Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 6, 2012
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Small Savings Schemes - Public Provident Fund Scheme, 1968 (PPF, 1968) and Senior Citizens Savings Scheme, 2004 (SCSS, 2004) - Revision of interest rates. - Cir. No. H- 6506/15.02.001/2011-12, Dated: April 3, 2012
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Section 119 of the Income-tax act, 1961 - income-tax authorities - instructions to subordinate authorities - order under section 119(1). - Cir. No. F.No.225/138/2011/ITA.II Dated: March 30, 2012
Customs
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Hazardous Waste (Management, Handling and Transboundary Movement) Rules, 2008, issued under the Environment (Protection) Act, 1986 (29 of 1986). - Ntf. No. 31/2012-Customs (N.T.) Dated: April 4, 2012
FEMA
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Authorised Dealer Category II Permission for additional activity and opening of Nostro account. - Cir. No. 104 Dated: April 4, 2012
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Data on import of Gold Statements Modification . - Cir. No. 103 Dated: April 3, 2012
Indian Laws
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FM to Hold Meeting with Representatives of Jewellery Manufacturers from Major Cities on Friday 6th April, 2012.
Case Laws:
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Income Tax
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2012 (4) TMI 496
Deletion of penalty u/s 271(1)(c) LTCG on sale of factory land and building at Siliguri - deduction u/s 54G denied and penalty imposed on ground that area where assessee's undertaking was located was not declared to be 'urban area' Held that:- Claim is declined on the ground that the place where assessee's industrial undertaking is located has not been declared to be an 'urban area' - something which is highly technical and it cannot be against the preponderance of probabilities, particularly in the light of legal advice rendered to the assessee, that the assessee made the error bona fide. As long as there is a reasonable explanation for the conduct of the assessee, the onus of the assessee stands discharged. CIT(A) was justified in deleting the penalty Decided against the Revenue.
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2012 (4) TMI 495
Assessee firm of solicitors and advocates- in reassessment proceedings AO noted that the assessee has made payments to various lawyers for their professional services, but has not deducted tax at source under section 194J such payments are to be disallowed under section 40(a)(ia) - assessee's contention that the amounts paid to the lawyers were reimbursed by assessee's clients, and, therefore, the amounts paid to the lawyers were never claimed as a deduction in the first place - It was then contended that when deduction is not claimed in respect of these amounts, there cannot be any occasion to invoke section 40(a)(ia)- It appears from the copy of TDS certificates that the appellant had raised the composite bills for entire work on its clients and was accordingly paid after deduction of tax Held that:- As a corollary to this position, unless a deduction is claimed in respect of the said amount, under sections 30 to 38, the disallowance under section 40(a)(ia) cannot come into play at all - the manner in which taxes have been deducted by the end user of the legal services cannot be determinative of whether the assessee has claimed it as reimbursement or no - restored to the file of the Assessing Officer for necessary verifications on this factual aspect.
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2012 (4) TMI 494
Exercise of extraordinary jurisdiction conferred by Article 226 of the Constitution Of India- Petitioner is engaged in the business of turn key projects - a warranty clause providing for warranty of performance - a notice u/s 143(2) of the Act issued in respect of the assessment years 1995-96 and 1996-97 stating that there were reasons to believe that the petitioner s income, chargeable to income tax, as estimated assessment for the aforesaid assessment years, within the meaning of Section 147 of IT Act - petitioner submitted that the said notices had been issued beyond the period of four years and the present assessment proceedings are based only on a change of opinion Writ was filed - Held that:- the assessing authority had issued the impugned notices on the ground that there were reasons to believe that certain income chargeable to tax had escaped assessment within the meaning of section 147 - It is for the petitioner to raise its objections, if any, in respect of the impugned notices - Even assessing authorities concerned had accepted the methods of accounting for past years, it is for the assessee to substantiate its claim by furnishing the relevant pursuant to the impugned notices issued u/s 148 - when an efficacious alternative remedy is available under a statute, this Court would not exercise its extraordinary jurisdiction, under article 226 of the constitution of India - the writ petitions stand dismissed - open to the petitioner in the above writ petitions to raise its objections within a period of four weeks from date of Order.
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2012 (4) TMI 490
Interim stay of demand assessee engaged in real estate business following completed contract method addition of Rs 1.94 crores made under scrutiny assessment stay petition filed before CIT got rejected during hearing of writ petition, petitioner submitted to pay Rs 40 lacs for disposal of the appeal Held that:- Petitioner is directed to deposit said sum within a period of 4 weeks from the date of receipt of a copy of this order. Thereon, third respondent shall hear and dispose of the appeal on merits within a period of four months.
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2012 (4) TMI 489
Recovery of duty - Petition to defer recovery proceedings initiated during pendency of appeal against the order and stay petition - Held that:- 2nd respondent is directed to decide on stay petition within a period of one month. Meanwhile further proceedings for recovering the amount due under said orders will be kept in abeyance.
