seller in connection with the construction of residential complex till the execution of final sale deed would be in the nature of 'self-service' and consequently would not attract service tax - decided in the case of Commissioner of Service Tax Versus Shrinandnagar-IV Co. Op. Housing Society Ltd (2011 -TMI - 207838 - GUJARAT HIGH COURT) - against Revenue. Claim refund of service tax paid - Commissioner (Appeal) allowed the appeals as was no unjust enrichment involved – Held that:- No basis on the Commissioner (Appeal) point that the principle of unjust enrichment was not raised in the SCN and hence it cannot be raised in the adjudication order - No clear evidence is produced to depict that the prices were agreed to with the buyers before they started paying service tax and the price remained the same without any increase on other pretexts till the delivery of the flat to the prospective buyers - that the Respondents were not given opportunity by the adjudicating authority to substantiate their claim that principle of unjust enrichment will not apply - does not propose to decide the issue without any finding by either of the lower authority – remand the matter to adjudicating authority for examination of all evidences produced by the Respondents to prove their claim
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2012 (4) TMI 426
Service Tax liability payable under the category of Man Power Recruitment & Labour Supply Services, and interest thereof and also penalties u/s 77 and 78 – Held that:- Dismissal of the appeal on the ground that there is no reply filed by the appellant before adjudicating authority and the first appellate authority cannot be accepted reason - if there is no reply filed before adjudicating authority, those submissions made before the appellate authority would be considered as submissions and not additional submissions -assessee is directed to file a reply to the Show Cause Notice within 30 days from the date of Order to the adjudicating authority - in favour of assessee.
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2012 (4) TMI 425
Claim of refund rejected on the ground that according to the Clause 2(f) of Notification No.17/2009-ST, dt.7.7.09, the claim of refund has to be filed within 1 year from the date of export of the goods – assessee submitted that in the case of Service Tax, the refund claim cannot be filed without paying the Service Tax and therefore, 1 year period is required to be counted from the date of payment of Service Tax – Held that:- It is settled law that the notifications issued by Government have to be considered as a part of statute - the Notification No.17/2009-ST is a self-contained exemption notification and provides that the exemption is provided by way of refund of Service Tax paid in respect of export - the Tribunal, being a creation of law, cannot go beyond the provisions of law and statutes and give relief – decided case of LGW Ltd Vs CST Kolkata (2010 - TMI - 77744 - CESTAT, KOLKATA)- in favour of revenue.
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2012 (4) TMI 409
Denying Cenvat Credit availed in respect of goods transport services for transportation of empty container to factory for stuffing of export final products and re-transportation to the port of the export - imposing the interest and penalty on the appellant – Held that:- The appellant is liable for availment of CENVAT Credit in respect of freight charges paid by the appellant for bringing in the empty containers as held in CCE, Jaipur vs. Nitin Spinners Ltd.( 2009 - TMI - 76078 - CESTAT, NEW DELHI) stating that containers are used for packing the final products thus can be treated as inputs used by the manufacturer in or in relation to the manufacture of final products - Notification no. 18/2009-ST dated 07.07.2009 exempts the taxable service received by an exporter in respect of the transport of goods from place of removal to port of export therefore,appellant is entitled to avail credit of Service Tax in respect of these charges also – in favour of assessee
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2012 (4) TMI 407
Eligibility of the respondent for refund under Notification No.41/2007-ST, dt.06.10.2007 - Commissioner (Appeals) has allowed the refund claim in respect of Service Tax paid on Port services, Terminal Handling Charges, CHA services, GTA services, Wharfage charges – Held that:- The services such as Stevedoring, transporting the cargo after unloading from the vessel, are covered under the Port service - once the Service Tax was paid under the category of Port service, at the end of the receiver of the service the eligibility for the credit cannot be questioned - the decisions in the case of Western Agencies Pvt.Ltd. Vs CCE Chennai (2011 - TMI - 206087 - CESTAT, CHENNAI - LB), covers the services in respect of which the refunds have been claimed by the respondents - as regards CHA service and GTA service it is clear that the respondents are eligible for CENVAT Credit upto the place of removal and in the case of export on FOB basis, the place of removal has to be taken as Port – against revenue.
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2012 (4) TMI 406
Penalty u/s 76 on delayed payment of Service Tax – Held that:- No penalty can be imposed if the Service Tax liability and interest thereof stand deposited under the Section 73(3) - Show Cause Notice even for penalty cannot be issued if Service Tax liability and interest thereof has been met – decided case Krishna Security & Detective Services Vs CST (2011 - TMI - 211577 - CESTAT, AHMEDABAD) – against revenue.
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2012 (4) TMI 405
Service Tax liability under the reverse charge mechanism – Held that:- As the provisions of Section 66A of Finance Act, 1994 were brought into play w.e.f. 18.04.2006 no liability arises of payment of service tax - the issue is no more res-integra - as decided by Hon'ble Supreme Court in the case of Indian National Shipowners Association Vs UoI (2010 - TMI - 78723 - Supreme Court of India) – in favour of assessee.
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2012 (4) TMI 404
Setting aside the penalties under Section 76 & 77 by first appellate authority – Held that: - For the period October 2004 to March 2006 photocopies of the Service Tax returns filed have been produced depicting that it has been filed with Superintendent of Service Tax, Range Gandhidham - the same has been filed in time and hence no penalty can be imposed under Section 77 - For Quarter July 2006 to September 2006 Form ST-3 return produced by the assessee specifically indicating the taxable service rendered from said Quarter is ‘Nil’ - if there are no services rendered during the relevant period there cannot be any demand of Service Tax liability and consequently no delayed payment – against revenue
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2012 (4) TMI 386
Whether the appellant is liable to discharge the Service Tax liability on the commission paid to the commission agents situated abroad for procurement of sales orders under reverse charge mechanism from 09.07.04 to 15.06.05 – Held that:- As the provisions of Section 66A of Finance Act, 1994 were brought into play w.e.f. 18.04.2006 no liability arises of payment of service tax - issue is decided by Hon'ble Supreme Court in the case of Indian National Shipowners Association Vs UoI (2010 - TMI - 78723 - Supreme Court of India) – in favour of assessee. Demand of CENVAT Credit on Service Tax on the outward transportation – Held that:- The judgment of Larger Bench of the Tribunal in the case of ABB Ltd Vs CCE (2010 - TMI - 202803 - CESTAT, BANGALORE) held that the CENVAT Credit on the Service Tax paid on outward transportation is related to the business and is covered under the definition of input services under Rule 2(l) of CENVAT Credit Rules, 2004 ,thus squarely cover the issue in their favour of assessee.
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Central Excise
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2012 (4) TMI 412
Shortages of raw material and finished goods noticed at Factory premises - Director of the company present at the time of stock checking accepted the shortages - further follow-up statements of the director admitted the illicit clearances of the finished goods and raw materials - confirmation of demand of duty, interest thereof and equal amount of penalty on the assessee-appellant, and penalty imposed on the individual appellant Rs.50,000/- Held that:- the statement of director present at the time of stock checking clearly indicates that clandestine removal of the raw materials as well as the finished goods have taken place and the amount for the same received in cash, thus the lower authorities were correct in coming to the conclusion that the appellant is liable to discharge duty liability on such clandestinely removed goods - benefit of Section 11AC to the appellant company is correct, legal and does not suffer from any infirmity - penalty imposed on the individual appellant, i.e Director Rs.50,000/- is reduced to Rs.25,000/-
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2012 (4) TMI 411
Whether equivalent amount of penalty needs to be imposed on the appellant under the provisions of Section 11AC - the appellant has accepted the duty liability on the goods captivity consumed and discharged the same prior to issuance of Show Cause Notice – Held that:- Assessee has complied with the first proviso of Section 11AC by paying the amount prior to the raising of demand is eligible for the provisions of Section 11AC which talks about the discharge of 25% of duty liability as penalty if it is paid within 30 days from the date of the order of the Tribunal –as decided in case of CCE, Ahmedabad Vs. Akash Fashion Prints Pvt. Ltd. (2009 - TMI - 33022 - GUJARAT HIGH COURT) – in favour of assesee.
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2012 (4) TMI 410
Rejecting the refund claim filed by the assessee for refund of duty paid and not collected from their purchasers - the refund claim has arisen on the ground that the appellant was not supposed to discharge duty liability on the medicines which were cleared from the factory premises as they were exempted – Held that:-Chartered Accountant’s certificate concluding that there was non-passing of the incidence of duty to the buyer is produced for first time - this certificate was not produced before lower authorities the same needs to be considered which is first defense of the appellant - set aside the orders of lower authorities and remand the matter back to re-consider the issue afresh in the light of the certificate issued.
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2012 (4) TMI 408
Whether the cables which were cleared in running length of 25 and 100 meters can be considered as parts, components or assembly of automobile – Application for waiver of pre-deposit of duty interest and penalty - Held that:- The cables manufactured and cleared in running length cannot be considered as parts of battle tanks and not eligible for benefit of notification which grants exemption from payment of duty to parts of battle tanks – decided in case of Incab Industries vs. CCE (2000 -TMI - 50339 - CEGAT, EASTERN BENCH, KOLKATA) - the amount already deposited is sufficient for hearing of the appeal - Pre-deposit of the balance of duty, interest and penalty is waived and recovery thereof stayed during the pendency of the appeal - in favour of assessee.