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2012 (4) TMI 488
Jurisdiction Power of Commissioner - Assessees claim in respect of deductions on account of payment of bonus was allowed under Section 43B of the Act - said claim had been allowed in the assessment year 1994-95 also - proceedings initiated for rectification under Section 154/155 were dropped - initiation of suo motu revisional jurisdiction by seeking to revise order of assessment in lieu of the interest of Revenue as the assessee had claimed the deduction twice CIT set aside the order of assessment and directed re-computation - the assessee approached Court under Article 226 of the Constitution - writ petition was opposed and it was submitted that merely because rectification proceedings were dropped, did not affect jurisdiction of the Commissioner under Section 263 Learned Single Judge held that the writ petition could be entertained as order of the Commissioner was without jurisdiction - Held that:- the learned Single Judge was not justified in interfering with the order of the Commissioner passed under Section 263 of the Act - an error was noticed by the Commissioner in the order of the AO and thus it could not be held that such an order was beyond the revisional jurisdiction of the Commissioner - allow appeal, set aside the impugned order passed by the learned Single Judge and dismiss the writ petition filed by the respondent assessee.
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2012 (4) TMI 487
Validity of reopening of assessment beyond 4 years Trust - A.Y. 2004-05 Revenue contended that provision made in the accounts cannot be treated as income applied to the objects of the trust hence escapement of income not entitled for double deduction by way of claiming both capital expenditure as application of income and depreciation on capital assets Held that:- Second contention of revenue is not sustained, since same has been decided in favor of assessee for A.Y. 2003-04. Further, since Income & Expenditure A/c clearly reflects provision for doubtful accounts it is ex facie, evident that there was no suppression of material facts by the assessee. Therefore, in absence of failure on the part of the assessee to disclose fully and truly all material facts, notice issued u/s 148 is quashed Decided in favor of assessee.
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2012 (4) TMI 486
Appeal by Revenue against the Tribunal - challenging the order that interest under section 234B and 234C of the Act cannot be levied against the assessee as the computation of income has been made under Section 115JA of the Act Held that:- The pre requisite condition for applicability of Section 234B is that the assessee is liable to pay tax under Section 208 and the expression "assessed tax" is defined to mean the tax on the total income determined under Section 143(1) or under Section 143(3) as reduced by the amount of tax deducted or collected at source - The expression "assessed tax" is defined to mean the tax assessed on regular assessment which means the tax determined on the application of Section 115J/115JA in the regular assessment - there is no exclusion of Section 115J/115JA in the levy of interest under section 234B appeal of revenue accepted.
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2012 (4) TMI 129
Applicability of Section 35AB to expenditure incurred on preliminary survey resulting in agreement for transfer of technical know how Assessee company entered into agreement with foreign company for conducting preliminary survey, subsequently entered into collaboration agreement with same foreign company for transfer of technical know-how payment to be made in installments A.Y. 1994-95 - Held that:-If a technical collaboration agreement were not to culminate as a result of the preliminary survey which was carried out for the assessee, obviously there would be no transfer of technical know-how. Therefore, CIT(A) and Tribunal have rightly held non-applicability of Section 35AB since amount was paid for preliminary survey and not for transfer of technical know-how. However allowable u/s 37. Further, though the payment for know-how was liable to be effected in installments, it was nonetheless a fixed sum which had been agreed between the parties and was, therefore, a lump sum within the meaning of Section 35AB expenditure on know-how eligible u/s 35AB Decided against the Revenue. Matter related to deletion of addition on valuation made by A.O, is restored back to Tribunal to decide afresh. Also, matter related to deduction of lease rent and depreciation on leased assets for computing eligible profits u/s 80HHC is restored back to A.O.
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2012 (4) TMI 128
Premium paid on redemption of debentures capital expenditure vs revenue expenditure - NCD issued in F.Y. 1984-85, liable to be redeemed in F.Y. 1991-92 at a premium of ₹ 15 lakhs - AY 1992-93 Held that:-Amount paid towards premium is the liability which the assessee incurred for the purpose of its business in order to obtain the use of the funds for the period covered by the issue of NCD. Therefore in view of decision in case of Madras Industrial Investment Corporation Ltd v CIT (1997 (4) TMI 5 - SUPREME Court) actual premium paid upon the redemption of the debentures would have to be classified as revenue expenditure Decided in favor of assessee. Set off of short term capital loss against short term capital gain arising on sale of debentures and units - deduction u/s 80M without adjusting the loss on sale of shares Held that:- Same has been decided in favor of assessee in view of decision in case of CIT Vs. Walfort Share and Stock Brokers P. Ltd. (2010 (7) TMI 15 - SUPREME COURT) Deletion of addition by Tribunal in value of inventory and goods in process made by A.O Held that:- Matter is restored back to Tribunal for deciding afresh on the finding that there was no independent application of mind by the Tribunal.
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2012 (4) TMI 127
Debenture Redemption Reserve - whether qualify as reserve for the purpose of Section 115JA - AY 1997-98 Held that:- Supreme Court in National Rayon Corporation Ltd. Vs. CIT (1997 (7) TMI 113 - SUPREME Court) have held that basic principle is that an amount set apart to meet a known liability cannot be regarded as reserve. Where a company issues debentures, the liability to repay arises the moment the money is borrowed. The mere fact that a Debenture Redemption Reserve is labeled as a reserve will not render it as a reserve. Consequently, Tribunal was correct in holding that the Debenture Redemption Reserve is not a reserve within the meaning of Explanation (b) to Section 115JA Decided in favor of assessee. Dis-allowance of pre-operative expenses by A.O. treating it to be capital expenditure Held that:- Tribunal deleted the dis-allowance in view of its earlier decision in relation to AY 85-86 confirmed by this court treating Pre-operative expenses viz salary and wages, staff welfare expenses, power, travelling, legal and professional fees and miscellaneous expenses to be revenue expenditure No infirmity found in the order Decided in favor of assessee.
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2012 (4) TMI 126
Compensation for foregoing right to acquire the shares - the company received Rs.10 Crores towards compensation for waiving the right to receive the equity shares which was admitted under the head "Other Income" in the profit and loss account whereas in the computation of income the assessee company claimed this receipt to be capital in nature -It was the contention of AR that, there was no cost of acquisition incurred by the assessee for obtaining the rights under the agreement cited earlier in this order and so there could be no capital gains assessable in that connection - Held that :- the entire amount of Rs.10 crores received by the assessee company towards compensation for waiver of rights to receive the shares of KPCL is to be brought to tax as capital gain to be computed as long term or short term depending upon the investments/advances as made by assessee Recalculation of deduction under section 80IC - The AO has pointed out in the assessment order that the assessee has clearly deflated salary expenses, raw material expenses, etc. with respect to Dehradun to artificially inflate the profit - the formulations in Mekaguda unit cannot be sold in the market, it is obviously not practical for him to calculate the prices of inputs on the basis of market prices - Held that :- it is most appropriate to consider the actual cost as per cost records maintained by the assesee and thereafter assessing office consider the profits on these transaction as compared to other industries in similar line or if there is no comparable, fix reasonable percentage of profit depending upon market condition prevailing in the similar line of industry. Thus to set aside this issue to the file of assessing office to bring the comparable cases on record and redo the assessment on this issue. addition made by the assessing office towards interest - The assessee company had advanced certain loans to M/s Natco Organics Limited in the earlier years and the assessee has not admitted any interest - Held that :- Assessing Officer does not have any basis on the addition made for the interest - The issue is covered in favor of the assessee as that interest has to be charged from the date on which there is a resolution of the Board of the company stating that interest has to be charged.
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2012 (4) TMI 125
Disallowance u/s 14A - Assessing Officer, while making disallowance under Section 14A, had observed as under: In the computation of income assessee has shown a dividend income of Rs.1,12,89,548/- and claimed the same as exempt u/s 10(33) of I.T. Act - The reply of the assessee has been considered and as per provisions of sec. 14A as mentioned above, the expense relatable to earning of exempt income are not allowable - CIT(Appeals), as observed above, held that the investment with reference to the applicability of section 14A should be taken as Rs.13,57,50,000/- and not as Rs.18,57,50,000/- after inter alia holding that the investment of Rs.5,00,00,000/- in bonds of ICICI Bank had not resulted in tax-free income - It is clear from the observations made by the Assessing Officer, in the assessment order, that his intention was to segregate and compute the disallowance to be made of expenses under Section 14A - Held that: the disallowance, if any, to be made by the Assessing Officer will not exceed the disallowance which was made in the original assessment order as reduced by the CIT(Appeals) - Decided in favor of the assessee by way of remand to AO
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2012 (4) TMI 124
Assessee in default - TDS u/s 194I - Central Board of Direct Taxes in Circular No.715 dated 8th August, 1995 - A plot of land was purchased by Late Sri Pyare Lal long back on which a building was constructed, which was numbered as 141/1, Hanuman Road, Ward -3, Shamli, district Muzaffarnagar - Fourteen persons, including M/s. Atma Ram and Brothers, executed a registered lease deed on 2nd January, 1986 giving lease of 6290 sq.ft covered area on the ground floor of the aforesaid property to the Manager, State Bank of India, Hanuman Road, Shamli, Muzaffarnagar - The covered area of 3287 sq.ft of the aforesaid property on the ground floor was given to the Senior Manager, Oriental Bank of Commerce vide registered lease deed dated 17.10.1997, which was valid for 20 years at the monthly rent of Rs.8904.50 per month inclusive of house tax and all other taxes with a clause that after every five years there would be an increase of 15% in the rent - On a reading of the Section 194-I and the scope and effect elaborated by the Board it is clear that Section 194-I was inserted to bring more persons in the tax net and it also helps in the reporting of correct income by way of rent - It has come on record that after the letter written by one of the coowners that the premises is owned by 15 co-owners and their shares are definite, the Bank has been paying rent to each co-owner by a separate cheque, the total of which did not exceed Rs.1,20,000/- a year - Decided in favor of the assessee
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2012 (4) TMI 123
Income from 'lottery' - revenue filed an appeal against the order of Tribunal as assessee was liable to pay tax on the prize of 1Kg. Gold won by him Section 2 (24)(ix) of the Income-tax Act, 1961 - assessee subscribed to PPF which formed part of Small Savings Scheme of the Government - lucky coupons were issued to encourage investments and the assessee was also issued a lucky coupon which won the prize of 1Kg. Gold - assesse contented that gold received by him did not amount to winning from lottery because for the purpose of lottery the assessee has to purchase a ticket and he loses the amount spent on purchase of lottery ticket but in case of contribution to small savings scheme a person obtains a return on his investment and there is no risk of loss on the amount contributed - Held that :- It may be observed that all the categories which are brought to tax in s. 2(24)(ix) concerns those schemes where there was an element of risk meaning that a person could lose part of his money except in the case of cross-word puzzles which has been specifically mentioned therein - assessee has invested in PPF and his contribution and return at the fixed rate remain the same and will be given to the person on maturity of the scheme irrespective of the fact whether the person has won the prize or not. Therefore, there is no element of risk involve - amount realised would not fall within the provisions of Section 2(24)(ix) and cannot be brought to tax - question raised by the revenue is decided in favour of the assessee and against the revenue.