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2012 (4) TMI 388
Search at factory premises of the appellant – shortages of finished goods noticed – levy of demand and interest with equivalent amount of penalty u/s 11AC r.w.r. 25 of Central Excise Rules, 2002 and penalty on the partner of the assessee – Held that: - Invoices issued by appellant were for CTD bars of various sizes and dimensions recorded in RG-1 during the period in question - daily stock account maintained during this period the opening stock indicated 585.293 MTs which is the closing balance of stock of the finished goods on the date of visit of the officers to premises - if the appellant had taken the opening stock as the same as was on the date of visit of the officers and had cleared finished goods on payment of appropriate duty, it cannot be said that the duty liability arises - there cannot be demand of duty on the same product, one by adjudication order and another by way of discharge of appropriate duty by preparing duty paying invoices - set aside the duty liability, interest and penalty on the said amount. Shortage of waste & scrap – Held that: - the appellant has not produced any evidence for clearances of said waste & scrap subsequently on discharge of appropriate duty – uphold the demand along with interest - the appellant is liable to be penalized under Section 11AC to the equivalent amount can discharge an amount of 25% as penalty, provided he discharges entire duty liability along with interest and 25% of the duty amount as penalty within 30 days from the receipt of order. Penalty imposed on the partner – Held that: - the penalty imposed on the partner is reduced from Rs.1, 50,000/- to Rs.25, 000/-
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2012 (4) TMI 387
Polymer Modified Bitumen (PMB) and Crumbled Rubber Modified Bitumen (CRMB) cannot be treated as Bituminous mixtures falling under Chapter sub-heading No.27150090 and shall continue to be classified under Chapter sub-heading No. 27132000 – as decided by Hon'ble Supreme Court favoring the order of the Tribunal in appellant s own case – Held that:- the Revenue is in appeal against the Order-in-Appeal wherein the first appellate authority the judgment of the Tribunal in appellant's own case - since the Apex Court has upheld the order of the Tribunal in respect of very same assessee, no merit in the appeal filed by the Revenue - against revenue.
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2012 (4) TMI 385
Claim of interest on refund as Rule 5 of CCR, 2002 - exported Copper Cathode and Copper Rods without payment of duty but under Letter of Undertaking in place of bond for period May 2002 to December 2002 and April 2001 to August 2001 - the assessee bought raw material Copper Anode from their sister concern - assessee claimed interest to be paid on the refund claim filed by them on 29.09.01 and 31.01.03 – Held that:- The refund has been ordered under Rule 5 of the Rules and there was a delay in sanctioning the refund the provisions of Section 11BB of the Act would clearly be attracted as rightly held by the Tribunal - entitlement to interest on delayed refund of Cenvat Credit arises - interest at the appropriate rate as provided under the law under Section 11BB will be payable to the appellant from and after 3 months of the date of refund claim filed by them and on the amount calculated on the reduced balances – against revenue
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2012 (4) TMI 384
Stay Petition for the waiver of pre-deposit of duty, interest and penalty confirmed by the adjudicating authority and upheld by the first appellant - the applicant didn't appeared - Held that:- An identical issue decided by this Bench in the case of Shri Manohar Mali Vs. CCE Surat - impugned order set aside and matter is remanded back to adjudicating authority to reconsider.
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2012 (4) TMI 383
Stay Petition - adjudicating authority as well as the first appellate authority has confirmed the demand against the appellant as appellant has availed CENVAT Credit on ineligible inputs - Held that:- The issue is squarely covered by the judgment of the Larger Bench of the Tribunal in the case of Vandana Globals Vs. CCE Raipur (2010 - TMI - 76147 - CESTAT, NEW DELHI (LB) allowing the appeal of the Revenue against the assessee - Goods like cement and steel items used for laying 'foundation' and for building 'supporting structures' cannot be treated either as inputs for capital goods or as inputs in relation to the final products and therefore, no credit of duty paid on the same can be allowed under the CENVAT Credit Rules for the impugned period – against assessee.
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2012 (4) TMI 382
Confirmation of the demand of duty, interest and equivalent amount of penalty with imposed penalty on the director of the company – clandestine removal - Held that:- Assessee was denied grant of the copies of relied upon documents for upholding the charge against him - the adjudicating authority passed an ex-parte order upheld by first appellate authority without considering their grounds of appeal – though assessee did not have any documents with them when they filed the appeal before the first appellate authority and had proceeded only on the basis of Show Cause Notice and the Order-in-Original the adjudicating authority has erred in confirming the demand without following the principles of natural justice - remanded matter back to adjudicating authority to reconsider it afresh - against revenue
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Indian Laws
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2012 (4) TMI 424
RTI Application denied for want of information about some adverse entries allegedly made in the Annual Confidential Report of Ms. Jyoti Balasundram, Member/CESTAT by the President of the CESTAT for the year 2000-01 and follow-up action thereupon - Held that:- Since the petitioner wanted information contained in personal files relating to ACRs, this information was of personal officers viz-a-viz person who is not an employee of the Government of India and seeking such an information as a matter of public was accordingly treated as “third party information” - when “third party” information regarding ACRs was sought, the procedure outlined under Section 11(1) under RTI Act had to be followed i.e. opinion is formed by the CIC that the disclosure of information would be in public interest - the procedure under Section 11(1), which is mandatory has to be followed which includes, giving of notice to the concerned officer information whose ACR is sought for and if that officer pleads private defense that defense has to be examined while deciding the issue - the learned Single Judge has rightly held that except in cases involving overriding public interest, the ACR record of the officer cannot be disclosed - Since the matter was not looked into by the CIC, the learned Single Judge remitted the case back to the CIC – appeal rejected.
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