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2012 (4) TMI 122
Assessee in default - Time limitation - assessee had a successful GDR issue with nine times over subscription and allotted 6,613,750 GDRs inclusive of firm and optional GDRs being the maximum issue possible at a rate of US$ 7.56 per GDR - The work involved in the issuance of GDRs to international investors was carried out outside India and as indicated above, the distribution and marketing as also approaching target international investors all necessarily had to be done outside India - AO passed an order u/s. 195 of the Income Tax Act, 1961 (the Act) on 30/3/1995 holding that the payments made by the assessee to the non-resident Lead Manager's was in the nature of fees for Technical Services rendered and therefore, the assessee ought to have deducted tax at source on the payments so made - AO worked out the quantum of tax in respect of which the Assessee was to be treated as Assessee in default and the quantum of interest payable on tax not deducted at source as follows - It has also been submitted that the question of limitation in whatever manner it arises is a question of law and goes to the root of the appeal and jurisdiction of the Tribunal - The liability of the person liable to deduct tax is a vicarious liability and, therefore, he cannot be put in a situation which would prejudice him to such an extent that the liability would remain hanging on his head for all time to come in the event the Income-tax Department decides not to take any action to recover the tax either by passing an order under section 201 of the Income-tax Act, 1961, or through making an assessment of the income of the person liable to pay tax - no period of limitation can be read into the provisions if there is no period of limitation specified in the Act for taking action u/s. 201(1) or 201(1A) then no time limit can be read into those provisions - Decided in favor of the assessee
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2012 (4) TMI 121
Search and seizure of 4136.83 grams of gold from the business premises - Following the search and seizure, by Exts.P2 to P2(f) orders issued on 31/12/2010, assessment for the years 2003-04 to 2009-10 was completed under Section 153C of the Income Tax Act - Penalty u/s 271(1)C - the correctness of the stand taken by the respondents in refusing to release the gold to the petitioner has to be decided with reference to the pendency of the penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961 - the respondents do not contend that the petitioner had any existing liability and therefore, the first part of section 132B(1)(i) of the Act does not have any relevance - the contention of the petitioner is that the section entitles the respondents to apply the assets seized only towards existing liability, liability determined, penalty levied and interest payable - These orders itself stated that penalty proceedings under section 271(1)C of the Act are being initiated and accordingly such proceedings have been initiated and are pending - When statute recognizes the entitlement of the respondents to apply the asset seized towards the tax liability determined,which includes penalty, it is puerile to contend that the statute obliges the respondents to return the same on determination of the tax liability and before levying the penalty - Held that: the section entitles the respondents to retain the gold in question with them until penalty is levied and apply the same towards the liability so determined, provided the petitioner is in default or deemed to be in default
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2012 (4) TMI 120
Addition u/s 92CA(4) of Rs.1,93,48,372 - A reference u/s. 92CA(1) of the I.T. Act for the Assessment Year 2004-05 was made to the TPO for computation of Arm's Length Price (ALP) in relation to the international transactions carried out by the assessee - TPO noted that the assessee has used TNMM method and its OP/TC comes to 1.8%. By taking comparable margins as per Annexure-I, the TPO noted that the OP/TC ratio comes to 20.42% for the sample set - TPO vide notice dated 24.11.2006 asked the assessee to show cause as to why the mark-up earned by the assessee at 10% upon cost be not considered as under pricing of the services to the parent company as the industry is earning a mark-up of over 30% - It is only after this incomplete list showing lesser profit than the profit declared by the assessee was brought to the notice of the TPO that he excluded the 47 loss making companies to determine the mean average profit at 20.42% - the submission of the Ld. Counsel for the assessee that there is no basis for only excluding the loss making companies and not excluding the high profit making companies or companies which are not at all comparable considering their size, volume of turnover and other factors. In our opinion, the whole exercise of selecting the comparables by the TPO is not proper and is in a haphazard manner - Decided in favor of the assessee Regarding addition of Rs.1,13,84,034/- made by the AO on account of income received from the holding company treated as advance by the assessee deleted by CIT(A) - Held that: during the course of assessment proceedings the assessee has given a statement that it has received advance towards market research analysis services rendered during the year - Appeal is partly allowed by way of remand to AO
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2012 (4) TMI 119
Saty petition - Taking note of the pendency of appeals and stay petitions mentioned above, this writ petition will stand disposed of directing that the first respondent will consider and pass orders on Exts.P3 and P7 stay petitions - Petition is stayed
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2012 (4) TMI 118
Recovery of duty - Petition to defer recovery proceedings - appeal against the order/ rectification order and stay petition are pending consideration - Held that:- 2nd respondent is directed to consider stay petition filed within stipulated time. Meanwhile further proceedings for recovering the amount due under said orders will be kept in abeyance.
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2012 (4) TMI 117
Deduction u/s 80IA - Rule 18C[4] of the Income Tax Rules, 1962 - petitioner, by a letter dated December 9, 2005 informed the Assistant Commissioner of Income Tax that the time mentioned as "September, 2002" was a typographical mistake in the petitioner's earlier letter dated August 25, 2003 and the correct time to be read was "September, 2001 - according to the petitioner, the Board ought to have notified the industrial park on getting a copy of approval letter dated June 21, 2001 of the Commerce Ministry, which is annexed to the writ-application as Annexure: A - it is the duty of the Commerce Ministry to decide whether an industrial undertaking is complying with the conditions envisaged in the scheme and if the undertaking fails to comply with those conditions, it is the Commerce Ministry alone, which has the right to withdraw the benefit granted under sub-rule [2] of Rule 18C of the Rules - Held that: it is a fit case where the petitioner is entitled to the relief claimed in the application. We, accordingly, direct the Central Board of Direct Taxes to notify the petitioner's industrial park for the benefits under Section 80-IA in terms of Rule 18C[[4] of the Rules within one month from today without any further inquiry - Decided in favor of the assessee
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2012 (4) TMI 116
Royalty paid to foreign software Supplier Held that:- Consideration paid by the Indian customers or end-users to the assessee - a foreign supplier, for transfer of the right to use the software/computer programme in respect of the copyrights fells within the mischief of 'royalty' as defined under sub-clause (v) to Explanation 2 to Clause (vi) of section 9(1). See CIT v. Samsung Electronics (P.) Ltd (2011 - TMI - 208153 - Karnataka High Court) Decided in favor of Revenue
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2012 (4) TMI 115
Disallowance of Depreciation - appellant is a charitable institution under Section 12A acquired medical equipments with the surplus funds available AO held that the assessee claims expenditure for acquisition of assets claiming depreciation in the computation of income though the appellant enjoys a 100% write off of the cost of assets resulting in double deduction of capital expenditure leading to violation of the provisions of Section 11(1) assessee contented that the system of allowing depreciation was followed by the assessee for several years - Held that :- if the assessee treats expenditure on acquisition of assets as application of income for charitable purposes under Section 11(1)(a) and claims depreciation then in order to reflect its true income, the assessee should write back in the accounts the depreciation amount to form part of the income -assessee cannot be taken by surprise by disallowing depreciation which was being allowed for several years and to demand tax for one year after making dis-allowance - assessee should be allowed to write back the depreciation for this year and even for previous and then allow the same to be carried forward for application for subsequent years - appeal in favour of Revenue but by granting the relief to the assessee .
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2012 (4) TMI 114
Assessee filed a return declaring a loss - scrutiny with the service of notice u/s 143(2) of the Act - A.O noticed that the assessee had entered into international transactions with its A.E TPO suggested initiation of penalty proceedings u/s 271AA, 271G and 271BA - Ld. CIT(A) deleted the penalty levied by the AO as the appellant had submitted chronology of events before the TPO Held that:- In the penalty orders passed by the AO,there is nothing to suggest as to which particular information or document was not submitted by the assessee nor the exact nature of default has been brought out - the Revenue have not placed any material, controverting the findings of the ld. CIT(A) to enable take a different view in the matter appeal of revenue dismissed.
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2012 (4) TMI 113
Clerical mistake in filing return - return declaring nil income filed by the assesse - providing education and training for professionals in insurance and finance sector - service of a notice u/s 143(2)for scrutiny - A.O. noticed in the Tax Audit Report in Form 3CD that the prior period expenses totaling to Rs. 36,14,178/- were debited by the assessee under the different heads in the profit and loss account for the period ended 31.03.2006 - Show cause was issued as why the assessee did not add back aforesaid prior period expenses in the computation of income - the assessee submitted that the return filed originally contained some clerical mistakes and revised the computation of income, adding back the aforesaid amount of Rs. 36.14 lacs besides disallowing an amount of Rs. 2,17,344/- u/s 40(a) of the Act and claiming higher depreciation -The AO while accepting the revised computation of income added another amount of Rs. 7,000/- towards charity and donation and assessed loss - the AO initiated the penalty proceedings u/s 271(1)(c) of the Act in response to a show cause notice - After considering the reply to SCN, the AO levied penalty @100% of the tax evaded on the income as a result of aforesaid disallowances of Rs. 36,14,178/- and Rs. 2,17,344/- on the ground that the assessee furnished inaccurate particulars of income - Held that :- mere erroneous claim in the absence of any concealment or furnishing of inaccurate particulars, is no ground for levying penalty, especially when there is nothing on record to show that any material particulars were concealed or furnished inaccurate - appeal of revenue dismissed
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2012 (4) TMI 91
Validity of revisionary powers exercised by CIT u/s 263 exemption u/s 54F for LTCG on sale of shares granted by A.O. shares purchased on 21.04.2000 for Rs 19,536 sold on 02.05.2001 for Rs 6,36,640 increased price of more than 30 times in one year CIT suo-moto assumed jurisdiction on ground that AO failed to make any enquiry while accepting genuineness of the share transaction Tribunal set aside order of CIT Held that:- Jurisdiction u/s 263 in the present case has not been exercised merely on the ground that the A.O. should have gone deeper into the matter but by pointing out that the A.O. had failed to apply his mind in allowing the benefit u/s 54F by accepting the genuineness of the capital gain - Decided in favor of Revenue.
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2012 (4) TMI 90
Capital gain - the assessee had filed its return of income and had, amongst others, offered an income of Rs.11,15,44,005 as capital gains - in the instant case, that the return was filed by the assessee and the assessee disclosed a capital gain amount of Rs. 11,15,44,005 - A footnote if at all can be for the pur- pose of amplification or for further reference or any such thing, but not to indicate a stand contrary to the main thing - a footnote cannot guide or control a return which is filed by an assessee. A footnote if at all can be for the pur- pose of amplification or for further reference or any such thing, but not to indicate a stand contrary to the main thing - Held that: the instant case was not one of a principle of estoppel being put against the assessee to deny any examination but it was a more a case of non-production of relevant material by the assessee which would have compelled the Tribunal or the Appellate Commissioner to examine and opine on that and merely raising a ground is not a substitute for material to make good the ground - Appeal is dismissed
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2012 (4) TMI 89
Indo-German DDTA - Appeal by revenue CIT(A) stated assessee's income from ground handling and technical handling services is not taxable in India as the same is held to be covered by Article 8 of DTAA India and Netherlands - The Tribunal has observed that such services are to be considered part of business of assessee from operation of aircraft in international traffic assessee stated that Article 8(1) of DTTA propound that profit from the operation of aircraft in international traffic shall be taxable only in the contracting state in which the place of effective management of the enterprise is situated - Accordingly "international traffic" means, transport by aircraft operated by an enterprises which has its place of effective management in a contracting state except when the aircraft is operated solely between places in the other contracting state Held that:- that any receipt received by the assessee due to participation in the pool as provided in IATP manual and also explained in sub-article 4 of Indo-German DTAA will not be taxable in India under sub Article 1 of Article 8- The Indo-Netherlands treaty is similar to that of Indo-German and not in parity with Indo UK Treaty - appeal of revenue dismissed.
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2012 (4) TMI 88
Appeal against the order passed by the CIT(A) that the appellant is a Govt - institution established for public charitable purposes and ought to have considered exemption u/s 11 of the IT Act - the expenditure incurred by the appellant in the light of the provisions of section 36(1)(xii) of the Act delay of filing of return for 2003-04 and 2004-05 - The assessee filed petitions for condoning of delays - reasons for delay communicated were that assessee income was assessed under 143 and 147 being aggrieved filed an appeal and ld. CIT(A) disposed of the said appeal and the Secretary was not working at the relevant time - the matter was entrusted to other lawyer who not in the knowledge of the Income-tax matters, Commissioner and Director of Agriculture, Hyderabad advised to claim exemption u/s 11 of the IT Act and for this purpose seek registration of the AMC under section 12AA of the IT are required to file the returns of income, the Secretary was under the bonafide impression that once the registration is granted, it could claim exemption u/s 11 of the IT Act. Therefore, no appeal was filed before the Hon'ble ITAT against the appellate order of the ld. CIT(A) Held that:- the reasons advanced by the assessee do not show any good and sufficient reason to condone the delays of more than 1500 days - The delays are not properly explained by the assessee appeals filled by assessee dismissed
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2012 (4) TMI 87
Exemption u/s 54F - The assessee sold the property on 8-6-2006 and immediately thereafter, on 5-7-2006, purchased a landed property to construct a house for a consideration of ₹ 33,88,160 - the Civil Court granted injunction to the owners of the property and ordered status quo, which prevented the assessee from proceeding further in constructing the residential house - The expiry of the three-year-period from the date of sale of the property was on 8-6-2009 - Even though these circumstances were explained before the assessing authority, the claim of exemption made by the assessee under section 54F was rejected on the ground that the assessee has not constructed the residential house within the period of three years, which is mandatory as per the provisions of the Income-tax Act, 1961 - the learned counsel appearing for the assessee, argued that the sale proceeds were straightaway utilized by the assessee in purchasing the landed property to construct a residential house and it was on that basis that exemption was claimed under section 54F - intention of the assessee is very clear from the fact that within days of the sale of her old property, the assessee had purchased the new site for constructing a residential house - The purchase value of the property is more than the long-term capital gains taxable in the hands of the assessee - Held that: the entire amount spent by the assessee in purchasing the land should be construed as amount invested in purchase/construction of residential house - Decided in favor of the assessee
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2012 (4) TMI 86
Assessment under scrutiny - assessee had transferred as per the agreement goodwill to client which AO contested that it cannot be treated as a capital receipt and be treated as a revenue receipt and brought to tax under the head "Profit and Gains of Business'' Held that:- :- if the entire agreement is read as a whole there is no transfer of Goodwill at all - acquirer has not acquired the business name/brand name which is the main ingredients of Goodwill - said consideration is paid for sale, transfer and assigning the business, the network and benefits and obligations of pending contracts of the business and commercial rights associated with - consideration paid is not for the goodwill but it is for the assets, properties and rights of the transferor hence treated as capital receipt - in favour of assessee. Loss on shares disallowed by the assessing officer by invoking the explanation to Section 73 of the Act as the same amounted to speculative loss - Held that :- Section 73 deals with loss and speculative business - If a Company whose gross total income consists mainly of income which is chargeable under the heads "Interest on securities", the "Income from house property", "Capital gains" and "Income from other sources" and if such Company indulges in purchase and sale of shares then by a deeming provision that it is carrying on the speculation business is not attracted - Section 73 is not attracted and the assessing authority committed an error in disallowing the said deduction claimed by the assessee in favour of assessee.
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Customs
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2012 (4) TMI 493
Direction for release the goods - issues involved in this writ petition is covered by the order of this Court, wherein, this Court had directed the respondent therein to release the goods concerned subject to certain conditions Held that:- Release of goods is directed subject to conditions namely:(i)The petitioner shall pay the entire amount of duty, as per the declared value, which may be based on the contract or price etc.(ii)the petitioner shall provide sufficient bank guarantee in respect of 50% of the difference in duty, in favour of the Department,(iii)the remaining 50% of the difference in duty, the petitioner shall furnish personal bond to the satisfaction of the respondent(iv)adjudication process to be completed by respondents
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2012 (4) TMI 485
Petition filed for directing respondents to dispose of the refund claim application Held that:- Respondent is directed to dispose off refund claim on merits and in accordance with law, within a period of six weeks from the date of receipt of a copy of this order. No opinion is expressed on merits of the matter.
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2012 (4) TMI 484
Writ petition for a Mandamus directing the respondents to release the goods residue Wax imported vide Bill of Entry No.5345063 - third respondent on being forwarded the Bill of Entry alleged that the petitioner had undervalued the goods and withhold the goods - petitioner submits to release Residue Wax as it will melt causing great prejudice to the petitioner - petitioner claims that since Residue Wax is declared as freely importable goods, the value declared by the petitioner has to be accepted as correct as per the provisions of the "Customs (Provisional Duty Assessment) Regulations, 1963 - Held that:- only reason for non releasing of the goods is that the petitioner has undervalued the goods at USD 325 per MT - writ petition is disposed of - provisional release of the goods in regard to deposit with the custom authorities the duty payable on the value declared by them i.e. USD 325 Per MT and 50% of the differential duty
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Corporate Laws
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2012 (4) TMI 483
Companies Act 1956 - petitioning-creditor seeking immediate appointment of a provisional liquidator over the company non-payment of debt winding up petition filed by creditor in 1998 dismissed on ground of reference made by the company to the BIFR prior to the filing of such petition no scheme formulated by BIFR for nearly a decade - immovable properties of the company were alienated against little or no consideration fictitious financial restructuring undertaken by the company to have positive net worth to de-register itself from BIFR scheme other creditors winding-up petitions also admitted - Held that:- Merely by virtue of the pendency of the reference, the company enjoyed the suspension of legal proceedings, contracts and the like under Section 22(1) of the BIFR Act of 1985. A series of measures was adopted by the management of the company as a part of a vicious and malafide design to cheat its creditors, deceive all authorities and, its employees. In such circumstances, petition is allowed by way of appointment of official liquidator as the provisional liquidator over the company. Since, company is unable to show that transactions of sale of immovable properties were necessary or for the purpose of augmenting resources to discharge the companys debts. Hence they being fraudulent, the title therein may not be deemed to have passed at all from the company Decided in favor of petitioner.
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2012 (4) TMI 108
Application for the winding up - a joint venture agreement - one company pulled out of it agreeing to sell to the company some assets - consideration to be paid in 15 installments - petitioning creditor files appeal for the principal due and an interest claim on outstanding amount - petitioning creditor submits that the claim is admitted by the company by placing an email - Company contented after importation equipments by the petitioning creditor were sold to the company but the ownership of these equipments remained with them - Company alleged that absence of the papers they were not required to pay the balance amount - Held that:- the company has been unable to disclose any bona fide defense to the claim of the petitioning creditor - defense by the company to pay the balance money on not providing the papers came only after the letter of demand was written by the petitioner creditor- by the time they sent their second email on 26th March, 2009 the required documents were received by the company else they would not have admitted their liability, so unconditionally - relegate the petitioning creditor to a suit to recover the claimed sum, but, upon the company furnishing security - directing the company to furnish within four weeks from date a bank guarantee in favour of the petitioning creditor by a nationalized bank for a sum of Rs. 2,92,01,970.41/- and to keep it renewed until contrary orders are passed by any court. The petitioning creditor will file a suit claiming the sum claimed in the winding up application within four weeks of furnishing of the above security - winding up application is disposed of
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Service Tax
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2012 (4) TMI 492
Demand - Classification - erection commission and installation or works contract service - Held that: the activity undertaken by the applicant have been clarified by Board vide Circular no. B1/16/2007-TRU dated 22.5.2007 as covered under works contract services. - Decided in favor of the assessee
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2012 (4) TMI 491
Maintainability of application filed u/s 96(C) of the Finance Act, 1994 whether subsidiary of a subsidiary of a Government company, could invoke the jurisdiction of Authority for advance ruling - questions, identical to the ones sought to be raised by the applicants, are pending before the CESTAT at the instance of the holding company Held that:- If ruling is given in this case, it will bind only the applicants, this would mean CESTAT is free to render a ruling ignoring what is being ruled by this Authority. Such a situation should be avoided. Also, once the existence of the conditions specified by any one of the clauses barring the jurisdiction of the Authority is established, the Authority was bound to reject the application. No necessity is felt for adjudication on first contention. We, thus, reject these applications in exercise of our discretion Decided against the appellant.
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2012 (4) TMI 133
Appellants entered into a contract for investing into the construction of BOOT Projects - permission to put up specified number of sky-signs, unipoles, kiosks, lollipops etc. at different parts of Jalandhar-Kaparthala railway over bridge and also rent certain shops under the said railway over bridge - Such places given to the parties under the contract were being used by them for putting advertisements or further allotting the same to the advertisers - service tax demand was confirmed under the category of Sale of Space and Time for advertisement services assessee contented that there exists an agreement with the agency to spend a sum on the Jalandhar-Kapurthala railway line and in lieu of that obtained sole rights to display unipoles and sky signs with add-space - further submits that the applicants granted spaces to the agencies to put up structures and not space to advertise any products or services - he submits that the amount collected by the Municipal Corporation is on account of advertisement tax - the said parties are registered with the service tax department - Held that:- there is difference of opinion between Member (Tech) and Member (Judicial), the registry of the Tribunal is directed to place the case papers before Hon ble President for nominating a third Member for decision
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2012 (4) TMI 132
Application for stay - The appellants are engaged in the business of promoting and marketing vacations and trips conducted by foreign principals as General Sales Agent - An enquiry regarding the commission retained by the appellants was made and it was found to the department that the amount retained by the appellants is chargeable of Service Tax under the category of Travel Agent Service - Held that: no show-cause notice has been issued in this matter and there is no adjudication order against the appellants, therefore, no appeal was maintainable before the Commissioner (Appeals). Admittedly, the department has not challenged the impugned order before us - Appeal is allowed
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2012 (4) TMI 131
Application for stay - The facts of the case are that the appellant are engaged in the activity of selling of SIM cards and registered with the service tax department - It is contended on behalf of the appellant that on the same activity of selling of SIM cards they have to pay VAT to the State Government and under bona fide belief, service tax was also paid under the same challans - it is true that the appellant has paid the service tax regularly but under the State Government challans which was later transferred to the Central Government account, and that, as the appellant could not appear before the adjudicating authority, therefore, these facts were not considered by that authority - Appeal is allowed by way of remand to original adjudicating authority
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2012 (4) TMI 130
Demand - Cenvat credit on the strength of debit notes - assessee has submitted the detailed worksheet of debit notes (summary) for the relevant period along with challans evidencing payment of service tax by their two parties in question viz., M/s. Kunal Enterprises and M/s. Neha Global and the assessee has also submitted the service tax returns in the form of ST3 duly acknowledged by the C.Ex. department - Rule 4A of the Service Tax Rules, 1994 and the title of the duty paying documents, i.e. 'debit note' instead of 'invoice, bill or challan' does not make a difference more so when the service tax has been charged and paid into the Govt, exchequers account - Decided in favor of the assessee
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Central Excise
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2012 (4) TMI 482
Rebate claims - Petition filed for directing respondents to dispose of the various rebate claims filed by applicant - Held that:- Respondent is directed to dispose off rebate claim filed by applicant on 16.08.2011, 17.08.2011, 04.11.2011, 07.12.2011, 08.12.2011 and 23.01.2012 on merits and in accordance with law, within a period of six weeks from the date of receipt of a copy of this order. No opinion is expressed on merits of the matter.
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2012 (4) TMI 480
Period of limitation rejection of rebate claim on ground of limitation - goods actually exported on 12.02.2006 finally assessed copy of shipping bill handed over to assessee on 25.06.07 rebate claim filed on 17.07.2007 Held that:- U/s 11B a claim for the refund of duty has to be made within a period of one year from the relevant date; the date on which the ship or the aircraft in which such goods are loaded leaves India would be regarded as the relevant date. Therefore, rejection of application for rebate filed on 17 July 2007 is justified Decided against the assessee.
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Indian Laws
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2012 (4) TMI 481
Vested right of promotion petitioners passed the department examination, for the post of Senior Tax Assistants in February, 2009 seeking consideration for promotion to that category before 1.1.2010 - vacancies were identified as available as on 1.1.2010 to operate during F.Y. 2010-11 Held that:- Appointment to a higher category, even by promotion, is not a vested entitlement. It is also the vested right that among the persons in the field of choice, seniority will apply unless the junior has certain other grounds for marching over the priority based on seniority that may be available to an admitted senior. In present case, petitioners do not have any claim that any person junior to them in same category was given promotion in preference to them. Further, period of service would be counted from actual date of promotion and not from availability of vacancy Petition dismissed
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